Finance minister: Construction of new oil refinery to begin in 2021

Minister of Finance Mart Helme (EKRE, middle) visiting Eesti Energia's Auvere Power Plant in Ida-Viru County.
Minister of Finance Mart Helme (EKRE, middle) visiting Eesti Energia's Auvere Power Plant in Ida-Viru County. Source: Sergei Stepanov/ERR

The construction of the Estonian state-owned energy group Eesti Energia's new oil refinery is expected to begin in 2021, Minister of Finance Martin Helme (EKRE) told lawmakers during Question Time in the Riigikogu on Wednesday, adding that €125 million has been earmarked in the 2020 state budget for its construction.

"We have passed the decision by now, and Eesti Energia is working with a view to build one more oil plant ⁠— a plant for producing oil from oil shale, which will be geared toward export in the first place and in whose case the price of CO2 plays a significantly smaller role than in producing electricity from oil shale, for instance," Helme said.

MP Aivar Sõerd (Reform), a member of the Finance Committee of the Riigikogu and former finance minister, described the allocation of €125 million to Eesti Energia for the construction of the planned oil plant as one of the strangest items in next year's state budget, saying it was impossible to understand where exactly this money was going.

"The point is that the new oil plant's project doesn't even exist yet, but the money has been written into next year's state budget," Sõerd said in a press release. "At the same time, the construction of numerous major facilities, roads and even the airport were postponed in the drawing up of the state budget on the grounds that preparation for construction has been dragging on, public procurements are delaying project deadlines, projects are being amended and so on."

Regarding specific timelines, Helme said that funds for the designing of the project will start to be spent next year already, construction is expected to begin in 2021, and the plant is expected to be operational by 2022 or 2023.

Sõerd said that construction of the new oil plant will thus begin in 2021, not next year as required under the State Budget Act, and the €125 million will largely be spent to cover the cost of the design of the plant for Eesti Energia.

"It means that the energy giant itself has no money to commission the designs of the new plant, and taxpayer money has to be spent there," the opposition MP said.

Helme said that no serious consideration has been given to the option that the state would participate in the project with additional capital.

"Under current plans, the state would participate in it primarily via the 100 percent state-owned company Eesti Energia," the finance minister explained to lawmakers. "That is, it would be Eesti Energia's business project in which other market participants would take part with their capital."

Helme: Many countries still use fossil fuels

"A very big part of the world — in principle, a large part of Asia, Africa and Latin America — has not adopted the kind of climate goals that Europe has and are using fossil fuels, and will continue to use fossil fuels in growing amounts," he responded when asked how the plan for the establishment of the pre-refinery relates to climate neutrality goals.

According to the minister, Estonia should engage in both the refining and pre-refining of shale oil.

"So to tell us in such a situation, 'Let's not mine for oil shale anymore' and 'Let's not export it anymore to where a market exists for it' is not rational in my opinion," he said. Describing oil shale as Estonia's national wealth, he said that not adding value to it is out of the question.

Unlike the decision on the construction of the new oil plant, the decision concerning the possible construction of a €650 million pre-refining plant has yet to be made. The latter should be made early next year, Helme added.


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Editor: Aili Vahtla

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