European refiner Varo Energy has agreed to buy Preem AB, in a deal that will make it the region’s second-largest producer of renewable fuels.
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Published Mar 31, 2025 • 2 minute read
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(Bloomberg) — European refiner Varo Energy has agreed to buy Preem AB, in a deal that will make it the region’s second-largest producer of renewable fuels.
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Varo, backed by trading giant Vitol Group and private equity firm Carlyle Group Inc., will acquire Preem through the purchase of 100% of its parent Corral Petroleum Holdings AB. The transaction also boosts Varo’s conventional oil-refining capacity to about 530,000 barrels a day.
“The acquisition of Preem is transformational for Varo,” Chief Executive Officer Dev Sanyal said in a statement. “We will become Europe’s second-largest renewable fuel producer with an extensive distribution and storage network across major European markets.”
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The deal to buy the assets is part of a growing shift towards co-processing among fuel makers — where a conventional oil refinery undergoes an upgrade to allow it to partly use greener feedstocks such as vegetable oil. OMV AG has such a plant at its Vienna refinery, while TotalEnergies SE is looking at the technology.
Preem, whose operations are mainly focused on Scandinavia, has spent almost $1 billion in renewable fuels output and decarbonization initiatives since 2010. Its investment includes a major co-processing initiative at the Lysekil refinery, which has experienced delays recently.
With the inclusion of that upgraded complex, which will be able to run on as much as 40% renewable feedstock, Varo will have total renewable fuel production capacity of 1.3 million tons annually. On a call Monday, Varo’s Sanyal didn’t say when when the complex might reach that target.
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Sanyal also declined to give an update on the timing of a joint venture in Rotterdam with Gunvor Group, which is scheduled to start operating next year.
Varo’s decision to boost its renewables capacity coincides with increasing uncertainty in the business of making fuels from vegetable oils and used cooking oil. Shell Plc has put plans to make sustainable aviation fuel on hold and industry pioneer Neste Oyj is delaying its expansion plans.
Varo, two-thirds owned by Carlyle and one-third by Vitol, didn’t disclose the value of the all-cash transaction in a statement on Monday.
(Updates with details throughout.)
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