Ampol has put its only oil refinery under review and will consider options including its closure, even after the Morrison government last month unveiled a $2.5 billion rescue package intended to keep refineries open.
Lytton refinery process 6,300 barrels of oil a day. The other refineries in Australia at the former Shell operation at Geelong, now owned by Viva Energy which is reviewing its operations.
Ampol – formerly Caltex Australia – on Thursday said it’s Lytton refinery in Brisbane had made losses of $82 million in the September quarter, and $141 million so far in 2020. Mobil owns the Altona refinery, also in Victoria (Melbourne). The Kwinana refinery near Perth is owned by BP.
The reason for these losses has been the slump in demand for fuel – especially jet fuel, diesel, and petrol, with the collapse in jet fuel the most damaging.
“Ampol will commence a comprehensive review of the Lytton refinery and its related supply chains to determine the best operating model over the medium term. The review will consider all options for the facility’s operations and for the connected supply chains and markets it serves.
“These options include closure and permanent transition to an import model, the continuation of existing refining operations and other alternate models of operation, including the necessary investments required to execute each of the options,” Ampol said.
Ampol CEO Matt Halliday said the review will consider all relevant strategic, economic and operational factors, including the recent measures announced by the Australian Government to support refining and bolster fuel security, and the potential impacts on employees, suppliers and other stakeholders.
“Global economic conditions triggered by COVID-19 have put significant pressure on refining, as evidenced by our performance in the first half and the significant losses announced today.
“We must continue to deliver strong returns on capital and this review will allow us to be proactive in determining the best course of action to protect our balance sheet, improve earnings certainty and maximise shareholder value from our integrated supply chain.
“The review is also an important step to ensure the ongoing competitive cost of liquid fuel supply to our customers,” Mr Halliday said on Thursday.
Ampol said the review is expected to be concluded in the second quarter of 2021.
Ampol shares rose 1.2% to $24.60.
