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Preem to retract 2016 Environmental Permit Application for Lysekil refinery

Sweden's largest oil refiner and transportation fuels producer Preem AB has announced that in the light of "new economic circumstances", it will cancel its proposed Residue Oil Conversion Complex (ROCC) project at its Lysekil refinery. As a result, the 2016 Environmental Permit Application at Lysekil Refinery will be withdrawn in favour of a re-prioritization centered around renewable product production.

Sweden’s largest oil refiner and transportation fuels producer Preem AB has announced that in the light of “new economic circumstances”, it will cancel its proposed Residue Oil Conversion Complex (ROCC) project at its Lysekil refinery. As a result, the 2016 Environmental Permit Application at Lysekil Refinery will be withdrawn in favour of a re-prioritization centered around renewable product production (photo courtesy Preem).

According to a statement, the Residue Oil Conversion Complex (ROCC) project, a significant part of the 2016 permit application, was an innovative but technically difficult and costly project designed to reduce the production of sulphur-rich heavy fuel oil (HFO) in favour of low-sulphur fuel products such as diesel and gasoline.

As a result of the coronavirus (COVID-19) pandemic’s effects on the energy sector globally, the economic logic of investment in this project no longer stands. The Board’s decision to cancel the project also means that the application, from 2016, for a new environmental permit for the Lysekil refinery will be withdrawn.

The closure of ROCC is a necessary commercial decision based on an assessment of profitability and technical feasibility. This decision also makes the 2016 permit application redundant, said Magnus Heimburg, the newly appointed CEO of Preem, who took a leading role in the strategic re-prioritization of the company’s efforts.

Ramp up renewable fuels production

The re-prioritization now allows funds to be concentrated on projects which enable increased renewable production. These are also the projects that will most effectively secure jobs and regional development.

Preem is Sweden’s largest producer of renewable transport fuels. Preem’s highest priority now is to speed up the programme aimed at producing renewable fuels at the Lysekil refinery. During the fall, a new application will be submitted to enable large-scale production of renewable fuels.

Preem also prioritizes to ramp up the production of renewable fuels at the refinery in Gothenburg. Sweden’s largest production site for renewable diesel and sustainable aviation fuel (SAF) is currently planned at the refinery. The environmental permit process for this unit has already begun and is being processed in the Land and Environmental Court.

Re-prioritization is an important step in accelerating the transition at both of our refineries from fossil fuel production to renewables. It is a positive step in our commitment to the Green Agenda, remarked Magnus Heimburg.

The economic recession and declining fossil fuel demand have put pressure on the global refining industry, including Preem. At the same time, the government has decided on a more ambitious blending mandate in Sweden including aviation and has announced a willingness to support investments in domestic production of renewable fuels which has improved the investment climate.

Focus on renewable fuels is the cornerstone of Preem’s overall and long-term business strategy. In a situation where tough decisions have to be made, it is crucial for Preem to allocate resources to those projects that will accelerate our renewable production fastest and most cost-effectively, and I look forward to leading this major and important transition, Magnus Heimburg concluded.

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