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April 2, 2014 5:21 pm
BP said it would halt operations at its Bulwer Island oil refinery in Queensland, Australia by mid-2015, blaming rising competition from big new low-cost refineries in Asia.
The move is part of a general retreat by the majors from the “downstream” – the business of refining and marketing oil.
All of them have been hit by a serious downturn in refining, particularly in developed markets such as Europe, where margins have been hit by overcapacity and weak demand for oil products.
The big oil companies have all been divesting billions of dollars worth of downstream assets in recent years. Just over a month ago, Royal Dutch Shell sold its large petrol station business in Australia and its Geelong refinery in Victoria to oil trader Vitol for $2.6bn. Shell has also sold refineries in the UK, Germany, France, Norway and the Czech Republic.
Traditional participants have been undermined by a wave of low-cost mega refineries in Asia, such as Reliance’s Jamnagar facility in India, one of the largest in the world.
Andy Holmes, head of BP Australasia, said such plants were putting heavy commercial pressure on smaller-scale refineries.
“It’s against this background that we have concluded that the best option for strengthening BP’s long-term supply position in the east coast retail and commercial fuels markets is to purchase product from other refineries,” he said.
The company said it was considering converting Bulwer, which has been operating since 1965 and has a capacity of around 102,000 barrels a day, to an import terminal.
BP said that to avoid disruption to customers, it had made alternative supply arrangements, including imports of jet fuel and a long-term agreement with Caltex to provide motor spirit and diesel from the nearby Lytton refinery.
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