VaroPreem CEO: Refining is 'critical infrastructure' for Europe
- Europe has been closing refineries for decades
- Its plants struggle to compete with China, India, Middle East
- VaroPreem CEO says sector consolidation to create opportunities
Europe must view oil refining infrastructure as critical, VaroPreem chief executive Dev Sanyal said on Wednesday, as he prepares for more consolidation in a sector battered by decades of closures and intensifying competition from newer plants abroad.
Europe built its last major refinery in 1975 and has shut dozens of facilities over the past 30 yrs as its oil production declined and its aging plants struggled to compete with modern facilities in China, India and the Middle East.
Speaking on the sidelines of the World Economic Forum in Davos, Switzerland, the energy company boss said the continent could not afford further erosion of capacity.
"The entire European refining landscape is changing ... But having refining in Europe matters, because it's critical infrastructure,” Sanyal said.
He said smaller refining players would likely be forced to sell more assets, because they lack the balance sheet strength to retain all their plants. Larger companies, including some oil majors, could also divest as they redirect capital toward upstream developments.
That would create more opportunities for consolidation for companies like Varo, Sanyal said.
Varo now has > 500,000 bpd of conventional refining capacity and has become the second‑largest renewable fuel producer in Europe - and among the top six globally - after completing its acquisition of Sweden's Preem.
Sanyal said that when he took over as chief executive in 2022, he pledged that within five years he would triple earnings and Varo's size while improving returns on capital.
"All targets were achieved 18 months ahead of schedule," he said.
Asked whether Varo was considering a stock market listing to allow shareholders Vitol and the Carlyle Group CG.O to capture value, Sanyal said the company still saw "many more opportunities for growth".
He said the company's strategy was guided by closely tracking customer demand rather than attempting to get ahead of it.
"Shutting down conventional fossil fuel demand isn't the right thing to do. We don't want to shut down demand before society wants to do it," Sanyal said.
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