Australia's Ampol sees slow recovery in jet fuel demand

Ampol Ltd, Australia’s biggest fuel seller, said on Monday it expects market conditions to remain challenging in 2021, with travel restrictions due to the coronavirus pandemic likely to continue denting fuel demand.

Ampol reported a A$145 million ($114 million) loss in its refining business for 2020, down from earnings before interest and tax of A$70 million a year earlier, as it shut its Lytton refinery for an extended period of maintenance after fuel consumption collapsed.

The big refining loss comes as the company is set to decide in the second quarter whether it will close the refinery, potentially following BP Plc and Exxon Mobil Corp , which have decided to stop refining in Australia.

Ampol said assuming a delayed recovery in jet fuel demand and continued domestic travel restrictions, it expects Australian fuel sales of around 13.5 billion to 14 billion litres in 2021.

That would be barely changed from the 13.6 billion litres sold in 2020, which was down 17% on the previous year.

“Demand for jet fuel continues to be most impacted ... with significant uncertainty that international travel will resume in 2021,” Ampol said in its annual results.

Ampol’s jet volumes, which in normal times are largely linked to international travel, slumped 56% in the fourth quarter from the same period a year earlier.

Diesel demand held up well, supported by demand from the mining sector, however a recovery in gasoline demand in late 2020 was curbed by snap lockdowns in some states in Australia.

“Current regional refining margins remain weak, but Lytton has the ability to produce around 6 billion litres in 2021, subject to market conditions,” the company said.

Lytton produced 3.5 billion litres in 2020, down 40% on the previous year. Increased production will reduce the level of product imports in 2021, it added.

$1 = 1.2706 Australian dollars Reporting by Sonali Paul; editing by Richard Pullin

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