4. OIL

regular increases in tax rates since 2016; Estonia’s fuel prices have shifted from being among the lowest to being within the median levels of countries in the IEA oil price comparison.

Figure 4.1 Share of oil in different energy metrics, 1990-2018

IEA 2019. All rights reserved.

Estonia’s production of unconventional oil comes from the liquefaction of oil shale.

* The latest data available for total final energy consumption are for 2017.

Notes: TPES = total primary energy supply; TFC = total final consumption. Estonia’s production of oil shale, from which its unconventional oil is produced, is accounted for as “coal and oil shale” in the IEA’s TPES metrics, and is the reason for the apparent discrepancy in the share of oil between TPES and TFC. Data for 2018 are provisional.

Source: IEA (2019a), World Energy Balances 2019, www.iea.org/statistics.

Estonia fully meets its IEA and EU emergency oil stockholding by holding public stocks of refined products, a substantial portion of which is held in other countries under bilateral agreements.

Supply and demand

Oil production

Estonia has unconventional oil production in the form of shale oil from domestically produced oil shale. The liquefaction of oil shale, an energy-rich sedimentary rock, into shale oil accounts for all domestic oil production. Liquid shale oil is essentially a synthetic crude oil, with a lower viscosity and lower sulphur content than heavy fuel oil derived from refining of conventional crudes. It is primarily used as a blending component in heating or bunker fuel oil to lower sulphur content, and as refinery feedstock.

In the period 2008-18, Estonia’s domestic oil production increased by 157%, reaching 21.6 thousand barrels per day (kb/d) in 2018 (Figure 4.2), the equivalent of 1.12 Mt annually. The amount of shale oil production in a given year is directly linked to changes in the supply of domestic oil shale, global crude oil prices and electricity demand, as oil shale is also used for power generation. Sharp annual changes in 2015-17 were mainly due to changes in global oil market fundamentals, where falling crude oil prices led to a steep decline in production for the first half of 2016 followed thereafter by more stable growth. The longer term trend of rising shale oil production reflects the growing economic advantage of producing liquid fuels rather than electricity from the oil shale (see Chapter 3).

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