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Shell looks to sell Geelong refinery in Australia

04.04.2013  | 

The number of refineries in Australia has dwindled in recent years as vast new processing facilities have sprung up in India, Singapore and elsewhere in the region, producing products such as gasoline, jet fuel and motor oil more cheaply. Geelong is now Shell's only oil refinery in Australia.

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By ROSS KELLY

SYDNEY -- Royal Dutch Shell said it plans to sell its only oil refinery in Australia, as the local industry struggles to compete with low-cost operators in Asia.

The number of refineries in Australia has dwindled in recent years as vast new processing facilities have sprung up in India, Singapore and elsewhere in the region, producing products such as gasoline, jet fuel and motor oil more cheaply.

The Anglo-Dutch oil company said Thursday it may convert its refinery in Geelong to a fuel import terminal if it can't find a buyer. The plant, near the country's second-most populous city, Melbourne, currently supplies about half of Victoria state's fuel. It employs about 450 staff, plus between 100 and 150 contractors.

Shell has hired Bank of America Merrill Lynch to assist with the sale process, which it expects to complete by the end of next year.

Last year, the company converted a refinery in the commercial capital, Sydney, to an import terminal. Caltex Australia, half-owned by Chevron, plans to make a similar conversion to its Sydney refinery next year.

The Geelong plant is larger than Shell's former Sydney operation, producing up to 120,000 bpd of crude oil. It can process cheaper types of crude and also makes a larger range of products including solvents, high-octane gasoline and bitumen, potentially making it a more attractive sale target.

"Every refinery in Australia is different," said Andrew Smith, the head of Shell Australia's refining unit. He declined to comment on whether the refinery is profitable, or if it has attracted any early buyer interest.

Among the handful of remaining refineries in Australia, Caltex has another plant in Brisbane, BP owns refineries in Perth and Brisbane, and ExxonMobil has a refinery in Melbourne.


Dow Jones Newswires



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