It gives me a little bit of space to think about things. It’s good to keep fit, and by having one of these races in the calendar, it gives you a goal to work towards.”
Meet Louise Warner, over the weekend sweating it out on the Larapinta Trail in the MacDonnell Ranges around Alice Springs.
She is also the head of Fuels and Infrastructure at Caltex, the No 1 provider of fuels to the Australian economy. That’s about three-quarters of Caltex’s business, the rest being customer-facing retail and petrol stations.
Back in Caltex headquarters on Market Street, Warner is remarkably unchanged from the track: hair pulled back in a no-nonsense ponytail, clear-eyed and not a stitch of make-up.
Warner is the frontrunner internally to replace CEO Julian Segal, who announced his retirement last week after a decade at the helm. First question: does she want the job? Warner smiles. “As you know, I’ve worked at Caltex for almost 20 years now and I’m really proud of the company I work for. I’ve made a huge number of contributions to Caltex and if the board is interested in me putting myself forward for the CEO, I’d love to give it a shot.”
Segal, appropriately, did not single out Warner as the board commenced its search for his replacement. But last year he spoke enthusiastically about his division chief. “I met Louise soon after joining Caltex in 2009, in her natural habitat at the Kurnell refinery. She’s a chemical engineer. To an extent, spiritually she still belongs there. She’s got an outstanding intellect, she’s got an outstanding integrity, and she loves Caltex.”
That Warner is a fine chemical engineer is no surprise. Raised in Townsville, her father was a civil draftsman and her mother trained as a science teacher. She joined in 1999 as a Caltex graduate. “I chose Caltex because I got to work in an exciting manufacturing plant which the Kurnell Refinery was for me. Being out in the operational facilities, it keeps you honest.”
Warner’s remarkable career has ridden the dramatic transformation of the Caltex business model. In 2014, Segal decided to convert Kurnell from a refinery to an import terminal, but long before he recognised Caltex needed oil trading expertise. He asked his then shareholder Chevron to take Warner on in London.
“Kicking and screaming we dragged Louise to London and in a very short period of time she became an outstanding trader,” Segal told me last year.
Warner clearly has admiration for her mentor, both for his strategic brain and for pushing her to think differently. “That was one of the gifts that Caltex has given to me to learn about different markets. Working in the trading and shipping team in London, I learned about blending in Amsterdam and upstream oil markets down in Nigeria.” By the time Segal needed trading capability in Singapore in 2013, he had just the right person. Warner opened the Singapore office from a standing start, the first international business for Caltex worldwide. It seems incongruous, looking at this petite, pale businesswoman, that she pulled it off: a hard-nosed crude and fuel trading operation, recruiting locally and building a team from 15 different countries. “Today we’ve continued to grow the counterparties we engage with in the Asian market and increasingly through the other parts of the global market. Understanding the perspectives of all those different cultures has been an important part of that.”
Ampol Singapore is now the heart of Caltex’s trading business and vital to its supply chain. Interestingly, it is the shift from onshore refining to trading and importing fuel that is now a hot debate around fuel security.
Australia is in breach of its international obligations because it only holds 55 days’ worth of fuel imports. The International Energy Agency requires a 90-day minimum set aside. Caltex under Segal has been adamant that the energy security argument is flawed, and that supply is secure.
“Let’s unpack the issues a little,” Warner says. “There’s two topics that people are taking about. One is the IEA compliance, and one is what I would call real fuel security. The IEA compliance is a commitment that Australia has made to the international markets, and that does not really relate to Australia’s fuel security. If we think about fuel security, yes I do agree with Julian’s view that we provide a very secure supply base to the country.
“Today a bit over 40 per cent of Australia’s fuel is supplied by Australian refineries, but even if we used every bit of crude produced in Australia, that would only be 25 per cent of Australia’s fuel requirements, so something has to come from overseas for us to keep ourselves fuels-sufficient. Whether it’s crude or products, that means we have to have a reliable international supply chain. And that is really what led us to establish our own trading and shipping capability in Singapore, which is the Ampol business I set up.” But consider a scenario, in these troubled times, where Hong Kong implodes, and the Chinese move in messily, taking full control of the South China Sea; we already have tensions in the Straits of Hormuz. Should Australians still feel confident that fuel would continue to be delivered? In a word, yes, according to Warner.
“A lot of the fuel to Australia does come through north Asia, but we have many different supply sources that are possible and within easy access to us. And the work that we have done to diversify and to control our supply chain means that we would actively monitor those situations and then divert to the next logical location.”
Are you doing any of that monitoring right now? “We do it each and every day and, really, I think there’s good, strong alignment between supply security and our commercial incentives, because our earnings and our reputation are based on that reliable supply to our customers.” Were the politics in Australia to shift policy and mandate higher onshore fuel storage, Warner argues that Caltex is well placed to help with both the expertise and infrastructure.
Following a restructure last year to put the entire fuel supply chain into one business, Warner now heads Caltex Fuel and Infrastructure, which she says is running well.
Her remit includes two relatively recent offshore investments, both of which she says are exceeding expectations: Gull, the New Zealand challenger brand fuel business; and the partnership with Seaoil, an independent fuel company in The Philippines, which exposes Caltex to a rapidly growing market.
Warner is now looking for other similar opportunities. “We found as we set up Ampol and went into the NZ and Philippine markets we had grown a set of skills here in Australia because of the tough environment that we operate in — a remote market, a market that requires a reliable supply chain — and those skills can be transferred into other businesses. There is real potential for other international opportunities, so long as they play to our strengths as Caltex.”
While Warner does oversee Gull’s 90 retail business, Caltex’s vast retail portfolio will be a challenge for whoever leads the business. She wouldn’t be drawn on speculation Caltex might look again at a sale, but she has been spending a lot more time with Jo Taylor, who runs the retail side.
Warner talks energetically about electric vehicles. Caltex supports the evolution but believes the shift will take longer because of the barriers in getting large numbers of EVs into the market. “Australia has a lot of heavy vehicles and we believe that a number of different fuels are required to service the transportation needs. They might be things like hydrogen or biojet, or other biofuels.”
Perhaps of all the work facing a new leader, a priority should be communicating with the market.
“I think (we) can do a better job as a company of explaining who we are and what we do,” she says.
After her 20km trek on Saturday in 31 degree heat I ask, how does she feel out there? “Basically, trying to get to the end. That’s about it,” she laughs. “It’s a good challenge to set for myself.” The race is on.
Extracted from The Australian