BP exits refining in Australia: Announces to shut Kwinana refinery

BP has operated its Kwinana refinery for over 65 years, last week the announcement came they will pull the plug on refining and turn it into an import facility. The global refinery landscape is facing severe challenges from COVID-19 and refining overcapacity, pressuring margins. Especially older, smaller and less complex refiners with limited petrochemical integration in isolated locations face an existential threat. The Australian refinery landscape has for almost a decade been restructuring to cope with weak margins and is, despite government voiced support, now continuing on its path of closures. In this insight, we will dig into the structural issues facing the Australian refining landscape and share our views on the rational for BP’s decision making to close its 146,000 b/d refinery. We will explore the impact to Australia’s oil product balances and how the increasing oil product deficits will likely be met.