BP Australia is ceasing fuel production at its Kwinana refinery and will convert it into an import terminal, resulting in hundreds of job losses.
BP Australia has announced plans to close its Kwinana refinery and turn it into an import terminal, resulting in the loss of hundreds of jobs.
In a statement released this morning, BP said an oversupply of fuel and sustained low refining margins meant the plant was no longer viable.
BP Australia head of country Frédéric Baudry said the decision came in response to 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," Mr Baudry said.
"We deeply regret the job losses that will result and will do everything we can to support our people through the transition.”
The refinery employs about 650 people, including 400 permanent staff and 250 contractors.
The exisiting infrastructure will be reconfigured for petroleum storage and distribution.
Once complete, the import terminal is expected to support around 60 jobs.
Premier Mark McGowan said BP should ensure workers were supported to find new jobs.
In a statement, the state government said BP had confirmed a redundancy package would be available and that it would assist workers find new positions in the sector, or in Kwinana.
“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," Mr 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.
"This is a sad day, and the state government has an expectation that BP will honour its commitment to do everything possible to find alternative work arrangements for those who want it."
Opposition leader Liza Harvey said her thoughts went out to the 650 workers at the refiney.
She said the pandemic had made clear the importance of securing critical and strategic resources to manage unforeseen gloval events.
"With the announcement today that the BP oil refinery in Kwinana will close, we will now be completely reliant on importing petrol from interstate and overseas for our domestic fuel security," Ms Harvey said.
BP said refining activities would wind down over the next six months, with a conversion workforce supporting site works.
Energy Minister Angus Taylor said the government was disappointed by BP’s decision.
"As BP has made clear, its decision to close the refinery was based on commercial and international factors, including the age of the refinery and overseas competition," he said.
"Closure of the refinery will not negatively impact Australian fuel supplies."
In September, the federal government announced it would invest $211 million to build 780 megalitres of domestic fuel storage facility and assist refineries in staying open.
At the time of the announcement, the government said it would work with industry over the next six months on the legislative and regulatory design of the package.
Australia's three remaining oil refineries have been under growing pressure in recent months.
In September, ExxonMobil said its Altona refinery was trading at a loss and Viva threatened to shut its Geelong refinery.
Earlier this month, Ampol said it was considering closing its refinery in Brisbane.
Kwinana Industries Council chief executive Chris Oughton said BP's decision was a blow for the region.
"It's tragic really," he said.
"We've got the state's premier industrial area here in Kwinana. An oil refinery is key in that."
Mr Oughton said the industry council would assist BP to find opportunities for employees elsewhere in the industrial zone.
"The industries in Kwinana need to compete on the international markets, both for import and export of input materials and products," he said.
"If a company is uncompetitive it ultimately fails if it cannot reinvent itself.
"It is costly for big industry to do business in this state, and many of the costs they must bear are not applied to competitors in other countries.
"The costs of excessive regulation, red tape, certain wage sectors, common user infrastructure constraints, only reduce a company’s competitiveness.
"It is incumbent on all parties that add cost to the industrial manufacturing, or any sector, to minimise these.
"The Kwinana Industrial Area will adjust to what BP has announced.
"The world is moving toward renewable energies and companies must continually innovate to survive.
"New companies are signalling their intent to establish in the industrial area.
"Are we ready to accommodate them; is the land and common user infrastructure available, today?"
The refinery was the first business established in the industrial zone and has provided fuel to WA for the past 65 years.