Ampol's refining margins have fallen so low that it may be eligible for a payment made by the Australian Government to petroleum refiners during periods of low profitability.
The company said if its trading refiner margins continued for the full quarter at the level they fell to in March and early April, it would be eligible for a Fuel Security Services Payment (FSSP) providing downside protection.
Payments under the FSSP program range up to 1.8 cents per litre, depending on factors like fuel and crude oil prices, freight costs and refinery yields.
Ampol said the Lytton Refiner Margin (LRM) for the first quarter of 2025 was US$6.07 (A$9.63) per barrel, about US$6.00 below a year earlier, mostly due to weakness in Singapore refined products in the quarter.
The maximum payment applies when the external margin marker falls to US$7.30 per barrel and below, and payments end at or above US$10.20 per barrel.
The company said the lower Australian dollar was positive for converting its U.S. dollar earnings while lower fuel prices were expected to be a “modest tailwind” for retail fuel volumes in Australia and New Zealand and should temporarily benefit fuel margins.
In an ASX announcement, Ampol also said its Fuel and Convenience businesses increased earnings before interest and tax (EBIT) in the first quarter of 2025 by a ‘mid-single digit’ percentage level.
The New Zealand segment also grew earnings by a mid-single digit percentage compared to the first quarter of 2024 as fuel volumes and margins improved and non-fuel income also grew.
At the time of writing Ampol (ASX: ALD) shares were trading 22 cents (1.03%) lower at $21.08, capitalising the company at $5.01 billion.
Ampol was founded as the Australian Motorists Petrol Company in 1936 and was listed on the Australian Securities Exchange (ASX) between 1980 and 2023 as Caltex before Chevron Corporation’s decision to remove the license to use the name forced a name change to Ampol.
