New shale oil pre-refining plant to be discussed

Eesti Energia Auvere oil plant.
Eesti Energia Auvere oil plant.

The Estonian government's climate and energy commission will discuss whether and how the government should support the establishment of a shale oil pre-refining plant, ERR reported on Monday.

The plant is seen by the country's shale oil producers as an opportunity for making the transition from fossils to other kinds of fuel less abrupt. The project will cost €600 million.   

The risks entailed in the are related primarily to fluctuations in fuel and raw material prices and the project's feasibility, but also for climate policy and prevailing attitudes in society. For that reason, shale oil producers are seeking political and financial support from the state.

"We have been talking about 20-30 percent state support, and that could come either from Europe, from the so-called modernization fund or something else, that measure is not conclusively in place yet, but a debate in principle is underway. And before we get to the point of investing that money there's a lot of work to be done with designing, and that we will start doing regardless," Eesti Energia CEO Hando Sutter said.

The head of the state-owned energy group said that if such investment materializes, it should be over €200 million euros in additional export revenue, and create job security for approximately 15,000 people in the shale oil sector, and a substantial tax inflow for the state. 

Meelis Eldermann, technology director at Viru Keemia Grupp (VKG), said that a pre-refining plant will fit into the framework of the environment policy of Europe and Estonia for at least 20 years and make the transition to non-fossil fuels smoother.

Eldermann said that for the period of the changeover, which requires substantial investments, a plant like this is precisely the right option which enables money to get into the state coffers and boost exports. 

"I think it's the best that can be done in the present situation and in the present transition period," Eldermann said.

VKG and Eesti Energia are currently preparing the plant' preliminary designs, selecting suitable technology, determining the potential size of the investment and the sources of financing. As things stand now, Estonian oil producers produce slightly over a million tons of shale oil annually. The planned facility would have a processing capacity of over 1.5 million tons of oil a year. 


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Editor: Helen Wright

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