Government greenlights new €286 million oil shale plant

Existing Enefit oil plant in Auvere, Ida-viru County.
Existing Enefit oil plant in Auvere, Ida-viru County. Source: Sergei Stepanov/ERR

State-owned energy company Eesti Energia has the go-ahead from the government to build a new oil shale plant, which will be used to produce liquid fuel. The government has put up €125 million for the construction.

The new plant, called the Enefit280 plant and using technology from Eesti Energia's renewable subsidiary Enefit Green, forms part of Eesti Energia's strategy as it transitions from older and less environmentally friendly oil shale use – including burning in the generation of electricity – and also helps to mitigate job losses in Ida Viru County, where Estonia's oil shale sector is largely located.

"The construction of a new oil shale oil plant is a long-term and strategic investment, with which we wish to enhance Estonia's most important mineral resource, create new jobs and save more the natural environment," said Prime Minister Jüri Ratas (Center) of the move.

"Creating additional jobs will reduce social risks of the ongoing transformation of the energy sector and support the Ida-Viru County region as a whole," Ratas noted.

New plant facts

  • Construction work is scheduled to begin this year. 
  • Due to be completed in 2024, reaching full capacity a year later.
  • Total investment is estimated at €286 million.
  • Nearly 1,000 people will be employed to build the oil plant, including up to 700 locally employed people.
  • Up to half of the construction cost will be borne by Estonia, experts say. 
  • Once up and running, the oil plant will create around 500 jobs.
  • Output: 268,000 tons of liquid fuels per year. 
  • Uses Enefit technology developed by Estonian engineers.
  • Enefit technology is known to be the most efficient and proven oil shale refining technology in the world with the lowest environmental impact.
  • 2020 State Budget Act provides for corresponding financial resources.

Finance minister: In the current economic climate, major investments are important

Minister of Finance Martin Helme said the state's expectation was for Eesti Energia to develop a more efficient and cleaner use of oil shale; oil production is a good example of this.

"The construction of the new oil plant is in line with national strategy documents such as the Energy Development Plan, the Oil Shale Development Plan and also basic principles of climate policy.

In the current economic climate, it is important to make major infrastructure investments, which is all the more reason to expect that construction will become cheaper in the near future," Helme added.

"With the new oil plant construction, CO2 emissions and oil shale use by the Estonian oil shale sector will not increase, but decrease."

Helme added the oil shale sector is a key source of state revenue for the state. The state has received over €100 million a year from the sector, and the oil shale industry also helps to keep high-paying jobs in Ida-Virumaa. 

Eesti Energia chief: The oil plant will generate sales of €250 million a year

Hando Sutter, Eesti Energia board chair, said that EU is in a deep energy deficit, with a particularly large deficit in liquid fuels, 90 percent of which is imported, putting Estonia in a strong position in that regard.

"Estonia is one of the few countries in Europe that has the capacity to produce liquid fuels on its own, and I think that is a great asset. Our technology is of global interest and we have recently exported this know-how. Shale oil is a very important export," he said, via a press release.

"With the new plant, Eesti Energia's annual oil production will grow to over 700,000 tons. Taking into account the average sales price of liquid fuels in 2019, this sales volume translates to €250 million," Sutter added.

Enefit Green – Eesti Energia's renewables subsidiary - technology also enables the recycling of scrap car tires, and potentially plastic refuse, during shale oil production, which helps address environmental issues, he said.

As global demand for petroleum-based products is likely to grow, oil shale production will remain competitive over the next couple of decades, making it sensible to produce high-quality, low-sulfur liquid fuels with which Estonia is competent locally, he said.

"Earning money from oil production will also increase investment in renewable energy development, as Norway has done with its oil money," he went on.

Eesti Energia's Strategic Action Plan forecasts a decline in electricity generation from oil shale burning, a rise in the production of renewable energy will increase, as well as a rise in liquid fuel output - the most efficient and environmentally friendly way of upgrading oil shale, the company says. 

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Editor: Andrew Whyte

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