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Main > News > Situation in the oil shale industry in Estonia in 2015. Expert opinion of TTU Ltd engineers.

Situation in the oil shale industry in Estonia in 2015. Expert opinion of TTU Ltd engineers.

Oil shale in Estonia is mined and processed in the North-East of the country, in Ida-Virumaa region. Most of the oil shale mines, pits, power plants and processing factories are located there. The population of the region is 150,943 people, and about 6,000 of them are working in the oil shale industry.
State owned company Eesti Energy is a monopoly in oil shale mining and electricity production and distribution. Main facilities of the company are Estonia mine and Narvsky pit, Estonian, Baltic and Auvere power plants.
Eesti Enegy company owns oil shale processing factory called Oil Factory which consist of two UTT-3000 processing installations existing from 1980ths (renamed to Enefit-140) and the new one Enefit-280 installation from 2012. The total installed capacity of the two oil shale processing factories is 1,8 and 2,0 mln of oil shale per year respectively.
The more big company processing oil shale in Estonia is VKG Oil AS (a part of VKG Group) which owns Ojamaa mine, has its own processing plants, power plant, electrical and thermal distribution grid. Total installed capacity of the oil shale processing complex is 4.7 mln t of oil shale a year using 3xUTT-3000 units (called Petroter by the owners) and oil shale gas generators (Kiviter process).

Due to sharp drop in prices (including prices for shale oil) in 2015 Estonian oil shale sector turned into a crisis:
Power blocks of Estonian and Baltic power plants were stopped because the production cost of electricity in other EU countries became cheaper due to oil prices drop.
Oil factory is stopped due to economic reasons (nowhere to burn produced gas, net cost of oil shale processing artificially inflated)
Enefit-280 still not commissioned due to design errors, it was officially recognized by the Eesti Energy management and turned into the status of pilot production.
VKG Oil AS has stopped all their Kiviter generators. Their exploitation became unprofitable because they can only process oil shale fraction 25-125 mm, most of which was supplied by Eesti Energy at 32 EUR per 1 ton.
Mine Estonia was stopped.
The production volume of shale oil dropped more than twice.

According to the Estonian mass media reports there are following staff reducing:
On Ojamaa mine 138 workers fired
On Eesti Energy mines and pits 150 workers
On the Nitrofert plant 426 workers
On VKG Oil AS 500 workers fired.

More than 13,000 jobless people have left Ida-Virumaa region during last 5 years.
In addition to global circumstances (situation on the world oil market) the crisis in the oil shale industry is driven by irrational Government policies in relation to private entrepreneurs for filling the budget: prices for oil shale, exceeding the reasonable production cost at 300-600%, taxes on emissions of pollutants into the atmosphere and oil shale ashes disposal are so high, that even such effective enterprise as VKG Oil AS unable to pay them.

Nevertheless, in a such critical conditions VKG Oil AS continues to operate 3xUTT-3000 units, and the reasons for this are:
Rational technical policy of the company's management. During the period of high oil prices the loans of European banks were obtained, which allow the company to construct three UTT-3000 units and Ojamaa mine, which ensured the independence of supply of raw oil shale from Eesti Energy and the production costs on a reasonable level;
High efficiency of processing of oil shale in the UTT-3000 units, comparing with gas-generators or Enefir-140 installation the efficiency is higher up to 12%;
Usage of own semi-coke gas from UTT-3000 installation as a fuel for the own needs;
Usage of the ash heat, produced during oil shale processing, to heat the water systems and to supply heat to the local populated areas;
Existence of own distribution electrical and heating grid.

The improvement of the current situation in the oil shale sector in Estonia is possible when the oil prices will raise and the Government taxation in relation to the private companies will be optimized.