Shell puts last remaining Australian refinery on sale, delivering a ‘hammer blow’ to Geelong

• Matt Chambers and Stuart Rintoul
• From: The Australian
• April 04, 2013 5:30PM

The oil giant says if it can’t sell the refinery, it will consider turning it into a fuel import terminal to supply its local marketing and distribution business.

The move is another blow to Australia’s struggling refining industry, which cannot compete with giant refineries in Asia.

In 2011, Shell said it would close its only other refinery, at Clyde in Sydney, and convert it into an import terminal – a move that meant the loss of about 350 jobs.

Shell’s local head of refining and marketing, Andrew Smith, today announced the company’s intention to sell the Geelong refinery and said it was searching for a buyer with a view to keeping the site open.

It hoped to seal a sale by the end of 2014, but if a buyer could not be found it would explore other options, such as a fuel terminal.

“Naturally this announcement will be a difficult one for the hardworking people at the refinery,” Mr Smith told reporters.

He hoped a buyer would continue running the site, which has been operating since 1954 and supplies about half of Victoria’s and 30 per cent of South Australia’s fuel.

“We encourage employers and their representatives to support an outcome that maintains operations and local jobs.”

Mr Smith said a successful sale was the preferred option for Geelong, and he could not speculate on how many – if any – jobs would be affected.

In addition to around 450 full-time employees, between 100 and 150 contractors work at the refinery each day.

“Shell will be seeking a buyer who will show due care for employees, provide reliable supply for the company and its customers, and run the facility safely with respect for the environment and the Geelong community,” Mr Smith said.

Mr Smith said Shell made the decision because it wanted to grow its retail and bulk fuels business, along with terminals and pipelines.

In September, Shell’s global downstream director Mark Williams described the refinery’s future as questionable and borderline, blaming increased competition from Asia and reduced margins.

Caltex last year announced it would convert its Kurnell refinery in Sydney into an import terminal, in a move that reduced the number of Australian refineries to just five, including Geelong.

This was down from eight in 2003, before Exxon Mobil closed its Adelaide refinery.

Australian Workers’ Union acting branch secretary Ben Davis said the company had delivered a “hammer blow’ to 450 employees, their families and a “community that is already on its knees” as a result of job uncertainty at the city’s other big employer, Ford.

“Geelong is reeling from a series of punches and workplace closures and job losses and this is the latest instalment,” he said. “Geelong is really struggling and this community will be traumatised by this announcement.”

Mr Davis said he expected the sale process to take months, rather than weeks.

He said he was contacted by Shell just before the company made its announcement to workers at 10am and that Shell workers were shocked and “desperately upset” after the company’s assurances last year that the site was secure.

Mr Davis said the list of potential buyers was “obviously very short” and limited to other oil companies, which were consolidating and closing refineries internationally, or “someone who wants to get into oil”, or a private equity firm.

He said the potential closure of the Geelong refinery, which produced about half of Shell’s Australian manufacturing capacity, raised questions about Australia’s fuel security.

“If this sale is not achieved and this refinery closes, if is as likely as not to happen, we will become more dependent on imported fuel and imported oil, (and ) more (affected by) price spikes and supply chain interruptions overseas”, which would inevitably impact on price.

Victorian Premier Denis Napthine says the state government will support Shell in finding a buyer for the refinery.

“Victoria has proved time and time again that it is a great place to invest and the coalition government is giving Shell its full support in achieving a successful outcome,” he said.

“Shell management have advised me that they are doing their utmost to support their staff and keep them fully informed of progress.”

Victorian Labor leader Daniel Andrews, speaking at the Shell refinery gates within hours of the company’s announcement, said workers faced “a very, very uncertain future” .

“This is a very sad day for the people of Geelong and the people of Victoria,” he said.

He said there would be a “limited field” of buyers.

Mr Andrews attacked the Napthine government, saying: “This is a government that has no jobs plan and this is what happens when you have no jobs plan.

“When you send the Victorian economy to sleep and when you refuse to work hard to keep Victorians in work, you get announcements at Ford, at Toyota, at Shell, at National Foods, at Bosch, the list goes on and on and on.

“We don’t need in this state a premier for funny hats. We need a premier for jobs.”

He said the company’s announcement would be a “kick in the guts” for Geelong and Mr Napthine had been on notice for months as the minister for regional development, and now premier, that Shell was not as secure as the company suggested last year.

Geelong Trades Hall secretary Tim Gooden says unions will meet on Monday and are seeking urgent talks with Shell management to discuss its proposal in more detail.

With AAP

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