The availability of oil shale resource as the main raw material should be assessed from two perspectives, that is the sufficiency of the resource in terms of volume and the maximum permitted excavation volume arising from the regulations.
Oil shale resource is sufficient in Estonia, and the companies consuming oil shale mainly manage to provide for their needs for the raw materials by their own means. An exclusion is VKG, whose processing capacity related to production volumes has been exceeded the maximum rate established in the mining permits issued to the Group for years. The Earth Deposits Act, which has exerted a significant impact on development, has not provided market players with any kind of certainty or predictability, which is why a large number of applications for mining permits have been submitted, including the overlapping ones (between different companies). For the sake of the best possible and the least damaging for the environment use of the oil shale resource in Estonia it is essential that market players could find the options for cooperation as well as be able to make compromises, which would take due consideration of the needs of different companies in terms of volume as well as the suitability of this or that location in terms of logistics and with regard to processing capacities.
VKG runs the Ojamaa mine, whose geological stock of oil shale was 60.2 million tons as of 31.12.2018. If we consider the valid assessment of the environmental effect, according to which the maximum permitted excavation volume is 3.5 million tons of geological resource per year, the resource available at the Ojamaa mine will last for approximately 12-14 more years. In order to extend the service life of the mine, VKG is planning to apply for the mining permit at Aidu III extracting permit area, which is adjacent to the Ojamaa mine and has been left unused by Eesti Energia.
In order to provide the sufficiency of the resource in the long-term perspective, the priority of VKG has been ave the processing of the application for the permits pertaining to Uus-Kiviõli, Oandu, and Sonda excavation fields. These excavation fields are in the best location in terms of logistics, regarding oil shale processing facilities belonging to VKG that are located in Kohtla-Järve, and they would enable the company to use the existing infrastructure to the maximum. The separation plant that is located near the Ojamaa mine could also serve the processing of the produce obtained from the new extraction fields, and there would be no need for additional above-ground construction works and nature destruction. Currently, the applications for permits pertaining to Uus-Kiviõli and Oandu have been stuck in court disputes but taking into consideration the overall sufficiency of the oil shale resource, there is no doubt that it will be possible to find compromise solutions.
The maximum permitted annual mining amount at VKG does not cover the needs of VKG in full. The mining permits that have been issued to VKG enable the company to excavate 2.77 mln of tons of geological resource, from which about 3.5 mln tons of commercial oil shale can be produced. If other players in the market within the past 7 years leave the permitted volumes unexcavated in full extent, and provided that the overall excavation of oil shale is within the limits of 20 mln tons of geological reserve, VKG will be able to increase the amount of its produce up to 3.5 mln tons of geological reserve respectively (4.4 mln tons of commercial oil shale) by means of "post-factum excavation mechanism". The total demand of VKG for oil shale, with due consideration of all oil production capacities, is 4.2 mln tons of geological reserve per year, i.e. the deficit of oil shale at VKG is the minimum of 0.7 million tons of geological reserve per year.
At present, VKG covers the need for the resource that has not been covered through mining permits by means of purchasing the raw material from Kiviõli Keemiatööstus and Enefit Kaevandused, but, due to the lack of oil shale market based on free competition, VKG cannot regard these solutions as stable in the long-term perspective.