Bp Australia has announced it will cease fuel production at its Kwinana Refinery and convert it to an import terminal – a move that will come with the loss of hundreds of jobs.

The refinery currently employs around 650 people – 400 permanent staff and 250 contractors. Once converted, the new import terminal is expected to support only 60 jobs.

The Kwinana Refinery, near Fremantle, has provided fuels for Western Australia for 65 years. However, the continued growth of large-scale export-oriented refineries throughout Asia and the Middle East has structurally changed the Australian market and made it economically unviable to continue operating.

Over the next six months refining operations will wind down and construction of the new terminal will commence, with expected completion in 2022.

In addition to investing in an import terminal at Kwinana, bp is also exploring future options for the site including a potential clean energy hub to harness the existing and emerging technologies required for the decarbonisation of the Western Australian economy.

Frédéric Baudry, bp Australia Head of Country, says that bp’s Kwinana Refinery has played an important role in the development of Western Australia and that all job losses are deeply regrettable.

He said: “Generations of Western Australians have worked at the facility, building a fantastic legacy of safe and reliable operations that we will always be proud of.

“[The] decision to cease refining is a difficult one and not in any way a result of local policy settings. It comes in response to the 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. We deeply regret the job losses that will result and will do everything we can to support our people through the transition.”

In August, bp announced it had been hit with a $16.8 billion quarterly loss as it grappled with the fallout from COVID-19.

The drop is in contrast to the company’s $1.8 billion profit for the quarter in 2019 and reflects just how hard the global pandemic has hit fuel.

The oil and gas giant also halved its dividend, down from 10.5c to 5.25c a share — a move not seen since the Deepwater Horizon spill in 2010.

This followed a previous announcement that bp would cut close to 10,000 jobs, to help the company to recoup $2.5 billion in annual cash costs by the end of 2021.

Bp reaffirmed its commitment to, “playing a leading role in growing Australia’s future prosperity”.

This includes building on its position in the North West Shelf joint venture through gas exploration at Ironbark and investing in retail growth, as well as progressing low carbon projects with Lightsource bp.

It is also assessing the feasibility of a large-scale hydrogen export plant in Geraldton (WA) in partnership with the Federal Government.

“We are particularly excited by the shared ambitions with Western Australia to be net zero by 2050 and the opportunities this can offer,” says Baudry.

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