The development of the Moonie and Bass Strait reserves led to pipeline links to the refineries in Brisbane, Altona and Geelong while the other refineries are served by ship. Therefore, though small by world standards, the diseconomies of small scale refinery production are at least in part offset by their location close to major markets (with distribution cost savings).
Refinery capacities are indicated millions of tonnes per year (mtpa; and barrels per day).
New South Wales
|Kurnell (near Sydney); Caltex Refining Company 4.9 mtpa (116 700 barrels/day 1998 ex BP)|
|Clyde; Shell Refining (Australia) 3.2 mtpa|
|Lytton (near Brisbane); Ampol Refineries 3.4 mtpa (104 000 barrels/day 1998 ex BP)|
|Bulwer Island (near Brisbane); BP Oil Distribution 2.6 mtpa (73 000 barrels/day ex BP)|
|Altona; Mobil Altona Refinery (MAR, previously Petroleum Refineries Australia) (Mobil) 5.0 mtpa|
|Geelong; Shell Refining (Australia) Pty Ltd 5.3 mtpa|
|Port Stanvac; Petroleum Refineries (Australia) Pty Ltd (3.3 mtpa) operated by Mobil. To close in 2003, though Mobil indicated it could reopen with more favourable conditions.|
|Kwinana (near Perth); BP Refinery (Kwinana) 5.7 mtpa (138 000 barrels/day ex BP)|
In Australia, four petroleum refineries are involved with the manufacture of petrochemicals
|The Shell refineries at Clyde, New South Wales and at Geelong, Victoria producing propylene that is manufactured on site into polypropylene resins.|
|The Mobil Refinery at Altona supplies gas oil (about 8 per cent of refinery throughput) to the Altona petrochemical complex (for their SCAL 1 cracker).|
|The Caltex refinery at Kurnell, New South Wales has provided naphtha (about 3 per cent of turnover) to ICI's (now Orica) Botany petrochemical complex. It now only provides propylene to Orica for refining (legacy of its PP business which supplies it to Basell at Clyde.|
Australia is about three-quarters self sufficient in oil production. Some declines in self sufficiency are projected though new discoveries may delay this estimate.
Australian feedstocks tend to be of the light form, which is complemented by heavier imported forms for lubricating oils and bitumen offset by exports of Australia's lighter forms.
In 1999, the market in Australia was 48 000 megalitres of refined products of which 2 800 (5 per cent) was supplied by imports.
The Australian petroleum production capacity for the eight refineries is about 32 million tonnes per year (mtpa) representing 1 per cent of world refining capacity. Average production capacity is around 4.5 million tonnes per year or 100 000 barrels per day ( about one-third the scale of Asian export refineries producing 250 000 to 300 000 barrels per day with new investment at 800 000 tonnes (ca 12 million tonnes per year). Rationalisation of refining capacity in Australia is clearly required to promote expansion of course 'jobs' are at stake.
There have been plans to merge the refining businesses of Mobil and Shell in Australia. (Royal Dutch Shell sold one-half of its interest in Basell). It involved the merger of Shell's Geelong and Clyde refineries and Mobil's Altona and Adelaide refineries. In January 1999, Mobil Oil declared it abandoned the proposed merger. A newspaper reported that Mobil's decision was driven by Exxon's study that indicated that much of the profitability of the Australian refining industry was determined by what happened in Asia's larger and more efficient refineries. In March 1999, Caltex and BP abandoned discussion on a possible merger of refinery operations.
The abandoned mergers could be a portend of closures as the benefit of the merger is insufficient to justify the operation of small scale refineries. Closure of Clyde, and Brisbane's Lytton refinery has been contemplated.
In December 1999, the ACCC had no merger requests for the oil industry.
|In July 1998, BP announced a A$250million upgrade to the refinery at Bulwer Island (including a 25 per cent expansion to 100 000 barrels per day, cogeneration and gas production for BOC).|
|Mobil has spent $100m on Port Stanvac. The have gone to the local council and sought a reduction in rates from $1 per year to $0.25 million because of margin pressures. Mobil said it was "generally cheaper to refine than import in "normal times".|
Industry profits in 1999 was identified as A$221 million with total 'assets' of A$10.7 billion.
Margins in Australia were US$3 bbl in 1996 in 1999 were US$0.50. The net profit of the industry US$0.04 per litre of fuel.
The Howard government is signalling plans to 'save' the $25 billion refining industry that may come in the form of taxpayer assistance. (Government in the Action Agenda said the local refinery industry is an important national asset.) The discussion is similar to the motor vehicle industry which said to government, if new investment is wanted, the government must 'help out'. (BRW 10 December, page 50 'Big Oil' says it's squeezed and puts out its hand.
|An estimated $1 billion to keep the industry alive is required.|
|Each local refinery must spend between $100m and $200m to meet higher standards for pollution control|
|Allow the refineries to charge higher prices for certain fuels.|
The federal government has announced new standards which will effectively ban fuel with MTBE added by January 2004. It is seen as a compromise between independent retailers which rely on fuel imports with MTBE, and the multinational refineries which have lobbied for an immediate ban citing concerns about groundwater contamination in the event of leaks or spills.
Note: Australian States can set their own standards which may exceed federal standards. WA for example, bans gasoline with MTBE and with a lower benzene requirement.Federal standards will not be matching WA standards in 2004. For Gasoline, WA benzene is 1.0 vol% max while federal will only be 1.0% max in 2006. Also WA MTBE is 0.1 vol% max and the federal spec will be 1.0 vol% max in 2004
The Australian Institute of Petroleum signalled that up to three refineries could close following the announcement, with the industry facing transitional costs of more than A$1 billion to upgrade capacity to meet the new national environmental standards. While closures have been raised, Shell said the Clyde refinery ``had a life span beyond 2007" while Mobil said it was ``working very hard to ensure our refineries remain competitive".
The chairman of the ACCC, Professor Allan Fels, said he recognised ``the environmental dimension". But, he added: ``It would have been better that more time had been given because of the significant danger to the competitiveness of the independents".
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