Shell oil refinery geelong

The Shell oil refinery at Geelong in Victoria has been an integral part of the local community for almost 60 years after refining its first oil at the plant in 1954. During those years it had become one of the largest and most complex hydrocarbon refineries in Australia employing more than 500 direct employees and contractors. The company has given itself till the end of 2014 to sell the refinery complex before it begins to make any other arrangements regarding the refinery's future. The future of the Geelong crude oil refinery is affected by the following events:

In April 2013 it was announced that Shell were putting its Geelong oil refinery up for sale and if it fails to sell the refinery it will be closed and turned into a fuel import storage terminal to supply its distribution and local marketing business. The closure of the Geelong crude oil refinery has come about as a result of the local industry being unable to compete with giant oil refineries in Asia. The Shell oil company had already closed its only other Australian refinery, at Clyde in Sydney, in 2012. The Clyde refinery is in the process of being turned into an oil import storage terminal. The Geelong plant currently supplies 50 percent of Victoria's and 30 percent of South Australia's fuel requirements.

The availability of crude oil sourced from Australian oil wells is diminishing fast as domestic crude oil production dropped from 570 thousand barrels a day in 2002/3 to 370 thousand barrels a day in 2010/11. The percentage of crude oil from Australian sources that is processed in Australian refineries has fallen from 37 percent to a mere 17 percent during the same period. This trend downwards is particularly noticeable in refineries located along the Australian east coast. For a short period the Australian refineries received crude oil from New Zealand but where they were importing around 50 thousand barrels a day of New Zealand crude oil in 2009, in 2012 only eight thousand barrels a day was refined.

The declining availability rate of domestic crude oil is significant because the Australian refineries have been able to source domestic crude at a discounted rate in comparison to imported crude. However, in recent years they have been forced to increase their importation of; West African, Vietnamese, UAE, Indonesian and Malaysian crude oil supplies. In 2010/11 Australian refineries imported 16 percent of their crude oil requirements from UAE and 15 percent from Congo, Gabon and Nigeria.

Domestic crude oil is delivered to the oil refineries by a pipeline directly linked to the source or by means of a short two to eight day voyage but the crude oil sourced from UAE and West Africa takes around 20 or 30 days. This means the cost of getting crude oil to the Australian refineries is increasing substantially and as the situation worsens the point is reached where it is no longer viable, unless the price for the refined product is increased substantially and a terminal to store the refined product that has been refined elsewhere becomes most attractive.

Another problem facing Australian crude oil refineries is that the Australian market is increasingly demanding diesel and high octane petrol products that are able to accommodate blending components such as ethanol and high octane hydrocarbon components. This is placing increasing pressure on them to import unleaded petrol with high octane components. The sales of diesel powered cars over recent years has increased fourfold owing to the rapidly rising cost of fuel. These changing demands are putting pressure on old refineries, built during the old leaded petrol days, to keep changing their technology, whereas the giant more modern Asian refineries are better able to meet such a demand.
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