Caltex has carried out major restructuring that will see the axing of more than 300 jobs.
It comes after a review into Caltex's refinery at Kurnell, which found that "without substantial investment" it would not be economic to continue operations as "it still could not become competitive with newer, larger scale plants in the region".
"Despite exhaustive examination of a wide range of alternatives, we have been unable to develop a compelling case to maintain the Kurnell refining operation," the company said.
However Caltex added that the decision had nothing to do with the impact of the carbon tax.
It expects the closure to take around two years, and "involve a reduction in employee positions from around 430 to less than 100".
Caltex said it was not an easy decision, but did state that "with the closure of Kurnell the company has identified a range of opportunities to improve the performance of the Lytton refinery in Brisbane", as "Lytton has superior hardware compared to Kurnell".
The oil and gas company went on to outline "significant costs associated with the closure of the Kurnell refinery, including employment benefits, refinery dismantling, and clean up costs".
It will turn the site from a refinery to a major import terminal in the future, and will spend around $250 million to upgrade the site.
Following the restructure Caltex expects its overall employee numbers in New South Wales to drop from 1650 down to 1320.