The Traditional Hydrogen Dilemma in Industrial Decarbonization

To appreciate the impact of clean hydrogen, one must first understand the historical role of hydrogen within a refinery. Hydrogen is the circulatory system of the refining process. It is used extensively in hydrotreating to remove impurities like sulfur from crude oil and in hydrocracking to break down heavy molecular chains into high-value products like gasoline, diesel, and jet fuel. Historically, this hydrogen has been produced through Steam Methane Reforming (SMR), a process that relies on natural gas as a feedstock. While SMR is cost-effective and highly efficient, it is also carbon-intensive, releasing significant amounts of carbon dioxide into the atmosphere. This grey hydrogen is currently responsible for a massive portion of a refinery’s direct carbon footprint.

The challenge for industrial decarbonization is that refineries cannot simply stop using hydrogen; in fact, as crude oil quality declines and environmental regulations for fuels tighten, the demand for hydrogen actually increases. This creates a paradox where the industry needs more of a resource that is a major contributor to its emissions profile. This is where green hydrogen integration enters the narrative. By replacing grey hydrogen with hydrogen produced via the electrolysis of water using renewable energy, refineries can eliminate a substantial percentage of their Scope 1 and Scope 2 emissions without compromising their core output.

Technical Pathways for Green Hydrogen Integration

Integrating green hydrogen into existing refinery operations is far more complex than simply swapping one gas for another. It requires a sophisticated understanding of both chemistry and logistics. The primary technology at play is the electrolyzer, which uses electricity to split water into hydrogen and oxygen. For a refinery to successfully implement this, it must manage the scale and intermittency of renewable energy sources like wind and solar. Unlike a steady stream of natural gas, renewable energy fluctuates, meaning the hydrogen refinery of the future must incorporate significant storage solutions or be paired with massive, dedicated renewable energy parks to ensure a constant supply of pressurized hydrogen for sensitive refining units.

There are two primary types of electrolyzer technologies currently being evaluated for large-scale sustainable refining: Proton Exchange Membrane (PEM) and Alkaline electrolysis. PEM electrolyzers are often favored for their ability to respond quickly to the fluctuations of renewable power, making them ideal for direct integration with wind or solar farms. Alkaline electrolyzers, while more mature and generally less expensive at scale, typically require a more stable power input. Choosing between these technologies—or utilizing a hybrid approach—is a critical decision for engineers tasked with refinery decarbonization. The goal is to ensure that the hydrogen supply remains as reliable as the SMR units they are intended to replace or supplement.

Optimizing Refinery Operations for Low-Carbon Fuels

The drive for clean hydrogen is closely linked to the growing market for low-carbon fuels. As the aviation and maritime industries face increasing pressure to reduce their carbon footprints, the demand for Sustainable Aviation Fuel (SAF) and renewable diesel is skyrocketing. Producing these fuels requires significantly more hydrogen than traditional fossil-based fuels because bio-based feedstocks often have a high oxygen content that must be removed through hydrodeoxygenation. Green hydrogen integration provides the necessary chemical bridge to turn vegetable oils, waste fats, and cellulosic biomass into drop-in fuels that are compatible with existing engines.

Furthermore, the integration process allows refineries to diversify their product portfolios. A refinery that masters the production and use of green hydrogen can pivot from being a purely petroleum-based facility to a multi-energy hub. This transition is essential for the long-term viability of the industry. By producing low-carbon fuels, refineries can maintain their relevance in a world where electric vehicles are reducing the demand for traditional gasoline. The hydrogen itself can also become a product for sale, serving local transport fleets or being injected into natural gas grids, thereby deepening the facility’s role in the regional hydrogen economy.

Overcoming the Economic and Infrastructure Hurdles

While the environmental case for green hydrogen integration is undeniable, the economic hurdles remain significant. Currently, the cost of producing green hydrogen is substantially higher than that of grey hydrogen. This price disparity is driven by the capital expenditure required for high-capacity electrolyzers and the operational costs associated with securing a consistent supply of renewable electricity. However, the gap is narrowing. Economies of scale, advancements in electrolyzer manufacturing, and the falling cost of solar and wind power are all contributing to a downward trend in green hydrogen pricing.

Policy frameworks play an indispensable role in bridging this economic gap. In many regions, carbon pricing and subsidies for renewable energy projects are making refinery decarbonization a more attractive investment. Governments are recognizing that without the active participation of heavy industry, net-zero targets will remain out of reach. Tax credits, such as those seen in recent North American and European legislation, provide the financial cushion necessary for refineries to take the leap into large-scale green hydrogen integration. These incentives do not just offset costs; they de-risk the transition for stakeholders and encourage the long-term capital commitments required for such massive infrastructure projects.

Scaling Up for Global Impact

The scale of integration required is staggering. A mid-sized refinery might require hundreds of megawatts—or even gigawatts—of electrolyzer capacity to fully replace its SMR units. This scale necessitates a complete overhaul of on-site utilities. Beyond the electrolyzers, refineries must invest in water purification systems, as the electrolysis process requires high-purity water, and heat management systems to handle the thermal energy produced during the splitting of water molecules.

Integration also demands a rethink of inside the fence versus outside the fence operations. Some refineries are choosing to build and operate their own electrolyzer plants, while others are entering into over-the-fence agreements with third-party utility providers who deliver the hydrogen via pipeline. This latter model allows the refinery to focus on its core competency of fuel production while leveraging the expertise of specialized hydrogen producers. Regardless of the business model, the physical footprint of the refinery will expand, requiring new safety protocols and a workforce trained in the nuances of high-pressure hydrogen handling and renewable energy management.

Sustainable Refining and the Circular Economy

The shift toward sustainable refining goes beyond just emissions reduction; it is about embracing a circular economic model. For instance, the byproduct of electrolysis is pure oxygen. In a traditional setup, this might be vented into the atmosphere, but a truly integrated hydrogen refinery can find value in this stream. The oxygen can be used to enrich the air in fluid catalytic cracking units or used in wastewater treatment facilities, further improving the overall efficiency of the site.

Additionally, the captured carbon from existing processes, if combined with clean hydrogen, can be used to create synthetic fuels or e-fuels. This process, known as Power-to-X, represents the ultimate frontier of industrial decarbonization. It allows for a closed-loop system where carbon is reused rather than released, and the energy carrier is entirely carbon-neutral. While still in its infancy, the pilot projects currently underway at major global refineries are proving that this level of integration is technically feasible and holds the key to a future where liquid fuels are no longer synonymous with environmental degradation.

Navigating the Social and Regulatory Landscape

The transition to green hydrogen integration also carries significant social and regulatory implications. As refineries are often major employers in their local communities, the move toward greener technologies must be managed as a just transition. This involves reskilling workers and ensuring that the new hydrogen-based economy provides the same level of economic stability as the oil era. Regulators are also looking at the life-cycle analysis of hydrogen, ensuring that the electricity used is truly additional and not simply diverted from the existing grid, which could inadvertently increase overall emissions.

In Europe, the Renewable Energy Directive (RED II and III) has set strict criteria for what constitutes green hydrogen, forcing refineries to be meticulous in their sourcing and documentation. Similar standards are being developed globally, creating a standardized market for clean hydrogen. For refinery operators, staying ahead of these regulations is not just about compliance; it is about securing a competitive advantage in a market where consumers and corporate partners are increasingly demanding transparency regarding the carbon intensity of their fuel.

Synthesizing the Path Forward

The integration of green hydrogen into refining operations is not a singular event but a multi-decade journey of transformation. It begins with small-scale pilots that prove the reliability of electrolyzers within the high-stakes environment of a refinery. It then moves into larger demonstrations where green hydrogen is blended with grey hydrogen to gradually lower the carbon intensity of the final products. Finally, it culminates in the full-scale hydrogen refinery, an industrial facility that operates in harmony with the planet’s ecological limits.

As we look toward the middle of the century, the refineries that thrive will be those that viewed refinery decarbonization not as a burden but as a catalyst for innovation. The movement toward green hydrogen integration is essentially a commitment to the longevity of the industry. It ensures that the vital role refineries play in the global economy—providing the energy and materials necessary for society to function—can continue in a world that can no longer afford the cost of carbon. Oil & Gas Advancement notes that by embracing low-carbon fuels and the broader hydrogen economy, the refining sector is proving that even the most established industrial giants can evolve, paving the way for a cleaner, more resilient energy future.

Strengthening Regional Energy Ties

Maixent Raoul Ominga, the Managing Director of SNPC, led a delegation to the petroleum refinery facility in Lagos. He characterized the site as a vital asset for the continent and expressed a strong interest in establishing a long-term relationship.

“We have visited this remarkable refinery, which represents a major industrial achievement for Africa. The Republic of the Congo has refining capacity and we are keen to explore strategic cooperation that will help strengthen the supply of refined petroleum products while creating value for both organisations,” he said.

The dialogue between the two entities centered on several key pillars, including refining operations, energy security, and the sharing of technical knowledge. Ominga commended Dangote Group to prove the ability of African entities to finance and manage world-class industrial infrastructure. He further acknowledged the existing presence of the group in the Congolese cement sector, which has already contributed to local industrial capacity and improved access to essential construction materials.

Commitment to Continental Industrialization

Aliko Dangote, President and Chief Executive of Dangote Industries Limited, stated that the facility serves the broader continent, emphasizing a willingness to meet the specific energy needs of neighboring nations. The petroleum refinery is currently producing fuels that meet international quality standards, which helps in reducing the reliance on imported products from outside the region.

Future Expansion and Investment Goals

Devakumar Edwin, the Group Vice President for Oil and Gas, Dangote Industries Limited, detailed the long-term strategy to expand total refining capacity to 2.1 million barrels per day. This plan includes the current operations in Nigeria and a proposed facility in Kenya to serve East African markets. Furthermore, the organization intends to invest an additional $46 billion between 2026 and 2028 across its refining and fertilizer sectors to support industrial infrastructure development.

The engagement regarding refined product supply cooperation highlights a shared vision to improve energy security and promote self-sufficiency. By strengthening regional value chains and fostering regional energy cooperation, both organizations aim to facilitate increased trade and industrial growth through sustained African energy cooperation.

This transformative process, often termed chemical recycling, is creating a viable pathway towards a truly circular economy for plastics. It leverages the existing infrastructure and chemical expertise of refineries to integrate plastic waste conversion seamlessly into the production cycle, moving us decisively beyond the limitations of mechanical recycling and incineration. The implications for environmental sustainability, resource efficiency, and the economic landscape of the petrochemical industry are profound, marking a new chapter in industrial symbiosis and ecological responsibility.

The Imperative for a Circular Plastic Economy

For decades, the production and consumption of plastics have followed a linear ‘take-make-dispose’ model, fueled by readily available virgin fossil resources. While plastics offer unparalleled versatility and utility, this linear paradigm has led to an escalating waste crisis. Traditional mechanical recycling, while valuable, struggles with mixed, contaminated, or complex plastic streams, often resulting in downcycled products or a significant portion still ending up in landfills or incinerators. Incineration, while generating energy, releases carbon emissions and destroys the material value of the plastic.

The urgent need for innovative solutions to manage this ever-growing volume of plastic waste has driven the development of refinery recycling technology. This quest for solutions isn’t merely about waste disposal; it’s about preserving the embedded energy and molecular value within plastics, preventing the extraction of new fossil resources, and mitigating the environmental footprint associated with plastic production. The advent of advanced recycling units offers a powerful means to address these challenges, presenting a pathway for plastic waste conversion on an industrial scale that closes the loop on previously unrecyclable materials.

Demystifying Advanced Recycling Units (ARUs)

At its core, advanced recycling refers to a suite of technologies designed to break down plastic waste into its fundamental chemical components, or monomers, or into valuable petrochemical intermediates. Unlike mechanical recycling, which melts and reshapes plastics, these processes alter the chemical structure of the material. This capability is particularly crucial for handling mixed plastic waste, multi-layered plastics, and plastics with food residues or contaminants – streams that often overwhelm conventional recycling facilities.

The integration of advanced recycling units in refineries is a natural fit because refineries are already equipped with the infrastructure and expertise for complex chemical transformations. They routinely convert crude oil into a myriad of products, including the naphtha and other fractions that are the building blocks for virgin plastics. By incorporating ARUs, refineries can now convert difficult-to-recycle plastic waste directly into these same valuable hydrocarbon feedstocks, creating a powerful synergy.

Several key chemical recycling technologies underpin these ARUs:

Pyrolysis: Thermal Decomposition for Hydrocarbon Oils

Pyrolysis is perhaps the most widely recognized and rapidly commercializing form of chemical recycling within advanced recycling units in refineries. This process involves heating plastic waste in the absence of oxygen to high temperatures (typically 300-700°C), causing the long polymer chains to break down into smaller hydrocarbon molecules. The resulting products are primarily pyrolysis oil (or plastic oil), along with some gas and char. This pyrolysis oil is chemically very similar to crude oil fractions like naphtha or gas oil and can be directly fed into a refinery’s existing cracker or other processing units. This direct conversion of plastic waste to feedstock is a game-changer, allowing refineries to augment their traditional crude oil intake with recycled content.

Gasification: Synthesis Gas from Plastic Waste

Gasification transforms plastic waste into syngas (synthesis gas), a mixture primarily of carbon monoxide and hydrogen. This process typically occurs at even higher temperatures than pyrolysis and involves a controlled amount of oxygen or steam. Syngas is a versatile intermediate that can be used as a fuel, or further processed to produce a range of chemicals, including methanol, ammonia, or even new plastics, offering another avenue for waste-to-feedstock systems within a refinery complex.

Depolymerization: Reverting to Monomers

For certain types of plastics, particularly PET (polyethylene terephthalate) and polystyrene, depolymerization is a highly effective chemical recycling method. This process specifically breaks down the polymer chains back into their original monomer building blocks. These pure monomers can then be repolymerized into virgin-quality plastics, creating a truly closed loop. While often performed in specialized chemical plants, the resulting monomers could theoretically be used within refinery-linked petrochemical operations.

The Refinery’s Strategic Advantage: A Symbiotic Relationship

The decision to site advanced recycling units in refineries is not arbitrary; it represents a deeply strategic and symbiotic relationship. Refineries offer several compelling advantages that make them ideal hosts for these transformative technologies:

Integrated Infrastructure and Expertise

Refineries are vast complexes with established infrastructure for handling, processing, and upgrading hydrocarbon streams. They possess the necessary utilities, storage tanks, safety systems, and, crucially, a highly skilled workforce accustomed to managing complex chemical processes. Integrating an ARU into an existing refinery minimizes the need for entirely new greenfield facilities, reducing capital expenditure and accelerating deployment. The ability to integrate the generated feedstock recovery oils or gases directly into existing production lines without significant modifications is a monumental advantage.

Direct Feedstock Integration

One of the most significant benefits is the direct integration of the products from plastic waste conversion into refinery operations. The pyrolysis oils, for instance, can be co-fed alongside virgin naphtha or other fractions into steam crackers, fluid catalytic crackers (FCCs), or other units. This allows the refinery to produce certified circular polymers and fuels, blending recycled content seamlessly with conventional products. This capability is central to achieving circular economy in refining and validating the “mass balance” approach, where the proportion of recycled content is tracked throughout the production chain.

Economies of Scale and Operational Efficiency

Refineries operate on massive scales, benefiting from significant economies of scale. Integrating ARUs allows them to leverage these efficiencies, reducing the per-unit cost of processing plastic waste. Furthermore, the heat generated by some refinery processes can be utilized by the ARUs, improving overall energy efficiency and reducing operational costs.

Economic and Environmental Imperatives

The rise of advanced recycling units in refineries is driven by both compelling economic incentives and urgent environmental mandates.

Boosting Circular Economy Goals

The primary environmental driver is the establishment of a robust circular economy in refining for plastics. By converting plastic waste back into valuable feedstocks, ARUs reduce the reliance on virgin fossil resources for new plastic production. This significantly lowers the carbon footprint associated with plastics, as the energy-intensive process of extracting and refining crude oil is partially offset. Moreover, it diverts immense volumes of plastic from landfills and incinerators, mitigating land and air pollution. This closed-loop system is essential for corporations and nations striving to meet ambitious sustainability targets and achieve net-zero emissions.

Enhancing Refinery Value and Yields Growth

From an economic perspective, ARUs offer refineries new revenue streams and opportunities for diversified feedstock sourcing. As environmental regulations tighten and consumer demand for sustainable products grows, the ability to produce “circular” plastics or fuels adds significant market value. Refineries can command a premium for products derived from recycled content, strengthening their market position and fostering yields growth. Furthermore, a diversified feedstock supply, including plastic waste, can hedge against volatility in crude oil prices and enhance supply chain resilience. This proactive adaptation positions refineries not just as fuel and chemical producers, but as key players in the sustainable materials economy.

Refinery Sustainability and ESG Leadership

Embracing refinery sustainability through advanced recycling significantly enhances a company’s Environmental, Social, and Governance (ESG) profile. Investors and stakeholders are increasingly scrutinizing corporate environmental performance, and the deployment of ARUs demonstrates a tangible commitment to addressing plastic pollution and reducing environmental impact. This can lead to improved public perception, stronger brand reputation, and potentially better access to capital. By actively participating in plastic waste conversion, refineries move towards becoming leaders in sustainable manufacturing, aligning their operations with global ecological imperatives.

Navigating Challenges and Forging the Path Forward

While the promise of advanced recycling units in refineries is immense, their widespread adoption faces several challenges that the industry is actively addressing. Securing a consistent and high-quality supply of plastic waste remains a hurdle. Effective sorting and collection infrastructure are paramount to ensure the ARUs receive suitable feedstock. Furthermore, the economic viability of these processes, especially at scale, requires ongoing optimization and supportive policy frameworks. Regulatory clarity, particularly regarding the classification of pyrolysis oil as a recycled content input, is crucial for fostering investment and accelerating deployment.

Despite these challenges, the momentum behind advanced recycling is undeniable. Major petrochemical companies are investing heavily in new ARU facilities and strategic partnerships across the globe. Governments are increasingly recognizing the importance of chemical recycling in achieving circular economy goals, often providing incentives and establishing supportive regulatory environments. Innovations in reactor design, catalyst development, and pre-processing technologies are continuously improving the efficiency and economics of these processes.

Oil & Gas Advancement highlights that advanced recycling units in refineries are emerging as a beacon of hope in the battle against plastic pollution. By transforming intractable waste into valuable new resources, these units are propelling us towards a future where plastics can be part of a truly circular economy, providing the materials we need without sacrificing the health of our planet. This paradigm shift, integrating waste into the core of industrial production, underscores a profound commitment to innovation and sustainability, marking a critical step towards a more resource-efficient and environmentally responsible world

According to Devakumar Edwin, Vice President for Oil and Gas at Dangote Industries Limited, the capacity increase to 700,000 bpd forms part of a comprehensive strategy to more than double processing capabilities to 1.4 million bpd over the next 30 months. This ambitious growth trajectory positions the facility to potentially become the largest refinery globally. Edwin underscored that the expansion initiative reflects a deliberate progression toward continental and global refining dominance, extending well beyond domestic supply requirements.

The 700,000 bpd milestone is anticipated to significantly bolster Nigeria’s energy self-sufficiency by eliminating dependency on imported refined products while establishing the nation as a prominent regional export hub. This development aligns with broader national objectives to enhance local refining infrastructure and maximize economic value derived from Nigeria’s substantial crude oil reserves.

Since commencing fuel production in 2024, the facility owned by Nigerian industrialist and philanthropist Aliko Dangote has rapidly established itself as a major supplier to both domestic and international markets. The refinery has successfully exported refined petroleum products to multiple African nations and key European destinations, including the United Kingdom, France, Spain, Italy, and the Netherlands. Additionally, the facility has supplied petrol to American markets and jet fuel to Saudi Arabia and other international clients.

The facility has also played a stabilizing role within the petroleum industry during periods of disruption, particularly given ongoing Middle Eastern tensions. Many African countries have increasingly turned to the refinery for energy security, demonstrating the strategic importance of local refining capacity in the continental energy landscape.

The crude oil processing capabilities of the refinery have proven instrumental in stabilizing fuel supplies throughout Nigeria, directly reducing the nation’s dependence on imported petroleum products and alleviating pressure on foreign exchange reserves. The growing production volumes have attracted considerable attention from global crude suppliers and commodity trading entities, with the refinery sourcing feedstock from both domestic and international producers to sustain escalating output levels.

Aliko Dangote has communicated ambitious plans to transform the facility into the world’s largest refinery by 2028, with a targeted processing capacity of 1.4 million barrels per day. This expansion initiative is expected to generate substantial economic benefits, including employment creation, increased industrial activity, and improved trade balance positions for the nation.

The refinery will strengthen downstream manufacturing by guaranteeing consistent supply of Liquefied Petroleum Gas (LPG) and other critical industrial feedstocks, particularly polypropylene utilized extensively in packaging materials and consumer goods production. The facility has also outlined future plans for Linear Alkylbenzene (LAB) supply, an essential ingredient in detergent manufacturing, thereby establishing integrated value chains across multiple industrial sectors.

According to the NOC statement, a final agreement has been officially executed between the National Oil Corporation and Trasta Company. This accord mandates the withdrawal of the foreign partner from LERCO, with its shares now reverting to the NOC. Consequently, the Ras Lanuf refinery and its associated complex will operate entirely under Libyan sovereignty and management.

The Chairman of the Board of Directors of the National Oil Corporation confirmed that this agreement formally concludes the foreign partnership within LERCO. This marks a pivotal moment for the Libyan oil sector, enabling the restructuring and operation of the Ras Lanuf complex under exclusively Libyan leadership. This outcome is being recognized as one of the most significant transformations within the Libyan oil sector since 2011.

The resolution of this dispute definitively closes a complex chapter in the Libyan oil and gas industry. It ensures that one of the country’s most crucial oil and petrochemical assets is returned to full Libyan control. This development is expected to pave the way for a new era of rehabilitation, operation, and development for the Ras Lanuf complex.

The NOC Chairman expressed his satisfaction with the achieved agreement, commending the extensive efforts of the negotiating team and the Corporation’s legal and technical departments throughout the years of conflict. He emphasized that this accomplishment underscores the capability of Libyan expertise in safeguarding state rights and recovering strategic assets through legal and negotiated avenues. Furthermore, he acknowledged the contributions of various departments within the Corporation and its subsidiaries, viewing this Ras Lanuf Refinery recovery as the commencement of a revitalized phase for the complex. The goal is to restore the Ras Lanuf complex to its former standing as a premier refining and petrochemical hub in the region. The Ras Lanuf Refinery recovery is a testament to sustained efforts.

The Inevitable Evolution: Why Oil Majors Are Pivoting Towards Sustainability

The decision by established oil companies to venture aggressively into alternative energy sources, particularly biofuels and SAF, is multifaceted. It’s a strategic response to a world grappling with escalating environmental concerns and the tangible impacts of climate change. The narrative is no longer one of simple energy provision but of responsible energy transition.

Several powerful forces are compelling these industrial titans to recalibrate their business models. Firstly, stringent environmental regulations, from carbon pricing mechanisms to mandates for blending renewable fuels, are making traditional fossil fuel operations more costly and complex. Governments worldwide are setting ambitious net-zero targets, pushing industries like aviation towards radical aviation decarbonization. Secondly, institutional investors, increasingly conscious of Environmental, Social, and Governance (ESG) factors, are divesting from companies perceived as slow to adapt, and are instead demanding clear strategies for emission reduction. This financial pressure is a potent catalyst, linking access to capital directly to sustainability performance. Thirdly, public perception and consumer demand are shifting. There’s a growing preference for products and services with a lower carbon footprint, influencing everything from transportation choices to corporate supply chain decisions. For oil majors, maintaining relevance and social license to operate necessitates a proactive stance on sustainable energy solutions. This collective pressure ensures that the oil majors energy transition is not a choice, but an essential evolution for their continued viability.

Biofuels: A Foundational Pillar in the Decarbonization Strategy

Biofuels encompass a range of liquid fuels derived from biomass, offering a direct pathway to reduce greenhouse gas emissions compared to their fossil counterparts. These fuels have been around for a while, but their importance is skyrocketing as a versatile tool in the decarbonization toolkit.

Understanding the Spectrum of Biofuels and Their Impact

From bioethanol, commonly blended with gasoline, to biodiesel, a diesel substitute, biofuels offer significant emission reductions across various transport sectors. First-generation biofuels, primarily derived from food crops like corn and sugarcane, faced criticism regarding food security and land use. However, the industry has evolved significantly, with a strong focus now on second and third-generation biofuels. These advanced biofuels utilize non-food feedstocks such as agricultural waste, municipal solid waste, algae, and industrial gases. This shift addresses sustainability concerns and broadens the resource base. Oil majors, with their extensive refining infrastructure and expertise in complex chemical processes, are uniquely positioned to process these diverse feedstocks into usable fuels. Their involvement can significantly accelerate the scaling of sustainable alternative fuels, bridging the gap between niche production and widespread availability. The ability to integrate biofuel production into existing refineries, often through co-processing technologies, presents a cost-effective and efficient way to boost renewable fuel capacity without entirely reinventing their operational footprint.

The Ascent of Sustainable Aviation Fuel (SAF): A Critical Frontier

While biofuels address a broad spectrum of transportation, one sector stands out for its particularly challenging decarbonization pathway: aviation. Here, Sustainable Aviation Fuel (SAF) emerges not just as an option, but as a critical necessity, driving substantial investment and innovation from oil majors.

Decarbonizing the Skies: Why SAF is Indispensable

Aviation is often considered one of the hardest-to-abate sectors due to the high energy density requirements of aircraft fuel and the lack of viable battery-electric or hydrogen solutions for long-haul flights in the near to medium term. SAF offers a drop-in solution, meaning it can be blended with conventional jet fuel and used in existing aircraft engines and infrastructure without modification. This immediate compatibility is a game-changer. Produced from diverse sustainable feedstocks – including used cooking oil, animal fats, municipal waste, agricultural residues, and even captured carbon dioxide – SAF can reduce life-cycle greenhouse gas emissions by up to 80% compared to fossil jet fuel. The demand for SAF is set to skyrocket, fueled by ambitious targets from airlines, governments, and international bodies like ICAO, making SAF market growth an incredibly attractive proposition for energy companies with the capacity to produce and distribute these complex fuels. The strategic imperative for oil majors to secure a share of this market is clear, as it represents a significant avenue for future revenue and a vital component of their own decarbonization narratives.

Scaling Up: Investment, Innovation, and Collaboration

The expansion into biofuels and SAF requires more than just good intentions it demands substantial capital investment, technological innovation, and often, strategic partnerships. Oil majors are leveraging their vast financial resources, engineering prowess, and global logistics networks to establish themselves as leaders in this emerging field.

The Path to Commercial Viability: From Research to Refineries

Major players are investing heavily in research and development to optimize conversion technologies, enhance feedstock flexibility, and improve the efficiency of renewable fuel capacity. This includes exploring advanced pathways like power-to-liquid (PtL) fuels, which convert renewable electricity, water, and captured CO2 into synthetic hydrocarbons. Existing refineries are being reconfigured and upgraded to produce SAF and other biofuels, utilizing processes like hydrotreating vegetable oils and fats (HEFA) or converting alcohol-to-jet (ATJ). Companies are also forming joint ventures and alliances with agricultural producers, waste management firms, and technology specialists to secure diverse feedstock supplies and bring cutting-edge solutions to market. For instance, partnerships with airlines and cargo operators are crucial for securing off-take agreements, providing the long-term certainty needed to finance large-scale production facilities. This ecosystem approach is vital for overcoming the complexities of nascent supply chains and accelerating the commercialization of low-carbon fuels. The commitment extends beyond just production it involves building the entire value chain, from feedstock sourcing and processing to distribution and market access.

Challenges and the Road Ahead for Low-Carbon Fuels

While the trajectory towards biofuels and SAF is clear, the path is not without its hurdles. Realizing the full potential of these alternative fuels requires addressing significant challenges related to economics, infrastructure, and policy.

Navigating the Complexities of a Sustainable Future

One of the primary challenges is feedstock availability and sustainability. Ensuring a consistent, ethical, and scalable supply of biomass or waste materials without competing with food production or driving deforestation is paramount. The sustainability credentials of the entire lifecycle of biofuels and SAF must be rigorously maintained to uphold their environmental benefits. Another key obstacle is cost competitiveness. Currently, SAF and advanced biofuels are often more expensive to produce than traditional fossil fuels, due to higher production costs and the relatively small scale of current operations. Government incentives, carbon pricing, and long-term purchase agreements are crucial to bridge this price gap and stimulate demand. Furthermore, developing the necessary infrastructure for production, storage, and distribution of these new fuels requires significant investment. While oil majors can adapt existing infrastructure, new dedicated facilities are also needed. Finally, a stable and predictable policy environment is essential. Inconsistent or short-term policy signals can deter investment and slow the pace of deployment. A harmonized global regulatory framework for aviation decarbonization and other sectors reliant on low-carbon fuels would provide the certainty needed for sustained growth. Despite these challenges, the long-term vision remains compelling. Oil majors, with their extensive financial muscle, technical expertise, and global reach, are uniquely positioned to overcome these barriers and lead the charge in establishing a robust and scalable market for biofuels and SAF. Their strategic pivot is not just about survival it’s about shaping the next generation of global energy, ensuring their continued relevance in a world that increasingly values sustainability. The journey is complex, but the destination of a significantly decarbonized energy system is a shared imperative.

A central component of the Rijeka Refinery upgrade project is the installation of a new Delayed Coking Unit along with supporting processing facilities. With these additions, the refinery can now process up to four million tons of crude oil annually, including heavier crude grades. The upgraded configuration is designed to optimize refining operations, allowing the plant to generate greater volumes of high-value petroleum products from the same amount of crude input. As a result, diesel production at the facility is expected to increase by approximately 30 per cent. Another operational change brought by the project is the elimination of the need to import vacuum gas oil (VGO), which was previously sourced largely from Russian origin.

The scale of construction involved in the Rijeka Refinery upgrade project was substantial. The refinery’s new units required more than 10,000 tons of steel, along with approximately 60,000 cubic meters of concrete. The completion ceremony was attended by representatives from the Croatian and Hungarian governments, ambassadors, members of local communities, and executives from INA and MOL Group, highlighting the national and regional significance of the project.

Ahead of the ceremony, INA also signed a 15-million-euro grant agreement under the National Recovery and Resilience Plan for the construction of a green hydrogen plant at the refinery site. As part of this initiative, the company plans to invest more than 60 million euros in a 10-megawatt (MW) electrolyser and an 11 MW solar plant. The hydrogen produced will be used both in transportation and refinery operations. Completion of the hydrogen facility is planned for the end of 2026, with production expected to begin in 2027.

Commenting on the development, Zsuzsanna Ortutay, President of the Management Board of INA, stated that the refinery will facilitate the company’s transition to a lower-carbon economy.” Croatian Minister of Economy Ante Šušnjar also addressed the project, expressing hope that the Rijeka Refinery will “operate stably, sustainably, and at full capacity, benefitting Croatia’s economy, energy system, and our partners in the region.”

It is well to be noted that the resumption of output growth post a three-month pause will enable Saudi Arabia – the OPEC leader and members like the UAE to go ahead and regain the market share at a time when other OPEC+ members, like Russia and Iran, face Western sanctions, whereas Kazakhstan tries to take hold of the situation from a range of setbacks within oil production.

Interestingly, amidst the commotion taking place, eight OPEC+ producers – Saudi Arabia, Russia, Kazakhstan, the United Arab Emirates, Kuwait, Iraq, Algeria as well as Oman – meet on March 1, 2026.

In another development, Saudi Arabia has gone on to activate a plan related to a short-term oil output and export growth in case a U.S. strike on Iran goes on to disrupt the flows from the Middle East, remarked two sources who are familiar with the Saudi plan.

U.S. President Donald Trump has already said that he is considering going ahead with a strike on Iran in order to pressure its leaders to agree to a deal in order to curb the nuclear programme of Tehran.

Brent Crude Went on to Close to the Highest Since July 2025

The eight members went on to raise the production quotas by almost 2.9 million barrels per day from the end of April to December 2025, thereby equalling almost 3% of the global demand, and also went ahead and froze more planned increases from January to March 2026 because of seasonally weaker consumption.

In spite of the fears that a dip in supply would hit the prices in 2026, the Brent crude benchmark is trading at almost $71 a barrel. That, apparently, is not far from a seven-month high of $72.50 that was reached this week due to ongoing tensions between the United States as well as Iran.

All three sources, who have declined to be identified by name, have said that an increase of 137,000 bpd by all eight members for April 2026 was the decision most likely to take place on March 1. As per a fourth source, a pause for April 2026 was a possibility as well.

Raising oil output by 137,000 bpd for April is going to be the same as the ones agreed for December and November, as well as October 2025.

OPEC+, which has in it the Organization of the Petroleum Exporting Countries along with Russia and other allies, happens to pump around half of the oil of the world.

It is well to be noted that both these projects happen to represent a major step forward when it comes to developing the biofuel production capacity of Enilive.

Both the biorefineries are forecasted to be completed by 2028 and are going to provide maximum flexibility when it comes to producing both HVO diesel – Hydrogenated Vegetable Oil as well as SAF-biojet, Sustainable Aviation Fuel.

Apparently, the new biorefinery in Sannazzaro de’ Burgondi is not going to affect the existing traditional fuels production capacity of the plant. Rather, it is going to bring to the fore more biofuel production coming from renewable raw materials, thereby further helping to diversify the range of products that are available to the market.

Notably, the project happens to involve the conversion of the Hydrocracker – HDC2  unit by using Ecofining™ technology and the construction of a pretreatment unit in terms of waste and residues, which apparently happen to be the main feedstocks that are used by Enilive in order to produce HVO biofuels. The hydrogen that is needed is going to be supplied by the present plants, whereas supporting infrastructure, which includes the likes of logistics as well as connections to airports in Lombardy, is going to be adapted for the new setup in terms of production.

Apparently, the new biorefinery in Sannazzaro de’ Burgondi will boast of the capacity to produce 550,000 tonnes per year of feedstock. It will also have the flexibility to produce SAF-biojet in addition to HVO diesel.

The Priolo biorefinery, for which the preparatory activities are currently ahead of the award pertaining to procurement and construction contracts when it comes to new units, is going to have a capacity of around 500,000 tonnes per year and is also going to have operational flexibility that’s pretty extensive for HVO diesel or SAF-biojet production, which is
in line with the dynamics and demand that exist in the market. The Priolo biorefinery happens to be a part of the basic chemicals transformation plan by Versalis and is going to be built within the present site, thereby replacing the cracking plant, which ended its operations in 2025 and which is, as a matter of fact, at present getting dismantled.

Because of Enilive, Eni happens to be the second largest producer when it comes to hydrogenated biofuels HVO – both diesel as well as biojet – SAF across Europe and plans to raise its biorefining capacity from 1.65 million tonnes per year, which currently exists, to more than 3 million in 2028 and beyond 5 million by 2030, with the potential to go ahead and produce around 2 million tonnes of SAF by the end of the decade.

This move came after the government-appointed manager of the top international commodities trader went on to drop plans to purchase international assets of Lukoil, as the company rejected U.S. government allegations of being a Kremlin puppet. Lukoil remarked that it was selling its international assets in response to the U.S. sanctions that were aimed at pushing Russia to go ahead and agree to a ceasefire in the war against Ukraine. The company happens to have stakes in oil and gas projects throughout 11 countries, which includes the Burgas refinery and also gas stations throughout many countries.

As per the new amendments, the manager happens to be granted quite a significant operational control of the refinery, which also includes the right to sell its shares. Opposition lawmakers have criticized the alterations, stating that they could go on to prompt legal action against Bulgaria.

According to the leader of the Democratic Bulgaria alliance, Ivaylo Mirchev, this person will be granted extraordinary powers, and, in the end, Lukoil is going to end up suing Bulgaria, and the money is going to end up in Russia.

It is well to be noted that the ruling coalition went ahead and introduced the changes, arguing that U.S. sanctions, which are scheduled to take effect from November 21, are going to effectively lead to the shutdown of the operations of the refinery because of the refusal of all the counterparties to make payments to the companies owned by Lukoil. Apparently, in 1999, Lukoil, which happens to be the Russian oil giant, went on to acquire the Neftochim plant based on the Black Sea. It happens to be the largest oil refinery in the Balkans. As per the recent estimates made by experts, they happen to set the value of the refinery at somewhere around 1.3 billion euros, which is equivalent to $1.5 billion.

Apparently, Lukoil-Neftochim refinery happens to be the largest company in Bulgaria, happens to play quite a significant role when it comes to the economy of the country and the move to prevent shutdown of the only oil refinery in Bulgaria is understood. In 2024, it happened to have a turnover of almost 4.7 billion euros, or $5.4 billion. Its countrywide network of oil depots as well as gas stations, along with its supply of ships and also aircraft, goes on to give it a near-monopoly status.

Recently, Bulgaria went on to impose temporary restrictions on the export of petroleum products, which includes the ones for other EU members, in order to make sure of sufficient domestic supplies ahead of the new U.S. sanctions when it comes to Russian energy. This ban happens to cover the exports of petroleum products, which includes the likes of diesel as well as aviation fuel.