Fields of activity

Introduction of the areas of activity

Oil shale emerged in Estonia more than 450 millions of years ago. Estonia is dealing with the excavation and adding value to oil shale a little more than one hundred years ago. Throughout a century, about one billion tons of oil shale was excavated in Estonia. The current stock of oil shale is about 4.8 billion tons. With the current rate of consumption, there will be enough oil shale for approximately half a century more.

In accordance with the Earth Deposits Act, it is allowed to excavate up to 20 million tons of oil shale per year. The excavation rate is distributed in accordance with the issued extraction permits between four oil shale users - Eesti Energia, VKG, Kiviõli Keemiatööstus, Kunda Nordic Tsement. In 2018, about 16 million tons of oil shale was excavated in Estonia on the whole, which makes 80% of the permitted rate. VKG used up its quota to the full extent and, in addition, it has also been the only one that has realized the opportunity for retroactive extraction established by the Act.

Our goal and one of the most important principles is adding the value to the oil shale processing value chain and its extension. The existing value chain at VKG is the longest in Estonia and one of the longest in the world.

Introduction of the areas of activity

The excavation of oil shale at VKG takes place at the Ojamaa mine, which is the most recent in Europe and the first new mine in Estonia that was built after regaining independence. Since the layer of oil shale is deposited in the bed that is more than 30 metres deep, underground extraction is used at Ojamaa.

Every day about 150 units of wheeled machines are working underground, and 27 km of conveyors are used on a regular basis. Mining provides employment to about 540 people. By a good tradition, the friendly team of the mine selects the best of the best each year, who are awarded an honourable "Honorary Miner" title. The best workers are also acknowledged on the last Sunday of August, i.e. on the Miners’ Day. So far, 50 workers of the Ojamaa mine, whose work has been acknowledged by their co-workers and the management of VKG, have been awarded this title.

Honorary Miner

The total surface area of the Ojamaa mine is 23.7 km²

The excavated area since the opening of the mine has been 8.5 km²

The annual production capacity is 4.5 million tons of oil shale

2004

VKG obtained the mining permit for Ojamaa mine.

2007

preparations for opening the mine.

Juuli 2009

the commencement of works at the site.

Alates 2010

Ojamaa mine supplies oil shale for Petroter and Kiviter oil plants.

Jaanuar 2013

the grand opening of the mine.

Detsember 2013

full capacity was achieved.

2017

Ojamaa was operating with a load of 1.4 times higher than had initially been expected.

2018

five years since the grand opening of the mine.

Detsember 2018

the production record was broken, and 4.35 million tons of commercial oil shale was produced.

Availability of oil shale resource

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.

Shale oil

We have been dealing with shale oil production since 1924. We have been processing oil shale using the Kiviter technology for over 80 years, and since 2005, we have been developing the Petroter technology, too.

The main product of VKG is shale oil, which is obtained in the result of the processing of oil shale. Its advantages as compared to oil products is its small viscosity, low chilling point, and insignificant sulphur content. The fuel oil produced from oil shale mixes well with conventional fuel oils, which allows getting the products with the desired specifications.

Shale oil is used due to its small viscosity, low chilling point, and insignificant sulphur content mainly in order to improve the properties of heavy fuel oils, including as an additive to marine fuels, as a raw material in the chemical industry, and as fuel for boilers and industrial furnaces. The shale oil produced at VKG is also used in Estonia for heating boilers and industrial furnaces. However, the largest part of shale oil is exported.

We produce shale oil using two different technologies: Kiviter and Petroter. Kiviter oil plants are operating on the basis of lump oil shale, and oil is manufactured in vertical retorts, where gas is used as a heat carrier. The plants that are operating on the basis of Petroter technology use fine oil shale, and the manufacturing process takes place in horizontal retorts, while ash is used as a heat carrier.

Until June 2018, production was carried out at the three Petroter and the two Kiviter plants. A purchase and sale contract was entered into with Eesti Energia, according to which the Group is going to buy within the three years about one million tons of lump process oil shale. It helped to re-launch one of the Kiviter oil plants that had so far been closed down due to the lack of raw material. Thus in the second half of the year, we were operating six production facilities. This contract, in addition to oil shale companies, has also had a positive effect on the area owing to new workplaces, and on the state in the shape of environmental charges and increased export turnover.

The production facilities of the Group processed about 4.76 million tons of oil shale per year (+10%), out of which 620,000 shale oil products were obtained (+13%). Product output mainly improved due to the optimization of the operating modes at the plants. The reason for the growth in production has been an increase in the amount of working time at the three Petroter plants by 2.6% up to 905 days as well as the launching of the additional Kiviter plant in the middle of the year. Petroter oil plants are characterized by a high level of reliability and energy efficiency. Last year the average net efficiency of the three plants in terms of oil shale processing reached 90.5%.

2018 year production increased
+ 13 %

Manufacturing heat, steam, and electricity

Adding value to oil shale takes place at VKG via co-production of oil, energy, and heat, which is the most environmentally-friendly way to use this natural resource. In the result of shale oil production process, oil shale gases are generated that are moved to VKG Energia, where they are used for manufacturing heat, steam, and electricity.

Heat energy is forwarded to the local central heating system, steam is sold to production companies located in the neighbourhood, and most part of power energy is consumed by the companies of the Group. In addition to that, we also use oil shale gases at the limestone plant, whose produce is consumed by our own sulphur-trapping devices that purify exhaust gases. This production chain guarantees the ultimately efficient and environmentally-friendly use of energy contained in oil shale.

An increase in the production volumes of shale oil in 2018 was accompanied by the growth of the number of by-products produced from oil shale gases. Last year VKG Energia, the subsidiary of the Group, produced 1 TWh of heat and electrical energy in total, which is the historical record of the company. As compared with 2007, the production volume increased by 6.5%, including an increase in the production of electrical energy by 12% within a year. The year was also very productive insofar as the market prices for electricity last year were much higher as compared with the year before. The total of 41.8% increase in prices for electricity was caused by a low level in hydroreservoirs in Scandinavia, an increase in the price for CO₂ as well as a rise in prices for other production inputs

VKG is the second largest energy producer in Estonia.

Over 30,000 clients in Narva, Narva-Jõesuu, and Sillamäe

VKG Elektrivõrgud, which is the subsidiary of the Group located in the north-east of Estonia, deals with the sale of electricity and the provision of network services. Its area of service covers Narva, Narva-Jõesuu, and Sillamäe.

In terms of the volume of sales of network services, the company is the third electricity distribution company in Estonia. In addition to satisfying the demands of private consumers and small enterprises, VKG Elektrivõrgud plays an important part in providing with electricity large industrial companies in Narva and Sillamäe.

The area with the population of about 90,000 people is provided with power energy via electric power lines of VKG Elektrivõrgud, the total length of which makes 930 km, including 408 km of overhead cables and 522 km of cable lines. The company has 4 transforming substations with the voltage of 110 kV, 8 transforming substations with the voltage of 35 kV, 360 transforming substations with the voltage of 6 kV and 10 kV.

In 2018, the volume of network services increased by 11.3% as compared with 2017 and made up 242.9 GWh. The main driving force was mainly an increase in the growth of consumption volumes among business customers. The sales volume of electrical energy increased by 1%, making up 109.6 GWh. Since throughout the year the prices at the power exchange went up significantly, the growth in the electricity sales turnover made up 27% in total.

etwork services and electricity sales volumeshud

2013

219,18 GWh

95,59 GWh

2014

208,8 GWh

98,87 GWh

2015

203,86 GWh

93,74 GWh

2016

212,46 GWh

95,65 GWh

2017

218,19 GWh

108,51 GWh

2018

242,88 GWh

109,58 GWh

Network services sales volume
Electricity sales volume

Every year VKG Elektrivõrgud makes considerable investments into the maintenance of lines, transforming substations, and other equipment, which is why the reliability of network has increased, and network losses have diminished. In 2018, ca 2.44 mln EUR was invested in the development of network and the enhancement of its reliability.

The average frequency of disruptions caused by some network malfunctions per one consumption point per year (System Average Interruption Frequency Index, SAIFI) in 2018 was 0.519, and the Customer Average Interruption Duration Index (CAIDI) was 37.3 minutes. Both results demonstrate the high quality and reliability of network services.

2018 SAIFI
0.519

Environmentally-friendly central heating

VKG Soojus deals with heat distribution and sales service. The residue heat generated in the course of processing oil shale is used for heating catchment areas. The provision of heating to the areas of Kohtla-Järve and Jõhvi has become possible owing to the heating main that is longer than 18.5 kilometres, which was built by the Group in 2012. The heating main runs from the production territory of VKG Energia in Kohtla-Järve through the territories of several rural municipalities up to VKG Soojus connection point with the distribution network.

Last year the heating energy produced within the Group made up 454 GWh, and the sales volume to final consumers was stable, i.e. 275 gigawatt-hour. Within the reporting period, VKG Soojus lowered the rate by about 5%, and from 1 November the users have been paying 52.66 EUR/MWh for heating.

VKG Soojus deals with heat distribution and sales service. The residue heat generated in the course of processing oil shale is used for heating catchment areas. The provision of heating to the areas of Kohtla-Järve and Jõhvi has become possible owing to the heating main that is longer than 18.5 kilometres, which was built by the Group in 2012. The heating main runs from the production territory of VKG Energia in Kohtla-Järve through the territories of several rural municipalities up to VKG Soojus connection point with the distribution network.

Last year the heating energy produced within the Group made up 454 GWh, and the sales volume to final consumers was stable, i.e. 275 gigawatt-hour. Within the reporting period, VKG Soojus lowered the rate by about 5%, and from 1 November the users have been paying 52.66 EUR/MWh for heating.

2 In 2018, VKG Soojus started an extensive project of renovation of depreciated heating mains. Within the two years, the heating main that is ten kilometres long will be renovated. First of all, the new pipelines will ensure the provision of a stable service of the highest quality to the consumers of VKG Soojus, thermal losses will be reduced, and the reliability of the heating mains will be improved. The total value of the project is 4.4 mln EUR, and it will be implemented with the co-financing of the Environmental Investment Centre.

Cost of the project
4,4 miljon €

Oil shale chemicals

In addition to electricity, heat, and oil, different chemical products are also manufactured from oil shale. VKG still remains the only company in Estonia that manages to obtain valuable chemicals from phenol-water that is separated in the course of oil production at Kiviter plants. Our fine chemicals have a high purification level, i.e. over 99%.

Oil shale chemistry can be divided into two groups: oil shale chemicals (alkyl resorcinols fractions) and fine chemicals. The first group is widely used in rubber and plywood industry, the production of moulded forms, etc. The second group includes products with a high level of purity, which are used in cosmetics, perfume manufacture, and electronics. The main field of application of fine chemicals is the synthesis of medications and the manufacture of hair dyes. For example, fine chemicals produced in Estonia can be found in the products of such companies as Keune, Estel, and Schwarzkopf. Besides, they are used in the process of production of liquid crystals for LCD monitors.

Oil shale phenol fractions are used in the form of resin adhesives in the tyre, plywood, and oil industries and in the process of manufacture of tyres with high durability level (Goodyear, Pirelli and Bridgestone) as well as in the manufacture of Lexus and Toyota spare parts.

In 2018, we produced 1,911 tons of fine chemistry and phenol products, which were sold by the company both to Estonian and foreign customers. The chemicals produced at VKG were mainly sold to the markets in Great Britain, India, Italy, Belgium, and the USA. Now we are dealing actively with the expansion of our customer database for marketing standardized fine chemicals.

The production of fine chemicals contributes to the development of the national economy and oil shale industry since they are manufactured from the by-products of oil shale processing. The troublespot of oil shale chemical industry is still a high amount of expenses for research and development activities and marketing expenses. In addition to that, in connection with the so-called REACH regulation adopted by the European Union, the companies that produce chemical substances must register them, which is also accompanied by a significant amount of expenses.

More information about fine chemicals is available here
www.finechem.eu

Turnkey solutions

The Group has a subsidiary Viru RMT, whose customers include both the companies within the Group and larger industrial companies outside of it.

Viru RMT was created from the former repair and assembly department of the oil shale chemical plant, which means that it has extensive experience in the field of provision of repair and assembly services.

Areas of activity of Viru RMT:

electrical works from the lamps in the ceiling to transforming substations
production, installation, maintenance, and repair of metal structures
design, production and installation of technical equipment
automatic management systems design, software development and installation
installation and repair of control and measuring instruments
implementation of turnkey technical solutions

The largest projects that have been initiated and implemented in 2018:

Provision of electricity to Narva quarry from the 8th block of the Estonian Power Plantб commissioned by Enefit Energiatootmine AS and Enefit Kaevandused AS
Reconstruction of district heating pipelines in Ahtme district. I construction stage, commissioned by VKG Soojus.
Replacement of the 2nd section of distribution device 6 kV at NEMK 110/6 kV substation.
Reconstruction of the underground cable line 6 kV in Olgina village between Futura LP and AJ-71.
Construction of the system of electric power supply in the shopping mall at 1a Pavlova st. in Sillamäe.

You can have a look at the projects implemented by the company at
www.virurmt.com

Construction materials

Own lime plant

VKG lime plant operates from summer 2014. The factory uses limestone from Karinu quarry, which is used to produce lime necessary for the operation of desulphurization device. Semi-coke and generator gases deriving from the production processes of shale oil are used to get energy for decarbonisation. Both the purified char gas and the mixture of semi-coke and generator gases can be used in the operating process. To mix and dose gases, a modern mixing unit has been built. It was developed by Viru Keemia Grupp and is a unique solution developed in Estonia for limestone production.

In 2018, the plant produced ca 22,600 tons of limestone, which was used in full extent in the process of binding sulphides contained in flue gases. In December last year, 2,536 tons of limestone was produced, which is a record-breaking amount since the start of the operation of the burner. The capacity of the lime plant's production fully covers all current and future needs of VKG, and, in addition to that, it provides an opportunity to sell a certain amount of limestone to consumers outside of the Group.

Some of the products of desulphurization found use in agriculture. The Agricultural Board confirmed that the product complies with quality requirements set for lime fertilizers in the Fertilizers Act, which is also proven by a certificate issued to the company.

Use of oil shale residues in road construction

The considerable amount of limestone gravel which results from the excavation of oil shale is successfully used in road construction, landscaping and as a filling material. Last year, the mine waste generated in the group was fully re-used.

Last year 95% of the oil shale waste rock, which is used as a filling material and in road construction, generated at the Ojamaa mine was sent for re-use.