Estonian state power firm Eesti Energia is to sign a EUR950m ($1.23bn) deal with France's Alstom to build a 600 MW shale oil fired power plant.
Eesti Energia spokeswoman Marina Bachmann told AFP that the deal would be inked on Friday, during a visit by Pierre Lellouche, France's foreign trade minister.
"The cost of the project is EUR950m. The new power plant will be fired by oil (from) shale and will have up to two energy blocs of 300 MW each," Bachmann said. "The first bloc of the new power plant will have to be completed by 2015 and a decision on the second will made in 2012," she added.
The plant will be located next to an existing facility in Narva on Estonia's northeastern border with Russia. Estonia, a European Union member with a population of 1.3m, covers almost all its energy needs using oil derived from its reserves of shale -- rocks which contain matter from which petroleum can be extracted by distillation.
Narva is the country's energy hub, with 95 pe rcent of the country's power generated in the region. Two bids were submitted to build the new plant last summer, but a Polish contender fell short of requirements, leaving Alstom as the only player.
Eesti Energia said it had agreed terms with last month with Alstom, which in 2009 also struck a deal to supply desulphurization systems at existing facilities in Narva. "The construction of the new power plant is an extraordinarily important investment for Estonia which will make the production of energy more environmentally-friendly in future," Eesti Energia's Narva plants' chief Tonu Aas told reporters.
Eesti Energia declined to say whether the new plant would be part-financed from EU funds, which poorer member states such as ex-communist Estonia are able to tap to upgrade their infrastructure and clean up their environment.