The peak motoring organization in Australia expresses concern that Caltex’s choice to close its Kurnell site may have left the nation vulnerable to risks in fuel supply and fluctuations in prices.
Caltex is set to eliminate over 330 positions as the Kurnell site in Sydney transitions into a basic fuel import facility within the next two years.
This closure follows Shell’s recent announcement to shut down its refinery at Clyde, resulting in Sydney lacking an operational oil refinery.
Significant concerns are now being raised regarding the security of fuel supplies in Australia and the possible repercussions at the fuel pump.
Andrew McKellar, executive director of the Australian Automobile Association, warns that consumers may bear the brunt of the closure.
“We must guarantee adequate reserves are in place while also promoting and developing alternative supply sources,” he remarked.
“It is critical to acknowledge the consequences such an outcome can impose on consumers and the Australian economy.”
Currently, Caltex is responsible for approximately 30 percent of all transport fuels consumed in Australia.
To maintain a steady petrol supply into Australia, Caltex has partnered with Chevron, which will procure and supply imported products from Singapore at market rates under their agreement.
Fat Prophets Resources analyst David Lennox claims that this partnership offers little reassurance for motorists who now depend on imported fuels for their vehicles.
“If there’s a disruption in the supply chain outside of Australia, we would undoubtedly be affected,” he stated.
“Australia’s lack of self-sufficiency in crude supply means we will always be vulnerable to these disruptions.”
The NRMA concurs, with Graham Blight, the director of motoring and services, emphasizing that Australia has not invested sufficiently in alternative fuel sources such as biofuels.
“The fundamental issue lies in Australia’s fuel security,” he remarked.
“Evidently, we are failing to meet our international obligations regarding fuel reserves, placing us in a precarious position, especially when 52 other nations are ahead of us in this regard.”
Meanwhile, the organization representing independent service stations insists that petrol prices and availability should remain unaffected.
Colin Long, head of the Service Station Association, stated that major refineries in Singapore and India can easily fulfill Australia’s fuel supply demands.
He believes that motorists will not face any immediate issues.
“Similar to Shell, they will bring in the refined product ready for distribution across Australia through their tanks,” he explained.
“Thus, motorists and service stations will experience no difference, which means there is no actual threat to supply in that scenario.”
Caltex maintains that its decision to close the Kurnell refinery is driven solely by economic factors.
“I would like to highlight that we incurred losses of $208 million in our refining operations last year. Such a situation cannot prevail,” said chief executive officer Julian Segal.
“Our belief is that this decision positions Caltex on a more sustainable path going forward. We will persist in investing in our supply chain and marketing operations to further our proven growth strategy.
“At the same time, we are committed to halting losses at our refining operations by transforming Kurnell into a key import terminal.”
The terminal will receive and distribute fuel to the Sydney metropolitan area.
For the last 57 years, this has been the primary function of the Kurnell refinery, but as Caltex states…It produced only 100,000 barrels of petrol a day, being small in scale.
In contrast, it faced competition from new facilities in Asia, which generate over 1 million barrels a day.
Caltex confirms that its refinery in Lytton, Brisbane, will operate normally and is even set for a modest upgrade.
However, with the refineries at Kurnell and Clyde now closed, only six refineries remain operational in Australia.
The Federal Government has minimized the impact, indicating that most of the oil refined at the Kurnell site was sourced through imports.
According to Resources Minister Martin Ferguson, “The independent national energy security assessment established excess refinery capacity in the Asia-Pacific region, and already 80 per cent of the crude oil refined at Kurnell is imported.”
“There are mature import channels and ample product available to meet our needs and I am confident there will be no problems, difficulties in terms of the supply of fuel to Sydney or any other place in Australia.”
With the closure of the Kurnell refinery, Caltex will face substantial costs amounting to approximately $430 million.
Additionally, it plans to invest $250 million into upgrading and expanding its existing import facilities.
The expectation is that the Kurnell site’s closure will be finalized in the latter half of 2014.
Meanwhile, unions are urging the Federal Government to advocate on behalf of Caltex to halt the closure.
Paul Howes, national secretary of the Australian Workers Union, states that both the State and Federal governments have overlooked the Kurnell refinery.
“Why aren’t they stepping in here and saying, ‘Chevron, if you want the right to exploit our natural resources in the form of the Gorgon project – a $48 billion natural gas project – then you have the obligation through your 50 per cent shareholding of Caltex to ensure that just a little bit of the crude oil is value-added in Australia.'”
by Vandas Voice
