Preem to invest in renewable fuel production at Lysekil Refinery
Preem's Board of Directors has approved an investment of approximately SEK5.5 billion (USD527 million) to repurpose its existing refinery in Lysekil, Sweden. This investment marks a pivotal moment in Preem's journey towards sustainable energy, as the company shifts from fossil fuel production to renewable fuels for both road and air transport.
Preem is the largest fuel company in Sweden, with a comprehensive network of refineries and service stations. Preem operates two refineries in Sweden – one in Lysekil and the other in Gothenburg. These refineries are among the most modern and environmentally efficient in Europe with a total refining capacity of more than 18 million cubic metres of crude oil per year.
The investment positions Preem as the largest producer of renewable aviation fuel in Northern Europe and one of the top producers of renewable fuels for road transportation. The reconstruction of the Lysekil facilities is scheduled to begin in 2024, with completion expected in 2027. This project will increase Preem's renewable production capacity by an additional 1.2 million cubic metres, a significant rise from the current capacity of about 530,000 cubic metres per year.
"We are thrilled to commit to one of Sweden's most substantial climate investments. The growing demand for sustainable aviation fuels, driven by both increased awareness and EU regulations, positions Sweden as a key player in Europe's sustainable aviation fuel production," said Magnus Heimburg, CEO of Preem.
The investment involves the reconstruction of the IsoCracker plant (ICR) at the Lysekil refinery, which currently produces diesel fuel. Post-reconstruction, the plant will focus on producing sustainable aviation fuel (SAF) and renewable diesel (HVO).
"With this investment, Preem takes another crucial step in transitioning from fossil to renewable production," Heimburg said
This investment is part of a series of large-scale projects expanding Preem's total renewable production capacity to approximately 2.5 million cubic metres annually. The first project, the Synsat project, is ongoing and expected to complete in 2024, adding about 1 million cubic metres of renewable production capacity.
"By repurposing existing facilities, we are leveraging the operations and infrastructure already built at and around the refinery. This is the most sustainable strategy for our company to contribute both economically and environmentally to the transition."
The investment will enhance the competitiveness of Preem's Lysekil refinery, aligning it with future market conditions and demand. The reconstruction is expected to positively impact the local business community in Lysekil, bringing a significant number of contractors to the area.
Preem aims to finance the investment through a combination of own and external capital. The environmental permit process is ongoing, with the Land and Environment Court expected to decide on the matter in late spring 2024.