The refinery, south of Perth, currently employs 650 people - 400 permanent staff and 250 contractors - with refining activities expected to wind down over the next six months.

With first imports expected in the first half of 2021. the terminal once completed will employ just 60 people. 

The supermajor said regional oversupply and low refining margins meant the refinery was no longer economically viable and that after exploring multiple options for its future, converting was the best option. 

"Today's decision to cease refining is a difficult one and not in any way a result of local policy settings. It comes in response to the long-term structural changes to the regional fuels market," BP Australia head Frederic Baudry said.

WA Premier and member for Kwinana Mark McGowan has demanded that BP ensure workers are supported to find new jobs. 

"This is an extremely disappointing outcome, and our primary concerns are the welfare of the dedicated workers at the Kwinana refinery and the continuation of fuel supply to WA," he said. 

"This is a sad day, and the State Government has an expectation that BP will honour its commitment to do everything possible to find alternative work arrangements for those who want it." 

The government said BP had been in discussions with the state government and confirmed a redundancy package will be available for workers. 

In a statement to Energy News the Australian Manufacturing Workers Union state secretary Steve McCartney said they had yet to be told what would be done with the bulk of the refinery's workforce. 

"Five months, including a Christmas period, is not long enough to substantively retrain workers," he said. 

"BP needs to step up and show us what they're going to do for these workers and for the contractors who provide maintenance and services." 

BP said it is committed to exploring opportunities to convert the Kwinana site to a renewable and clean energy production hub, in line with BP's plan to reach net-zero emissions by 2050. 

"We are particularly excited by the shared ambitions with Western Australia to be net zero by 2050 and the opportunities this can offer," Baudry said.

The company said the hub could produce and store lower carbon fuels, including aviation and marine fuel, and waste to energy solutions such as renewable diesel. 

"BP is committed to playing a leading role in growing Australia's future prosperity, making significant investments in natural gas production, as well as in convenience and mobility businesses," Baudry said.

The company said it would also support the state by building on its position in Woodside's North West Shelf joint venture through gas exploration at Ironbark and invest in retail growth.

It is also exploring the feasibility of a large-scale hydrogen export plant in Geraldton. 

McCartney said he was worried that workers would be expected to go into FIFO jobs and the mental and emotional toll associated with that work. 

"BP needs to immediately provide access for counselling and support for all employees and contractors," he said. 

Energy and emission reduction minister Angus Taylor said the federal government was "deeply disappointed" by the news, but the refinery's closure would not impact Australian fuel supplies, despite Ampol publicly mulling closure of its Lynton refinery in Queensland.  

He noted the COVID-19 pandemic has placed immense pressure on refineries' margins worldwide, as fuel demand goes through the floor. 

"We will ensure Australia maintains a sovereign refining capability to support local industry, meet our nation's needs during an emergency, and protect motorists from future higher prices," he said.