Shell Australia to spend A$100 mln on refinery
Date: 03-May-02
Country: AUSTRALIA
Author: Michelle Nichols
Victoria state premier Steve Bracks announced the start of construction of a new hydro-desulphurisation plant at the refinery, which will allow it to meet new air quality standards two years ahead of the Australian government's schedule.
Karel Pronk, Shell general manager manufacturing, said when the plant was completed in late 2003 the refinery would be able to produce ultra-low sulphur diesel which would meet the new fuel specifications of 50 parts per million sulphur that are due to be introduced on 1 January 2006.
"Australia's downstream oil industry is currently in crisis with an oversupply of regionally refined product and hyper-competive market conditions," Pronk said in a statement.
"However Shell is determined to maintain a viable downstream business in Australia and this major investment is a clear example of our confidence that market conditions will improve."
The Shell Geelong refinery, 60km from Melbourne, is one of eight in Australia and produces 15 per cent of the country's petroleum products. It supplies about 50 per cent of Victoria's petrol.
REDUCE REFINERY WASTE
Shell will spend another A$30 million to cut refinery water consumption and improve quality of waste water discharge.
The Federal Government's tougher fuel quality standards are a major issue for the industry with speculation that at least one of the oil companies might close a refinery rather than make the substantial investment needed.
The Australian Institute of Petroleum said two of Australia's other refiners, Mobil Oil Australia, a unit of ExxonMobil Corp , and Caltex , half-owned by ChevronTexaco , would "conservatively" need to spend at least A$400 million to upgrade their refineries.
Shell began a A$30 million project last July to expand the processing capability at its Clyde refinery in Sydney to meet the tougher fuel standards by the end of 2003.
The massive investments come at a time when Australia's four refiners, including BP Plc , lost a net A$161 million in calender 2000 with losses deepening last year.
Mobil recently reported a loss of A$208 million for 2001, compared with a loss of A$99 million in 2000, while Caltex reported a A$38.6 million loss for calender 2001, compared with profit of A$36 million for 2000.
BP Australia and Shell Australia have not yet announced their results for 2001.
BP Australia said it had already invested in its refineries at Kwinana in Perth and Bulwer Island in Brisbane, allowing both to meet the fuel quality standards in October 2000.
Caltex told shareholders yesterday it was considering whether to upgrade its Kurnell and Lytton refineries.
Mobil said its Adelaide refinery needed more funds to meet the 2006 cleaner fuel deadline, but no decision has been made.
Mobil's Altona refinery recently received government approval to use a proprietary additive which reduces particulate emissions as an interim measure.
A spokeswoman said no decision had been made as to whether further investment would be made to upgrade the refinery further.
