After wiping $1.5bil from the book of value of its Sydney and Brisbane oil refineries and also confirming that they might close them due to the repercussions of the high dollar, ever-increasing labour and oil costs plus competition from Asian refineries, two Caltex refineries may cease operations.
The Kurnell refinery and the Lytton refinery in QLD are the two Caltex refineries under review. As well as the loss of 800 jobs, the closures would mean Australia would have to import approximately half its refined petroleum products, increasing the current amount imported by about 25%. The review follows Shell’s decision to close its Clyde refinery in Sydney last year.
Caltex chief Julian Segal stressed “the writedown of the book value of the two refineries to just $340 million did not mean the five-month-old refinery review, which will take another six months to complete” but it was leaning towards the decision to close the refineries. On the 16th February 2012 writedowns and comments from the company stating that they were considering options for the refineries (from refitting them to closure) has increased speculation Caltex will shut them down. Mr Segal also said that the move was not carbon-tax related and did not believe there was much the federal government should do to ease the situation.
The position of Caltex after this report raises questions over the viability of the four other refineries in Australia which are owned by Shell, Exxon Mobil and BP.
In regards to competition coming from Asian refineries, Australian refineries are over 40 years old and produce around 100,000 barrels of petrol products per day whereas much newer refineries in Asia can produce up to 1.2 million barrels a day, proving how hard it is for Australian companies to compete in the world market nowadays.
BP’s president Paul Waterman also confirmed that the oil’s major two local refineries were doing it tough due to the strength of the Australian dollar and increased labour and maintenance costs.
Click here for the article “Review floats closure of Caltex refineries” in The Australian.
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This is such devastating news for Cronulla and surrounds, the oil refinery creates so many jobs for the locals here