Italian refiner Saras wary of EU fuels plan

Italian refiner Saras said today that the European Commission is unwilling to take representation from the sector over its 'Fit for 55' plan to decarbonise European fuels supply.

The firm's chief executive Dario Scaffardi said "the implications are huge" for the European refining industry, which may have to shoulder costs of emissions related to fuels production.

The possibility of refiners outside the EU not having to pay the cost of emissions is "an ungappable difference," he said today at Saras' second quarter results presentation. "The Saudi refinery, the Turkish refinery does not have to pay this, so it would be a significant disadvantage. We are asking that the rules are the same for everybody. They are not."

A proposed "tax on imports might be a good idea, I do not know," Scaffardi said. "There are very different ways of looking at this, if you are an export refinery or not. We will be extremely vocal in addressing our issues.

"The commission has rejected 99pc of the suggestions," he said. "This is extremely worrying."

Saras operates the 300,000 b/d Sarroch refinery on the island of Sardinia.

Market disruption caused by the Covid-19 pandemic is still weighing on middle distillate margins, said Scaffardi. But gasoline crack spreads are widening as demand rises.

"This testifies how the market is upside down," said Scaffardi. "For years people have been investing to produce middle distillates as gasoline was supposed to be dead. The picture has changed entirely. The majority of traders think the gasoline market will be under supplied. Also the new refineries built in the Middle East are middle distillate refineries," he said.

Saras said it processed 265,000 b/d of crude in the first half of the year, slightly above Argus' estimate of seaborne imports at 255,000 b/d. The firm expects runs at between 255,000-270,000 b/d in the third quarter and in a 260,000-270,000 b/d range for the full year. The firm had been hoping for a resumption in crude supplies from Iran, but Scaffardi noted a lack progress in talks that could enable that.

"We were sort of hoping Iran would be able to quickly come back onstream. It is negative for us as we hoped an important supplier would be back," he said.

Saras made a profit of €24mn ($28mn) in the second quarter of this year, compared with a loss of €67mn in the same period in 2020. When the effects of inventory valuations are removed Saras made a €24mn loss, compared with a €41mn loss a year earlier.

By Adam Porter