Petroleum company Caltex is shutting down its Kurnell refinery in Sydney because it says it is no longer financially viable in the face of competition from big Asian refineries.

Caltex says it will close Kurnell by the middle of 2014, after 57 years of operation, and instead use the facility to import fuel refined overseas.

More than 300 jobs will go as staff numbers are reduced from 430 to about 100.

A review of the plant's operations was announced in May this year as part of a major restructuring of the company's supply chain.

The company says the carbon tax had no impact on the decision to close the refinery.

Here are the day's key developments:

2:38pm: Unions are calling on the Federal Government to lobby Caltex to prevent the closure of the Kurnell refinery.

Australian Workers Union national secretary Paul Howes says both the State and Federal governments have neglected the refinery.

"Why aren't they stepping in here and saying, 'Chevron, if you want the right to exploit our natural resources in the form of the Gorgon project- a $48 billion natural gas project - then you have the obligation through your 50 per cent share holding of Caltex to ensure that just a little bit of the crude oil is value-added in Australia."

1:57pm: Woolworths Petrol general manager James Aylen has issued a statement in which he says Woolworths retails less than one-third of Kurnell's total output.

"We understand that Caltex has decided that the Kurnell plant is uneconomic due to the age of the equipment, scale of the operation and efficiencies from newer refineries in the region. "Any decision on refining processes at Kurnell is a matter for Caltex. "We have been assured that our petrol supply will not be impacted in any way."

1:34pm: The ABC's Ben Worsley reports from outside the Kurnell refinery.

1:22pm: Caltex says it's confident about the future of its Lytton refinery in Brisbane.

Chief executive Julian Segal says the circumstances surrounding its Brisbane operations are different to those in Sydney.

"In terms of its ability to match better the demands of the product mix in the market, particularly in respect to premium fuel and to diesel. "The hardware is different and therefore we saw a pathway to improving the efficiency and competitiveness of the Lytton refinery. We stand by the decision and yes we will be considering some modest investments."

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12:50pm: ABC business editor Peter Ryan talks to The World Today about where today's decision by Caltex leaves Australia when it comes to independent oil refining.

12:25pm: This report provides a snapshot of the Australian petroleum industry, showing that Kurnell (following the closure of the Clyde refinery) was the third largest refinery in Australia.

12:20pm: The executive director of the Australian Automobile Association, Andrew McKellar, says the closure threatens Australia's fuel security:

"We need to ensure that we have the adequate plans and systems in place to ensure that if we're losing our domestic refining capacity, that our fuel supply chain is not exposed to a future supply site shock that would drive up oil prices at great detriment to the Australian economy and to consumers." "We need to ensure that we have in place the right systems, so the right reserves and so on to handle an external shock. "Equally, we need to ensure that we've got the thought going into how we continue to diversify our fuel requirements, how we promote alternative fuels, and how we ensure that if there is a major external shock, that we can handle that within the Australian economy and we don't end up exposing our selves to what we've seen in the past in the 1970s and so on."

He has also warned retailers not to use the situation to raise prices:

"I think we do need to put the major fuel suppliers on notice that this is not an opportunity to increase margins." "We have seen that past margins are quite variable and we would be concerned to ensure that there is scrutiny in terms of what happens as this process goes forward.

"I think they need to be on notice, I think they need to understand that they can't get away with using a situation like this as an opportunity to drive up margins or to pass on higher prices to consumers without justification."

12:10pm: Resources Minister Martin Ferguson discusses the closure on News 24:

Sorry, this video has expired Resources Minister discusses Caltex closure

12:00pm: Simon Hepworth, Caltex's chief financial officer, says it will cost $250 million to close the refinery, which he expects to be offset by savings including $100 million per year in maintenance:

"I mentioned earlier on that the costs relating to closure are quite material, quite significant and of course we are investing a significant amount in the conversion of the refinery to a terminal, $250 million over the next four years." "Those cash outflows will be offset by cash flow benefit as rising as a result of the closure. Of course there will be ongoing cash flow benefits such as the elimination of the maintenance capital that we put into Kurnell today, which is about $100 million a year."

11:55am: Julian Segal, the managing director of Caltex, has told reporters the closure of the refinery will not have any impact on petrol prices:

"There will be no impact. There will be no connection between Caltex owning and operating a refinery or not. The prices are set by the competition in this market." "The ACCC has said time and time again that the competition is pretty fierce and that will continue. The other factors that are affecting the price here in Australia are global forces like the Australian dollar, the price of crude, the Singapore refining margin and those will continue to impact the price."

11:50am: Mr Segal says the small size of the refinery meant it lacked the efficiency needed to compete against bigger foreign refineries:

"Our refineries are small in scale. Just to give you an idea the average Australian refineries are about 100,000 barrels a day - the ones we're competing with are in the order of half a million to 1.2 million." "So the scale is significantly smaller. The efficiency of the gear is significantly lower, simply because of the age of these refineries. "There [are] other global and regional factors such as the high Australian dollar, the lower Caltex refining margin, so I will just point out to you that last year we lost $208 million in our refining operations. "That's a situation that cannot continue and it's putting us at great disadvantage."

A review of the plant's operations was announced in May this year as part of a major restructuring of the company's supply chain. ( AFP: Torsten Blackwood, file photo )

11:46am: Mr Segal has told a press conference the decision to close the refinery was a difficult one:

"The most difficult part of this strategy is the proposal to close Kurnell, and that's because of the impact is has got on our people." "We accept the closure process will take two years and involve a reduction of employee positions at Kurnell from around 430 to less than 100."

He says he is committed to helping employees who will lose their jobs in the process:

"We have kept our employees informed of the progress of the strategic review and on an ongoing basis over the last 12 months but there is no doubt the reality of this decision will be difficult for them. "I am personally committed to ensuring that we do all we can to help them and their families cope with this transition."

11:40am: Julian Segal, the managing director of Caltex, says the refining operations have been generating major losses in recent years:

"Today we have announced the restructuring of our supply chain, a strategy which will underpin Caltex's future growth. This follows an extensive review of our operations with a particular focus on the company's refining operations, which have been generating major financial losses in recent years."

Mr Segal says the closure was needed for the company to remain sustainable in the long term:

"The facility will be converted into a major transport fuel terminal from which we will continually reliably supply our customers." "We believe this decision puts Caltex on a much more sustainable path going forward."

11:09am: The Australian Manufacturing Workers' Union (AMWU) represents about 100 maintenance workers at the refinery.

The Union's Tim Ayres is calling for Government intervention:

"Losing one significant petrol refinery business is careless, but losing two significant petrol refinery businesses in the space of three months is a catastrophe." "And they have sat on their hands right through this whole process and it's time for Barry O'Farrell and the NSW Government to step up."

10:45am: Opposition treasury spokesman Joe Hockey have had a heated exchange on Twitter over who is to blame for the closure:

Joe Hockey:@howespaul YOUR carbon tax is paid by Caltex ...will their competition in Singapore pay a carbon tax? It all adds to the cost of business! Paul Howes: @JoeHockey do you commit that all refineries will remain open in Aus - without carbon pricing?

10:30am: Caltex shares are trading up above 2 per cent on the back of the announcement.

10:05am: Resources Minister Martin Ferguson says he is confident the workers will be able to find replacement jobs:

"They're going to be very attractive, especially if they're prepared to move or think about fly in fly out."

9:55am: The Prime Minister, Julia Gillard, says the announcement is very concerning:

The closure process is going to happen over a couple of years we as a federal government will be working with Caltex to provide appropriate employment services to people who will be looking for a new job, [and to make sure] Caltex is in a position that people get all of their entitlements."

9:18am: The AWU's Paul Howes has tweeted that the closure is a "kick in the guts":

"Caltex's announcement of closure of Kurnell is a kick in the guts to every motorist we will respond at 12 noon at the Refinery."

9:05am: Resource Minister Martin Ferguson has extended his sympathies to the Caltex workers set to lose their job:

"I understand this is an anxious and difficult time for many Caltex workers and their families. "This decision will affect the approximately 430 Caltex employees at the Kurnell refinery and an additional 300 contractors. "In the first two years, there will be a limited reduction in employee numbers to ensure the full operation of the refinery."

Mr Ferguson says the refinery was too small to remain competitive:

"Caltex's review of its refineries, which were built in the 1950s and 1960s, focused on options for improving competitiveness. "By today's standards they are small compared to the mega refineries in our region, for example the capacity of the Jamnagar refinery in India is larger than the total capacity of Australia's six refineries "The review concluded that investment to bring the Kurnell refinery to a sustainably competitive position was not economic."

But he says Caltex has assured him the Brisbane refinery is not at risk of closure: