Shell Australia Ltd. is likely to close its Clyde refinery in Sydney by 2006.
"On present industry outlook, it is difficult to see a future for our Clyde refinery beyond 2006," said Shell Australia Chairman and Chief Executive Peter Duncan recently.
The company has commissioned a detailed study of Shell's existing and future manufacturing and supply arrangements in New South Wales. The 160,000 b/d Clyde refinery produces about 40% of Sydney's fuel requirements.
The refinery, along with Australia's seven others, is struggling to compete with Asian product imports. The country's refiners are also faced with meeting the high cost of revamping their plants in order to comply with Australia's new fuel emission requirements, due to be phased in during 2003-07.
These factors mean that Australia's refining industry is struggling to justify its existence, when Asia's newer and larger refineries could easily supply Australia's refined product needs.
Duncan said it would cost hundreds of million of dollars to upgrade the Clyde facility to meet the new fuel standards. This, combined with sustained poor returns from the manufacturing business, is causing Shell to examine every possibility.
However, it may be that the company's Gore Bay terminal on Sydney Harbor will remain open, even if the refinery closes, as fuel from overseas could still be offloaded there.
Shell's commissioned study will be completed in March 2000.
