Singapore, 10 December (Argus) — Chevron's Australian subsidiary Caltex Australia plans to close the country's sole remaining base oils refinery by the end of 2011, citing the plant's “outmoded lubricants products”.
Caltex, which also saw its refining margins slump in the second half of the year, said it will book an A$93mn ($85mn) charge for the cost of the planned closure of the Caltex Lubricating Oil refinery at Kurnell in Sydney. The 3,333 b/d plant, which began operations in 1964, is connected to Caltex's 135,000 b/d Kurnell refinery, which supplied it with feedstock to make base oils.
The size of the plant, and its production of Group 1 base oils, put it at a disadvantage compared with more modern, larger plants in Asia that are using more efficient production techniques and producing higher-quality base oils.
The global trend in motor vehicles of improved fuel efficiency, and increasingly tight rules on emissions, is prompting a switch among lubricant-makers to the use of higher-quality Group 2 and Group 3 base oils as their key feedstock.
Caltex will meet its customers' requirements through long-term import contracts. Australia consumed about 26,800 kilolitres (5,600 b/d) of base oils in September, up by more than 50pc from around 17,700 kl a year earlier. Caltex had exported surplus base oil from the plant to regional consumers such as New Zealand, Philippines and Thailand.
The shutdown of the Caltex plant follows the closure of Shell's Geelong base oils plant in 2004 and BP's base oils unit at Kwinana in 2002.
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