"The disappointing result reflects the very difficult and highly competitive business environment that continues to face both the refining and marketing sectors of the industry," Mobil chairman, Mr Robert Olsen said.

Last month, Caltex Australia reported a loss for its refining and marketing operations last year of $186 million. Shell Australia, which reports next month, is expected to record a loss of about $100 million on its oil products business in 2001.

Most industry watchers believe that of the eight refineries in Australia, at least two need to go in order to maintain long-term investment in the sector.