Kurnell conversion on track: Caltex

Caltex says the conversion of Kurnell refinery into a fuel import terminal is on time and budget. Source: AAP

FUEL refiner and supplier Caltex's $270 million conversion of its Kurnell oil refinery in Sydney into a major import terminal is on time and on budget.

Kurnell is due to close as a refinery and open as Australia's largest fuel import terminal in the fourth quarter of this year.

"The conversion of the Kurnell refinery to a leading import terminal remains on time and on budget, with the refinery on track to cease operations in the final quarter of this year," Caltex chief executive Julian Segal told shareholders at the company's annual general meeting on Thursday.

After the closure of the Kurnell refinery is complete, the amount of crude oil imported by Caltex will halve - Caltex still operates the Lytton refinery in Brisbane - and imports of refined fuels will increase.

The refinery closure was expected to result in the loss of 330 jobs, with several hundred more contract jobs on the line.

To strengthen the fuel supply chain after the conversion of Kurnell, Caltex has established an Ampol-branded office in Singapore.

The role of Ampol Singapore, which is wholly owned by Caltex Australia, is to source refined fuels and related shipping to Australia.

On behalf of Caltex, Ampol has entered into a deal with Chevron to help procure and supply imported refined fuels.

Mr Segal said that in the first three months of 2014, Caltex had made an unaudited profit of $121 million, down from $190 million in the first quarter of 2013.

Using the company's preferred measure - replacement cost of sales operating profit - unaudited profit was $96 million, down from $146 million in the prior corresponding period.

In the first quarter, Caltex's marketing and distribution business continued to grow despite the sale of Caltex's bitumen business in 2013.

Higher sales of jet fuel and premium grades of petrol and diesel offset a long-term decline in demand for unleaded petrol.

External factors, including currency and crude oil price fluctuations, that affected Caltex's refining and supply business in the second half of 2013 had continued into 2014 and had resulted in the business posting an earnings loss.

Caltex's refiner margin was $US8.78 per barrel, down from $US13.60 in the prior corresponding period.

The Lytton refinery increased production.

Mr Segal said the outlook for the marketing business for the rest of the year was positive, and the full year outcome for refining and supply would depend largely on the level of the refiner margin.

Caltex shares were 42 cents higher at $22.22 at 1320 AEST.

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