BP will cease production from its Kwinana oil refinery south of Perth and convert the facility into a fuel import terminal.
Oversupply in Asia and sustained low refining margins have made the refinery uneconomical, and—after exploring numerous options—conversion to a fuel terminal is the best alternative, the company said.
Refining operations will be wound down over the next 6 months. First imports of fuel to the converted terminal are expected in first-half 2021.
In operation for 65 years, Kwinana is the only refinery on Australia’s west coast. Its closure leaves Australia with three remaining refineries – Ampol at Lytton in Brisbane, Queensland; ExxonMobil at Altona in Melbourne, Victoria; and Viva at Geelong in Victoria.
Of these, Ampol and Viva are conducting reviews about the future of their plants, having also suffered from falling demand and refining margins, exacerbated by the COVID-19 pandemic. ExxonMobil in September said its Altona facility had been under pressure, but no plan to review operations was announced.
The Australian government has expressed disappointment at BP’s decision after revealing last month a proposed $2.5 billion (Aus.) fuel security package that included measures to buffer against potential supply shocks and help keep refineries open where commercially possible. Under the plan, refiners will receive a direct payment of 1.15 cents (Aus.)/l. for locally made fuel.
Refiners warned the government that the measures may not be sufficient to support the viability of their businesses amid the unprecedented pressure caused by the pandemic-driven fuel oversupply.
Australia’s refining industry has been halved during the last decade with the closure of refineries in Sydney (Ampol and Shell), Brisbane (BP), and Adelaide (ExxonMobil).
