Job Cuts at Shale Companies Prompt Estonia to Consider EU Help

  • Largest private shale producer to eliminate 500 jobs
  • Hundreds more positions at risk in industry, minister says

Estonia, the only country in the world that depends on oil shale for most of its energy needs, may ask for European Union aid as job cuts in the industry brought on by tumbling prices threaten efforts to boost energy independence and risk stoking social tensions.

The Baltic nation’s government is considering applying for money from the European Globalisation Adjustment Fund after Viru Keemia Grupp AS, Estonia’s largest private oil producer, said it will cut about 500 jobs, more than a fifth of its staff, Health and Labor Minister Jevgeni Ossinovski said Friday in an e-mailed statement. Hundreds more positions are at risk at state-owned AS Eesti Energia, he said.

Plunging global oil prices are hammering shale producers in Estonia, which has been seeking to trim reliance on natural-gas imports from its former Soviet master Russia because of political animosity. The industry, afflicted by job losses since 2014, is concentrated in the nation’s north east, where unemployment is double the national average and the biggest ethnic group is the Russian-speaking minority.

‘Depressing’ News

“News of job cuts in a region that suffered several large layoffs only last year are undoubtedly depressing,” Ossinovski said in the statement. The government “takes the ensuing social situation very seriously.”

Viru Keemia announced as many as 200 job losses at the end of 2014, while Eesti Energia said last month it will shed about 150 mining positions in the region. AS Nitrofert, an Estonian fertilizer unit of Ukrainian billionaire Dmitry Firtash’s OstChem Holding, eliminated more than 400 jobs between September and November as fertilizer prices fell.

The cabinet late Thursday backed measures allowing Eesti Energia to apply for subsidies for burning wood chips at its power plants as part of renewable-energy trade between EU members. The Economy Ministry is also considering a temporary moratorium on environmental fees for energy companies.

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