State-owned energy group Eesti Energia and shale oil producer Viru Keemia Grupp (VKG) have decided, after a feasibility study, to stop the process of building a shale oil pre-refinery.
Eesti Energia AS and Viru Keemia Grupp reached a cooperation agreement last year to develop a shale oil pre-refinery with the processing volume of 1.6 million tons a year. The total cost of the investment was estimated to be around €650 million.
After the results of a feasibility study were conducted, the groups have now suspended the project and are focusing on alternative methods to improve the quality of energy.
The price of Estonian shale oil increased on international markets in connection to a EU sulphur directive, which also improved the profitability of production under current standards. The additional value of refining concurrently dropped and the profitability from an investors view is now less attractive.
The state was prepared to allocate funds to support the project but after the feasibility study, that amount would have had to increase considerably. Eesti Energia did not consider it reasonable to ask the state for such support.
Tightening climate restrictions were taken into account when drawing up the business plan with a pre-refinery potentially being profitable in such case.
Editor: Kristjan Kallaste