The 102,000 barrel per day Queensland refinery is scheduled to stop operating by mid-2015, with 355 jobs lost.

"This is a sad day for all of us at Bulwer and I know that these changes will be difficult for our employees," Bulwer Island refinery managing director Tim Wall said.

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

"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."

BP Australia president Andy Holmes said the very large refineries in the Asia Pacific region were driving "structural change" in Australia's fuels supply chain and putting "huge commercial pressure on small-scale plants".

"It's against this background that we have concluded that the best option for strengthening BP's long-term supply position in the east coast retail and commercial fuels markets is to purchase product from other refineries," he said.

"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."

As part of transitional arrangements over the next 12 months BP has struck supply arrangements to import motor spirit and diesel from Caltex's nearby Lytton refinery and to import jet fuel from elsewhere.

By mid-2015 the site could effectively become an import fuel terminal, with 25 of the present 380 refinery staff keeping their jobs.

"Once processing has been halted, the import jetty, aviation fuel tanks and associated pipelines will remain operational while other storage tanks and pipelines will be placed on a care and maintenance basis pending a decision to convert the site to a multi-product import terminal," BP said.

The news comes after rival oil major Shell Australia sold off its underperforming downstream assets, including the Geelong refinery, in a $2.9 billion deal to oil trader Vitol about six weeks ago.