Caltex to supply BP with diesel and petrol as refinery site becomes import terminal
Caltex is the beneficiary of BP’s decision to cease refining operations at its Bulwer Island refinery in Brisbane by mid-2015.
BP’s diesel and petrol needs will be fulfilled through a deal utilising Caltex’s Lytton refinery, while jet fuel will be imported.
Distribution will be unaffected by the move, a BP spokesman says.
Caltex is bullish about its position in the fuel supply landscape now.
“The supply contract provides economic benefits for both BP and Caltex,” Caltex CEO and Managing Director Julian Segal says.
“It will provide ongoing safe and reliable supply to BP, and enable Caltex to place more of its Lytton refinery production in Brisbane.”
“The supply contract is further confirmation of Caltex’s position as the outright leader in transport fuels across Australia.”
In order to supply BP’s terminal on the north side of the Brisbane River, Caltex will build a new cross-river pipeline and associated works costing about $30 million.
BP Australasia President Andy Holmes put the reason for 102,000 barrels a day refinery’s closure down to the growth of huge refineries in the Asia-Pacific region.
This was “driving structural change within the fuels supply chain in Australia and putting huge commercial pressure on smaller scale plants”.
“It’s against this background that we have concluded that the best option for strengthening BP’s long-term supply position in the east coast retail and commercial fuels markets is to purchase product from other refineries,” Holmes says.
“And while more of our transport fuel demand will be met by imports in future, ample supplies are available to maintain Australia’s energy security.”
Once processing has been halted, the import jetty, aviation fuel tanks and associated pipelines will remain operational while other storage tanks and pipelines will be placed on a care and maintenance basis pending a decision to convert the site to a multi-product import terminal.
The processing units will be isolated and made safe while plans for their eventual removal and any environmental remediation are developed.
The changes required to maintain supply and safely shutdown the process units are expected to take about 12 months to implement.
About 355 jobs are expected to be lost by mid-2015.