Maritime workers rallied outside BP's Melbourne headquarters in Docklands on Friday, attacking the company's decision to lay off the seafarers and condemning the use of the "unsafe" foreign-flagged ships increasingly operating in Australian waters.

British Loyalty is the third Australian tanker to stop operating in the last 12 months, leaving just two local tankers being used for coastal transport. The maritime union said the work was going to international boats that have not passed Australian safety standards, crewed by foreign sailors who are also "grossly underpaid".

The decision to remove British Loyalty from Australian coastal trade came after BP announced the closure of a BP Queensland oil refinery and said it would no longer require the vessel.

The tanker has been ordered to sail to Singapore, where it will be returned to BP's international shipping trade.

The entire crew of up to 36 Australian employees will be made redundant when it arrives.

"The crew of the British Loyalty are decent, honest, hard-working Australians," MUA assistant national secretary Ian Bray said.

"They just want to feed their kids, pay their mortgages, and work under Australian conditions. Instead, BP wants to give them the sack and replace them with foreign crew on as little as $2 an hour."

Mr Bray said the decision exposed Australia's marine environment to the lax safety and environmental standards of foreign "flag-of-convenience" ships. He said there was a risk of a repeat of a 2010 incident when a Chinese bulk carrier, Shen Neng 1, slammed into the Great Barrier Reef.

"These are the consequences of multinational companies throwing jobs onto the scrap heap to save a dollar," Mr Bray said.

The maritime union said Australia's fuel security was also being jeopardised by BP's greed and called for a boycott of BP petrol stations nationwide.

Australia now imports 91 per cent of its petrol and diesel, up from 60 per cent in 2000, and relies on one mega-refinery in Singapore for half of its unleaded petrol supply.

BP Australia confirmed its intention to remove the fuel tanker, but has denied the union's claims the crew will be replaced with underpaid overseas labour.

A spokeswoman said British Loyalty has been moving refined petroleum products around the Australian coast from Queensland's Bulwer Island refinery. She said the refinery's closure had prompted the return of the vessel to the company's international fleet.

"To ensure a reliable and secure liquid fuels supply to the Australian market, BP will continue to utilise vessels for spot requirements for supply from the global market, as and when required, working within the rules and regulations for Australian coastal trading," she said.

ACTU secretary Dave Oliver said it was "deeply concerning" that the federal government was taking Australia in the wrong direction by allowing more and more jobs to go offshore.

"We are deeply concerned that they are allowing organisations like BP to do what they want, sack their workforce and bring in foreign labour for two bucks an hour," he said.

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