Shell will end its refining operations in NSW, labelling the Clyde Refinery ”no longer competitive” compared with new ”mega-refineries” in Asia.

Clyde and the Gore Bay Terminal in Sydney will be turned into a fuel import terminal and employees were this morning informed of the news.

Clyde produces 75,00 barrels of a day and along with Shell’s other refinery, Geelong in Victoria, supplies around 25 per cent of Australia’s petrol needs.

It comes a week after Shell announced the sale of its Stanlow refinery in England for $350 million to India’s Essar Enegy.

The proposal requires the approval of the Shell Australia board.

”The proposal to convert Clyde into a terminal is consistent with Shells strategy to focus its refining portfolio on larger integrated assets, and to build a profitable downstream business here in Australia, said Shell vice-president, Andrew Smith.

”Shell acknowledges the valuable contribution made by local employees in servicing the New South Wales market for more than 100 years. We commit to a timely consultation process and to providing support to our employees during this period.

Clyde is one of seven operating refineries in Australia.

Apart from the refinieries, Shell’s downstream portfolio in Australia also includes more than 800 Shell branded service stations, a lubricants blending plant and 16 terminals.

It has an exclusive arrangement to supply around 600 Coles Express convenience stores and petrol stations, owned by Wesfarmers.

Today’s announcement follows Shell’s sale last year of its 200 petrol stations, pipes and storage and a 17 per cent stake in New Zealand Refining Company for $US490 million.

It has also been selling refineries in Europe due to weak refining margins and falling European fuel demand.

Last week it agreed to sell its Stanlow refinery in England for $US350 million to India’s Essar Enegy.

Australia’s refiners, including Caltex and ExxonMobil, have long talked about shutting or consolidating plants to help improve their margins, but changes have been slow.

ExxonMobil was blocked by the competition watchdog from selling its petrol stations to Caltex in late 2009 and ended up selling 295 service stations on Australia’s east coast to convenience store chain 7-Eleven Australia for an undisclosed sum.

mmurphy@theage.com.au

with Reuters

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