Exxon’s Altona Refinery Defies Challenges and Boost Production

The Altona refinery of Exxon Mobil has defied the drop in Australian manufacturing and is ready to increase its production of petroleum products by nearly 13 percent.

An investment of $20 million will see a pre-distillation stage included to one of the current oil units at Altona. Moreover, it will allow the Altona refinery to ramp up its production of premium products.

Diesel and jet fuel production will boost as the Altona refinery resumes chasing the trend for motorists to opt for premium fuels, which are also the greatest yielding products for energy corporations.

The energy firm’s refining manager for Australia and New Zealand, Mr. Andrew Warrell, stated that the output growth would reverse the declines that were made when the refinery was finding it challenging to survive about a decade ago.

“What makes this significant is it is the first time we have grown our crude processing capacity since 2005,” the refining manager stated.

“Back in 2005 we went through a pretty tough and confronting time as a business. We actually shrank in order to survive, so I hope you can all appreciate how exciting it is for everyone who works here to be back in a phase of renewal and growth,” Mr. Warrell further added.

The overall production of the Altona refinery will expand from 80,000 barrels per day (bpd) to 90,000 bpd. The total production consists of 60 percent of unleaded fuel, 30 percent diesel, and 10 percent jet fuel, which is piped to the Tullamarine airport at Melbourne.

Exxon’s investment amounting to $20 million is part of its greater plan to spend $370 million on the site over a period of 5 years.

The Altona refinery is part of the energy company’s integrated fuel supply system in Victoria. Moreover, it is linked by pipe to the oil and gas fields that energy giant and BHP Billiton harvest in Bass Strait.

The Altona refinery has 350 employees and Mr. Warrel indicated that the 27 percent plunge in the Australian dollar within the period of 3 years had aided the refinery to survive a decade, which has seen several refineries in Queensland and New South Wales shut down.

According to Warrell, “Ninety percent of our operating costs are in Australian dollars so a lower Australian dollar makes us far more competitive.”

“Our real competition is not the other Australian refineries, our real competition is all the large refineries in the rest of the region so a lower Australian dollar absolutely helps when competing against those much larger refineries,” he further added.

While the low crude oil price environment is unfavorable for Exxon in general, it is actually a good thing for Altona refinery which is technically a buyer of oil.

The Australian division of Exxon Mobil does not disclose the yearly profit and loss for Altona, but it is believed to have been cashflow positive for the previous 2 calendar years, and is expected to also be favorable in 2016.

Exxon’s Altona refinery provides approximately 50 percent of the fuel in Victoria, with the Geelong refinery of Viva Energy supplying the majority of the remainder. Only a small portion of the fuel of Victoria is imported.

Leave a Reply

Get Pre-Market Alerts!

Get Pre-Market Analysts' Upgrades, Downgrades, Earnings & Initiations with our FREE daily email newsletter.