Minister's call for bar on new oil shale mining a surprise to sector

Signage near VKG's Ojamaa oil shale mine.
Signage near VKG's Ojamaa oil shale mine. Source: Rene Kundla/ERR

A call by Minister of Economy and Infrastructure Riina Sikkut (SDE) for a bar on constructing any new oil shale mines came as a surprise to industry chiefs, ERR reports.

The minister said that it would be irrational to mine further for oil shale, by digging new mines, in the midst of the Green Transition, arguing that better use should be made of existing resources instead.

Oil shale is mined and then refined into the actual oil in Ida-Viru County and, while the oil and its by-products have a variety of different purposes, the carbon imprint made by one of its main uses – burning in power stations – is under pressure in the context of EU climate norms.

The energy source has seen something of a renaissance with the soaring energy prices of the last year-and-a-half, as well as the need to decouple from reliance on Russian-origin energy.

Speaking to ERR Radio news show "Uudis+" this week, minister Sikkut said there is no clear and present need to open any new oil shale mines, given their deleterious effect on the environment, in the context of the Green Transition. 

Simultaneously, the minister applied the brakes to the development of a planned mine at Uus-Kiviõli.

Sikkut conceded that this policy of not excavating any new mines has not been fully discussed at coalition-level – in effect the Reform-Eesti 200-SDE coalition-in-waiting, rather than the sitting coalition her party is in with Reform and Isamaa.

Declining to grant approval to the Uus-Kiviõli development was her sole decision as minister, Sikkut added.

Since soon-to-expire reserves belonging to the Ojamaa mine, operated by Viru Keemia Grupp (VKG), one of the major private sector players in the sector and which would have developed the Uus-Kiviõli mine as well, the company had said it had hoped the latter would have started to be operational by 2026.

VKG chair Ahti Asmann said: "We started applying for the mining permit for Uus-Kiviõli back in 2004."

"15 years later, we received the permit. Over the last four or five years, we have been working on plans and the preparation of ground infrastructure. But now, instead of signing the technical application questionnaire received in November, we find out in March, via a radio show broadcast by ERR, that our activities should be halted in the near future. This is certainly unexpected, to put it mildly," Asmann continued.

According to Environmental Board (Keskkonnaamet) data, existing oil shale reserves total over 230 million tonnes of oil shale reserves in the existing mines. Considering the current mining volumes, this should last for around 20 years, and it is these existing reserves which should be utilized, minister Sikkut said.

The bulk of the reserves belong to the state-owned Eesti Energia.

On this, Sikkut said: "Who owns the oil shale and at what price it is resold is a key question, one which the state must achieve a fair result on, so that everyone who continues to derive oil or electricity from oil shale, in the context of a moratorium on new mines being opened, would gain equal access to mineral resources – resources which actually belong to us all."

Ahti Asmann said that while minister's idea is understandable, but it is not feasible, economically speaking or time-wise.

He said: "First of all, the idea would require large-scale investments in the expansion of railway infrastructure and production capacity, which in turn means new plans, designs and extensive construction works. All this is unfeasible in terms of time and simply unreasonable."

"Second, the environmental impact of opening Uus-Kiviõli is lower than when expanding the Estonia mine (the name of one the main facility whence the reserves noted above would be mined-e.d).

In the case of Uus-Kiviõli, infrastructure is for the most part pre-existing, while oil shale transport is carried out using conveyers, which bring the lowest environmental impact.

"The third important aspect is that the regulatory reform is 10-15 years late, so the current market regulation does not support joint mining," Asmann said.

Andres Vainola, board chair of Eesti Energia subsidiary Enefit Power, said that oil shale companies have enjoyed short-term cooperation before, adding he was unaware of the minister's policy as stated.

The state has not indicated larger quantities of oil shale should be shared with other companies, in the future, he added.

"We are not aware that anything has changed, and our owner's expectations were reset completely in August of last year. So we are not aware of this idea," Vainola told ERR.

VKG's representatives are set to discuss the deadlock with minister Sikkut on Monday.


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Editor: Andrew Whyte

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