The Federal Government has lifted the Fuel Security Services Payment (FSSP) thresholds that will result in far lower risk of EBITDA losses in both Ampol and Viva’s refining businesses. We estimate the EBITDA loss scenarios would only occur at a refining margin close to LRM of US$4.50/bbl or lower Ampol or GRM of US$6/bbl for Viva. Current elevated refining margins mean the FSSP is not at all relevant for the March quarter. The real debate is how long elevated refining margins hold. The situation around oil and fuel supply remains highly uncertain and should be taken into consideration in gauging the 12-24 month outlook.

Ampol reported a good FY25 result, once again characterised by higher margins on lower fuel volumes. The company’s focus is subtly shifting towards more volume. Near-term, Ampol faces a headwind from lower refinery margins. Ampol has a few key catalysts in the next six months with potential change to government support on its refinery and ACCC approval of the EG acquisition. While there are these positives, weaker refinery margins and higher net interest keep us somewhat cautious.