TALLINN - Following a request from Russia, the government has decided to negotiate a deal for importing oil shale after a temporary cessation due to arrears built up by a Russian shale producer.
According to reports, a delegation headed by Russia's Deputy Energy Minister Ivan Materov held negotiations with Signe Ratso, deputy state secretary in the Estonian Ministry of Economic Affairs, last week to discuss options for cooperation.
The two sides agreed that the Russian side should prepare the offer on joint participation in the investment of a deep processing spread in the Leningrad region. State-owned Narva Power Plants will process Russian oil shale until the end of 2005 's to the tune of 1 million tons. On an annual basis, the amount of oil shale to be imported and processed should not exceed 2 million tons, the government press office reported.
Narva Power Plants ceased purchasing and processing shale from Lenigradslanets, the Russian producer, on April 1 due to delays in payments.
Company officials suggested the agreement could work. "If we are speaking about a short-term deal, and the cost of the deal is reasonable to us in economic terms, then it will not provoke the closure of [Estonian] mines and a loss of jobs for miners," Lembit Vali, company CEO, told the Baltic News Service.
Still, Estonia, which extracts some 15-17 million tons of shale oil per year, has no need to import raw material given the plant's capacity. This has led some observers to dub the new deal "humanitarian aid" for Russia.
But Economy Minister Edgar Savisaar, speaking at a press conference, stressed that after Estonia joined the EU and signed the Kyoto Protocol, circumstances have changed. Estonia is interested in continuing collaboration, as long as international agreements are favorable for both sides, he said.
As an example, Savisaar suggested the possibility of jointly using the Russian hydroelectric power station located on the Narva River.
Others criticized the agreement because it decreases from Estonia's opportunities to sell emission quotas in accordance with the Kyoto agreement. The Rosbalt agency estimated that Estonia's possible revenues from selling emission quotas could amount to 7 's 17 million euros annually, while income from processing Russian oil shale would comprise some 6 million euros.
Grigory Fraiman, director of Leningradslanets, was quoted in the business paper Kommersant as saying that Estonia received quotas calculated on 1990 rates, when it processed 2.5 million tons a year. The current amount is 1.2 million tons.
As a result of Estonia's decision not to accept Russian shale, some 2,000 miners have been laid off, and the company has declared bankruptcy. Leningrad Oblast tax inspectors arrested Lenigradslanets' accounts on June 20.
Technologically and economically Leningradslanets and Narva Power Plants have been closely connected. Estonia has been the largest consumer of Leningradslanets' output and has processed up to 95 percent of the shale oil extracted by Leningradslanets .
