Ampol is considering closing its refinery in Lytton, Brisbane, as fuel demand remains low during the COVID-19 pandemic.
The petroleum company on Oct. 8 said it would review Lytton’s operations and consider options including a closure, a move to importing and other operating models.
About 300 permanent staff work at the refinery, and 250 contractors.
The refinery made a cumulative loss of $141 million in the three quarters to the end of September, although it was closed for maintenance from May to September.
Ampol said the loss reflected the impact of the pandemic on fuel demand and refiner margins, as well as maintenance costs.
Ampol chief executive Matt Halliday said the review would also consider the federal government’s recent measures to improve the nation’s fuel security.
Tuesday’s budget included a $211 million plan to build domestic storage facilities while keeping refineries open.
Halliday said the review was an important step to ensuring the competitive cost of fuel supply.
The review is expected to be finished in the second quarter of 2021.
Ampol, which changed its name from Caltex this year, opened the refinery in 1965.
RBC Capital Markets analyst Gordon Ramsay said the refinery had high fixed costs, which impacted Ampol whether the refinery was used or not.
However he was upbeat about other parts of the business.
Strong retail fuel margins would continue to offset weak sales volumes, he said.
Ramsay also said Ampol’s decision to create an unlisted property trust of 203 sites would help.
The company in August created the trust, which will generate $612 million in proceeds after a Charter Hall and GIC consortium took a 49 percent interest.
Shares in Ampol, previously known as Caltex Australia, were higher by 2.1 percent at $24.82 at 1319 AEDT.
By Steven Deare