Timing perfect for Ampol brand switch

TICKY FULLERTON

MAY 18, 2020

The Australian

The timing could not be better. With cries of Team Australia ringing in our ears, rising regional tensions, worries about national security and threats to our supply chains, Australia’s leading transport fuels business Caltex is rebranding as Ampol.

For those of us sitting in the backs of hot cars in the 70s and 80s as Mum or Dad filled up at the bowser, what could be more Australian than that?

As the new Ampol battles COVID-19 with a 90 per cent drop in jet fuel volumes, and fuel volumes at its convenience retail outlets down 16 per cent, the push to “buy Australian” may work at the margin.

But there is a much bigger prize that the brand and the capability behind it might just deliver. That is in fuel security: specifically, the strategically positioned land, often connected to the fuel transport network, which Ampol can offer Team Australia. Talks with the Morrison government are under way.

The in-tray is piling up for interim CEO Matt Halliday. Now in his early forties, Halliday was finishing his commerce degree at UWA when the Ampol brand was benched in 1997.

“Yes I think that’s right,” he says, rather amused at the thought but clearly stoked at the leverage he now has from the new messaging. “There almost couldn’t be a better time, in terms of Australians wanting to support independent Australian companies and wanting to buy Australian — a brand that resonates with most Australians, renowned for high-quality customer service, products that were made by Australians for Australian conditions and a very deep connection to Australian community.”

The baptism of fire for the interim CEO, who joined Caltex just over a year ago as chief financial officer, includes plummeting oil prices and a long and drawn out takeover dance and due diligence with Couche-Tard. The pandemic curbed the Canadian giant’s enthusiasm but, come the recovery it has not ruled out another look at the business. Halli­day believes the new unique Australian brand can only add value.

Branding aside, Halliday’s job now is to minimise pandemic damage as the economy clunkily shifts gear. A return to pre-COVID-19 levels of jet fuel volumes looks a long way off and there are questions over how soon the company’s Lytton refinery, which was put into maintenance shutdown early to coincide with the current low margins, will open again.

It is the other shift, towards a heightened national security, that brings risk to the upside for Ampol. Even before the pandemic, there were growing concerns in political circles about national fuel security with just 30 days of fuel stores, below the minimum 90 days outlined in international agreements.

It is worth noting that the Caltex management position has been to dismiss such concerns. After all, under former CEO ­Julian Segal, Caltex shut down the huge Kurnell refinery at ­Botany in Sydney’s south and replaced it with an import terminal. It argued that national fuel security was entirely satisfactory given that the sourcing of oil and product came from many different countries across the region.

The government disagrees. Last month, Energy Minister Angus Taylor swooped on the low oil prices, spending $94m on a strategic reserve for use in any ­future “global disruption”. That reserve will be held initially in the US, the minister explained, because Australia simply did not have the storage space. “In time we are exploring opportunities with the industry to establish local storage,” he added.

Halliday is just as confident in Australia’s fuel security as his predecessor, but if the government wants more storage, Ampol is there to help. “We are having very active conversations with the government on the impact of COVID-19 on our business. It makes a lot of sense for the government to take advantage of record low oil prices to build a strategic fuel reserve,” he says.

“We do not see a fuel security issue in the market, but as the government thinks about storage and thinks about a national fuel reserve onshore, we are clearly very well placed as an Australian company with the capability and the asset base to play an important role, so we will continue to have those conversations.”

It’s not hard to imagine Halli­day’s Team Australia pitch in Canberra. “If the government is committed to increasing its level of storage onshore, that will require a significant tankage build onshore. We have capability as an independent Australian company right across the value chain: we have our Ampol Singapore team that does all the trading and shipping, the procurement of both crude and product; we have a very strong asset base and infrastructure base spread right around the country, in terms of a network and in tankage.”

Ampol’s ability to operate right across the supply chain matches a competitor like Viva operating under the Shell brand with supply through international trading house Vitol.

The difference, Halliday argues, is that Ampol is Australian with land available for storage in the right places — most importantly at Kurnell. “You can’t really fly over it at the moment,” he says, “but whenever you do and you look out of the window or do a Google Earth, there is an enormous land position there that is currently vacant.

“Kurnell is already the largest import terminal in the southern hemisphere. It is connected through pipes so it is very efficient in terms of getting product up to Newcastle, through the airport, around the city. It has a wharf fac­ility and you are sitting on a large major hazard facility connected to existing tankage. It is the jewel in our infrastructure.”

There is potential for more storage around Ampol’s refinery asset at Lytton, connected to the port of Brisbane and some spare ground at Newport in Melbourne, but Kurnell’s huge land position, which cannot be replicated, remains the attraction.

Halliday is ready. “The strong balance sheet means we need to make sure we are not cutting into the bone and we will take the decisions that are important to reposition Ampol to add value to shareholders in the years ahead.”

Back in the 1960s, when a wave of nationalism blew through, there was a call for ideas on a new flag and national anthem. The Australian Motorist’s Petroleum Company, Ampol’s submission, to the tune of Waltzing Matilda, paid tribute to our land: “Here in this God given land of ours Australia, this proud possession our own piece of earth.”

Coming out of the pandemic, Tourism Australia needs all the help it can get. So surely we can look forward to the return of some “beneath the Southern Cross” marketing under the new Ampol (stock exchange ticker ALD — AMP is taken). Look no further than Ampol’s TV advert beamed into homes in 1989:

I’m as Australian as Ampol, you know

I’m one of those who paints white on their nose

Don’t give me the heat about sharks on the beach

Or the gravel and travelling far different roads

I know who my friends are without being told

I’m as Australian as Ampol!