Shale Oil Industry Has Two Faces, Says Regional Newspaper Chief

Erik Gamzejev is the editor in chief of the newspaper Põhjarannik Photo: Põhjarannik
3/27/2014 3:00 PM
Category: Economy

A critical report by the National Audit Office concludes that the state has not achieved any set goal on shale oil in the past seven years, notes Põhjarannik editor in chief Erik Gamzejev in an opinion that aired on Vikerraadio.

"The resource is not mined efficiently. Effects on the environment have not decreased and the system of environmental tax does not motivate companies to decrease pollution. The state is not paid enough. Necessary studies for a new development plan have not been conducted. Supervision over mining volumes is weak,” Gamzejev commented on the recent damning report on the mining and use of shale oil in Estonia, a industry worth 4 percent of Estonia's GDP.

Gamzejev said the report gives ammunition to environmentalists and other opponents of shale oil, yet the industry has another side that is less exposed.

The sizable chunk it forms of the Estonian economy should grow even larger in the future looking at the investments and plans of the oil industry, he said.

Local governments earn large sums in tax from the mines and plants, which are increasing annually and Eesti Energia, which mines and processes the lion's share, paid 190 million euros in tax to the state in 2013, Gamzejev said, adding that the sum is larger than the cost of the promises unveiled by the new government.

The industry provides well-paid jobs to more than 10,000 people mostly in areas lacking other industry. The social stability those jobs bring to the northeastern part of the nation also increases state security.

“If the [...]technology used in [oil shale production] plants reaches maximum potential and the price of oil does not drop much, the shale oil industry should increase the wealth of the entire nation,” he said.

Speaking about the environmental effects, Gamzejev said thorough and modern studies are needed, and the lack of such studies has led to both opponents and proponents of increasing mining quotas to use emotional arguments instead.

Lobbying efforts have redoubled recently as the state is drawing up a development plan for the next 15 years, which will have great affect on the industry, he said, adding that the need for scientific studies is crucial.

“When the St. Petersburg mining company Paul Boeckel & Co desired to begin mining shale oil in the fall of 1916 in Kukruse, Estonia they signed a contract with owner of the Tehvo-Jaagu farm, Gustav Tello, promising to pay him half of kopeck for each load of 16 kilograms. That was the beginning of the shale oil industry in Estonia. Close to 100 years later, the necessary factors connected with use of shale oil have increased and are thus more complicated. But a sensible solution which would make shale oil work for Estonian interests in the best possible way should still be possible to find,” said Gamzejev.


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