Caltex plans to shut Kurnell refinery despite falling dollar

Caltex has confirmed that, despite better economic circumstances, it still plans to shut down Sydney's Kurnell refinery in 2014.

AAP reports that, while the company's first half profit dropped 13 per cent to $171 million, the result was at the higher end of Caltex's guidance range for profit on a replacement cost basis. This figure excludes the effect of changes in world oil prices and reflects underlying performance.

The weaker Australian dollar would make the prospect of continuing refining more profitable because the finished product is traded in US dollars.

Even so, while delivering Caltex’s results for the first half of 2013, chief executive Julian Segal focussed on the company's retail stores and fuel distribution business.

He added that, because more motorists are using premium fuels, growth would continue in the company's marketing and distribution operations.

Analysts predict that Caltex is also likely to wind down its Lytton refinery in Brisbane.

"The refining business is highly volatile, sometimes they get excellent numbers, sometimes they don't and more times than not, the `don't' numbers influence them more than the good numbers," IG market strategist Evan Lucas said.

The refining business made a loss of $43 million in the first half of 2013. This compares with a profit of $2 million last year.

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