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Swedish fuel company Preem is planning to invest around US$527.5M in repurposing its refinery in Lysekil to produce hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF), PR Newswire wrote.

The work would involve the reconstruction of the refinery’s IsoCracker plant (ICR), which was currently used for diesel production, the 27 November report said.

In addition to providing Preem with an additional 1.2M m³ of renewable production capacity on top of its current capacity of 530,000 m³/year, the company would also be reducing its fossil fuel production by the same amount, the 27 November report said.

Scheduled to begin next year, construction of the new facility was due to be completed in 2027.

“Demand for sustainable aviation fuels is rapidly increasing, and we are already in discussions with several major airlines,” Preem CEO Magnus Heimburg was quoted as saying.

The investment is the second in a series of large-scale projects set to expand Preem’s total renewable production capacity to approximately 2.5M m³/year, the report said.

The previously announced Synsat project is ongoing and expected to be completed next year, with a renewable production capacity of approximately 1M m³/year, according to the report.

“By repurposing existing facilities, we are leveraging the operations and infrastructure already built at and around the refinery,” Heimburg added.

Preem has a long-term production target of about 5M m³/year of renewable fuels and a climate-neutral value chain by 2035.

Preem has two refineries in Sweden – Preemraff Göteborg in Gothenburg and Preemraff Lysekil near Lysekil – with a total refining capacity of more than 18M m3/year.

The Stockholm-based company exports its products to the international market, mainly northwestern Europe.