Oil shale cutbacks will bring industry to a halt, says municipality chief

Oil shale extraction (picture is illustrative).
Oil shale extraction (picture is illustrative). Source: Postimees/Scanpix

Reducing oil shale mining volumes would force those areas most focused on it to tighten their belts and cut investments, ERR's online news in Estonian reports.

AS Enefit Kaevandused, the oil shale mining and transportation subsidiary of state-owned Eesti Energia, has presented its forecast in mines in Ida-Viru County, as well as the Narva quarry, finding volumes to be significantly lower than the first half of the year, according to Alutagus mayor Tauno Võhmar.

Alutagus is a municipality in the oil shale mining region in Ida-Viru County.

How big that difference will be in terms of tons, Võhmar could not say, but noted that it could result in a loss of €800,000 to the industry, according to regional daily Põhjarannik.

"Revenues in Alutagus municipality were €12 million this year, and fixed costs €11 million, meaning €1 million was available for investments. Following this development we will have to cut down on fixed costs and abandon investments," Võhmar said.

"If we lose €800,000 for the second half of this year, next year the figure will probably be two million a year," he added, noting he saw no scope for recovery.

Võhmar did however acknowledge that the fixed costs in oil shale production in the Alugatus region are notably high compared with other municipalities.

However the effects of cutbacks would be felt far beyond the immediate oil shale sector itself, he said.

"Everything would need to be cut back, in particular, education costs, which make up the largest component. Six million [euros], that is half our budget.

We have 30 children born per year, i.e. one class. Specific to us is, of course, a large and dispersed area, but with such high costs we simply can no longer continue," Võhmar added.

President Kersti Kaljulaid recently stated that oil shale mining – used both to fuel power plants and to refine oil used for a variety of purposes – was a thing of the past.

The industry has long been criticised, particularly in surface extraction (i.e. quarrying) for its impact on the environment, as well as the economic considerations arising from EU carbon dioxide emmissions quotas.

Eesti Energia is temporarily laying off up to 1,300 employees over the summer, citing cheaper Russian electricity, not subjec to the EU rules, entering the market. 

Editor: Andrew Whyte

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