In Conversation with Savvas Manousos, Co-Founder, HC Thought Partners

Savvas Manousos is one of the most experienced and well-known leaders in energy trading, having led trading teams and businesses in Spain’s Cepsa, Denmark’s Maersk Oil Trading, India’s Reliance Industries and Britain’s BP. He recently became the founding member of HC Thought Partners, the new executive advisory service for the global commodities sector and adjacent industries.

In this article - first published in 2023 - Manousos reflected on his time at Cepsa as he prepared to retire from the role. In it he considers the role of asset-backed trading in the energy transition, and the long-term career prospects it offers. Interview by Anoush Kefayati.

Manousos' industry pedigree dates back to the early 1990s when he joined BP and where he spent 22 years in supply, trading and Group roles. His professional journey has been remarkably diverse, including working as trading operator, refinery production planner in Rotterdam, asset economist, physical products and derivatives trader before progressing into leadership positions. His career portfolio involved strategic roles such as Head of Crude and Products for Europe, Africa, and Russia and various corporate strategy positions focusing on downstream M&As and ultimately VP and Head of Competitor Intelligence. 

Subsequently, Manousos moved to India to serve as President and Head of Global Trading for multinational conglomerate Reliance. He led the expansion of the group’s trading activities across key global hubs like Houston, London, Singapore, and Mumbai, overseeing crude, refined products, feedstocks, shipping, gas, and petcoke for the Jamnagar refinery and the Reliance infrastructure system.

Following this, Manousos moved to Copenhagen as the Head of Global Trading for shipping giant Maersk, where he played a crucial part in preparing the company for the 2020 sulphur cap introduced by the International Maritime Organization. The team achieved this by orchestrating a portfolio of assets positions, crude tolling and blending across 10 ports globally served by a managed fleet of 25 barges and tankers. Thanks to Manousos' efforts, Maersk became self-sufficient in meeting 80% of its fuel needs from in-house activities – a significant leap from the company’s previous reliance on third-party resources. 

A Clear Pathway 

The next step on Manousos’ career journey was Spain’s oil and gas multinational, Cepsa. The company’s historical standing as a major supplier in the Iberian Peninsula is underpinned by its asset-centric portfolio. The company owns two Energy Parks, one in San Roque near Gibraltar and the other in Huelva on the border with Portugal. Cepsa primarily satisfies Spain and Portugal's domestic fuel requirements, and its fuel oil output is usually dispatched to major bunkering sites in Barcelona and Algeciras. 

Manousos’ decision to join Cepsa was driven by a distinct interest in working under a new leadership team formed by Maarten Wetselaar, who had been recently appointed as Cepsa’s CEO after a 25-year career at Anglo-Dutch major Shell. Wetselaar introduced the ‘Positive Motion’ strategy, an ambitious blueprint intended to morph Cepsa into a commanding figure in the energy transition whilst capitalizing on its integrated energy business. 

The company stands as Europe’s largest privately-owned integrated entity, with 63% held by Abu Dhabi’s sovereign wealth fund, Mubadala, and the remaining 37% owned by Carlyle Group, a leading player in the private equity space. 

This unique ownership structure grants Cepsa with a strong edge in charting its strategic and financial blueprint for the transition to a lower carbon future. “Negotiating our future path becomes a less arduous task with a smaller, focused group of stakeholders. In contrast, larger publicly traded firms often find themselves in a tougher position trying to balance the expectations of their green investors, who demand an accelerated transition, with the desires of institutional investors who, while acknowledging the impending energy transition, remain driven by short-term returns and dividends,” Manousos observed. 

Cepsa plans to invest between €7-8 billion this decade. Out of this, more than 60% is earmarked for green projects. These cover hydrogen and second-generation biofuels schemes, as well as the roll-out of ultra-fast chargers across Cepsa’s service station network and the development of green electricity, primarily to feed its clean hydrogen production. “We have charted a clear course towards a future where, by 2030, more than 50% of our EBITDA will be fueled by green projects. This approach shields us from short-term pressures and allows us to use our existing business as the funding engine for building our transition businesses.” 

Cepsa's ambition to stand out is reflected in its sustained focus on liquid fuels, particularly as the green electricity market in Spain and Southern Europe is increasingly congested. “Our corporate DNA is deeply intertwined with building process units, infrastructure, and managing liquid energy,” Manousos says. 

The company is already optimizing its strategic and financial assets with plans to develop a green hydrogen corridor. Cepsa signed a deal in October 2022 with the Dutch Port of Rotterdam, aiming to synergize southern Europe’s solar potential with the industrial demand hubs in northern Europe. “Cepsa envisions Andalucía transforming into a unique European region capable of producing some of the lowest cost hydrogen. We believe we can outpace many of our competitors and establish ourselves as one of the top, if not the premier, renewable energy companies in Europe, as an integrated firm,” Manousos asserts confidently. 

Asset Return and Optionality 

Asset-backed trading can play a pivotal role in facilitating this strategic transformation, in part because it can function as a shock absorber during market volatility, helping to pare down feedstock costs and maximize product netback. "By maintaining a diverse focus on multiple markets, products, pricing locations, and time periods, we can ensure maximum asset return," he notes.  

The optionality inherent to asset positions offers traders the latitude to innovate by assembling the pieces of the portfolio for the company's internal system or for third parties. This flexibility can manifest in numerous ways: "One might wonder how to seize arbitrage opportunities - should a cargo be dispatched to the other side of the world or sold domestically? If we have gasoline or diesel at our disposal, which trade channel should we utilize? How should we price it? Should it be catered to the wholesale business? Perhaps the retail business at the pump? Or the export market on an FOB basis? Could changing the crude slate and producing a different quantity and product be a viable strategy instead?" Manousos muses.

Industrial Logic 

In a world where a unanimous global pathway to net zero by 2050 remains elusive, asset-backed trading can serve as a compass, guiding the business through the volatility and hurdles posed by the energy transition. Manousos maintains that the varying options given by asset-backed trading give a higher degree of freedom and optimization compared to a standalone proprietary book. 

Given the increasing need to manage risks in the physical supply chains, the sense of purpose provided by asset-backed trading is not to be underestimated. “As part of an industrial entity, your trading rationale differs from that of a proprietary trading book. If you lack a clear market view in a proprietary context, you may choose to hold no position and wait for a more certain outlook. However, that's not a luxury you have when you're tasked with procuring crude and feedstocks for a refinery on a daily basis and selling the resultant products,” Manousos contends. 

This "industrial logic" has a natural influence on the development of a business strategy. “Your raison d'être in an asset-backed trading business can differ from that of your competitor next door. You may be trading against each other. But it doesn't imply that one party is right and the other wrong,” he notes. “That's a more challenging conundrum in a pure prop book where you may be trading against an algorithm, a computer, or a fund operating with entirely different motivations.” 

This is not to say that trading activities based on physical assets are less sophisticated or resource intensive. “The skillsets, competencies, tools, and techniques you can employ, contingent on your desired level of sophistication and risk tolerance, can mirror those used in a purely proprietary trading house,” Manousos clarifies. “I've always found this facet of the job intriguing and motivating.” 

The Best and Brightest 

Despite the potential prejudice that asset-backed trading may be viewed as less prestigious than proprietary trading – particularly in terms of risk tolerance and remuneration – Manousos is steadfast in his belief that it offers substantial long-term opportunities for the most talented individuals. “Asset-backed trading involves the management of billions of dollars in capital. The onus is on us to optimize these assets to their fullest potential, a task that requires top-tier technical skills and behavioural competencies,” he affirms.

Manousos admits that the intrinsic natural volumes of asset-backed trading may make it superficially challenging for compensation packages to match those of a well-funded proprietary book. However, the aim is to cultivate a virtuous circle where the remuneration scheme is sufficiently enticing for those eager for continuous optimization. “My experience has shown that collaborative efforts with employees to unearth more opportunities for P&L enhancement results in a happier workforce, both on a corporate and personal level, and consequently, better compensation. This shifts the focus away from negotiating the appropriate level of percentage pay, towards a more comprehensive discussion on how we can double our business over the next 4-5 years, and your role in achieving that,” he explains. 

Echoing Cepsa’s overarching strategy, the objective is to establish a long-term, stable platform that can adeptly navigate the tumultuous landscape ahead. “If you aim to not just survive, but thrive in the energy transition, it's always advantageous to work in an environment where the opportunities available ensure you consistently overperform and overdeliver”.

Next Generation 

Manousos stresses the importance of managing various streams in a comprehensive manner. Cepsa’s trading unit functions as a cohesive team across its global offices. Having robust systems and control mechanisms in place is paramount. “The goal is to ensure that our activities are well understood, well governed, and well measured. An asset-backed trading business requires more interaction, brainstorming, and alignment on average, given its dealings with refineries, marketing businesses, and other departments,” he explains. 

Talent development, including efficient graduate schemes, is an integral part of this operating model. As part of its plans to expand its global footprint and support the transition of other crude producers and small refiners, Cepsa intends to recruit individuals in areas where in-house competencies are lacking. “We expect the people we hire to nurture the next generation of talent. So, for those who are eager to delve into leadership development, team building, and strategic definition, Cepsa will be an engaging environment,” Manousos says. 

Diversity Fuels the Energy Transition 

The energy industry has strides to make in terms of diversity, whether it be gender, academic, geographic, or racial. But Cepsa is striving for more than just meeting the standard. As Manousos puts it, “we’re not yet where we aspire to be, either as Cepsa or as Cepsa Trading. We’re above average, but we don’t aim to be merely average.”  

Manousos envisions a workforce that reflects the multifaceted global community in which Cepsa operates. “By fostering diversity, we enable decision-making that fully considers the spectrum of opportunities, thus mitigating blind spots and reducing confirmation biases. Practically speaking, it also expands our access to a broader talent pool, enabling more individuals to succeed and establishing a more robust business framework.” 

The ongoing transition in the energy sector has made progress in this area somewhat challenging, as some believe the industry's peak days have already passed.  
 
But Manousos disagrees. After a decades-long career, he is deeply convinced that trading, particularly asset-backed trading, has a long journey ahead and can help shape tomorrow’s talent community too. “Asset-backed trading plays a crucial role in facilitating the energy transition. Moreover, embracing diversity and inclusion can act as a catalyst in this transition, helping to identify opportunities if we bring in the right talent from diverse backgrounds and different parts of society,” he concludes.