Ampol announced Monday that it will keep open its Lytton, Australia, refinery – which includes a finished lubricant blending plant – after agreeing to accept government financial support aimed at preventing the nation’s last fuels refineries from closing.
The New South Wales, Australia-based company, which formerly operated as Caltex Australia, warned last year that it might close the Lytton refinery, located outside Brisbane, because it was losing money.
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On Monday officials said the company decided to accept a government package that will provide it up to AU $108 million (U.S. $84 million) per year during periods of low refining margins, plus a one-time grant of up to $125 million to help upgrade Lytton’s facilities to produce ultra-low-sulfur motor fuel.
Lytton’s blending plant is one of the nation’s largest domestic sources of lubricants. Ampol had not said that it would close the plant if it shuttered the refinery, but the Monday’s announcement means that it will definitely stay open, at least in the medium term. Ampol committed to continuing to operate the refinery at least until 2027, provided the government implements the support package as proposed.
Australia has lost several fuels refineries since the turn of the century due to poor economies of scale and competition from fuel imports. The country had four refineries until the fourth quarter of last year, but BP said in October that it would convert its Kwinana refinery to a fuels terminal, and ExxonMobil announced in February that it would do the same with its refinery in Altona.
That leaves Australia with two refineries – Ampol’s and a Viva Energy’s facility in Geelong. Government officials have warned that further closings would leave the country vulnerable to disruptions in fuel imports.