Underperformer Closes Down Under


ExxonMobil announced last week that it will close its Adelaide Refinery in South Australia, a step that will take Australia from a net surplus to a net deficit of base oils.

The refining complex, located at Port Stanvac on the continents southern coast, includes a Group I base oil refinery with capacity to produce 6,500 barrels per day, making it by far the largest of Australias three base oil sources.

An official for Mobil Australia, ExxonMobils subsidiary in the region, said it will import base oils to supply its own lubricant blending operations and contractual supply obligations for a few large customers. He added, however, that some smaller customers will have to find new suppliers.

Were going to be limited in the number of customers we can serve, said David Leonard, general manager for base oils and bitumen.

The closing will leave Caltex and Shell as the only local base oil producers.

In its April 8 announcement of the closing, Mobil noted that the complex has been suffering because of surplus domestic refining capacity and poor refining margins worldwide. Despite its top-ranked position as a base oil supplier, the complex had a total crudecapacity of just 74,000 b/d, making it the second-smallest of Australias eight oil refineries.

Adelaide Refinery is one of the smallest refineries in the region and under current market conditions cannot compete with the much larger regional refineries that can produce petroleum products at a lower cost, the company said. Mobil has recorded significant financial losses over many years through its Adelaide refining operations and this is projected to continue.

Spokesman Alan Bailey said Mobil had been exporting 50 to 60 percent of the base oil produced at Port Stanvac, mostly to the Far East and South Asia.

The company will close the fuels refinery in late May and expects to cease all operations at Port Stanvac by July. Officials said Mobil will maintain the facilities to allow resumption of operations in case market conditions improve. Observers, however, said it would be unlikely for the complex to be reopened after it is shut down.

The complex employs approximately 400 people.

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