Dear reader!

For Viru Keemia Grupp, 2020 was a year of risk management. The corona virus, which abruptly reduced demand for oil products in the world and took the oil market into freefall, left a mark on the activities of every company. The changes that took place both in the economy and the society tested the competitiveness of our production cost as well as our risk management practices and the rightness of the decisions we made in a complex situation.

The Estonian capital-based Viru Keemia Grupp proved its competitiveness as a producer of ship fuel in the global market of oil products also in the most difficult times. We concluded 2020 with a net profit of 8.9 million euros, working mostly in our ordinary rhythm in valorising oil shale.

We were able to maintain our ordinary work routine thanks to a functioning risk management system and our company’s ability to promptly respond in changing conditions. The crisis forced us to cancel or postpone various planned activities and focus solely on ensuring the continuity of production processes. We used all the available options to protect our employees, reduce contacts and prevent the spread of the virus. We stopped buying raw material and used our stocks. We reduced the volume of both investments and maintenance works for the short-term without considerably increasing operating risks. Unlike many other companies, we were a contributor for the society, not a burden.

2020 was controversial for VKG. Despite the temporary drop in oil prices, the demand for our low sulphur content shale oils remained strong. The growth in the sales of phenol products was the highest in history and interest in our coke also grew among Western European undertakings. On the negative side, we saw the vigorous efforts of the Estonian politicians in conveying negative messages to enterprises that add value to oil shale. In a situation where several economic sectors are continually asking for help from the state and where states are forced to increase their loan burden in order to boost the economy and save enterprises, the Estonian state has publicly decided to give up an economic sector which is capable of independently functioning even in the most difficult crisis and ensuring the continuity of high added value export revenue.

Unjustified national decisions that do not rely on impact analyses, the European Green Deal related unprecedented state interventions in the economy and the increased number of those dependent on the state constitute a new reality which we have to take into account in planning our future in Estonia. The Estonian Government’s unjustified critical attitude towards oil shale has significantly shortened the permissible pay-back period of oil shale valorisation development projects and forced us to freeze our investment plans until the clarification of the future Green Deal regulations. We continue to look for business projects in areas with natural demand and free competition where profitability does not depend on political decisions.

The global ship fuel market does not currently have a carbon-neutral alternative and we continue to meet the clients’ demand for shale oil. We define our future direction on the basis of market demand, clients, and technological development. Our high efficiency, strong financial position and core value based operations are a strong foundation in adapting to market changes.