Swiss refiner Varo Energy plans to reach net zero emissions by 2040 and will spend the bulk of a committed $3.5bn in investment between 2022-26 on sustainable energy.
Varo will focus on two sectors — conventional energy and sustainable energy. It expects "high levels of cash flow" from the former, which it will invest in biofuels, biomethane and bio-LNG, hydrogen, e-mobility and carbon removals. Two-thirds of the $3.5bn in planned investment will go to its sustainable energy sector, while it envisages capital expenditure of around $140mn/yr in the conventional fuels segment.
Conventional energy covers manufacturing, storage, trading, marketing and distribution. Varo plans to reduce carbon intensity in this sector, although it emphasised the energy security it provided. The company plans to move "decarbonised assets" into its sustainable energy section.
This "twin-engine" approach will increase Varo's earnings before interest, taxes, interest, depreciation and amortisation (Ebitda) threefold by 2026 to $1bn, the company said. It aims for sustainable energy to account for more than half of Ebitda in the same timeframe.
Varo has set an interim target of a 40pc absolute reduction in its scope 1 and 2 emissions by 2030, and a 15pc cut in carbon intensity for scope 3 emissions by 2030.
Low-carbon fuels ambitions
Varo plans to ramp up its biofuels production, with a goal of over 250,000 t/yr of net biofuels capacity by 2026 and a longer-term target of more than 500,000 t/yr. It will build new production facilities and "repurpose older assets," it said. The company also eyes expansion in the biomethane and bio-LNG sector, through acquisition and development.
It aims to develop hydrogen production and will add an electrolyser at the 207,000 b/d Neustadt-Vohburg refinery in southern Germany to this end. The plant is operated in a joint venture with Russia's state-controlled Rosneft and Italy's Eni.
Varo will also look to increase its stake in the e-mobility market through partnerships and acquisitions, and plans to invest in forestry projects to drive carbon removal. It owns a majority stake in SilviCarbon, which focuses on forest-based carbon removal projects.
Varo is owned by trading firm Vitol and investment firm Carlyle.
