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Australia: Unions, Trade Groups, Concerned by Refinery Closure (01/08/2012)

Unions and industry bodies have reacted with dismay to Caltex's decision to close its refinery in Kurnell. The closure, which follows Shell's decision to shut its Clyde refinery, will leave the key city of Sydney without a local refinery, and only six refineries operational in the country.
The Australian Automobile Association has warned that the shuttering of Kurnell could lead to significant fuel supply problems in Australia.  "We need to ensure that there is adequate account taken of the impact that that sort of outcome can have on consumers and on the Australian economy," said the organisation's Executive Director Andrew McKellar. "We need to ensure that we have adequate reserves in place but also that we're encouraging and developing alternative sources of supply."
The Australian Workers Union (AWU) was also critical of the move, with National Secretary Paul Howes also citing supply concerns. "This is a decision that's going to take two years to implement and we think there is a valid argument that we need to fight back to preserve Australia's fuel refining capacity, to inform the Australian people that companies like Woolworths who market themselves as the Australian fresh food people will be, through this decision of Caltex, supplying only foreign fuel," he told local broadcaster ABC News. "It concerns me that this may be the beginning of the end of Australia's oil refining capability if we lose our oil refinery right across this country we'll have no ability to guarantee our fuel security."
However, some in the industry were optimistic that a deal to import fuel from Singapore at market-based prices would avert problems. "Like Shell they will be bringing in the refined product all ready to go into Australia through their tanks and out to the distribution of service stations," said Colin Long, head of the Service Station Association. "The public and the service stations will notice no difference, so there's no actual threat as to supply in that scenario."
Caltex Australia's Chief Executive Julian Segal also defended the decision to shut the refinery, which he said was based purely on economic considerations. "Last year we lost $208 million in our refining operations. That's a situation that cannot continue," he said. "We believe this decision puts Caltex on a much more sustainable path going forward. We will continue to invest in our supply chain and marketing operations to further develop our proven growth platform. Concurrently we will stem the losses at our refining operations by converting Kurnell to a major import terminal."

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