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MOSCOW (MRC) -- Ampol Ltd is
considering closing its Lytton oil refinery, one of Australia's four refineries,
as it has racked up big losses because of a coronavirus-driven slump in fuel
demand and competition from huge Asian plants, reported Reuters.
Ampol, formerly known as
Caltex Australia, may close Lytton despite a recent offer from the Australian
government of incentives worth AD2.3 billion (USD1.6 billion) to the industry to
keep the country’s refineries open for the sake of national
security.
Ampol's shares rose as much as 2.3% after flagging the refinery
review, outpacing gains in the broader market.
“We really appreciate the
government recognizing with its proposed package the challenges that the
refining sector is facing,...but we need to be realistic about the extreme
structural pressures that Lytton is facing,” Ampol chief executive Matt Halliday
said in an interview.
Ampol on Thursday reported a AD141 million loss at
the plant so far this year, worse than analysts’ expectations.
“That
demand destruction and the oversupply that we’ve seen ... presents a very
challenging outlook for margins,” Halliday told Reuters.
“That’s on top
of the pressures that we face in the international context. The (Australian)
refineries are relatively small and relatively old.”
Ampol said it would
review the future of the Lytton plant, located in Queensland state, by the
second quarter of 2021, weighing up whether to close it, turn it into a fuel
import terminal as it did with its Kurnell refinery in 2014, continue existing
operations or try other models of operation.
“Lytton’s larger than
expected loss for Q3 reflects a combination of weak refining margins and the
structural aspect of its relatively high fixed cost base,” RBC analysts said in
a note.
Energy Minister Angus Taylor said in emailed comments the
government was working closely with Ampol and the industry on its fuel security
package.
Analysts have expected Ampol, which fended off a takeover offer
earlier this year, to shut Lytton to boost returns.
Rival Viva Energy
Group Ltd last month also warned it might shut its refinery in Geelong, near
Melbourne.
As MRC wrote
before, Ampol brought forward the refinery turnaround to May, 2020, as
refining margins crashed and extended the outage from two months to four months
to the end of August to allow for social distancing of workers at the
site.
Ethylene and propylene are feedstocks for producing polyethylene
(PE) and polypropylene (PP).
According to MRC's ScanPlast report,
Russia's overall PE production totalled 1,712,400 tonnes in the first seven
months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE)
accounted for the greatest increase in the output. At the same time, overall PP
production in Russia increased in January-July 2020 by 24% year on year to
1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the
output. |
