Track Record

Our ability to predict market trends has led us to make investment choices in advance of many of our rivals, thus giving us a competitive edge in recent years and enabling us to benefit fully from a favourable market situation. We are referring mainly to the construction of the second mild hydrocracker and the gasification plant (IGCC) in the early 2000s, but also to the upgrades made to some key plants in the past two years which have enabled us to substantially increase our conversion capacity by reducing the production of fuel oil in favour of higher value-added products such as gasoil and gasoline.

The path of solid economic and industrial growth started in the previous years allowed Saras Group to record strong results also in terms of environmental sustainability, through the achievement of EMAS registration (Eco Management Audit Scheme), a voluntary scheme intended to promote continuous improvement in the environmental efficiency of industrial activities and the Environmental Integrated Authorization (AIA) which proves Saras commitment to minimize its environmental impact.

Thanks to the validity of our strategic choices Saras refining margins recorded a continuous improvement also in 2008 and, even more so, in the progressive widening of our premium versus the EMC benchmark margin which, has a stable growth pattern over the years.

The graph below shows a comparison between Saras refining margin after variable costs, and the corresponding margin calculated by EMC (Energy Market Consultants), which represents the performance of a middle complexity refinery located in the Mediterranean sea, and it is used by Saras as a benchmark.

Refinery margins: (comparable Refining EBITDA + Fixed Costs) / Refinery Crude Runs in the period
IGCC margin: (Power Gen. EBITDA + Fixed Costs) / Refinery Crude Runs in the period
EMC benchmark: margin calculated by EMC (Energy Market Consultants) based on a crude slate made of 50% Urals and 50% Brent

Looking to the technological upgrades introduced in 2008, we completed the construction of a gasoline desulphurization unit, which allows our Sarroch refinery to achieve the new EU specification of 10 ppm sulphur in the commercial gasoline, as per 1st January 2009. Moreover, during 2008, we completed also the construction of a tail gas treatment/sulphur recovery plant, which brings Saras among the best in class European refineries in terms of sulphur emissions.

Moreover in 2008 refinery runs achieved record highs at 15.5 ml tons (equivalent to 310.000 barrels per day).

However 2009 is expected to be a difficult year, due to the global economic crisis and the subsequent reduction in the consumption of oil products.

The market will penalise inefficient refineries, with lower complexity, forcing them to reduce runs. This will bring to a new equilibrium between supply and demand.

Saras is capable to resist to this crisis thanks to the defensive characteristics of its business model and the gearing towards the production of high yields in middle distillates, that will allow our Group to take full benefit of the economic recovery which will follow after the current crisis.

Last Update: 09/09/2009