Varo Energy in Talks to Acquire Preem's Refineries

By Robert Harvey, Marek Strzelecki and Anna Hirtenstein

LONDON (Reuters) – European energy firm Varo Energy is in talks to acquire Preem's two Swedish refineries, betting on growing demand for low-carbon biofuels, according to four industry sources.

Varo has been expanding rapidly in Europe's refining and fuel trading markets in recent years. The company is backed by private equity giant Carlyle Group (NASDAQ:CG) and the world's largest trading house, Vitol, which has seen record profits recently.

The refineries in question are located in Gothenburg and Lysekil, which Varo could acquire from Corral Petroleum Holdings, the parent company of Preem, the sources indicated.

A spokesperson for Varo declined to comment, and Preem also refrained from making any comments.

While the value of the potential deal remains unclear, the downturn in Europe's refining margins has complicated transactions, according to one source.

Preem's adjusted earnings fell 15% to $1 billion in the first nine months of 2024, and declined a staggering 94%, dropping to $28 million in the third quarter alone.

Varo already holds stakes in refineries in Germany and Switzerland and is actively expanding in sustainable fuel and trading. The company plans to invest around $3.5 billion between 2022 and 2026, with two-thirds of that committed to sustainable energies.

Preem aims to boost its production of renewable fuels to 5 million cubic meters by 2035 and operates a network of over 500 petrol stations in Sweden.

($1 = 10.8499 Swedish crowns)