Valero Energy (VLO) Investor presentation summary

Crude oil characteristics and market dynamics

• Crude oils are classified by density, sulfur content, and acidity, impacting processing complexity and pricing.

• Most global reserves are sour crude oils, while WTI and Brent serve as primary light sweet benchmarks.

• Heavy, sour, high-acid crudes are harder to process but trade at a discount to light, sweet crudes.

• U.S. refinery production yields a mix of gasoline, distillates, and fuel oil, with light sweet crudes being most expensive.

• Crude oil discounts relative to ICE Brent vary by type, with heavy sour crudes trading at the largest discounts.

Refining processes and optimization

• Refineries use distillation, cracking, combination, and treating processes to upgrade crude oil into higher-value products.

• Low-complexity refineries process sweet crudes, while high-complexity refineries handle heavier, sour crudes for higher yields.

• Fluid catalytic cracking and hydrocracking convert low-value feedstocks into high-value gasoline, jet, and diesel.

• Linear programming models optimize feedstock selection, product output, and operating parameters for maximum profit.

• Operating costs, hardware constraints, and market demand are key variables in refinery optimization.

Renewable diesel and low-carbon fuel trends

• Global low-carbon fuel policies are driving demand growth for renewable diesel, with ambitious GHG reduction targets in major markets.

• Renewable diesel is produced from used cooking oil, animal fats, and inedible corn oil, offering up to 80% lifecycle GHG reduction.

• Renewable diesel can be used in existing vehicles and infrastructure without blending limits if properly labeled.

• Feedstock choice impacts carbon intensity and credit value, with used cooking oil providing higher LCFS credits than soybean oil.

• SAF (Sustainable Aviation Fuel) mandates are expanding globally, with increasing blend requirements through 2050.