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New Zealand Herald: Shell cannot commit to maintaining Aust refining operations

5:00AM Saturday May 12, 2007

MELBOURNE: Royal Dutch Shell says it cannot commit to maintaining its Australian refining operations, and it’s possible Australia may end up importing all its refined fuel needs.

“When it comes a time for a major investment of hundreds of million of dollars then there’s a decision to be made, do you invest it in an old sub-scale local refinery or do you invest it in a big modern refinery in India or Singapore or somewhere and import,” Shell’s Australian chairman Russell Caplan said.

Australia, which has seven refineries in the country owned by Shell, Caltex , Exxon Mobil and BP, has seen imports for petroleum refined products steadily rise since 2002 due to rising domestic energy demands and lower refining capacity.

Exxon Mobil mothballed its Port Stanvac refinery in South Australia in 2003 due to poor returns.

Current refining capacity at Australia’s refineries is about 796,500 barrels of oil a day.

“I haven’t got in my mind when is the big make or break decision at [Shell’s Australian refining operations in] Clyde or Geelong. It won’t be in the next 12 months but I think it’s an issue that is constantly under review.”

Shell Australia saw pre-tax earnings from its downstream operations rise to A$398 million in 2006 from A$300 million a year earlier, thanks to strong refining margins. Attractive refining margins were expected to continue in 2007.

– Reuters

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