TALLINN - Despite rising petrochemical prices, profits collapsed last year at Kivioli Chemical Works, the Estonian oil shale company. The company reported a profit of 15.8 million kroons (1 million euros), down from 47 million kroons the year before.
The company blamed the unique circumstances of the Estonian market for their poor results.
"Maybe the price of oil is going up globally, but this is not a world market," company spokesperson Kirsti Saluleta told The Baltic Times.
Salulet said that the company had been hit hard by environmental taxes and wage inflation. The company employed 670 people last year and the cost of wages, including social tax, was 86.7 million kroons. The company's CEO earns 360,000 kroons per year.
"Things could have been better last year but we are confident that we continue to make profits and get better results," Salulet said.
Kivioli is largely a wholesale company but sells mainly to Estonian buyers. The company is key to the vitality of Estonian energy exports. "Eighty percent of what we sell goes abroad," Salulet said. "We export very little ourselves, but we know companies who buy our oil sell it [abroad]," she added.
The company's annual report says sales revenue in 2007 grew 16.4 percent year-on-year, to 318 million kroons. But the cost on the output sold increased by approximately 32 percent.
Oil shale sales generated 198 million kroons. Bitumen, used in building roads, earned the company 21.7 million kroons. Oil shale earned 52.5 million kroons and sales of thermal energy generated 12.4 million kroons.
Kivoli Chemical Works is a major employer in the town of Kivoli. The company is a subsidiary of T.R. Tamme Auto, which is listed on the Tallinn stock exchange. The plant is based in Northeast Estonia.
Oil shale is vital to the Estonian economy; 75 percent of the country's energy comes from the product. Estonia is the only country in the world which uses oil shale as its primary energy source.
Oil shale is found in 2.5- to 3-meter layers at depths of 70 to 100 meters in a 2700 square kilometer area of Estonia. Its production comprises 70 percent of the world's oil shale production.
Oil shales are not actually oil, but fine-grained, toffee-colored sediments of low density, containing high proportions of kerogen. Oil shale releases off liquid or gaseous hydrocarbons when heated. The proper term for this mineral is "kukersite."