Galp SGPS, S.A. Portugal's largest energy company and Japan-headed Mitsui & Co. Ltd – a global trading and investment company with a diversified business portfolio have announced that they have agreed to go ahead and invest in a renewable diesel (HVO) and sustainable aviation fuel (SAF) production business that will be operated by Galp.
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As the only oil refiner in Portugal, Galp has been operating the Sines Refinery since 1978. The Lisbon-based company has been stepping up its investment in the energy transition field and pursuing fuel conversion initiatives.
This project will involve the construction of a 270,000 tonnes per annum advanced biofuels unit within its Sines Refinery, which is capable of being switched between HVO and SAF production modes.
The partnership brings together the vast industrial expertise of both companies, combining Galp’s market and operational synergies with Mitsui’s global presence, also supporting the procurement of the plant’s feedstock needs.
Joint venture
A joint venture company in which Galp will own 75 percent of its shares and Mitsui 25 percent, will be established once necessary authorities’ clearances are obtained.
To be produced from waste residues feedstock such as used cooking oil (UCO) and animal fats, the first HVO production is expected at the end of 2025, while commercial operations are expected to begin in 2026.
It is anticipated that the facilities will also be used to produce SAF, demand for which is expected to increase over the long period of time.
In addition to its investment in the production business, Mitsui will also take responsibility for the overall value chain, including the procurement of feedstocks, primarily from Asia, and the sales of the products.
The plant will use Axens’ technology and the consortium Technip Energies / Technoedif Engenharia has been selected as the main Engineering, Procurement, and Construction Management (EPCM) provider.
The total investments in the new advanced biofuels plant are estimated to be around EU 400 million.
Green hydrogen unit
Galp will also invest in the construction of a 100 MW electrolysis plant, to produce up to 15,000 tonnes per annum of renewable hydrogen.
This large-scale project will allow the replacement of approximately 20 percent of the existing grey hydrogen consumption of the Sines refinery and may lead to greenhouse gas (GHG) emissions reduction of up to 110,000 tonnes per annum of Scope 1 and Scope 2, carbon dioxide equivalents (CO2eq).
The electrolyzers will be supplied by renewable power, originating from long-term supply agreements, also leveraging on the Galp renewable power asset base.
The unit will use industrial recycled water, with expected annual consumption representing less than 3 percent of the average annual needs of the refinery.
Plug Power was awarded the order for the 100 MW proton exchange membrane (PEM) electrolyzers, whilst Technip Energies will be the main EPCM provider.
The total investments for this green hydrogen project are estimated at around EUR 250 million with start-up slated for 2025.
These projects are some of the largest of their kind, representing an overall investment of around EUR 650 million. This is a significant contribution to the launch of the new industries of the future in Portugal, placing Galp at the forefront of the development of low-carbon solutions necessary for the energy transition. The decisions are based on the expectation that the fiscal and regulatory developments in Portugal will not hinder the success of such large-scale investments, said Paula Amorim, Chairwoman of Galp.
