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Sweden’s largest refiner prepares for 2020 with upgrades

17 Apr 2018

Sweden’s largest refiner Preem AB is making plans to prepare itself for 2020, when marine fuel will be limited to 0.50% sulphur content.

“We expect that when the new IMO sulphur specification for bunker fuel oil comes into effect January 1, 2020, the price for heavy fuel oil (HFO) will drop due to reduced demand, and the price for gasoil will increase due to increased demand,” it forecasts.

“What the net effect for the refining industry will be remains to be seen, but it is anticipated that especially ‘landlocked’ and smaller/simpler refineries with relatively high fuel oil production will struggle the most.”

The company currently runs its refineries in Lysekil and Gothenburg as a single 340,000 barrels per-day refining system where it has high upgrading (72% gasoline/diesel versus Europe average of 59%), and ample desulphurisation capacity.

“We believe Preem’s refining system is thus in a significantly better position than the average European refiner. Lysekil typically runs a high-sulphur (HS) crudeslate, while Gothenburg runs low-sulphur (LS),” it says.

“This pattern will most likely continue in general following the implementation of the IMO regulations, but with operations continuously optimized to reflect HS/LS crude differentials and the HFO versus diesel cracks spread.”

Moving forward, Preem is planning to start up a new Vacuum Distillation Unit in Lysekil in Q1 2019; the unit will produce Vacuum Gasoil from HFO and reduce leftover HFO by less than 20% in the product slate once operations start.

There is also a plan to start a new Hydrogen Production Unit in Gothenburg in Q1 2019; the unit will significantly the desulphurisation capacity of Preem refineries as well as further increase the economically attractive renewable transportation fuels production capacity in the Gothenburg refinery.

“We believe that the Preem refining system is very efficient, and focused on flexibility and continuous optimisation,” it says.

“We feel that we are thus well prepared to handle the new challenges — and opportunities — that will occur on the crude and products side with the implementation of the new IMO regulations.”

Published: 17 April, 2018

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