Suncor woos Estonia on 2.5 billion kroon deal

TALLINN (ETA) - Estonian government will launch talks with Canadian energy firm Suncor Energy on building a 2.5 billion kroons ($1.67 million) oil shale plant in Estonia.

Suncor Energy's president, Don Riva, meets with Prime Minister Mart Laar on Feb. 23 to agree on the start of the talks.

The official proposal for launching talks came from Suncor Energy representatives.

As the government firmly believes talks should not be delayed, all depends on when the government gives economy minister Mihkel Parnoja credentials for launching the talks.

Most probably the talks can start in March when a negotiator has been appointed, prime minister's Economic Adviser Kersti Kaljulaid said.

Estonian government will make more exact plans on Feb. 23. Suncor is interested in the investment because labor costs are low in Estonia. According to surveys, Suncor technology would enable production from Estonian shale to double the amount of oil produced from Australian shale sands which is another project considered by Suncor.

The state has intervened in the project because it sees oil shale as a national resource and it would be a very large investment for Estonia in a vital region.

Suncor has selected the likely location of the new plant, the structure of products and issues related to the environment and oil shale resources have been tackled.

The construction of the Suncor plant means that oil shale mining continues in Estonia, the economy is enlivened, new jobs are created and oil imports would be lowered, said Maria Alajäe, an adviser to the economy minister.

The Suncor plant would give work to 100-200 people and the plant would consume 5 million tons of oil shale a year which forms one third of the total mining volume of Estonian Oil Shale. Larger mining volume could mean that energy prices are lowered in Estonia because oil shale is the main raw material of Estonian power stations.

Last year Estonian Oil Shale mined 16 million tons of oil shale and this would be boosted to 20 million tons after the Suncor investment.

The ownership of Estonian Oil Shale also needs to be disputed because according to current plans it would be sold to U.S. NRG Energy, the company that will likely buy Estonian power stations this year.

Suncor's 1998 turnover was 21.6 billion kroons with net profits of 2 billion kroons.