UK markets open in 6 hours 27 minutes
  • NIKKEI 225

    26,757.67
    -43.31 (-0.16%)
     
  • HANG SENG

    26,532.58
    0.00 (0.00%)
     
  • CRUDE OIL

    45.16
    -0.12 (-0.27%)
     
  • GOLD FUTURES

    1,832.30
    +2.10 (+0.11%)
     
  • DOW

    29,883.79
    +59.87 (+0.20%)
     
  • BTC-GBP

    14,286.68
    -102.90 (-0.72%)
     
  • CMC Crypto 200

    374.48
    +9.56 (+2.62%)
     
  • ^IXIC

    12,349.37
    -5.74 (-0.05%)
     
  • ^FTAS

    3,651.32
    +37.15 (+1.03%)
     

BP to close Australian oil refinery in wake of pandemic slump

Sonali Paul
·2-min read
FILE PHOTO: Logo of BP is seen at a petrol station in Kloten
FILE PHOTO: Logo of BP is seen at a petrol station in Kloten

By Sonali Paul

MELBOURNE (Reuters) - BP plc <BP.L> plans to stop producing fuel in Australia and will convert its loss-making Kwinana oil refinery, the biggest of the country's four, into a fuel import terminal due to tough competition in Asia, the global major said on Friday.

BP is the first of Australia's four refiners to pull the plug on its plant in the wake of the coronavirus-driven oil demand slump this year. Two rivals have also flagged they are considering the future of their plants.

BP said it would wind down operations at the 146,000 barrels per day (bpd) plant in Western Australia over the next six months, affecting 650 jobs, but did not say how much the closure and conversion would cost.

"Regional oversupply and sustained low refining margins mean the Kwinana refinery is no longer economically viable," it said in a statement.

The move delivers a blow to government efforts to build up national fuel security and revive jobs in the wake of the coronavirus pandemic with incentives of A$2.3 billion (1.3 billion pounds) to Australia's four refiners to keep their plants open.

"The Australian government is deeply disappointed by BP's decision to close its Kwinana refinery in Western Australia after 65 years of operation," Energy Minister Angus Taylor said in a statement.

Viva Energy <VEA.AX> and Ampol <ALD.AX> are both considering shutting their refineries and converting them to fuel import terminals due to deepening losses. Australia's four refineries combined have less capacity than Asia's biggest refineries.

BP's plant, a major fuel supplier to Australia's biggest miners, had been seen as one of the least likely of Australia's plants to shut.

"The state government has repeatedly called on BP to continue its operations at the refinery, but the company has made this decision for commercial reasons after years of significant financial losses," Western Australia Premier Mark McGowan said in a statement.

As part of the company's push to become a clean energy provider, BP said it was considering producing and storing lower carbon fuels, such as renewable diesel made from waste, at Kwinana.

(Reporting by Sonali Paul; Editing by Clarence Fernandez and Stephen Coates)