MELBOURNE�BP Australia Ltd. is to halve its workforce at the Kwinana refinery, south of Perth in Western Australia. Staff at the refinery will be cut to 200 people from the current 400. This represents a severe drop from the 1,000 employees working at the refinery in the mid-1990s. The move is part of an Australian downstream restructuring strategy aimed at keeping pace with the substantial cost improvements made by competing refineries in Southeast Asia.
Australia's refining sector has suffered in recent years from the fierce competition presented by low-cost product imports. Shell Australia Ltd.'s Clyde refinery has already shed 40 jobs in an effort to enable the plant to stay viable before its expected closure in 2005-2006.
The moves coincide with the Australian refiners� preparation to fight tough new environmental fuel standards that will force them to spend a collective sum of about $1.3 billion (Aus.) to upgrade their facilities. The standards are scheduled to be implemented over the next 6 years and will dictate the pace of consolidation in the very low-profit Australian refining industry.
BP Australia wants to accelerate the introduction of low-sulfur and ultralow-sulfur fuel, because it has already made substantial investments of about $700 million (Aus.) in its Kwinana and Brisbane refineries towards that goal and is seeking a competitive advantage. It favors introduction of the 350-ppm low-sulfur fuel standard by 2002 and the ultralow-sulfur standard of 30 ppm by 2008. However, Australia's three other refiners�Shell, Mobil Oil Australia Ltd., and Caltex Australia Ltd.�want to gradually introduce the new standards. Mobil and Shell are facing refinery closures.
The Australian Federal Chamber of Automotive Industries has also weighed in on the issue by pointing out to the federal government that the vehicle industry had accepted its responsibility to meet the cost of upgrading for better environmental standards and it is essential that the petroleum industry match this commitment.
