By John Van Klaveren
A SENIOR Shell executive has described Geelong’s refinery as “borderline” amid increasing competition from bigger Asian refineries.
Shell downstream director Mark Williams said in a media interview that the refinery “faced challenges”.
Speculation about the future of the Geelong operations escalated after Shell closed its Clyde refinery in Sydney weeks ago.
Mr Williams said importing petroleum products cost as much as bringing in oil.
The performance of the refinery “over the next few years” would determine its future viability, he said.
Mr Williams warned that refineries requiring large ongoing investments were unsustainable.
Imports could supply petroleum products currently flowing from Geelong’s refinery, he said.
Petroleum industry experts predicted the closure of the Geelong refinery on the basis of Mr Williams’ comments.
HEH Australian Petroleum Consultancy managing director Kevin Hughes importing petroleum products was cheaper than refining locally.
Refineries required multi-million dollar investments that eventually outlived their sustainability, he said.
A statement from Geelong refinery general manager Mark Schubert said Shell recently invested $82.5 million.
“We recognise the challenge, hence Geelong’s improvement plan which is focused on improving safety and profitability.
“We are making progress and we need to stay the course. We are working to make the refinery more competitive with a continued focus on safety while enhancing profitable niche products including avgas, bitumen and solvents.”
Mr Schubert said Shell had invested $82.5 million on water and bitumen projects in addition to a recent major maintenance turnaround.
$250m ‘catastrophe’
BY NOEL MURPHY
SHELL’S Geelong refinery suffered lost production worth at least $250 million through unscheduled shutdowns in the past year, company sources have revealed.
They said a $70 million maintenance fit-out closed operations for months before a critical turbine/compressor breakdown in the refinery catalytic cracker’s power recovery unit.
Three months of repairs followed, costing the company about $180 million in lost production on top of a scheduled shutdown.
Shell refused to comment at the time on the breakdown or lost production.
But the sources said the power recovery unit’s “catastrophic failure” required 80 staff and specialist contractors from Siemmens working overtime to carry out repairs.
Australian Manufacturing Workers Union Geelong organiser Peter Douglas said in December that Shell was losing $2 million a day while the unit was out of action.
“I was told by Shell management. It was put to me in a conversation within an aspect of the breakdown.”
The power recovery unit was recommissioned around February.
