Caltex Australia to convert Kurnell refinery to a fuel import terminal

Caltex Australia Ltd. said it will close its 135,000 barrel-per-day Kurnell refinery in Sydney in 2014 and convert it to a fuel import terminal. With the closure of Kurnell, the number of refineries operating in Australia will shrink from seven to five, with the pending shutdown of Shell’s Clyde refinery in August.
“Caltex’s refineries are relatively small and, in their current configuration, are disadvantaged when compared to the modern, larger scale, more efficient refineries in the Asian region against which we compete,” Caltex Chief Executive Julian Segal said in a statement.
Even so, Caltex said it will continue to operate its other refinery, Lytton in Brisbane, with a focus on operational improvements. Australia’s remaining four refineries are the Altona and Geelong facilities in Melbourne owned by ExxonMobil Corp. and Shell, respectively, and BP’s Kwinana and Bulmer Island refineries in Perth and Brisbane.
Caltex expects to make provisions in 2012 of about A$450 million (US$473.5 million) to cover employment benefits, dismantling and remediation expenses due to the closure. It will also invest about A$250 million (US$263.1 million) converting the Kurnell operation into an import terminal.
The company in February reported a A$714 million (US$751.3 million) net loss for the year to December 31 after it wrote down the book value of its refinery assets by A$1.5 billion (US$1.57 billion) before tax.
Caltex Australia, which is 50% owned by U.S.-based Chevron Corp., currently sources about 55% of its transport fuels from its own refineries. After Kurnell closes, Lytton will supply only about a quarter of Caltex’s requirements. The rest of its fuel requirements will be supplied by imports.
The Kurnell workforce is likely to be reduced from 430 employees to less than 100.