A 50-50 joint venture between Galp - which earlier on Monday reported a 22% decline in third-quarter adjusted core profit - and Swedish battery maker Northvolt, dubbed Aurora and set up in November 2021, was previously expected to announce the FID by the end of 2024.

However, the refinery, which was scheduled to start commercial operations in early 2026, is facing delays due to the complexity of the project and uncertainty about grant funding, while lithium prices have been low due to oversupply from China.

"The market is very challenging as we speak. So, we are in no rush to take an FID until we see an appropriate return for the project. We don't seem to be there," Silva told an analysts call.

He said Galp is "also concerned that this project could become orphaned in case there is no mining of lithium in Portugal".

With some 60,000 tonnes of known reserves, Portugal is already Europe's biggest producer of lithium, traditionally mined for ceramics.

Portugal's center-right government, which took over in April, is finalising a strategic plan to explore for raw materials critical to the green transition, where copper could take on a more important role than lithium.

Portugal's previous government planned to auction licenses for lithium prospecting in six areas in the north and center of the country, but concerns about the environmental and social impact have led to multiple delays to the auction, initially planned for 2018.

The refinery, with estimated investments of more than 1 billion euros ($1.1 billion), aims to have an initial annual production capacity of up to 35,000 metric tons of lithium hydroxide, a key material for lithium-ion batteries.