05 July 2022
Sustainability
05 July 2022
Sustainability
Commenting on the announcement Dev Sanyal, VARO CEO, said: “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 decarbonisation solutions from a single company.
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 like industrial heat and aviation. It will also reorient VARO into the higher growth low-carbon sector and generate significant EBITDA growth.”
Marcel van Poecke, VARO Chairman and Vice Chair of Carlyle International Energy Partners, said: “The need to take action to limit global warming is driving regulatory change and shifting consumer behaviour and it is clear that VARO has a key role to play in Europe’s energy transition and energy security. Dev has an unrivalled track record in building low carbon businesses and I know he and the leadership team are well placed to deliver on VARO’s ambitious new strategy.”
Russell Hardy, Vitol CEO, said: “When we established VARO 10 years ago, we wanted to create an agile business that could move quickly to capitalise on opportunities in the energy sector. The energy transition also offers huge opportunities. Our new strategy and VARO’s track record of growth and acquisitions means we are well placed to make the most of these opportunities and continue to scale the business.”
Twin engine strategy accelerates growth in Sustainable Energies
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 our customers. Our track record of consistent performance is a driver of value and an enabler for our ambition for Engine 2.
VARO has introduced the “Fit For Growth” programme in Engine 1 to support these aims. “Fit For Growth” will improve efficiency through the optimisation 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 decarbonised 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:
Leveraging VARO’s strengths
This twin-engine strategy reflects VARO’s momentum in renewables and decarbonisation and plays to the company’s five core strengths:
These strengths combined with the twin-engine strategy will change the role VARO plays for customers, shifting it from being a supplier to becoming the energy transition partner of choice. As well as continuing to serve existing customers the strategy will also enable VARO to better serve wholesalers and retailers, food retailers, as well as those in hard to abate sectors such as industrial heat and aviation by providing a wider range of energy solutions.
Strategy built on strong financial foundations
Twin-engine strategy is underpinned by a robust financial framework, driven by high levels of cash generation, a strong balance sheet and a disciplined approach to capital allocation.
Leading Net Zero targets
Today VARO also sets out ambitious and sector-leading new targets for the reduction and elimination of CO2 emissions.