Ampol's Refining Margins Plunge 49% in Q1 Amid Cyclone and Market Headwinds

Australia’s leading fuel retailer, Ampol Ltd, reported a steep 49% decline in first-quarter refining margins at its Lytton refinery in Queensland, driven by global industry challenges and severe weather disruptions. The company's Lytton refinery margin dropped to $6.07 per barrel, down from $11.80 in the same quarter last year, reflecting weakened refining profits in Singapore—considered a key benchmark for Asia’s refining sector.

Production at the Lytton facility also fell by 5.7% to 1.30 billion litres after the refinery lost ten days of operations while preparing for Cyclone Alfred’s impact. Additionally, storm-related damage to a crude storage tank further weighed on the company's performance, increasing operational costs.

Global refinery margins have been under pressure due to slower economic growth, rising adoption of electric vehicles in China, and the commissioning of new refineries across Africa, the Middle East, and Asia. These factors have created oversupply concerns and squeezed profitability across the sector.

Ampol noted that if this downturn in margins continues into the second quarter, it could qualify for compensation through Australia’s Fuel Security Services Payment scheme. This government program offers financial protection to domestic refineries during periods of global market weakness, potentially cushioning Ampol’s earnings from further volatility.

Despite the downturn, Ampol remains focused on managing risks and maintaining operational stability in a volatile energy landscape. The company's performance will likely remain closely tied to macroeconomic trends and weather-related disruptions in the months ahead.