--Caltex says 135,000 b/d Kurnell refinery to shut
--Facility will be converted into fuel import terminal
--Caltex to keep Lytton refinery in Brisbane alive
--Caltex says 330 jobs will be cut
(Recasts first paragraph; adds Australian govt minister comment
in 6th and 7th paragraphs; detail, background throughout)
By Ross Kelly
SYDNEY--Australia's biggest city will be without an oil refinery
from the second half of 2014 after Caltex Australia Ltd. (CTX.AU)
Thursday said it will close its Kurnell facility in Sydney and
convert it to a fuel import terminal.
Australia's ageing refineries are small compared to new
facilities being built in China and India, making it tough for
local operators to compete on costs. An oversupply of fuel into the
Asia Pacific market has also put pressure on regional refiner
margins, making life tougher for companies like Caltex, which is
50%-owned by Chevron Corp (CVX).
The closure of Kurnell, involving the loss of 330 jobs, will
bring the number of refineries operating in Australia down to five
from seven at the start of this year as Royal Dutch Shell PLC
(RDSB) is also due to close its Clyde refinery in Sydney next
month. Kurnell's nameplate capacity is 135,000 barrels per day,
according to Caltex's most recent annual report.
"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. (XOM)
and Shell respectively; and BP PLC.'s (BP) Kwinana and Bulmer
Island refineries in Perth and Brisbane.
Martin Ferguson, Australia's resources and energy minister, said
the latest closure won't jeopardize Australia's energy security
because the country already imports large amounts of crude and oil
products.
Ferguson said Australian plants are small compared to the "mega
refineries" in Asia, with the Jamnagar refinery in India having a
larger total capacity than Australia's current six combined.
To ensure it has a reliable supply of refined products to sell
through its marketing division, Caltex said it has an agreement
with Chevron for the supply of transport fuels into Australia.
Kurnell's closure will come at a financial cost for the company,
which now expects to make provisions in 2012 of about 450 million
Australian dollars (US$463.6 million) to cover employment benefits,
dismantling and remediation expenses. It will also invest about
A$250 million converting the Kurnell operation into an import
terminal.
Caltex said savings associated with the closure will offset a
significant proportion of the costs, and it doesn't expect any
significant impact on its net debt.
The company in February reported a A$714 million net loss for
the year to Dec. 31 after it wrote down the book value of its
refinery assets by A$1.5 billion before tax.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;
Ross.Kelly@dowjones.com
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