Australia may be squandering gas refining opportunities

BP Australasia president Paul Waterman has highlighted the difficulties faced by Australian refining operations.

Speaking to an Australian British Chamber of Commerce lunch, Mr Waterman canvassed both the external issues such as lower international prices and competition from Africa and Asia, as well as the policy issues such as proposed restrictions on domestic gas prices and a lack of tax reform as well as skills shortages.

All these factors combine to undermine Australia’s advantage, holding such large gas reserves, with up to $100 billion of potential projects still awaiting a final decision.

Oil refining operations in Australia have been reducing wiht Caltex converting the Kurnell site in Sydney to a  fuel import facility and Shell closing its Clyde refinery.

“Fundamentally Asia sets the margins you make in a refinery so you have to live with Australian costs and that makes refining more difficult,” Mr Waterman said.

“We’re more selective about where and how we invest than we would be otherwise if you were sitting in the UK or US where you don’t have to worry about 4-5 per cent annual cost inflation,” he said.

“You also don’t have to worry about the skills of people that can execute things because they’re all over the place.

“Australia is an expensive place to do business and is getting more and more expensive.”

“You can have great organic growth in your country but if the cost line is only going up, something has to be done and it feels to me like it’s expensive but not getting dealt with.”

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