Italian refiner Saras today said buoyant diesel crack spreads are likely throughout the fourth quarter, and warned of shortages in Europe.
Saras chief executive Dario Scaffardi said a prospective EU ban on Russian oil products imports slated for February means the coming months will "be challenging in diesel supply… but rewarding for a dependable supplier like Saras."
The company operates one refinery, the 300,000 b/d Sarroch, on the island of Sardinia.
Speaking at the company's third quarter results presentation, Scaffardi said Saras is already selling diesel for 2023, to "niche players that are absolutely desperate." Saras is selling diesel for next year on term contacts, often with a premium to the regional diesel benchmark.
"This used to be a relatively small amount of money in absolute terms," said Scaffardi. "Now its a very significant amount. The premium used to be plus two [US dollars], now it is plus 40."
Scaffardi expects Europe to be unable to meet demand for diesel.
"From the point of view of a producer of diesel this is a good thing," he said. "There will definitely be a shortage, which the alternative producers in the Middle East will not be able to fill.
"Probably there will be about 500,000 b/d of sales from China, but that will not be enough to overcome the shortage," Scaffardi said.
On the crude side, Saras said its relationship with shareholder Trafigura, which now has a 5pc stake, has allowed this year for the arrival of US crude to Sarroch for the first time, just as traditional feedstock grades such as Azeri Light and BTC Blend rose sharply in price.
"Trafigura has been able to show us a lot of US crudes we have difficulty in accessing as we do not have a US office," Scaffardi said. "Crude that has been less hysterical, compared with the Azeris." The two firms also co-operated on selling gasoline to US and south American buyers, "splitting the profits."
Saras said it expects a run rate of around 260,000-265,000 b/d for the full year, slightly up from its previous estimates. The company said it ran 260,000 b/d of crude in the first three quarters of the year at an average gravity of 32.9°API, almost identical to the Argus tracking assessment of the unit.
Saras made a profit of €54.7mn in the third quarter, up from a loss of €35.4mn in the same period in 2021.
Scaffardi today said he will retire. Saras' chief financial officer Franco Balsamo will also stand down. Neither gave a date for that.
