Preem scraps plans for low sulphur project in favour of renewables

The Swedish refinery has announced that, ‘in the light of new economic circumstances’, it is to cancel its Residue Oil Conversion Complex (ROCC) project ‘in favour of a re-prioritisation centred around renewable production.’

The 2016 Environmental Permit Application at Lysekil Refinery will be also be withdrawn, the company confirmed.

A significant part of the 2016 permit application, the ROCC project, said Preem, was an ‘innovative but technically difficult and costly’ project designed to reduce the production of sulphur-rich heavy fuel oil in favour of low-sulphur products such as diesel and gasoline.

Citing the COVID-19 crisis’ effects on the energy sector globally, Preem says the economic logic of investment in this project no longer stands.

‘The closure of ROCC is a necessary commercial decision based on an assessment of profitability and technical feasibility,’ said Magnus Heimburg, the newly appointed CEO of Preem, who took a leading role in the strategic re-prioritisation of the company’s efforts.

The re-prioritisation will allow funds to be concentrated on projects which enable increased renewable production, and which will most effectively secure jobs and regional development, Preem said.

Preem, Sweden’s largest producer of renewable transport fuels, says its highest priority now is to speed up the programme aimed at producing renewable fuels at the Lysekil refinery. The company revealed that a new application will be submitted in autumn to enable large-scale production of renewable fuels.

Preem is also prioritising a ramp up in the production of renewable fuels at its Gothenburg refinery, including renewable diesel and renewable aviation. The environmental permit process for this unit has already begun and is being processed in the Land and Environmental Court.

‘The re-prioritisation is an important step in accelerating the transition at both of our refineries from fossil fuel production to renewables,’ added Heimburg. ‘It is a positive step in our commitment to the Green Agenda.’

Preem highlighted the Swedish government’s ‘more ambitious blending mandate’ and its 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,’ said Heimburg. ‘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 be leading of this major and important transition.’

Rhys Berry

Rhys Berry