BP plans to cease fuel production at its Kwinana refinery in Western Australia and convert the facility into an import terminal.
The refinery has provided fuels in the state for 65 years. However, BP has made the decision because the growth of large-scale, export-oriented refineries throughout Asia has structurally changed the Australian market.
According to BP, regional oversupply and sustained low refining margins mean the Kwinana refinery is no longer economically viable.
After exploring multiple possibilities for the refinery’s future, BP concluded that conversion to an import terminal was the best option.
BP Australia head of country Frédéric Baudry said the refinery had played an important role in the development of Western Australia.
“It helped underpin the early development of the surrounding community and key industries. Generations of Western Australians have worked at the facility, building a fantastic legacy of safe and reliable operations that we will always be proud of,” Baudry said.
“Today’s decision to cease refining is a difficult one and not in any way a result of local policy settings. It comes in response to the long-term structural changes to the regional fuels market.
“Converting to an import terminal will not impact the safe and reliable supply of quality fuel products to Western Australia; however, it will require fewer people to run. We deeply regret the job losses that will result and will do everything we can to support our people through the transition.”
BP employs around 650 people – 400 permanent staff and 250 contractors – at the refinery. The company will wind down refining activities over the next six months, with a conversion workforce supporting site works.
The new terminal will support construction work out to 2022. Once complete, the import terminal is expected to support around 60 jobs.
Western Australian Premier Mark McGowan has demanded that BP ensures workers at the Kwinana refinery are supported to find new jobs.
In discussions with the state government, BP confirmed a redundancy package would be available for workers. BP has also commenced a process to assist its workers to find new positions in the sector and in other Kwinana operations.
McGowan said the government expected BP to honour this commitment to the refinery’s workers.
“This is an extremely disappointing outcome, and our primary concerns are the welfare of the dedicated workers at the Kwinana refinery and the continuation of fuel supply to WA,” McGowan said.
“The state government has repeatedly called on BP to continue its operations at the refinery, but the company has made this decision for commercial reasons after years of significant financial losses.”
Despite the refinery closure, Baudry said BP was committed to playing a leading role in growing Australia’s future prosperity, including making significant investments in natural gas production.
This includes building on its position in the North West Shelf joint venture through gas exploration at Ironbark offshore Western Australia.
“We are particularly excited by the shared ambitions with Western Australia to be net zero by 2050 and the opportunities this can offer,” Baudry added.