Ampol’s Lytton Refinery Margin Soars to US$10.64/bbl Despite Lower Volumes

Refinery Margins Climb Despite Operational Hurdles

Ampol Limited’s third quarter trading update reveals a significant improvement in its Lytton Refiner Margin (LRM), which climbed to US$10.64 per barrel, a sharp increase from the previous year. This uplift was driven by a combination of global refinery outages and tightening product cracks in Singapore, alongside the impact of additional sanctions on Russian crude oil. Notably, September saw the margin peak at US$12.85 per barrel, underscoring a favorable market environment for refining operations.

Despite a planned Alkylation Unit Turnaround and Inspection (T&I) that temporarily constrained production, the Lytton refinery boosted output by 37% compared to the same quarter last year, producing 1,252 million litres. This resilience in production capacity highlights Ampol’s operational agility amid scheduled maintenance.

Volume Pressures and Retail Performance

While refinery margins and production improved, total sales volumes declined by 7.6% year-on-year to 6,028 million litres. This drop was influenced by the refinery turnaround, which led to increased purchases during the maintenance period, and adverse weather conditions, particularly in New South Wales and Queensland, which dampened convenience retail fuel sales.

Nevertheless, Ampol’s Australian Convenience Retail segment demonstrated strength, with network shop sales growing 1.8% excluding tobacco and U-GO conversions, and gross margins expanding by nearly 3 percentage points. This suggests that while fuel volumes softened, consumer spending within retail outlets remained robust, providing a valuable buffer to overall earnings.

Strategic Moves and Regulatory Progress

On the strategic front, Ampol continues to advance its acquisition of EG Australia, having lodged the necessary submission with the Australian Competition and Consumer Commission in early October. This move signals Ampol’s intent to expand its footprint and consolidate its market position, although regulatory approval remains pending.

Meanwhile, the company is preparing for the introduction of ultra-low sulfur gasoline specifications effective December 15, 2025. Construction delays at the Lytton refinery mean that compliant gasoline production will initially fall short, resulting in an estimated $7.5 million monthly cash cost from October due to the export of non-compliant product. Commissioning of the refinery upgrade is now expected to begin in the second quarter of 2026, marking a critical milestone for Ampol’s environmental and regulatory compliance efforts.

Looking Ahead, Market Conditions and Operational Outlook

Post-quarter trading conditions remain encouraging, with refiner margins continuing to strengthen amid ongoing global refinery outages and tightened crude oil supplies. The European Union’s restrictions on Russian crude processing and U.S. sanctions on Russian oil companies have further tightened market dynamics, benefiting Ampol’s refining margins.

In retail, October trading data points to a rebound in fuel volumes and sustained shop sales growth in Australia, while New Zealand benefits from stabilizing fuel input costs and improving margins. These trends suggest that Ampol is well-positioned to capitalize on favorable market conditions despite the operational challenges faced earlier in the year.