Advancing development plans for an electric natural gas facility
OX2 and Södra, together with the e-NG project development company TES, are advancing their development plans for an e-NG (electric natural gas) facility at the Värö peninsula in Varberg, Sweden, by entering the Pre-Front-End Engineering Design (Pre-FEED) phase
The decision follows the signing of a Letter of Intent in January 2025 and the completion of an initial feasibility study assessing the technical and commercial viability of the concept.
Sweden imports large amounts of fossil natural gas and biogas to supply chemical and industrial companies that depend on gas in their processes, mostly via pipelines from Denmark, with fossil-based natural gas accounting for the largest share of this energy mix. The Värö e-NG project can support Sweden's energy transition, economy, and energy security and resilience.
The facility has been designed to produce 1.2TWh of e-NG (e-methane) annually. e-NG is produced by capturing biogenic CO2 from Södra’s pulp mill at Värö before combining it with hydrogen produced onsite using renewable electricity
With 1.2TWh of e-NG, the share of Swedish-produced fossil-free gas in the Swedish gas grid would increase significantly, representing more than a fourfold increase in domestic production. The Pre-FEED phase, which is to be carried out over a one-year period, is partly supported by SEK 16.8 million in funding from the Industrial Leap, the Swedish Energy Agency’s programme for industrial decarbonisation and is part of the EU Recovery and Resilience Facility and Next Generation EU. The funding will form 50% of the Pre-FEED and development costs.
During the pre-FEED phase, the partnership will draw up technical designs, evaluate the potential for integration with Södra’s pulp mill operations, secure the necessary grid connections for electricity and gas distribution, advance permitting processes and refine commercial agreements.
The partnership combines complementary capabilities spanning the value chain, with Södra operating the pulp mill that generates biogenic CO2 as a by-product of its production processes; OX2 developing large-scale renewable energy projects in the region; and TES specialising in e-NG production technology, contributing technical knowledge and market insight gained from scaling up similar projects.
e-NG is a ‘fossil-free’ chemical equivalent to natural gas; from this perspective, it acts as a drop-in fuel that can be used immediately in existing infrastructure without any modification. Potential applications include maritime fuel, chemical-industry feedstock, and industrial processes.
The project established a Heads of Agreement with an energy major to purchase the majority of the planned production volume. Subject to the findings and subsequent investment decision by the partners, the facility is set to enter operation in the early 2030s, on time for the entry into force of sizeable EU RED III RFNBO obligations. Decisions on progressing to subsequent stages will be taken jointly by the partners based on this phase's results.
Emelie Zakrisson, country manager, OX2 Sweden, said, “The Värö e-NG project is a unique opportunity to deliver large-scale Swedish production of renewable gas close to the existing distribution pipeline. Combining Sweden's natural resources with a strong industrial know-how gives this project the potential to support the industry’s transition, cut emissions and move Sweden closer to real energy self-sufficiency”.
Johannes Bogren, business area president, Södra Bioproducts, said, "This project represents a strategic opportunity to turn existing biogenic CO₂ into renewable gas at scale. By integrating our processes with emerging market needs, the project can strengthen long-term value creation, enhance the value of every tree and support industry’s shift away from fossil gas in Sweden and across Europe."
Marco Alverà, co-founder and CEO, TES, said, “With its abundant renewable power, access to biogenic CO₂ and strong industrial base, Sweden has the foundations to pioneer large-scale e-NG production. Together with Södra and OX2, we are developing a project ready to meet the growing demand driven by RED III obligations across Europe.”
