* Closure follows 12-month review; will convert to import
hub
* Costs for closure, conversion to total A$680 mln
* Caltex signs long-term supply agreement with Chevron
* Caltex says refinery business lost A$60 mln in March qtr
* Caltex shares up 1.5 pct in firmer market
SYDNEY, July 26 (Reuters) – Oil refiner Caltex Australia
announced on Thursday it will close its loss-making
124,500 barrel-per-day Kurnell oil refinery in Sydney after a
year-long review, converting it into an import terminal and
cutting more than 600 jobs.
Australian refiners have been grappling with ageing
equipment, cheaper imports, high costs and a strong Australian
dollar, leading to closures, restructurings and reviews of
operations.
“Caltex’s refineries are relatively small and, in their
current configuration, are disadvantaged when compared to the
modern, larger scale, more efficient refineries in the Asian
region against which we compete,” Caltex Chief Executive Julian
Segal said in a statement.
Caltex said it had agreed a long-term supply deal with 50
percent shareholder Chevron for transport fuels at
“market-based prices”.
Segal did not specify where the fuel would be imported from
but said not having a refinery in the region would not impact
local fuel prices.
“There is a reliable supply in the region — in Singapore,
in Korea, India,” he told a news conference.
Kurnell has around 430 employees and 300 contractors. There
would be less than 100 employees on site once the plant is
closed in the second half of 2014, Caltex said.
Costs related to closing the plant and converting it into an
import terminal will come to around A$680 million ($698
million), the company said, announcing it will cut back on
dividend payments while the closure and conversion takes place.
Combined production at the 57-year-old Kurnell refinery and
the company’s Lytton refinery in Brisbane is made up of about 50
percent petrol, 30 percent diesel and 15 percent jet fuel.
Caltex said it was working to improve the operational and
financial performance of Lytton, which had better hardware than
Kurnell. While there were no guarantees about Lytton’s long-term
future, Caltex was confident it could better meet market
requirements, Segal said.
Caltex said its refinery business lost A$60 million in the
March quarter and A$208 million in the past year. It wrote down
the value of its refinery assets by A$1.5 billion earlier this
year.
Caltex also said it was cutting its dividend policy, from a
current payout ratio of 40-60 percent to 20-40 percent, and was
looking at raising capital by issuing hybrid securities to
improve its balance sheet.
Shares in Caltex rose 1.5 percent in a slightly firmer
broader market.
Australia consumed 52 billion litres of petrol, diesel and
jet fuel in the year to June 30, 2011, with net imports
accounting for around 14 billion litres.
