Refineries pumped on high-value, ultra-low sulphur fuel

A green premium is in the pipeline for lower-carbon fuels that will boost the value of upgraded Australian refineries, according to energy company and service station operator Ampol.

Ampol told shareholders on Thursday the Lytton oil refinery in Brisbane was on track to produce fuels suitable for the latest European and American cars that are being manufactured to meet more stringent emission standards.

Substantial progress has been made on design, approvals and ground works on the ultra-low sulphur fuels project, chief executive Matt Halliday told the annual general meeting in Sydney.

Matt Halliday says Ampol’s lower-carbon fuels are an exciting development. (Dean Lewins/AAP PHOTOS)

Mr Halliday confirmed Ampol intended to invest further in Lytton upgrades so new fuels could be in production by the end of 2025 to meet the federal government’s timeline for higher fuel quality standards.

“We expect this product to trade in international markets at a premium to existing Australian fuel grades, and therefore increasing the value of Lytton’s production,” he said.

Lytton’s production levels in the first three months of 2024 were hit by a refinery outage, as well as a delay because of disruptions in the Red Sea in the supply of an acid used as the catalyst, but normal operations resumed in early April.

Meanwhile, traditional fuels remain core business with a mere 82 electric vehicle charging bays installed in Ampol’s forecourts in Australia, although deals have been struck with Mirvac and Stockland to provide fast-charging at shopping centres.

Facing closure and mass lay-offs, Lytton in Queensland and the Viva Energy Geelong refinery in Victoria were bailed out by the former coalition government three years ago.

Domestic refiners of petrol, diesel and jet fuel continue to get a fuel security services payment, under a pledge to keep operating until at least June 2027.

Ampol’s Lytton refinery was saved by Scott Morrison’s coalition government. (Darren England/AAP PHOTOS)

Viva also committed to upgrading its refinery to produce ultra-low sulphur gasoline as part of the federal fuel security package.

For the heavy transport sector, Ampol is considering the feasibility of setting up a biorefinery at Lytton that would have the capacity to produce more than 500 million litres of renewable diesel and sustainable aviation fuel every year.

Instead of being produced from crude oil, so-called renewable diesel and sustainable aviation fuel made from renewable biomass waste products such as used vegetable oils or tallow.

“We are also exploring opportunities to commence co-processing of renewable feedstock alongside traditional feedstock at Lytton,” Mr Halliday said.

He said this would enable Ampol to produce new fuels more quickly and scale up to meet growing demand over the coming years.