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Shell speeds up refinery closure

Shell has been non-committal on the future of its Geelong refinery…

SHELL has brought forward the closure of its Clyde refinery in Sydney by up to nine months, cutting about 350 jobs as tough operating conditions plaguing the shrinking sector worsen.

Shell said it would close the 90-year-old refinery on September 30, which is earlier than indicated last year when the company said Clyde would close some time before the middle of next year.

Like most Australian manufacturers, refineries are straining under the weight of a high dollar, high-skilled labour costs and expensive raw materials – in the case of refineries, crude oil.

But they also have the added pressure of cheaper imports from giant new refineries in Singapore and other Asian centres that can be up to 10 times the size of Australia’s refineries.

“Since the decision (to close Clyde) was taken, the refinery has continued to struggle against sustained poor industry margins and intense competition from mega-refineries in Asia,” Shell’s head of Australian refining and marketing, Andrew Smith, said.

Mr Smith said the carbon tax was not a factor in the decision.

The refinery and its wharf facilities at Gore Bay will now be converted to take imports from the giant Asian refineries.

Only between 30 and 50 of Shell’s 275 Clyde and Gore Bay workers would be needed to operate the import terminal.

About 100 contractors were also working on the site.

Shell said it had already found jobs for 30 of the workers that would have been hit by this decision, including some moved to the company’s $US12 billion ($12.2bn) Prelude floating liquefied natural gas project planned for offshore Western Australia.

The conversion of Clyde into an import terminal will mean the nation needs to import one-third of its refined petroleum products such as petrol, diesel and jet fuel.

Sydney’s only other refinery, at Kurnell, is also flagged to close after a review by Caltex is completed in coming months.

If Kurnell, which is much bigger than Clyde, closes, up to 700 full-time and contractor jobs could be lost.

It would also mean more than half the nation’s refined products would be imported from giant refineries that Australian plants find it impossible to compete with.

If Kurnell closes, the nation would be left with just five refineries, down from eight in 2003 before Mobil’s Port Stanvac refinery in Adelaide was shut.

Canberra has rejected energy security concerns around the closure of the refineries.

This is partly because since the decline of Esso’s Bass Strait oil fields, which now produce about one-tenth the oil they did in their heyday, Australia has had to import most of the crude oil it puts into its refineries.

Of the nation’s remaining refineries, Exxon has said its Altona refinery in Melbourne will remain open and BP has said there are no plans to close its Perth or Brisbane refineries.

Shell has been non-committal on the future of its Geelong refinery and Caltex is also reviewing its Lytton refinery in Brisbane, although there are indications neither of these will close soon.

SOURCE

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