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Sustainable Aviation Fuel

Preem invests in refinery transition to become a leading European SAF player

Preem invests in refinery transition to become a leading European SAF player
Preem will invest approximately SEK 5.5 billion (≈ EUR 486.47 million) to repurpose the existing refinery in Lysekil, Sweden (photo courtesy Preem).

In Sweden, oil refiner and renewable fuel major Preem AB has announced that its Board of Directors has decided to invest approximately SEK 5.5 billion (≈ EUR 486.47 million) to repurpose the existing refinery in Lysekil.

The investment represents an important milestone on Preem’s transition journey, as the company is phasing out fossil production in favour of renewable fuels for road and air transport.

The investment enables Preem to become the largest producer of renewable aviation fuel in Northern Europe, and one of the largest producers of renewable fuels for road transportation.

The reconstruction of the facilities will begin in 2024 and is planned to be completed in 2027, and is expected to provide Preem with an additional 1.2 million m3 of renewable production capacity.

This can be compared to the current total capacity of about 530,000 m3 per year. At the same time, Preem is reducing its fossil fuel production capacity by the corresponding amount.

In total, the investment enables a reduction in annual fossil emissions at the user level by 2-3 million tonnes of carbon dioxide equivalent (CO2eq), and 200,000 tonnes of CO2eq locally at the refinery in Lysekil.

We are thrilled that Preem has committed to one of the most substantial climate investments in Sweden. The demand for sustainable aviation fuels is rapidly increasing, and we are already in discussions with several major airlines. Both increased awareness and EU regulations drive the market. Through this investment, we are also positioning Sweden as one of the most important producers of sustainable aviation fuels in Europe, said Magnus Heimburg, CEO of Preem.

Renewable diesel and SAF

The investment decision involves Preem’s reconstruction of the so-called IsoCracker plant (ICR) at the refinery in Lysekil.

Currently used for diesel production, following the reconstruction, the plant will shift its focus to producing sustainable aviation fuel (SAF) and renewable diesel (HVO).

With this investment, Preem takes another crucial step in the transition from fossil to renewable production, Magnus Heimburg said.

Magnus Heimburg, CEO, Preem (photo courtesy Preem).

The investment is the second in a series of large-scale projects that expand Preem’s total renewable production capacity to approximately 2.5 million m3 annually.

The first, the Synsat project, is ongoing and is expected to be completed in 2024, with a renewable production capacity of approximately 1 million m3.

In total, the two investments amount to approximately SEK 10 billion (≈ EUR 884.14 million).

The projects serve as the foundation for Preem’s long-term production target of about 5 million m3 of renewable fuels and the establishment of a climate-neutral value chain by 2035.

The investment enhances the competitiveness of Preem’s refinery in Lysekil, aligning it with future market conditions and demand.

By repurposing existing facilities, we are leveraging the operations and infrastructure already built at and around the refinery. This is by far the most sustainable strategy for our company to contribute both economically and environmentally to the transition, said Magnus Heimburg.

Throughout the reconstruction, a significant number of contractors are expected to come to Lysekil, positively impacting the local business community during the construction period.

Preem aims to execute the investment amounting to approximately SEK 5.5 billion (≈ EUR 486.47 million) by leveraging a combination of own and external capital.

The environmental permit process is ongoing, and the Land and Environment Court is expected to decide on the matter in the late spring of 2024.

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