History of Silmet dates back to 1926 when Swedish-Norwegian "Eestimaa Õlikonsortsium" (; ), controlled by Marcus Wallenberg, was established to build a shale oil extraction plant in Sillamäe. For shale oil production, the consortium built a tunnel oven in 1928. However, due to the Great Depression, production halted in 1930 and was restarted only in 1936 by the reorganized consortium called "Baltic Oil Company". The second tunnel oven was added in 1938. The main product was gasoline. After the Soviet occupation started in 1940, the plant was nationalized according to the 30 May 1941 Moscow Agreement between the Soviet Union and Sweden. Germany invaded the Soviet Union in 1941 and the industry's infrastructure was largely destroyed by retreating Soviet forces. During the subsequent German occupation, the plant was restored and subordinated to a company named Baltische Öl GmbH. However, most of its facilities were destroyed during the war.