Ampol to continue operations at Lytton refinery

Ampol will continue to operate its Lytton refinery after an comprehensive review found that the Federal Government’s support package would make its operations viable.

The decision is subject to the government’s refining support package being successfully legislated as proposed, follows comprehensive management analysis and constructive engagement with the Government.

The Federal Government’s proposed package will help underpin the viability of the refinery over the medium term, providing a variable support payment of up to $108 million per annum that should protect refinery earnings during periods of low margins, and supporting investment in infrastructure upgrades that will deliver the manufacture of cleaner fuels. 

Matt Halliday, CEO and Managing Director of Ampol, said the outcome was a win for shareholders and for the 550 manufacturing jobs that were on the line.

“Ampol is pleased that today’s outcome delivers value for shareholders and provides clarity and a path forward for our valued employees at Lytton, supporting the continued employment of 550 Australian manufacturing jobs and the indirect employment of hundreds more.

“The outcome will also allow Ampol to progress alternative future energy uses for this strategic site, preserving manufacturing skills that will be critical for success in the energy transition.

“Ampol is an Australian company with a long and proud history and our operations play an important role in the economy and in delivering national prosperity. Consistent with this, our discussions with the Federal and Queensland State Governments have been open and productive throughout our review, and Ampol is partnering with the Federal Government to meet the dual objectives of fuel security and energy transition.”

The Federal Government’s Fuel Security package, as announced on 17 May 2021, will provide refiners with access to a variable Fuel Security Services Payment (FSSP) for six years up to mid-2027 (with Ampol having an option to extend another three years).

It is structured to provide a high level of support when refining margins are low, and no support when refining margins are high, reducing volatility for refiners and ensuring Government support is targeted to the times it is most needed.  

In addition to the FSSP, the Government also intends to contribute 50 per cent of the capital expenditure, up to $125 million, required to undertake infrastructure upgrades to accelerate the introduction of ultra-low sulfur petrol. The Government is also introducing Minimum Stockholding Obligations for Australian fuel importers and refiners from July 2022, with refiners benefiting from lower stockholding obligations.

Ampol retains the option to pursue conversion to an import terminal should the package not be successfully legislated or, in future, in the case of persistently low refinery margins or other adverse events, including potential changes to the FSSP by future governments.

“We look forward to working with Government to continue to deliver safe, reliable and efficient refining operations, which will play an important role in enabling the opportunities in future energy that are ahead of us,” said Halliday.

1 thought on “Ampol to continue operations at Lytton refinery”

  1. Good to see Australia is trying to become more self sufficient in terms of liquid fossil fuels. If that Malacca straits are blocked, it will effect Japan and australia, – world war three

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