Shell to shut down Australian refinery

Global oil and gas giant Royal Dutch Shell Plc has said that the company is selling its last Australian refinery in Geelong, Victoria, as part of its global strategy to focus investment on the company's large scale operations.

The 120,000 barrels per day (bpd) Geelong refinery has around 450 fulltime employees and about 100 to 150 contract workers at the site each day, whose jobs have come under risk following the announcement.

Shell intends to complete the sale process by the end of 2014. If the sale turns out to be not successful, the company said that it has other options, including converting the site into an import terminal for supplying to the local market.

''Shell will be seeking a buyer who will show due care for employees, provide reliable supply for the company and its customers, and run the facility safely with respect for the environment and the Geelong community,'' the company said.

Shell Australia's downstream vice-president Andrew Smith acknowledged the sale process would create a period of uncertainty for employees.

''I understand this announcement will be difficult for refinery employees, but Shell will support them through this period of uncertainty,'' Smith said.

Shell hopes that a buyer would emerge for the refinery, which has been operating for almost six decades and supplies about half of Victoria's and 30 per cent of South Australia's fuel.

Shell has been operating in Australia for more than 110 years, supplying fuel to around 900 Shell service stations across the nation, as also other products such as aviation fuel, marine fuel, chemicals, bitumen and lubricants to a wide range of customers.

''Shell is one of Australia's largest private sector investors, and remains committed to its business in Australia,'' Smith said.

The Australian Workers Union representative Ben Davis said the union is deeply concerned for the Geelong refinery workers and their families and the entire Geelong community.

''We have been advised that it remains business as usual at the refinery while Shell tests the market for a potential buyer, but the long-term prospects for the site are unclear,'' Davis said.

In September, Shell's top management expressed concerns over the refinery's future as questionable and borderline, blaming increased completion from large Asian refineries and squeezed refining margins.

Earlier, in 2011, the company announced the closure of its 85,000 bpd Clyde refinery in Sydney, the oldest refinery in Australia, which employed around 310 people. The refinery ceased operations in September 2012, and is being converted into a distribution terminal.

The company had said that on completion of the conversion, it would need only 50 to 60 people at the terminal and the remaining would become redundant.