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Estonia's state power firm announces US shale deal

10 march 2011, 23:25
Eesti Energia. Photo courtesy of shaan.typepad.com
Eesti Energia. Photo courtesy of shaan.typepad.com
The state power firm of Estonia, a Baltic nation that all but covers its energy needs with oil shale, said Thursday that it was taking over a major US shale-sector player, AFP reports.

Eesti Energia announced that it was acquiring a 100 percent stake in the Oil Shale Exploration Company (OSEC).
It said that OSEC, whose operations center on the state of Utah, had the largest tracts of privately-owned oil shale reserves in the United States, with over 3.1 billion tons of oil shale containing almost 2.1 billion barrels of oil.

"Eesti Energia is planning to construct an oil shale plant with a capacity of 57,000 barrels of shale oil per day at full production," its chief executive Sandor Liive told reporters.

"It is a unique opportunity for Estonia to be able to provide one of the largest countries in the world with something they need -- technology which enables them to utilize their domestic oil shale resource and therefore increase the country's energy independence," Liive added.

The development phase of the U.S. project is expected to last four years, followed by a construction period of three years, Eesti Energia said.

It did not disclose the price tag.

To extract oil from shale -- rocks containing matter from which petroleum can be distilled -- the underground matter must first be heated to extremely high temperatures.

This allows hydrocarbons to be released, after which they must be pumped to the surface for processing.

Mined shale can also be used directly to fire power stations.

Estonia, a former Soviet-ruled European Union member nation of 1.3 million, covers more than 90 percent of its power needs by burning shale, the country's only mineral resource.

Eesti Energia's businesses range from oil shale mining, oil shale-based electricity and heat generation, to shale oil production, electricity distribution, and selling electricity to retail customers.

Eesti Energia said the OSEC takeover still needed a green light from the U.S. foreign investment watchdog.

It said that once the deal had closed, it planned to focus on developing oil shale projects in Estonia, the United States and Jordan, where it acquired a majority stake in a local shale company in 2006.

It is one of Estonia's largest companies, with total revenues of 796 million euros ($1.1 billion) and pre-tax earnings of 245 million euros ($340 million) in 2010.

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