Location of refineries in Australia

Bulwer Island QLD (BP)

Lytton QLD (Caltex) Kwinana WA (BP)

Kurnell NSW (Caltex)

Altona VIC (Mobil)

Clyde NSW (Shell)

Geelong VIC (Shell)

Victoria New South Wales South Australia

Northern Territory

Queensland Western Australia

As chart 3.1 demonstrates, there are two refineries in each of New South Wales, Victoria and Queensland and one in Western Australia. Tasmania, South Australia and the Northern Territory do not have operating refineries and source unleaded petrol through imports from domestic or international refineries.

Before 1 July 2003 Mobil’s Port Stanvac refinery operated in South Australia. Mobil decided to discontinue operations at the South Australian refinery as it was one of the smallest refineries in the South-East Asian region, and the refinery found it difficult to compete.6 _{The Port Stanvac refinery was}

‘mothballed’ on 1 July 2003 but has been maintained in a condition that would enable Mobil to restart operations if the refinery becomes viable again in the future.

The South Australian Government is seeking a decision from Mobil by 2009 concerning its intentions for the future of the Port Stanvac refinery. Mobil has made no decision about the future of the refinery at the present time and it appears that it will not do so before 2009. 7 _{Mobil submits that while there has}

been an improvement in the international refining business environment, there is insufficient certainty

6 Exxon Mobil, History of operations in Australia, viewed 3 October 2007, www.exxonmobil. com/AustraliaEnglish/PA/Operations/AU_Ops_CompanyInfo_History_Mobil.asp.

for it to undertake the investment necessary to comply with the Australian fuel standards and other operational requirements to re-open the facility at this time.8

3.2.3 capacity of refineries in australia

Refineries produce a number of petroleum products in addition to unleaded petrol, such as diesel, jet fuel, fuel oil, liquefied petroleum gas, lube oils, bitumen, heating oil and other products.

The total ‘nameplate’ or theoretical capacity of Australian refineries for the production of all petroleum products is 734.3 thousand barrels per day (KBD). The nameplate capacities reflect the output that would be produced if the refineries were running at optimum utilisation. In practice, refineries do not operate at their nameplate capacity throughout the year due to scheduled shutdowns for maintenance, or unscheduled shutdowns due to refinery failure.

Table 3.1 shows the nameplate capacity of refineries in Australia.

Table 3.1 Nameplate capacity for all petroleum products at Australian refineries9

Company Location

Capacity KBD

Capacity Million litres/day*

BP Bulwer Island, Brisbane Qld 84.0 13.4

BP Kwinana, WA 131.0 20.8

Caltex Lytton, Brisbane Qld 108.6 17.3

Caltex Kurnell, Sydney, NSW 130.7 20.8

Mobil Altona, Melbourne, Vic. 80.0 12.7

Shell Clyde, Sydney, NSW 90.0 14.3

Shell Geelong, Vic. 110.0 17.5

Total 734.3 116.7

* Note: Refinery capacity figures are presented in KBD and have been converted into million litres per day for ease of comparison with other volume data presented in the report.

Source: Public submissions provided by Mobil, Shell, BP and Caltex.

The suite of products produced at Australian refineries varies between each refinery and depends on the type of crude oils processed. For example, Caltex submitted that as its Lytton refinery generally used lighter and sweeter crude oils it tends to produce a higher proportion of petrol and diesel products. Caltex also noted that at its refineries petrol accounted for around 50 per cent of production, diesel accounted for around 25 per cent, jet fuel accounted for 13 per cent, and various other minor products made up the balance.10

Australian refining capacity has declined over recent years. In particular, total refining capacity was 874.5 KBD in 2003.11 _{This is due to a number of reasons, for example the ‘mothballing’ of Mobil’s Port}

Stanvac refinery in South Australia in 2003, which had a nameplate capacity of approximately 72 KBD. In addition, capacity at some other refineries was reduced with the need to re-configure to meet the

8 Mobil submission, p. 3.

9 There is also a small refinery with a capacity of 1.5 KBD located at Eromanga in the far west of Queensland operated by IOR Energy. IOR Energy, Refining, viewed 21 November 2007, www.ior.com.au/refining.html.

10 Caltex submission, p. 15.

Australian fuel standards that have progressively been introduced since January 2002.12 _{In particular,}

Mobil submitted that it completely restructured its Altona refinery to meet the new fuel standards and to remain competitive in the future. The restructure reduced the capacity of Mobil’s Altona refinery by approximately 50 KBD.13

Despite declining Australian refining capacity in recent years, refining capacity in the Asia-Pacific region has been increasing. At the same time, demand for petroleum products has been growing strongly in

Asia, led by China.14

Growth in capacity in the Asia-Pacific region appears likely to continue as several refineries are still under

construction. For example, Reliance Industries Ltd is building a refinery at Jamnagar on India’s northwest

coast. It is planned to be at full production by 2009–10 with a refining capacity of 1200 KBD.15 _{This will}

be almost double that of all seven operating refineries in Australia combined.16

3.2.4 Production of petrol

In 2006–07 total production of petroleum products at Australian refineries was 38 795 ML. Chart 3.2 shows production of petrol in Australia for the period 2002–03 to 2006–07. 17

The chart shows that production of petrol in Australia has fluctuated over the past five years but generally declined from 2002–03 to 2005–06. Production of petrol in 2006–07 was 17 732 ML or around 46 per cent of total production at Australian refineries. This is around 1 per cent less than domestic production of petrol in 2002–03 (17 984 ML).