Eesti Energia Investor Presentation
19 March 2012 Disclaimer
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2 Content
Section 1. Estonia and Eesti Energia in Brief 2. Eesti Energia — Business Areas 3. Eesti Energia — Strategy and Investments 4. Eesti Energia — Financials and Funding
Appendix 1. Eesti Energia Results in 2011 2. Detailed Business Overview 3. Management
3 Estonia and Eesti Energia in Brief
Section 1 Introducing Eesti Energia
Leading oil-shale-to-energy company, 100% owned by the Republic of Estonia
Integrated utility operating on converging Nordic and Baltic power market with added value from unique shale oil business
Total revenues and other operating income €858m, assets of €2bn and EBITDA of €265m in 2011
40% of revenues and EBIT from regulated activities in 2011
Rated Baa1 / BBB+ from Moody's and S&P with stable outlook
Reasonable leverage with long term maturity profile
5 Overview of Estonian Economy
Solid GDP growth in 2011 driven by exports 2010 2011 (+37% y-o-y), which have enabled Estonia to GDP change (%) 2.3 7.6 run a positive current account since 2009 Inflation change (%) 2.7 5.1 Estonian economy closely aligned with Unemployment (%) 12.3 8.4 Scandinavia, as Sweden and Finland are the Government surplus/ deficit as % of GDP 0.2 0.7* main export destinations alongside rest of the Government gross debt as % of GDP 6.7 n.a. European Union Current account balance / GDP (%) 3.6 3.2 Estonian banking system is dominated by Sources: Statistics Estonia, Eurostat,, Unemployment Insurance Fund Scandinavian banks (ca 90% of the market * Forecast Source: Bank of Estonia in 2011) Estonia's Export Partners 2011 In January 2011 Estonia adopted Euro, becoming the 17th member of the Eurozone 16% Estonia’s has the lowest government debt in 33% EU as at y/e 2010 15% Estonia ranks well in comparison with a credit rating of A1 / AA- (n) / A+ and CDS levels (among 5 top countries in Eurozone) 36%
Sweden Finland Rest of the EU Rest of the World
Source: Statistics Estonia
6 Estonia is Part of
BARENTS 350 MW Estlink 1 power cable between SEA Estonia and Finland operational from 2007
Murmansk Nord Pool Spot power market established in Estonia in April 2010 WHITE SEA In 2011 prices in Estonia and Finland equal ca 50% of hours
FINLAND 81 Integration to Nord Pool to be improved with TWh SWEDEN 650 MW Estlink 2 cable (expected GULF OF BOTHNIA 138 commissioning in 2014) NORWAY Helsinki St. Petersburg TWh Oslo 700MW Nordbalt cable between Lithuania Tallinn RUSSIA Stockholm ESTONIA 26 and Sweden potentially commissioned Stavanger TWh Moscow Goteborg Gotland LATVIA by 2016 BALTIC Riga SEA NORTH LITHUANIA DENMARK Oland SEA Vilnius Minsk Kaliningrad Copenhagen RUSSIA 137 TWh BELARUS NETHERLANDS
GERMANY POLAND UKRAINE
Planned interconnectors Existing interconnectors Nordpool Spot member
Source: Eurelectric, data for 2009
7 Eesti Energia — Business Areas
Section 2 Eesti Energia Business Model in Brief
20 14.3 15
10 18m tonnes 164 thousand tonnes 6.2 TWh of power 5 1.6 2.1 of shale oil sold to distributed to clients of oil shale 0 Power Oil External sold in 2011 clients clients in 2011 in 2011
Shale Oil Production Shale Oil Sales
Oil Shale Mining Power and Heat Deregulated Retail Power Sales Generation Sales in Baltics Unregulated Regulated Power Sales on Regulated Power Distribution network Nord Pool Spot Sales in Estonia
12 9.9 8 10 5.5 6 8 6 4 3.2 4 10.4 TWh 10.7 TWh of 2.0 2 0.4 0.1 2 of power 0 power sold Oil shale Renewable Gas 0 Regulated Retail Wholesale generated in 2011 in 2011 deregulated deregulated
9 Regulated Business Drivers
1 Mining 2 Power Generation 3 Regulated Supply 4 Distribution
Group holds licenses for Price of power Average price of Distribution of electricity 559m tons of geological generated in Narva electricity on the is fully regulated by oil shale as of 31 Power Plants for regulated retail market the ECA December 2011 (ca Estonian regulated retail was 30.8 €/MWh 465m tonnes of market is set by during 2011 Allowed return saleable oil shale) Estonian Competition regulated to equal Authority (“ECA“) Estonian retail market to WACC earned on Annual mining limit of be fully deregulated at Regulatory Asset Base 15m tonnes of geologic The last approval came the beginning of 2013 (RAB) oil shale (ca 17.8m into force from October tonnes of saleable 2009 when the price Current WACC 7.83%, oil shale) limit was confirmed at RAB €559m 29.4 €/MWh Current 3-year Regulated price of oil regulatory period shale €10.5 / tonne Regulation expected to in 2011 end alongside retail August 2011 – 2014 market deregulation at Main driver for business Oil shale pricing the beginning of 2013 regulation expected to is general economic be revised after full environment and power retail power market consumption growth deregulation in 2013 in Estonia
1 2 Power and Heat Oil Shale Mining Power Sales Generation 4 Distribution network 3 Regulated Power Sales in Estonia
10 Unregulated Business Drivers
5 Power Sales on Nord Pool Spot 6 Deregulated Retail Sales in Baltics 7 Shale Oil Sales
€/t $/bbl € / MWh 5 000 100% 80.0 600 140 70.0 4 000 72% 80% 500 120 60.0 100 50.0 400 40.0 3 000 60% 80 30.0 300 60 20.0 200 10.0 2 000 40% 40 0.0 100 15% 20 -10.0 1 000 20% -20.0 7% 0 0
0 0% Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-11 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Apr-11 Oct-11 Jan-11 Jun-11 Jan-12
Feb-11 Mar-11 Feb-12 Mar-12 Estonia Latvia Lithuania Aug-11 Sep-11 Nov-11 Dec-11 May-11 Fuel oil 1% ARA (€/t) Eesti Energia sales Other sales Nord Pool Estonia EE Dark Clean Spread Brent crude oil ($/barrel) EE market share
Source: Reuters, Eesti Energia Source: Reuters,
7 Shale Oil Production Shale Oil Sales
Mining 5 6 Power and Heat Deregulated Retail Power Sales Generation Sales in Baltics 5 Power Sales on Nord Pool Spot
11 Environmental Impact a Key Area
Annual Emission / Deposit (2011) Abatement Measures
CO 2 12.3m tonnes More efficient generation (CFB) Oilshale and biomass co-firing (up to 50/50) Wind and WTE generation
SO 2 56,800 tonnes Desulphurisation equipment for 800MW and measures for other blocks CFB generation
NOx 12,800 tonnes Denitrification planned for 800MW
Fly and bottom 7.1m tonnes Exploring ways to reuse ash in construction and other ash industries Hydro transport optimisation Recultivating old ash storage site (Narva wind park)
Waste rock 2.6m tonnes Gravel production from mining Road and landscaping projects using waste rock
12 Eesti Energia — Strategy and Investments
Section 3 Eesti Energia Business Strategy
Improvement of the distribution network €300m investment plan for 2011-14 regulatory period Distribution on the back of 7.83% WACC on RAB Reduction of network losses and provision of reliable service to clients
Refurbishment of existing generation portfolio to maintain compliance with more stringent regulation Power Investment into new generation capacity with lower Generation CO footprint and Supply 2 Maintaining significant market share in Baltic retail market to hedge generation portfolio
Expansion of shale oil production in Estonia with Enefit 280 plant expected operational in 2012 Shale Oil Exploring shale oil upgrading into lighter products Exploiting shale oil production expertise and proprietary technology internationally
14 Investment Plan and Key Projects
Capex up to Expected 31 Future December Capex Investment 2011 (EUR (EUR Expected Project million) million) completion Expected result Distribution 39 261 2014 Reduced network losses, networks smart metering 2011-2014 Desulphurisation 92 25 2012 Compliance of existing 800 equipment in MW of (gross) installed
Narva Power capacity with lower SO 2 Plant emission limits Narva wind park 55 4 2012 New wind park with 39 MW capacity Paldiski wind 7 26 2012 New wind park with park 22.5 MW capacity Iru waste-to- 35 70 2013 New CHP plant with capacity of
energy plant 17 MW e and 50 MW h New CFB power 70 568 2016 New biomass / oil shale fired plant in Auvere CFB power plant with 300 MW (gross) generating capacity
15 Investment Plan and Key Projects (Cont’d)
Capex up Expected to 31 Future December Capex Expected Investment 2011 (EUR (EUR Comple- Project million) million) tion Expected Result Enefit-280 160 52 2012 Additional annual oil production oil plant capacity of up to 290.000 tons of shale oil, additional products up to 78 m3 of high calorific value retort gas and up to 307 GWh of electricity Development of 6 19 2012 Infrastructure development for oil shale industry potential oil industry expansion and infrastucture new CFB power unit in Estonia Predevelopment 31 39 Developm Opportunity to invest in an oil project of liquid fuels ent up to with planned capacity of producing industry in USA 2016 50,000bbl of oil per day in the US Predevelopment 3 27 Developm Opportunity to invest in oil project of liquid fuels ent up to (planned capacity of producing and electricity 2016 38,000bbl of oil per day) and power industry project (oil shale power plant with in Jordan 500MW capacity) in Jordan
16 Financing of Capital Expenditure
EUR 560m expected capital expenditure for €m the year 2012 600 Currently committed projects and maintenance investments expected to amount 500 to 918 million euros of capital expenditure in 2013-15 – Some flexibility in investment timing (e.g. 400 maintenance capex) Financing mainly from internal cash flow and additional borrowing 300 – EUR 150 million additional equity capital included in the State Budget of Estonia EUR 918 million of 2012 (still to be approved by the 200 committed projects´ Government) capital expenditure and maintenance Currently committed capital expenditure 100 investments programme foresees investments peaking expected for 2013E- in 2011-12 15E 0 2010 2011 2012E 2013E 2014E 2015E EBITDA Net debt (end of period) Investments
17 Eesti Energia — Financials and Funding
Section 4 Solid Underlying Results in 2011
Total Revenues EBIT
Operating Cash Flow Capital Expenditure
19 Favourable Debt Maturity Profile and Healthy Liquidity Debt maturity profile is driven primarily by the Debt Maturity Profile duration of capital expenditure programme m€ 312 Healthy liquidity position due to available bank 350 financing (all unused as at 300 31 December 2011): 250 200 – EUR 500m revolving credit facility with 150 regional banks (maturing in September 100 50 1 1 1 1 14141413 12 12 12 12 12 12 2014) 0 2012 2014 2016 2018 2020 2022 2024 2026 – EUR 95m investment loan from European Investment Bank (EIB), available until December 2012 Debt Breakdown as of 31 December 2011 Long established lending relationship with EIB for long-term financing
Established investor relations activity with €146m quarterly earnings calls and semi-annual non-deal roadshows €300m
Eurobond EIB loans
20 Baa1 (Moody's) / BBB+ (S&P) with Stable Outlook
Main financial ratio not to be exceeded is Net Net Debt* / EBITDA debt / EBITDA of max 3x
1,6 No breach in financial covenants in the 1,5 Group's loan agreements
S&P (29 February 2012): "They further reflect our opinion that there is a "moderately 0,6 high" likelihood that the Republic of Estonia (AA-/Negative/A-1+) would provide timely and sufficient extraordinary support in the event of 2009 2010 2011 financial distress. " *Net debt = borrowings – cash and cash equivalents (incl. deposits with maturities more than 3-months) Moody's (09 January 2012): "We continue to regard Eesti Energia as of high importance to Financial Leverage the state given the group's role in the electricity and shale oil markets in Estonia. " 26,1% 24,7% 24,6%24,5%
2009 2010 2011
Financial leverage = borrowings / (borrowings + equity)
21 Summary and Investment Highlights
Integrated utility active in the converging Nordic and Baltic power market
Leading Oil Shale to Energy Company, 100% owned by the Republic of Estonia (A1/AA-(n)/A+)
Approximately 40% of the Group’s revenues and EBIT from regulated activities in 2011
Diversified and long term debt maturity profile
Comfortable liquidity position (EUR 636m as of end 2011)
Investments to increase and enhance profitable energy and oil production
22 Eesti Energia Results in 2011
Appendix 1 Revenue and Other Operating Income Growth Mainly from Open Market
Change of Group Revenues and other Breakdown of Revenues 2011 Operating Income by Products
24 Electricity Sales at Regulated Prices Decreased by 9%
Group Electricity Sales at Regulated Prices Comments
(9.2)% Partial electricity market opening on 1 April 2010 impacting the comparative basis for FY2011 (10.0)% Average sales price in the regulated market 30.8 €/MWh (+1.0% y-o-y)
Correction in energy prices electricity price packages from August 2011
25 72% Market Share in Estonian Open Market
Group Electricity Sales at Regulated Prices Comments
Retail sales 2,031 GWh (+307 GWh), sales +12.9% +13.5% on exchanges and to wholesale buyers 3,199 GWh (+289 GWh)
Average unregulated market shares in 2011: 72% in Estonia, ca 15% in Latvia and 7% in Lithuania
Average sales price on the unregulated market excluding renewable energy subsidies was 49.0 €/MWh (+1.4% y-o-y)
Renewable energy subsidies increased to 21.2 million euros (+30.2% y-o-y) due to increased production
26 Network Services Revenue Increased
Sales of Network Services Comments
Average network tariif of 30.0 €/MWh (2.2)% (+9.3%). New network tariff of 33.0 €/MWh from 1 August 2011 +7.0% Network losses were at 5.8% in FY2011 (- 0.8 percentage points) due to:
– new client care and billing software, which supported collection of previously unrecorded amounts
– replacement of electricity meters
– higher network tariff and renewable energy fees, which motivated clients to report their readings earlier
27 Shale Oil Revenues +18% y-o-y
Sales of Network Services Comments
Lower sales due to scheduled repairs (9.5)% +17.8% Average sales price was 371 €/t (+30%) due to higher fuel oil prices on the world market
– excluding price hedges average price was 418 €/t (+41.8%)
– average price of heavy fuel oil, the reference product, was 456 €/t
Sales hedged against price risk in FY2011 amounted to 61. 2 thousand tons with an average price of 333 €/t
28 Other Revenues and Operating Income Growth from Oil Industry Development
Other Revenues Comments
Increase in other revenues was supported by the development of Estonian oil industry +27.4% incl.:
– increase in sale of repair and construction services (+12.8 million euros)
– increase in the revenues from sale of electrical equipment (+4.4 million euros)
Revenue from the sale of business:
– sale of 11% stake in Jordanian subsidiary and revaluation of the remaing stake (+16.2 million euros)
– sale of Kohtla-Järve Soojus (+2.4 million euros)
29 EBIT Growth Mainly from Fuels Division
EBIT Change Breakdown by Divisions EBIT Divisional Breakdown 2011 *
m€
* Excluding other and eliminations
30 Increased Shale Oil Sales Price Behind Higher Group EBIT
Impact on Group’s Profitability:
250 m€
7 2 (10) 200 26 (9) (8) 16 (4) (1) 168 149 150
100
50
0 EBIT Higher Non- Higher More Fixed Repairs Lower Depreciation Other EBIT 2010 profitability recurring margin of profitable expenses profitability 2011 of revenues network projects by of liquid fuels services Technology electricity sales Industry
31 Operating Cash Flows Impacted by Influence of CO2 Allowances
Development of Operating Cash Flows:
32 Capital Expenditure at €508m in 2011
Capex Divisional Breakdown 2011 Major Projects
Enefit-280 shale oil plant 112 million euros
Distribution network 73 million euros
New CFB power plant in Auvere 70 million euros Capex Narva wind park 49 million euros €508m Oil shale mining equipment 32 million euros
Predevelopment of liquid fuels industry in USA 31 million euros
Desulphurisation equipment in Narva power plant 30 million euros
Iru waste-to-energy plant 25 million euros
33 Credit Lines Increase Financial Flexibility
Liquidity Comments
Liquid assets 56 million euros at 31 December 2011 due to extensive capex program
Dividend payment and repayment of bank loans 57 and 59 million euros, respectively
EIB investment loan of 136 million euros drawn in July 2011
500 million euros credit lines signed in September 2011, 95 million euro loan from EIB
* (excl. Changes in deposits and financial assets)
34 Income statement
million euros 2011 2010 Change % Total Revenues and Other Operating Income 857.5 796.2 7.7% Expenses (excluding depreciation) 592.4 554.0 6.9% EBITDA 265.1 242.3 9.4% Depreciation 97.1 93.4 4.0% EBIT 168.0 148.9 12.8% Net financial income /(-expenses) (3.2) (5.3) (39.0)% Income tax on dividends 14.7 28.8 (49.1)% Net profit from continuing operations 149.2 117.0 27.6% Profit from discontinued operations – 27.4 –
35 Balance Sheet
Change million euros 31 Dec 2011 31 Dec 2010 million euros Total current assets, incl.: 255.2 494.0 (238.8) Cash and cash equivalents 40.9 54.8 (13.9) Deposits with maturities greater than 3 months – 181.4 (181.4) Trade and other receivables 125.2 169.9 (44.7) Inventories 37.9 29.1 8.8 Other 51.2 58.8 (7.6) Total non-current assets 1,769.5 1,329.4 440.1 Assets for sale 11.8 20.7 (43.0) Total assets 2,036.5 1,844.1 192.4
Liabilities, incl: 799.9 737.0 62.9 Trade and other payables 176.1 132.7 43.4 Other 142.1 167.1 (15.0) Borrowings 436.2 358.7 77.5 Current borrowings 1.5 26.8 (25.3) Non-current borrowings 434.7 331.9 102.8 Provisions 45.5 78.5 (33.0) Equity 1,236.6 1,107.1 129.5 Total liabilities and equity 2,036.5 1,844.1 192.4
36 Cash Flow Statement
Change million euros 2011 2010 million euros Cash flows from operating activities 161.8 198.1 (36.3)
Purchase of tangible and intangible assets (417.3) (204.8) (212.5) Net change in deposits with maturities greater than 3 months 181.4 (176.3) 357.7
Received long-term bank loans 138.1 2.3 135.8 Repayments of bank loans (59.1) (3.5) (55.6)
Dividends paid (56.1) (109.2) 53.1 Other 38.0 139.7 (101.7) Cash flows from discontinued operations – 172.6 (172.6) Net cash flows (13.2) 18.9 (32.1)
37 Detailed Business Overview
Appendix 2 Introducing Oil Shale
What can be Produced from One Tonne of Estonian Oil Shale?
Electricity Shale Oil
Approximately 850kWh Approximately 128kg (0.82bbl) 1 t
Global Oil Shale Resources and Shale Oil Production
North America Europe
Oil shale resources (bn bbl) 3,722 Oil shale resources (bn bbl) 368 Shale oil production (‘000 t) - Shale oil production (‘000 t) 355 Shale oil production (countries) - Shale oil production (countries) Estonia
South America Asia
Oil shale resources (bn bbl) 82 Oil shale resources (bn bbl) 384 Shale oil production (‘000 t) 200 Shale oil production (‘000 t) 375 Shale oil production (countries) Brazil Shale oil production (countries) China
Africa Middle East
Oil shale resources (bn bbl) 159 Australia / NZ Oil shale resources (bn bbl) 38 Shale oil production (‘000 t) - Oil shale resources (bn bbl) 32 Shale oil production (‘000 t) - Shale oil production (countries) - Shale oil production (‘000 t) - Shale oil production (countries) - Shale oil production (countries) -
Note: Conversion factor to barrels is 6.42bbl/tonne Source: World Energy Council Survey of Energy Resources 2010 (which presents production figures as at end 2008)
39 Mining — Business Overview
Overview Regulation
Mining licence provides exclusive right to mine oil Price limit on sales to generation plants with shale within defined area capacity in excess of 500MW approved by ECA Exception to the auction process for new licences Under the current regulation, the approved weighted applied to companies with reserves depleting within average price of oil shale is €10.55/tonne five years Regulation expected to be revised or ended after full electricity market opening in 2013
Eesti Energia Mining Operation
Geological oil shale resource Saleable oil shale sales Mine Type (mt) 31/12/2011 in 2011 (mt) (1) Estonia Underground 230.6 7.0 Viru Underground 7.7 2.2 Narva Open-pit 104.8 5.6 Aidu Open-pit 2.7 2.7 Uus Kiviõli Underground 207.8 (2) – Tammiku Opencast 5.6 Total 559.2 17.5 (3)
(1) Saleable oil shale – i.e. includes limestone (2) Uus-Kiviõli license issued in October 2011 (3) Does not include: (a) change in inventory; or (b) sales, of oil shale where such oil shale has been purchased from mines outside the Group.
Source: Company information
40 Shale Oil — Business Overview
Overview Benefits of Enefit Technology
The Narva oil plant currently has two Enefit Process fines – all mined oil shale can be processed 140 units, each of which has the installed capacity Energy self sufficient to process 140 tons of oil shale per hour No water required for processing The plants were commissioned in 1980, but to date, Retort gas can be used as fuel for power generation 80% of the plant’s equipment has been replaced and and as a source for hydrogen production that can be improved by Eesti Energia’s engineers used in shale oil upgrader The shale oil produced comprises three fractions: – shale heavy fuel oil (78% by mass) – shale gasoline (18-20% by mass) Narva Oil Plant — Enefit 140 Units – shale light fuel oil (2-4% by mass) Shale heavy fuel oil can be sold as standalone product; other products are blend of the three fractions and sold by Eesti Energia at a similar price The key customer segments are bunkering and heating sectors The Narva oil plant also produced approximately 58m m3 of retort gas1 in 2011 that was used for electricity generation in the Narva Power Plants New Enefit280 unit expected to be commissioned in 2012
(1) Calorific value 46 MJ/Nm3
41 Generation — Business Overview
Existing Generation Portfolio (as at 31 December 2011) Electricity generated Heat generated
Plant Net MW e (GWh, 2011) Net MW h (GWh, 2011) Built Fuel
Eesti pulverised 1,187 5,683 84 97 1963-73 Oil Shale CFB 194 1,440 – – 2005 Oil Shale, biomass
Balti pulverised* 462 1,793 – – 1956-66 Oil Shale CFB 192 1,278 160 434 2005 Oil Shale Gas boiler house – – 240 18 2005 Gas Iru (CHP) 156 129 764 593 1980-82 Gas Aulepa 48 90 – – 2009 Wind Other 5 13 62 41 n/a Renewables / Diesel Total 2,244 10,426 1,310 1,183
*The pulverised blocks in the Balti power station will be put in reserve from 31 March 2012 due to new restrictions on SO2 emissions from 2012. Source: Company information
42 Distribution — Business Overview
Overview Map of Operations
The Group is the largest distributor of electricity in Estonia, having distributed around 6.2 TWh of power in 2011 Distribution area covers ca 42,400 km2, which contains c. 92% of Estonia’s population The network operates over 60,000 km of overhead and underground cables RAB (as at 31 December 2011): €559m Number of connections: ca 655,000 Allowed pre-tax return WACC 7.83% from 1 August 2011
43 Distribution — Regulatory Overview
Regulatory Framework Regulatory Building Blocks
Regulated Asset Base (RAB), calculated at book CAPEX OPEX value – RAB1 is calculated as RAB0 plus capex less regulatory depreciation Allowed pre-tax return (WACC) RAB – applied on RAB plus expected working capital requirement (ca.5% of the expected revenue) Regulatory depreciation of average 35 years (with some exceptions) — different from actual Return of Return on accounting depreciation capital capital Allowed operating costs of the company are subject to annual cost reduction factor 1.5%, agreed with ECA for 2012-14 Allowed Depreciation Regulation is in place from 2005 pre-tax return
Allowed Revenue
44 Supply — Business Overview
Domestic Market International Markets
Eesti Energia is dominant player in the domestic Latvia market Operates through 100%-owned subsidiary SIA The Group operates out of 14 customer service Enefit offices in Estonia and relies heavily on electronic Started business in 2008. channels (internet, call centre) Lithuania Regulated supply margin is 1.3 EUR/MWh Operates through 100%-owned subsidiary UAB Estonian regulated electricity market to liberalise Enefit fully in 2013 Started active business in 2010
Market Shares in Estonian Market (2011) Market Shares in International Markets (2011)
UAB SIA Enefit Enefit 7% 15% Other, 8% Other, Lit- Unre- Regu- 28% Latvia huania lated gulated
Eesti Eesti Energia Energia Other, , 92% , 72% 85% Other, 93%
45 Development Projects in Jordan
The Group has entered into a 44 year concession Concession Area in Jordan agreement in the Attarat region in Jordan Pre-development of 38,000 bbl/d shale oil industry ongoing and to last until at least 2016. Development of a project for constructing and operating 500 MW oil shale fired power station could enter construction phase in 2013. Additional investment during the pre-development phase of the two projects estimated at €27 million. The Group may reduce its holding and engage additional capital to finance the projects beyond the pre-development phase.
Total oil shale resource ca 2.3 billion tonnes based on 44 year concession agreement Pre-development of an oil project and power project The Group has 65% ownership in the Jordan projects while YTL Power International Berhad controls another 30%
46 Development Project in USA
In March 2011, the Group acquired 100% of Enefit Resource in USA, Utah American Oil Co. (formerly known as Oil Shale Exploration Company) Pre-development of shale oil industry (including mines and processing facilities) ongoing and to last at least until 2016 Additional investment during the pre-development phase estimated at €39 million
Oil shale resource in Utah, approximately 300 km east of Salt Lake City Access to 3.8 billion tonnes of oil shale Pre-development of shale oil industry with capacity of up to 50,000 bbl/d
47 Non-committed Investments
The Group is considering a number of investment projects which are not yet committed The decision to proceed with any of the larger investments would also require the securing of additional external financing, including additional equity capital
Potential Project Content of the Project Expected Timing The Group has the option to construct a June 2012 deadline for deciding whether or not Second CFB Unit second CFB unit, supplied by Alstom. Total to exercise this option or seek to extend it. cost currently estimated at €517 million. Two additional Enefit280 units and an after- Decision whether to proceed with the project Oil Industry treatment facility to upgrade shale oil to fuel expected to be taken in 2013, subject to the Expansion in products may be built near Narva. Total cost successful completion and commissioning of Estonia currently estimated at €1 billion. the first Enefit280 unit in 2012. Discussions ongoing regarding possible The project remains at an early stage. Nuclear Power participation in the proposed nuclear power Plant in Lithuania plant at Visaginas, Lithuania. Installation of denitrification equipment at some Tendering process is ongoing. Denitrification units of the Eesti Power Plant to comply with Equipment EU environmental regulations from 2016 onwards
48 Management
Appendix 3 Management CVs
Sandor Liive Margus Kaasik Chief Executive Officer Chief Financial Officer
Mr. Liive was elected as Chairman of the Management Mr. Kaasik was elected as Chief Financial Officer of the Board on 1 December 2005 Company on 1 December 2005 He has 17 years of experience in financial and He has 18 years of experience in financial roles at major management roles at major Estonian companies Estonian companies Mr. Liive acted as Chief Financial Officer of the Company Mr. Kaasik has worked for Eesti Energia since 1999, between 1998 to 2005 including being the financial manager of the distribution Between 1995 and 1998 he held positions as Head of network from 2000 to 2001 and heading the Company’s Treasury and Chief Financial Officer at Tallinna Sadam management accounting department from 2001 to 2005 (the Port of Tallinn) Between 1994 and 1999 Mr. Kaasik was a financial From 1990 to 1995 he had five years experience in manager at AS YIT Ehitus (formerly AS FKSM) finance with various private enterprises Mr. Kaasik has a diploma and a Master’s degree in Mr. Liive has a diploma in Accounting and Finance from Business Administration from the Faculty of Economics the Faculty of Economics at Tallinn Technical University at Tallinn Technical University and is currently taking doctoral studies at this university Mr. Kaasik is fluent in Estonian, English, Russian He has improved himself in INSEAD (2007, Advanced and Finnish Management Program) and IMD (2004, Strategic Finance) Mr. Liive is fluent in Estonian, English and Russian
50 Management CVs (Cont’d)
Harri Mikk Raine Pajo Head of Minerals, Oil Head of Electricity and and Biofuels Division Heat Generation Division
Mr. Mikk has been a member of the Management Board Mr. Pajo has been a member of the Management Board of the Company since 1 December 2006 of the Company since 1 December 2006 He is a lawyer, having received a BA in Law from the He has 14 years of experience in engineering University of Tartu and a Master of Laws from the and management University of Hamburg Between 2001 to 2006, Mr. Pajo worked in various roles Before joining the Management Board, Mr. Mikk acted as within AS Elering, including as a member of the General Counsel of the Company from 2001 to 2006 management board of Elering, a director of the From 2000 to 2001, he was a domestic policy advisor to development department and a director of the electrical the Office of the President and between 1994 and 2000 grid planning sector he held various positions at the Ministry of Justice of the He has also worked for Fingrid OYJ Republic of Estonia (the Finnish National Grid) Mr. Mikk is fluent in Estonian, English and German Mr. Pajo has a diploma degree in Electrical Engineering and a Master’s degree and a Doctorate in Engineering from the Faculty of Power Engineering at Tallinn Technical University He also has a Master’s degree in Business Administration from the Tallinn Technical University Mr. Pajo is fluent in Estonian, English, Russian and Finnish
51 Management CVs (Cont’d)
Margus Rink Head of Retail Business division
Mr. Rink has been a member of the Management Board of the Company since 14 April 2008 Over 16 years of experience in retail business From 1996 to 2008, Mr. Rink worked in various roles at AS Swedbank, including as head of Private Banking and head of Retail Banking Mr. Rink has a BA in Financial Management and a Master of Business Administration from Tartu University Mr. Rink is fluent in Estonian and English
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