Shale oil producer VKG to slash hundreds of jobs, cut wages

Photo: Viru Keemia Grupp

Viru Keemia Grupp (VKG), which said at the beginning of December it must scrap up to 200 jobs as a result of falling global oil prices and the high price it must pay Eesti Energia for oil shale, has now announced that the number of redundancies will be bigger and also the pay of some employees will be cut, the regional newspaper Pohjarannik said.

The number of people made redundant by VKG in December was 76, most of whom used to work at the two oil plants using the Kiviter technology that the Kohtla-Jarve, northeast Estonia based shale oil producer has shut down by now.

VKG Board Chairman Priit Rohumaa said that since the price of oil keeps declining, the company must go on with its cost-saving program at full speed.

«By now it's clear that we will send several hundred people home,» he said, adding that the measures are to be introduced in several stages.

The next step after the closure of two oil refineries is reduction of costs at the head office, where 50 out of 130 jobs are to be cut. To 35 of these employees the pink slip has been handed already. Those who remain are working four days a week starting Jan. 1 and their pay is lower by 20 percent.

«Whether or not this is all, we don't know yet,» Rohumaa told the newspaper.

Cost-cutting measures will be implemented also at the subsidiaries of VKG, where the repair and maintenance arm is taking the biggest blow. Besides VKG has cut to the minimum its sponsorship programs, such as those for Eesti Kontsert and the national opera.

«The economic situation that VKG is in now is still very strong, as we are much more conservative than during the last crisis in 2008. In addition we have two Petroter oil refineries of the new type ready and we will definitely complete also the third one despite the difficult situation,» the CEO added.