Maintenance of Lytton FCCU to Temporarily Reduce Production: Ampol Provides Update

Highlights:

• On 27 March 2021, Ampol Limited announced that it will temporarily reduce gasoline production.
• The company anticipates the FCCU to return to service in early May after repairs and attainment of steady-state operations.
• The impact of the outage on EBIT is expected to be between AU$ 30-50 million.

Ampol Limited (ASX: ALD) has announced that it will temporarily reduce gasoline production due to an issue with the slide valve in its Fluidised Catalytic Cracking Unit (FCCU) at its Lytton refinery in Brisbane. To conduct maintenance on the valve, Ampol has temporarily ceased operating the FCCU. The company anticipates the FCCU to return to service in early May after repairs and attainment of steady-state operations. During this time, the refinery will continue to operate and produce diesel and jet fuel. No disruption in supply to customers is expected, as replacement finished product is being secured through Ampol's Trading and Shipping capability.

What is Fluidised Catalytic Cracking Unit (FCCU)?

Fluidized Catalytic Cracking Unit (FCCU) is a process used in oil refineries to convert heavy, high-boiling point petroleum fractions into lighter, more valuable products such as gasoline, diesel, and other petrochemicals. The FCCU uses a catalyst to break down large hydrocarbon molecules into smaller, more useful molecules. The catalyst is usually a fine, powdered material that is suspended in a high-temperature gas stream.

FCCU technology utilizes a fluidized catalytic cracking process, which involves the use of a fluidized bed reactor to crack the heavy hydrocarbons. The fluidized bed reactor contains a catalyst material that is suspended in a fluidized state by a stream of gas. The hydrocarbon feed is then injected into the reactor, where it is mixed with the catalyst, which causes the heavy hydrocarbons to break down into lighter products. The lighter products are then separated from the catalyst and sent to further processing.

Impact on Production and Earnings

The maintenance at the Lytton refinery has led to a temporary reduction in gasoline production. However, the company will continue to produce diesel and jet fuel. Ampol expects the FCCU to be back in service by early May after repairs have been conducted, and steady-state operations have been achieved. The company does not anticipate any supply disruptions to its customers during this time.

The outage is expected to have an impact on EBIT, with the company estimating it to be between AU$ 30-50 million. This impact includes the cost of the repair and the lost opportunity cost from the sale of gasoline at higher product cracks. Despite this setback, market conditions have continued to be favorable, providing a strong start to the year for Ampol's integrated business.

Trading and Shipping Capability

Ampol assures customers that their supply will not be disrupted, as the company is currently sourcing replacement finished products through its Trading and Shipping capability.

Outlook

Ampol is optimistic about its future despite the temporary reduction in gasoline production at its Lytton refinery. The company is committed to ensuring a reliable supply of fuel to its customers and will continue to leverage its trading and shipping capabilities to achieve this. Ampol will provide further details on the situation at its first-quarter trading update on April 27, 2023.

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