Ampol forecasts modest rise in Australian fuel demand

Australian refiner and transport fuel marketer Ampol expects a modest rise, or possibly a slight fall, in Australian fuel sales in 2021 against last year with the impact of the Covid-19 pandemic still weighing on demand.

Ampol's current Australian volume expectations for 2021 are 13.5bn-14bn litres (233,000-241,000 b/d), with this forecast assuming a delayed recovery in jet fuel demand and the continued impact of domestic travel restrictions, said Ampol chief executive Matt Halliday.

This compares with the 234,000 b/d in 2020, which was 17pc below the 281,000 b/d in 2019. The fall last year compared with 2019 levels reflecting a 56pc drop in jet fuel sales and a 6pc decline in diesel volumes.

Current regional refining margins remain weak but Ampol's 109,000 b/d Lytton refinery in Brisbane, Queensland has the ability to produce around 103,000 b/d in 2021, subject to market conditions, Ampol said.

Ampol is reviewing Lytton's future with a decision expected to be made in the April-June quarter. The production guidance for Lytton will be affected by the outcome of the review. The firm disclosed Lytton's 2020 losses last month, with profits from the refinery affected by weaker refinery margins.

Ampol reiterated that it would not be accepting any payments from the Australian government as part of its subsidy programme to the downstream sector to maintain some domestic refining capacity.

Demand for jet fuel continues to be most affected, with Ampol jet fuel volumes during October-December 2020 down by 56pc from the same period a year earlier. More than 75pc of Ampol's jet volumes in 2019 were linked to international travel.

Diesel demand continues to demonstrate resilience, underpinned by sectors such as mining.

Retail fuels sales were 70,000 b/d in 2020, down by 14pc from the 82,000 b/d in 2019 because of the impact on industry demand from bushfires and floods during January-March then followed by Covid-19 travel restrictions.

"Ampol has navigated a tough operating environment, with sustained weakness in refining margins, ongoing government restrictions impacting travel and aviation in particular, and broad economic weakness impacting demand throughout the year," Halliday said.

By Kevin Morrison