Translated version of this PSD: Estonian
The EBRD is considering a senior loan of up to EUR 35 million to Viru Keemia Grupp AS (VKG), the largest oil shale processing company in Estonia, to finance part of its 2014-2015 investment program. The oil shale, also known as kerogen shale, is a sedimentary rock and is extracted through conventional mining methods which do not involve any hydraulic fracturing. VKG process oil shale into oil derivatives and chemicals a process which results in production of fuel gaseswhich are utilised for generation of power and heat. The proceeds of the Bank’s loan will finance construction of two fuel gas desulphurisation plants, a condensing steam turbine and a steam boiler, and a lime kiln. The total CO2 savings for the Project amount to 126,000 tn CO2/yr.
The key sources of transition impact for the Project derive from setting standards for business conduct.
The planned investment will be in line with Best Available Technique (BAT) reference notes and for some elements will go beyond BAT. Moreover, through the use of abatement technology, the company committed to meet Industrial Emissions Directive (IED) requirements for the entire facility and to go beyond IED requirements for part of the installation. On the efficiency side, the turbine and boiler efficiencies as well as the lime kiln plant will exceed the respective applicable EU-BREF standards. The lime kiln plant is a unique example of resource efficiency not only for the processing industry but also for related industries: the usage of the lime waste of the mining activities displacing use of raw lime for suppression of the toxic sulphur dioxide emissions. Finally, the company has agreed to the implementation, verification and certification of an integrated energy and carbon management system for the entire processing plant
VKG AS is the largest processing company in Estonia which produces chemicals and oil products.
EUR 35 million commitment parallel to a EUR 115 million debt facility.
EUR 214 million
The project has been categorised B in line with the EBRD’s Environmental and Social Policy (2008). E&S Due Diligence (ESDD) was undertaken by the Bank with the assistance of an international firm of independent consultants.
The consultant was instructed to undertake an E&S Analysis of the project and an E&S Audit of the project area of influence to determine the compliance status of the existing and proposed operations against EU requirements, including the IED and BAT. In addition, the consultant was instructed to identify potential projects that would result in an environmental performance being achieved beyond BAT.
ESDD has confirmed that the project will meet the EBRD's Performance Requirements and that a number of environmental and resource efficiency measures have been agreed with the client at the wider facility that will achieve and exceed BAT and go beyond the requirements of the competent authorities.
In total, the client will undertake a feasibility study for five sub-projects. The aim is to explore the reasonableness of an environmental performance beyond BAT for the sector and for the installation type and a further five resource and energy efficiency projects, as follows:
• Design and operation of the NID to achieve emissions standards below the IED requirement of 1000mg/Nm3 SO2;
• Installation of VOC abatement technologies at the oil shale loading unit that will achieve emissions standards stipulated by various BAT reference documents; review effectiveness of VOC abatement and consider implementation at the oil stores to achieve similar standards.;
• Undertake a feasibility study to further reduce particulate emissions to achieve a standard below BAT emissions standards;
• Undertake a feasibility study for the reduction of NOx and CO at the both power plants despite IED requirements (where applicable) already being met; and
• Review the Southern Power Plant’s total contribution to facility wide emissions and review where BAT / IED requirements could be met despite this not being a qualifying installation.
Energy and Resource Efficiency:
• Turbine and Boiler efficiencies to exceed EU-BREF standards. These have been secured for the boiler design study and include addressing the Water Balance of the entire facility.
• Lime kiln plant to exceed EU-BREF standards and the carbon intensity standards of the EU-ETS Phase III (tn CO2/tn product).
• Implementation and verification of all relevant management systems (ISO50001,etc).
• Finalise the Plant Wide Energy Efficiency study they are conducting in accordance with all relevant EU-BREFs and provide the EBRD the list of the top investments for
• Commitment to explore the option of the waste ash utilisation in substitutes products and to explore the option for the cement plant in order to reduce the plant overall carbon footprint to levels far below those of the EU.
The above have been incorporated into the ESAP along with a number of other actions to ensure that the facility is operated in compliance with the EBRD’s requirements. The project will be monitored in accordance with the commitments in the ESAP.
Tiit Atso, Project Finance Manager, Corporate Finance
Phone: +372 53311511
For business opportunities or procurement, contact the client company.
EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
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