More than 500 jobs will be lost with the decision by two of the world’s biggest multinationals to wind back their operations in Australia.

BP announced it would close its Brisbane operations at a cost of 350 jobs, while 180 jobs will go in Victoria with Philip Morris sending its cigarette making operation offshore.

BP says the emergence of large low-cost oil refineries in Asia is the reason for its decision to halt production at the Bulwer Island plant by mid-2015.

“While this decision will significantly improve our competitive position, it will result in job losses and I would like to acknowledge the enormous commitment and contribution made over many years by our staff at Bulwer Island,” BP Australasia president Andy Holmes said. “We will be doing everything we can to support them through this transition.”

Staff numbers at the plant will shrink from 380 to 25 as it is transformed into a fuel import terminal, and about 300 contractors may also be affected.

The growth of very large refineries in Asia had presented the Bulwer operation with a huge challenge which it was not able to meet, Mr Holmes said.

The company’s Kwinana refinery in Western Australia is not currently earmarked for closure, he added.

Sad day for workers

Tim Wall, the managing director of the Bulwer Island refinery, said it was a sad day for all of the plant’s staff.

“We will be putting measures in place to assist our affected employees, including transitional support and job placement assistance,” he said.

“Given the quality of our people, I’m confident that those who choose to look for alternative employment will be highly regarded by employers in this area.”

By scaling back refining operations, BP said it would be able to strengthen its position in the east coast retail and commercial fuel markets.

The company will make up its shortfall in refined oil products by increasing imports.

Australian Workers Union state secretary Ben Swan said the announcement was out of the blue and without consultation. “For workers to learn that their world has been tipped upside down is a devastating blow,” he said.

He said it would be difficult for workers to find new jobs and both state and federal governments needed to help them.

BP’s announcement follows Royal Dutch Shell’s recent decision to sell its Australian refining and marketing operations, including its Geelong refinery, to Vitol for $2.9 billion.

Caltex is also scaling back its refining operations, with plans to close its Sydney refinery in the second half of 2014 and convert it to an import terminal. Caltex still operates a refinery at Lytton in Brisbane.

The Bulwer Island refinery was built in 1965 by Amoco and bought by BP in 1984.

Cigarette production goes to Korea

In Melbourne, Philip Morris will sack 180 workers as it ceases manufacturing in Australia, with the tobacco giant partly blaming the closure on government regulation.

Philip Morris Limited (PML) will close its manufacturing plant in Victoria by the year’s end, with production to be sent offshore to Korea.

The company said its Moorabbin plant was operating at half capacity as plans to grow export markets for Australian-made cigarettes had not materialised and domestic demand was in a long-term gradual decline.

John Gledhill, PML managing director for Australia, New Zealand and the Pacific Islands, said the introduction in 2010 of reduced-fire risk requirements for Australian-made cigarettes had resulted in products that do not match consumers’ preferences in other markets in the region.

He said 180 staff directly involved in manufacturing would be affected by the shutdown, but Philip Morris would maintain a “strong, ongoing commercial presence in Australia” with about 550 people at its Melbourne headquarters.

Support for affected workers would include redeployment opportunities where feasible and career transition or retirement advice.

The AWUn said it was in negotiations with the company over the shutdown. “These are people who have done an honest job, been loyal to their employer and contributed to the life of this state. They need jobs.”