Shell questions the future of its Geelong refinery

Shell global downstream director Mark Williams said the operation of the refinery at Geelong was "questionable" given the challenges faced, including more competition from new megarefineries in Asia.

"It's borderline," Williams told the Australian Financial Review. "It depends a lot on how it performs over the next few years whether or not it will ultimately be a survivor.”

"Shell employees are working to make the refinery more competitive with a continued focus on safety while enhancing profitable niche products including Avgas, bitumen and solvents," company spokesman Paul Zennaro said.

Shell had recently invested $47.5 million in a new water processing plant and $20 million in new bitumen facilities at the Geelong plant, one of the largest hydrocarbon refineries in Australia, employing more than 400 people on site.

In June, Shell decided to close its refinery in Clyde, Sydney, to convert it into a fuel terminal, and Caltex Australia announced in July that it would also convert its Sydney refinery into an import terminal, closing the Kurnell refinery in 2014 at the expense of 330 jobs.

The decision follows a review of the company's operations announced in August last year.

The Victorian Government had committed $4 million to a Geelong-focused assistance fund in June, a spokeswoman said.

"The Australian refining sector, like others, is facing major challenges," she said.

"Remaining competitive is a key part of dealing with those challenges. That's why we have been calling on the Gillard government to address issues that impact Australia's competitiveness."

Source: AAP