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Shell quiet on refinery

SHELL Australia has again failed to guarantee the future of its refinery operations in Geelong, as the company looks to scale back in the face of increased Asian competition and reduced margins.

Cameron Best   |  December 6th, 2011

SHELL Australia has again failed to guarantee the future of its refinery operations in Geelong, as the company looks to scale back in the face of increased Asian competition and reduced margins.

While the company issued its standard “we never speculate on speculation” line, it admitted the Geelong refinery faced challenging times in a highly competitive environment.

“While the company does not speculate on the future of any of its assets, it is worth noting significant investment decisions made by Shell in the last 12 months,” Shell Australia spokesman Paul Zennaro said.

Over the past year, Shell has invested $47.5 million in Barwon Water’s Northern Water Plant and $20 million in new bitumen facilities at the Geelong refinery.

The company also has an ongoing maintenance program at the refinery, despite the decision to axe 22 maintenance jobs at the refinery in October.

At the time, refinery general manager Mark Schubert said it was a difficult, but necessary, decision aimed at improving the refinery’s sustainability.

Shell made the decision to close its smaller Clyde refinery in Sydney earlier this year, converting it and the company’s Gore Bay Terminal into a fuel import terminal.

The company blamed the rise of “mega-refineries” in the Asian region, which depressed industry margins for refined products.

Both relatively small in world terms, the ageing refineries at Geelong and Clyde process nearly 200,000 barrels a day, or about 25 per cent of Australia’s petrol needs.

Shell Australia vice-president of Australia downstream Andrew Smith told The Australian Financial Review there was no commitment on expanding Geelong in the wake of Clyde’s closure.

Mr Smith said the 120,000 barrel-a-day Geelong refinery was a better economic proposition than Clyde but there were a “cupboard full of options” for Geelong.

Scheduled to be completed next year, Shell’s bitumen manufacturing plant in Geelong will produce about 160,000 tonnes of bitumen per year in three key grades.

The company supplies more than one-third of all bitumen used for private and government roads.

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