Caltex to shut Kurnell refinery near Sydney

Caltex has decided to close its Kurnell refinery on Botany Bay, just south of Sydney, and convert the facility into a fuel import terminal at a cost of $680 million (Aus.).

The move, which will come into effect during second-half 2014, comes close on the heels of Shell Australia’s move to close its Clyde refinery in Sydney next year and also convert it to an import terminal.

Kurnell handles 125,000 b/d of crude and Clyde, 80,000 b/d. The two refineries together represent 27% of Australia’s current refining capacity.

However they have both been under increasingly stiff competition from imported product produced in the mega-refineries in Asia. The combination of cheap labor and more efficiency in Asia has become too hard for the Sydney facilities to match.

Caltex says it will buy refined oil from Singapore, South Korea, and India for sale in its Australian retail outlets.

The company adds that Kurnell lost $208 million (Aus.) last year and another $60 million (Aus.) during the first 3 months of 2012—a state of affairs that has forced its hand on the closure decision.

The closure will mean the loss of 330 in-house jobs and the loss of an unspecified number of jobs from the 300 contractors who also work at Kurnell.

The Clyde closure will cause the loss of 220 jobs.

The Caltex move means that there will be no refineries in New South Wales. Queensland still has two refineries in Brisbane, but Caltex has refused to rule out a similar closure of its Lytton refinery there. Its closure would leave BP’s facility at Bulwer Island the only one in that state except the small topping plant at Eromanga in the southwest of the state supplied by Cooper-Eromanga basin fields.

Victoria still has two refineries—Shell’s in Geelong and ExxonMobil’s Altona facility. The only other refinery in the country is BP’s Kwinana plant near Perth in Western Australia.

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