(EnergyAsia, May 18 2012, Friday) — Australia’s largest downstream oil company has just declared that it is still too early for the ailing refining industry to die.

After over a year of making funeral arrangements for its two unprofitable ageing refineries, Caltex Australia Limited surprised shareholders last week with CEO Jerry Segal announcing that it is hoping to continue operating at least one of them.

According to the Department of Resources, Energy and Tourism, Caltex’s 131,000 b/d Kurnell plant in Sydney and the 109,000 b/d Lytton plant in Brisbane are the second and third largest of Australia’s seven refineries. Built in the 1960s, the two refineries together employ about 800 people and another 650 contractors.

Oil refiners in Australia and other developed economies are increasingly unable to compete against larger and better capitalised rivals in Asia and the Middle East.

Last February, Caltex, half owned by US major Chevron, said it might have to shut down the refineries after writing down their combined value by A$1.5 billion.

The company may have been forced into a change of heart out of concerns that Australia will become overly dependent on imports for its future fuel requirements.

In announcing a 10.4% decline in first quarter profit at its annual general meeting last week, Mr Segal said the company’s refining business is expected to continue losing money into the future.

Company chairman Elizabeth Bryan added that refining has continued to lose money during the first quarter, with Kurnell responsible for the bulk since last year.