Ampol says margins at its Lytton refinery in Brisbane, one of only two in the country, has more than quadrupled as the conflict in the Middle East disrupts shipments, with the company confirming it had secured supply to produce diesel until the end of May and petrol until the end of June.
Production at the refinery rose 10 per cent in the first three months of the year after it postponed maintenance to the start of August to maintain supply and the federal government relaxed sulfur standards on fuel production.
Like other energy companies, Ampol shares have soared, rising 16 per cent since the start of the war between the United States and Iran on February 28.
The company operates one of the country’s largest networks of petrol stations and the Lytton refinery, which processes crude known as light sweet.
The war, which led to Iran cutting access to the Strait of Hormuz and chocking off supply from the oil-rich Gulf, has sent the price of Brent crude soaring from about $US70 a barrel to $US99. It has also limited supplies, forcing the Australian government to negotiate around the region for shipments.
Ampol told investors it had already secured supply before the strait closed, allowing it to record significantly higher profits on oil it processes. Margins rose from $US6.07 a barrel in the same quarter last year to $US25.45 in the three months to the end of March 31.
“Ampol was well-placed in terms of crude and product inventory,
confirmed orders and price risk management,” the company said. “As a result, Ampol was able to support the ‘brought-forward demand’ through its convenience retail and bulk fuels channels in Australia and New Zealand.”
The light sweet crude that Lytton uses is different to the so-called sour crude that comes from the Middle East and is typically sourced from Europe, North America and Africa.
Because light sweet crude is more available than the Middle Eastern crude, Ampol said it had managed to secure supplies into May and the end of June, although it was at a higher price.
Viva Energy’s Geelong refinery is the only other plant in the country and, with Lytton, produces about one-fifth of supply. A fire at the Geelong site last week dramatically reduced output at that refinery, although Viva said it expected to quickly restore petrol production to 60 per cent.
Ampol shares rose 4.4 per cent, or $1.38, to $32.99 on Wednesday morning.
RBC Capital Markets analyst Gordon Ramsay said Ampol was being bolstered by “higher than expected” margins.
“We see the Middle East conflict underpinning a tighter downstream market that supports elevated South East Asian refiner margins over the next 12 to 18 months,” Ramsay said.
Extracted in full from: https://www.afr.com/companies/energy/ampol-secures-petrol-supplies-until-the-end-of-june-as-margins-spike-20260422-p5zq00
