Sweden's Preem scraps residue oil project at Lysekil Refinery in favor of renewables

The board of Sweden's largest fuel company, Preem, announced Sept. 28 that, "in the light of new economic circumstances," the company is canceling its Residue Oil Conversion Complex at the Lysekil Refinery and withdrawing its 2016 environmental permit application "in favor of a reprioritization centered around renewable production."

Heimburg

The 2016 environmental permit application centered much on the ROCC project, which "was an innovative but technically difficult and costly project designed to reduce the production of sulfur-rich heavy fuel oil in favor of low-sulfur products such as diesel and gasoline," the company stated. "As a result of the COVID-19 crisis' effects on the energy sector globally, the economic logic of investment in this project no longer stands."

Magnus Heimburg, Preem's new CEO who played a big part in the reprioritization efforts, said, "The closure of ROCC is a necessary commercial decision based on an assessment of profitability and technical feasibility."

The company further noted that the canceling of the ROCC project now allows funds to be concentrated on expanded production of renewables. "These are also the projects that will most effectively secure jobs and regional development," the company stated.

Currently, Preem's no. 1 focus is to accelerate its program of producing renewable fuels at the Lysekil refinery.

"During the fall, a new application will be submitted to enable large-scale production of renewable fuels," the company stated. "Preem is also giving priority to ramping up the production of renewable fuels at the refinery in Gothenburg. Sweden's largest production site for renewable diesel and renewable aviation fuel 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."

Heimburg added, “The reprioritization 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.'"

The "new economic circumstances" causing Preem to scrap its ROCC project in favor of renewables is, quite evidently, the economic recession and drop in fuel demand resulting from the coronavirus pandemic. "At the same time," the company stated, "the government has decided on a more ambitious blending mandate in Sweden and has announced a willingness to support investments in domestic production of renewable fuels, which have seen an improvement in the climate for investment."

Heimburg further explained that 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," Heimburg said. "I look forward to leading this major and important transition."