Australia’s refining sector is once again under the spotlight, with Ampol reporting a sharp fall in profits for the first half of the year and calling on the government to review its fuel security support scheme.
Refinery Challenges Impact Results
Ampol posted a 23 per cent drop in replacement-cost net profit for the six months to June 30, falling to $180.2 million. The result was hit hard by a 99 per cent plunge in earnings at its Lytton refinery in Brisbane, where unplanned outages, including a cyclone-related shutdown, cut deeply into returns. While production volumes slipped only slightly, tighter margins meant profitability all but evaporated.
Refining margins, which have been a major driver of Ampol’s earnings in recent years, have remained weak and volatile. This has raised concerns about the sustainability of Australia’s refining capacity, which remains strategically important for national fuel security.
Calls for Government Adjustment
Ampol is urging the Albanese government to update the Fuel Security Services Payment scheme, which was designed in 2021 to support refiners during periods of low margins. Rising energy and labour costs have made the original framework less effective, and the company argues that the mechanism needs recalibration to ensure the sector remains viable.
Retail and Convenience Provide Balance
While refining dragged results down, Ampol’s retail and convenience division provided a stabilising influence, with earnings in this arm growing by 4 per cent. The company highlighted this as proof of its strategy to diversify earnings and reduce reliance on refining.
The $1.1 billion acquisition of EG Group’s Australian service stations has strengthened Ampol’s footprint in the convenience sector, supporting its long-term goal of evolving beyond fuel.
Preparing for an EV Future
Ampol is also looking ahead to the rise of electric vehicles. Its strategy involves positioning its service station network to eventually include EV charging, supported by stronger in-store retail offerings. The idea is that customers will spend more time and money in-store while vehicles recharge.
Rolling out charging infrastructure, however, comes with challenges. Move too quickly and charging bays may sit idle, move too slowly and competitors could seize the opportunity. Ampol acknowledges this balancing act but expects the transition to be gradual, given the current age profile of vehicles on Australian roads.
What It Means for Service Stations
For independent operators, Ampol’s latest results highlight two major industry trends: the ongoing fragility of refining margins and the growing importance of non-fuel income streams. The shift toward EV charging may still be some years away in full force, but the push to strengthen retail offerings is already shaping the direction of the industry.
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