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MELBOURNE, Australia — BP will halt operations at its Bulwer Island refinery in Australia’s Queensland state by mid-2015 and may convert the facility into a fuel-import terminal amid competition from Asia.
The closing of the plant, which has the capacity to process 102,000 barrels a day of crude, will prompt Europe’s second- largest oil company to cut the number of workers to 25 from 380, according to a statement Wednesday. London-based BP plans to import jet fuel and buy products from Caltex Australia to cover the reduction in supply.
Refiners including Royal Dutch Shell and Caltex are shutting processing operations across Australia amid the expansion of bigger plants in Asia-Pacific such as Reliance Industries’ Jamnagar facility in India, the world’s largest refining complex. BP’s Kwinana unit in Western Australia will continue to operate, said Andy Holmes, the president of the company’s Australasia business.
“The emergence of very large, modern export-based refineries in Asia that can operate on a much lower cost base has transformed the industry and presented the Bulwer operation with an insurmountable challenge,” Holmes told reporters in Melbourne Wednesday. “The business environment has changed.”
Caltex, half-owned by Chevron, will supply BP with gasoline and diesel from its Lytton refinery in Brisbane, Queensland, the Sydney-based company said in a separate statement Wednesday.
BP is seeking to expand its retail business even as it scales back refining in Australia while companies including Trafigura Beheer, the world’s third-largest independent oil trader, and Vitol Group gain a foothold in the sector.
“Our ambition is to capture a greater share of the growing Australian fuels market and our view is to actually be buying more retail assets rather than selling,” Holmes said. BP has about 1,300 filling stations across the nation.
Puma Energy, a unit of Trafigura, last year agreed to purchase two companies that will give it more than 200 pump stations in Australia. Vitol said this year that it will buy the Geelong refinery in Victoria from Shell and its 870-site retail business for about A$2.9 billion ($2.7 billion).
Shell ceased processing at its Clyde facility in Sydney in 2012 and converted the site to a fuel-import terminal. Caltex will halt its Kurnell plant in the second half of 2014. The Altona refinery in Victoria, Australia’s smallest, is operated by Exxon Mobil.
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