Sydney, 26 July (Argus) — Australian refiner and marketer Caltex will close its 135,000 b/d Kurnell refinery in Sydney and convert it to an oil product import terminal, leaving Australia's largest city with no refinery by mid-2014.
Caltex, which is 50pc owned by Chevron, will keep its 109,000 b/d Lytton refinery in Brisbane but close Kurnell in the second half of 2014, following a review of its supply chain. Shell is closing its 79,000 b/d Clyde refinery in Sydney on 30 September, also converting it to an import terminal.
Lytton will remain open for now, subject to improvements in operational and financial performance, Caltex said, which has signed a new transport fuels supply agreement with Chevron. “The company's Brisbane-based refinery at Lytton is better suited to the product mix demanded by our customers and consequently a pathway is being explored to improve its operations,” Caltex chief executive Julian Segal said.
Caltex blamed competition from larger more efficient refineries in Asia, and the challenging business environment in Australia for its decision to close Kurnell that has been making a loss for more than a year. The company wrote down its refinery assets by A$1.5bn ($1.55bn) in February. It is spending A$250mn converting and expanding the import facilities at Kurnell.
Caltex supplies more than a third of the transport fuel market in Australia. It supplied 270,000 b/d of gasoline, diesel and jet fuel in Australia last year, of which around 170,000 b/d was produced at its refineries. It plans to replace all the transport fuels lost with the closure of Kurnell with imports to the new terminal, implying it will import around 90,000 b/d more transport fuels to cover the lost production. With Kurnell's closure, the proportion of Caltex's fuel sales supplied by its own refineries will drop to around 25pc from the current 55pc.
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