Energy Security
Energy security is front and centre for all of us now, and there is a company that plays a crucial role for us in Australia and New Zealand. Sydney-headquartered Ampol owns familiar brands of service stations across the two countries including Z Energy. While we know the Ampol business as a place to fill up our cars, its role in our energy security runs much deeper, given our dependence on foreign supplies.
At its core, energy security is about ensuring reliable, affordable access to fuel and energy. Ampol supports this by maintaining a strong domestic fuel supply chain. It imports crude and refined fuels, operates a refinery in Brisbane, and distributes fuel nationwide in Australia and New Zealand, ensuring that petrol, diesel, and jet fuel are available where and when they are needed. This refinery is one of only two remaining facilities that converts crude oil into the fuel we need for our vehicles. In addition, Ampol supplements the refinery production by importing refined fuel globally to its network.
A key strength of the business is its infrastructure. Ampol owns and operates a network of fuel terminals, storage facilities, and distribution assets, alongside its retail footprint. This system acts as the backbone of fuel supply, enabling the storage of reserves and helping the country respond to disruptions – such as current geopolitical tensions in the Middle East. Without this infrastructure, supply shocks could quickly translate into widespread shortages.
Ampol’s strategy is to capture value across the full fuel supply chain. It earns margins at multiple points—from importing and refining, through to wholesale distribution and retail sales at their service stations. Most of these margins are relatively stable, but refining margins are tied to global benchmarks and can be volatile.
At present, supply disruptions in the Middle East have driven refining margins significantly higher, boosting Ampol’s earnings. While these elevated profits are unlikely to persist, they provide an opportunity for the company to strengthen its balance sheet and potentially increase shareholder dividends in 2026.
Beyond fuel, Ampol has invested heavily in upgrading its convenience offering. The traditional “servo” experience has evolved, with many locations now offering premium coffee, fresh food, and partnerships with well-known, quick-service restaurant brands. The proposed acquisition of the EG Australia network would further expand these offerings and enhance the customer experience.
At the same time, Ampol recognises that not all customers want a retail experience. It has rolled out unmanned, self-service sites across Australia and New Zealand, catering to price-sensitive customers who prioritise speed and low cost. This dual approach allows Ampol to serve a broad range of customer needs.
For investors, Ampol offers a unique combination of strategic infrastructure and market exposure. The current environment is providing a temporary earnings tailwind, but the longer-term outlook is supported by a growing focus on energy security. Governments and businesses are increasingly aware of the risks posed by external supply disruptions, which should drive policies that support domestic fuel capability. Ampol already benefits from government support mechanisms when refining margins fall below certain levels, and further policy backing is likely to improve earnings stability over time.
Overall, while near-term profits may normalise, Ampol remains well positioned as a critical player in the region’s energy security framework, with a solid medium-term investment outlook.
