Preem invests an additional USD$528 million for Lysekil refinery transition in Sweden

Preem's Lysekil refinery in Sweden (Photo: Preem)

The board of directors at Preem, Sweden’s largest fuel company, has decided to invest approximately 5.5 billion Swedish krona (USD$528 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 favor 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.

The project is expected to provide Preem with an additional 1.2 million cubic meters (317 million gallons) of renewable production capacity.

This can be compared to the current total capacity of about 530,000 cubic meters (140 million gallons) 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 million to 3 million tons of CO2e, and 200,000 tons of CO2e locally at the refinery in Lysekil.

“We are thrilled that Preem has committed to one of the most substantial climate investments in Sweden,” said CEO Magnus Heimburg. “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.”

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, also known as hydrotreated vegetable oil (HVO).

“With this investment, Preem takes another crucial step in the transition from fossil to renewable production,” Heimburg added.

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 cubic meters (660 million gallons) 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 cubic meters (264 million gallons).

In total, the two investments amount to approximately 10 billion Swedish krona (USD$960 million).

The projects serve as the foundation for Preem’s long-term production target of about 5 million cubic meters (1.32 billion gallons) of renewable fuels and the establishment of a climate-neutral value chain by 2035.

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

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

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 5.5 billion Swedish krona (USD$528 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 late spring.