Australian refiner and transport fuel marketer Ampol took a financial hit in 2020 because of weaker margins at its 109,000 b/d Lytton refinery in Queensland following the collapse in fuel demand with the impact of the Covid-19 pandemic.

It reported a loss before interest and tax of A$145mn ($112mn) in 2020 on a replacement cost of production basis. The loss compares with a profit before interest and tax of A$70mn in 2019 and A$161mn in 2018. Ampol showed signs of managing the losses lower in the October-December quarter with a loss before interest and tax of A$4mn compared with a loss of A$82mn for July-September and A$41mn during April-June.

“Economic conditions in 2021 remain uncertain as a result of continued Covid-19 impacts on international and domestic demand, further depressing already soft regional refining margins and the strengthening Australian dollar experienced over recent months also works against the available Lytton refiner margins (LRM) when expressed in Australian dollars,” Ampol said.

Ampol maintained its deadline of the end of June 2021 of its review of the Lytton refinery to determine the best operating model over the medium term.

The October-December quarter LRM was $5.13/bl, which was below the average of $8/bl in 2019 that was the lowest annual margin in more than six years. The Singapore weighted-average margin for October-December was $4.73/bl, which remained lower than the average of $9.08/bl in the first half of 2020 and well below the historic average, Ampol said.

Refinery production for October-December was 1.37bn litres (94,000 b/d) since the restart of refining operations in September, Ampol said. Total refinery production for 2020 was 3.5bn l or an average of 60,000 b/d or around 55pc of nameplate capacity.

Ampol challenges during 2021 include a higher US-Australia currency exchange rate, which affects the Ampol optimisation programme and the fact jet fuel demand remains low, Royal Bank of Canada energy analyst Gordon Ramsey wrote in a research note on Ampol. Normally jet fuel is up to around 15pc of Ampol’s refining output. But around 75pc of jet fuel sales are underpinned by international flight sales and this remains severely restricted from global Covid-19 restrictions, Ramsey said.

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