BP sticks by Kwinana despite Qld closure

Aerial view of BP's Kwinana refinery. Picture: Rod Taylor/The West Australian.

BP says it sees a long-term future for its Kwinana oil refinery despite the oil and gas giant today announcing plans to close a similar facility in Brisbane.

The company announced this morning it would halt production at its Bulwer Island plant by mid-2015, resulting in the loss of at least 350 jobs.

BP cited the growth of large refineries in Asia, which was causing structural change in Australia's fuel supply chain, for the closure.

However a spokesman for BP said the company's Kwinana facility enjoyed a number of competitive advantages when compared to Bulwer Island.

"Every refinery and its associated supply/distribution envelope is different," he said.

"Providing the Kwinana refinery keeps delivering year-on-year improvement in the areas of safety, reliability and efficiency, we can see a long term future for the facility."

BP's Kwinana refinery is understood to be being prepared for a major scheduled shutdown within months to undergo a multimillion-dollar maintenance program.

With a processing capacity of 137,000 barrels of oil a day and a workforce of almost 400 people, Kwinana is WA's only refinery - and Australia's biggest - and produces petrol, diesel and jet fuel.

The refinery's strategic importance would likely make it a sought-after asset if BP changed tack and decided to put Kwinana up for sale. A heavy maintenance shutdown is scheduled for this quarter.

BP's announcement this morning follows Royal Dutch Shell's recent decision to sell its Australian refining and marketing operations, including its Geelong refinery, to Vitol for $2.9 billion.

Caltex is also scaling back its refining operations, with plans to close it Sydney refinery in the second half of 2014 and convert it to an import terminal.

Caltex still operates a refinery at Lytton in Brisbane.

The Bulwer Island refinery was built in 1965 by Amoco and bought by BP in 1984.