Saras sees diesel margin improvement later in the year

Italian independent refiner Saras said today it expects diesel margins to rise later in the year, boosting profits at its 300,000 b/d Sarroch refinery.

The comapny said there has been a "drastic decline" in regional diesel margins since the first quarter of the year, caused by cargoes from the US arriving at the same time as supplies from east of Suez that had been delayed by taking the longer Cape of Good Hope route. This is not necessarily bad for Saras' profits, said the firm's chief operating officer Marco Schiavetti.

"All these logistic de-optimisations are supporting diesel cracks in particular, volatility in the market is supportive for the business in general," he said. The company expects diesel margins to rise later in the year.

Saras said today that some maintenance works on Sarroch's crude distillation units (CDU) would take place in the second quarter and again in the fourth quarter. There will also be works in both periods on the firm's adjacent IGCC power plant.

Saras' prospective purchase by trading firm Vitol could close within a couple of months. Saras' chairman Massimo Moratti said there are "no obstacles" to the deal from Italian authorities, with the firm waiting on EU approval including regulations on antitrust law. Deputy chief executive Franco Balsamo said: "We do not have any disclosure on the expected end of the process, but in my point of view in a couple of months we should receive a green light from the EU."

There has not yet been co-operation between Saras and Vitol regarding refinery operations, said Balsamo.

"Vitol is one of the largest broker in this market so we have regular business with them when there are mutual economic conditions," he said. "But as far as any formal co-operation it is not the right time. We are waiting for all the necessary procedures."

The company made a profit of €77.4mn ($83.5mn) in the January-March period, lower by 44pc from the first quarter of 2023. Profits were very similar to €76.6mn in the first quarter of 2022 when refining margins began rising following the Russian invasion of Ukraine at the start of February that year.

Company crude throughput forecast has historically been changeable. But 2024 guidance remains the same as previous statements at 265,000-275,000 b/d. The firm said its first quarter crude gravity was 32.5°API almost identical to Argus' assessment of the refinery slate.

By Adam Porter