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CANBERRA, Feb 5 AAP

February 05 2013, 8:19PM

Australian oil refineries are struggling to compete with the new "mega refineries" of Asia, a parliamentary committee has found.

High operating costs, ageing facilities, shallow berths, new technical challenges and the high dollar have all put Australia's industry at a competitive disadvantage, the lower house Standing Committee on Economics says.

These pressures have already led to the closure of Shell's Clyde refinery and the impending closure of Caltex's Kurnell refinery, both in Sydney.

"That leaves the nation with five ageing refineries under increasing competitive pressure," the committee's report says.

"The most pessimistic view was that this is the beginning of the end of Australian refining."

But the committee found reasons for optimism. Committee chair Julie Owens said MPs believe there is still a future for the industry in Australia.

Oil companies that gave evidence to the inquiry all agreed it is extremely unlikely market conditions would ever warrant the building of a new refinery in Australia.

The closure of the Clyde and Kurnell facilities has reduced the country's refining capacity by 28 per cent.