Saras

Saras states a target to reduce the scope 1 and 2 emissions intensity of the crude and complementary feedstock it processes by 2% by 2020, compared to the average emissions in the last three years (i.e. 2017-2019 levels). Framing the target this way makes the base year unclear and limits tracking of the company’s progress over time. Next to clearly specifying a base year for its target, Saras should set longer-term targets as well as intermediary targets to incentivise near-term action for its long-term goals. It should also include its scope 3 emissions in its emissions reduction targets, given that they represent close to 80% of the company’s overall emissions.

In 2019, Saras spent 7.7% of its total capital expenditure (CapEx) on wind power projects, and it intends to invest a similar share of its overall CapEx from 2020 to 2023 on wind power. Although this is a step in the right direction, it remains a small proportion of Saras’ total spending and is still far behind the sectoral expectation, which indicates that oil and gas companies should invest 77% of their CapEx in low-carbon projects to align with a 1.5°C scenario. Saras can improve its performance on material investment by ramping up its current CapEx share allocated to low-carbon and mitigation technologies and beginning to invest in carbon removal technologies.

The share of renewable electricity in the company’s sold product portfolio has seen a marginal increase from 0.13% to 0.16% between 2014 and 2019. However, this share is still negligible in comparison with the share of petroleum products sold from Saras’ midstream operations, which has not changed. This indicates that Saras’ scope 1, 2 and 3 emissions intensity has remained stable between 2014 and 2019, leading to a significant divergence from the company’s 1.5°C pathway, which requires an annual scope 1, 2 and 3 emissions reduction of around 4% until 2024.

In 2019, Saras installed nine additional turbines in the municipalities of Ulassai and Perdasdefogu in Sardinia. This will increase the capacity of its Ulassai wind farm from 96 megawatts (MW) to 126 MW. The company undertook works in 2020 to further improve the capacity of its renewable energy plants to generate approximately 300 gigawatt-hours (GWh)/year, and it plans to expand the capacity to 400 GW by 2023. Saras also plans to expand its biofuels capacity, through the co-processing of raw vegetable oils, to reach 50 kilotons (kton) of biofuels in 2020 compared to 10 kton in 2017-2019. In addition, Saras is analysing the possibility of producing green hydrogen for use as a raw material within its refineries.

While most of the companies in the benchmark assessment perform poorly on intangible investment due to a lack of disclosure, Saras scores poorly on this module for a different reason. The company reports not to have undertaken any significant research and development (R&D) activities in 2019. This calls into question whether the company is preparing itself for the inevitable changes needed to remain competitive in a low-carbon economy.

Saras plans to reach 400 MW of renewable capacity from wind and solar energy plants by 2023, compared to 220 MW in 2019. It also aims to reduce its scope 1 and 2 emissions intensity by 2% in 2020 compared to 2017-2019 levels, and to increase its biofuels production through the co-processing of vegetable oils by 50 kton/year in 2020 compared to 10 kton/year in 2017-2019.

Saras is planning to reduce emissions through energy efficiency measures at its plants and in its processes that will ensure higher performance. The company has also signed a memorandum of intent with Enel Green Power in February 2021 to develop a green hydrogen project in Sardinia.

In 2019, Saras invested 7% of its CapEx in wind power generation against only about 3% in 2018. Even though this is a step in the right direction, Saras is still investing close to 85% of its total CapEx in its refining operations with the aim of improving production capacity and optimising processes.

Between 2014 and 2019, Saras has seen increasing production volumes and no significant changes in its refining technologies or in its sold product portfolio. This means that Saras’ scope 1, 2 and 3 emissions intensity between this period is likely to have remained stable, leading to a further divergence from the company’s 1.5°C pathway.

Saras has started developing low-carbon business activities, such as wind power and biofuel generation, but has not yet implemented them at a sufficient scale to be able to transition away from fossil fuels. The company is still mainly reliant on refining petroleum products and producing electricity from gas.