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Caltex to shut refinery, sack 330 as part of restructure

Petroleum company will shut Sydney terminal in a move that will cost 330 jobs and leave 300 contractors in limbo

July 26, 2012

Caltex will shut its loss-making refinery in Sydney as part of a restructure that will put 330 people out of a job and leave hundreds of contractors in limbo.

The petroleum company today announced it will close its Kurnell oil refinery in the second half of 2014, reducing its headcount from 430 to 100 in the process.

There are also 300 contractors working at the facility, but there is no word on what the announcement means for them.

Caltex CEO and Managing Director Julian Segal says the refinery will be converted to a major import terminal under a long-term deal with Chevron that will deliver petrol, diesel and jet fuel.

He blames the small size of refinery, a strong Australian dollar and tough trading conditions for forcing Caltex’s hand.

Segal says Caltex’s refineries, which include Lytton in Brisbane, “have been generating significant losses”.

“This decision has been made in the long-term interests of Caltex and its various stakeholders, following an extensive review of the business,” he says.

“Caltex refineries are relatively small and, in their current configuration, are disadvantaged in the Asian region against which we compete.”

Segal says the closure will take about two years and that employees at Kurnell are being informed of the decision.

“I must stress this has been a difficult decision for the company to make due to the impact on our Kurnell refinery employees. Our review process has been exhaustive and examined all possibilities,” he says.

“I would like to recognise and thank our people at the Kurnell refinery, past and present, for their contribution over its 57 years of operation.”

The closure will reduce the size of Caltex’s workforce in New South Wales from 1,650 to 1,320.

Caltex will continue to operate the Lytton terminal. It says it is better suited to the product mix demanded by customers. Segal says the company is now looking at ways to improve its operation.

He says the carbon tax, introduced on July 1, did not influence Caltex’s decision to close Kurnell.

“Lytton has superior hardware compared to Kurnell, and a number of potential targeted incremental investments are currently under development,” he says.

Segal says Chevron, which has a 50 percent stake in Caltex, will provide fuel at market-based prices. Caltex intends to spend about $250 million to convert the Kurnell refinery to an import facility.

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