Ukrainian Firm Confirms Plan for Multibillion Euro Paldiski Oil Refinery
Ukraine's DMSS says it intends to go ahead with a 3-billion-euro investment for the contruction of an oil refinery in Paldiski, but some have voiced doubts.
The head of the company, Igor Suhhanov, told Eesti Päevaleht that the plans are "serious," that major issues are in the process of being worked out, and that the firm plans to open an office in Estonia. The details would come later, he said.
DMSS and the Port of Tallinn signed a memorandum of understanding in 2010, providing that construction begin in 2013.
The new refinery would be built next to Paldiski South Harbor, in a former military zone. It would have an annual output of 6 million tons of refined gasoline, diesel fuel and mazut (a residual fuel oil), and it would employ 640 people, according to the companies.
"We are serious about the refinery, but we cannot say when it will begin because it is a business secret," said Port of Tallinn Chief Commercial Officer Erik Ringmaa. "At the same time, we have ongoing talks with an alternative investor as well, for the event that something should change with the Ukrainians."
Kaupo Kallas, the mayor of Paldiski, said he hasn't heard any more news about the project since the city council initiated the thematic plan in October 2011.
The head of Alexela Oil, Heiti Hääl, whose company is building an LNG terminal and gas pipeline in Paldiski, voiced her doubts. "I have seen their business plan and I don't understand how it will be economical," Hääl said.
Eesti Päevaleht reported that the DMSS became interested in the location because the southern harbor does not freeze over during the winter and can accommodate large tankers, which would transport the refined oil to Europe.
Petroleum could also be transported directly from Russian drilling sites, but that raises the need to redirect Tallinn's railway, as cargo trains would need to maneuver directly underneath Toompea to get to Paldiski.
The plan was to complete the first building phase by 2016. Companies said they would see a full return on their investments by 2022.
DMSS is made up of six Ukrainian construction companies and one Moscow-based firm, also in the building sector. It builds houses as well as mining complexes and oil and chemical plants.