Shell to Convert Clyde Refinery in Sydney to Fuel Import Terminal

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Researched by Industrial Info Resources Australia (Perth, Australia)--Royal Dutch Shell (NYSE:RDS.A) (The Hague, Netherlands) has finalized a decision to close its 85,000-barrel-per-day Clyde Refinery in Sydney, Australia. The refinery and the existing Gore Bay Terminal will be converted to a fuel import terminal.

The decision to shut down the refinery is Shell's answer to the difficulty in remaining competitive with Asian mega-refineries. The refinery will cease operations by mid-2013 after almost a hundred years in operation. Shell realizes the need for better efficiencies in all business areas, and this decision is a direct response to an assessment of Clyde operations versus alternative methods to meet refined product demands for New South Wales. Shell also has stated that the decision to cease refining operations at Clyde had not been reached because of government policies, including any proposed price on carbon.

The development of the new terminal is now in the design phase and will be developed throughout the next five years, with the storage of refined products to remain consistent with market demand throughout the time period. The project will consist of tank demolishment, refurbishment and new tank construction. The fuel import terminal will be capable of storing jet fuel, gasoline and diesel fuel, along with a possibility of continuation to supply liquefied petroleum gas (LPG).

Shell Development Australia is developing a multitude of upstream natural gas projects in Australia and Asia. There is a chance that Clyde employees may be allocated jobs on project development for the Prelude floating LNG (FLNG) project, the first of Shell's many FLNG plants to be developed; or in other areas of Shell's business in Australia. Shell is focused on conventional gas resources and is investing in coal seam gas in Queensland, via its purchase of Arrow Energy in August last year, with partner Petrochina.

The Shell-owned Geelong Refinery in Victoria will remain operational for the foreseeable future. Upcoming projects at Geelong include a $47 million investment in a water processing plant and a $27 million investment in bitumen facilities.

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