VARO ENERGY announced a new strategy to become the partner of choice for customers in the energy transition by providing the sustainable and reliable energy solutions that they need to reach Net Zero. VARO has also announced its own commitment to become Net Zero by 2040.
“Our customers’ needs are changing fast as they adapt to the Energy Transition while expecting reliability of supply. They want a partner that moves with them, one that can advise and provide a wide range of energy and decarbonization solutions from a single company,” said Dev Sanyal, VARO CEO. “That is why VARO plans to invest $3.5 billion in the next five years in our twin-engine strategy, with around two-thirds of that investment focused on Sustainable Energies. This will enable VARO to provide integrated energy solutions to a wide variety of sectors including food, wholesalers and retailers as well as hard to abate sectors.”
The new strategy is built around two engines. Engine 1 is focused on VARO’s Conventional Energies business. Conventional Energies consists of manufacturing, storage, trading marketing and distribution. The priority for Engine 1 is to continue to operate safely and reliably, to reduce carbon intensity and to provide the energy security that is essential for customers. The company’s track record of consistent performance is a driver of value and an enabler for its ambition for Engine 2.
VARO has introduced the “Fit For Growth” program in Engine 1 to support these aims. “Fit For Growth” will improve efficiency through the optimization of assets. It will also further reduce emissions to ensure assets operate with best-in-class carbon footprint and continue to repurpose assets for alternative uses, ultimately transitioning decarbonized assets into Engine 2.
Cash flows from Engine 1 will be reinvested into Engine 2, which is focused on VARO’s Sustainable Energies business. Sustainable Energies consists of five growth pillars that VARO has identified as offering the most attractive low carbon growth potential while playing to the company’s strengths. VARO’s five strategic growth pillars in Sustainable Energies are:
Biofuels: an integrated producer of 2G advanced biofuels. Leveraging existing biofuels optimization expertise, VARO will build new renewable manufacturing facilities and, in time, repurpose older assets.
Biomethane & LNG: leading producer of biomethane and bio-LNG. VARO will develop portfolio through both acquisition and greenfield development to strengthen offers to industrial and road transport sectors.
Hydrogen: leverage position as H2 consumer to develop hydrogen production hubs. In the initial phase, VARO will invest in an electrolyser at Bayernoil Refinery, with offtake meeting part of the demand from the refinery. Additional green and biogenic production could lead to offtake opportunities for industry, heavy transport and synthetic fuels.
E-mobility: turnkey charging solution for customers transitioning to E-mobility. Through its acquisition of stakes in E-Flux, VARO is already at the heart of the EV ecosystem. Their focus will be on further partnerships and acquisitions to create new businesses and enter new, less mature, markets.
Carbon removal: a fully integrated carbon removal offer. Leveraging its existing expertise in carbon removal from majority stake in SilviCarbon, VARO will invest in forestry projects to generate high-quality nature-based carbon removal over next 5-10 years, optimized through advisory and trading.
This twin-engine strategy reflects VARO’s momentum in renewables and decarbonization and plays to the company’s five core strengths:
- Ability to provide customers with a fully integrated portfolio of energy solutions that can be tailored to customer needs
- Optimization and exposure management which supports value chain integration and benefits from VARO’s position as a leading biofuels trader in Europe
- Entrepreneurial culture well suited to developing the next generation of energy solutions. VARO was the first company to introduce UERs in Germany and has stakes in a number of businesses like E-flux that support customer integration
- Culture of operational excellence with safe operations and assets operating at 98% reliability
- Strategic infrastructure which can be deployed for current needs for energy security but which have flexibility for repurposing to meet the needs of energy transition.
Source: VARO Energy
