Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (June 2004)
19 slides from Fortum Oyj's investor day presentation, Jun 17, 2004
Slide 1: Oil Refining
Oil Refining Jarmo Honkamaa President, Oil Refining Capital Markets Day June 17, 2004
Slide 2: Oil Refining Segment
Oil Refining Segment Components Oil refining Core of the company Oil Retail Shipping 2
Slide 3: Oil Refining capitalizes on product deficits and strong market positions in clean traffic fuels
Oil Refining capitalizes on product deficits and strong market positions in clean traffic fuels Finland and Sweden • Strong position in wholesale markets • Logistical advantage over competitors • Only a few refineries able to produce Swedish MK-1 diesel North-West Europe • Increased supply of high q
Slide 4: Strong market positions in Finland and Sweden
Strong market positions in Finland and Sweden Wholesale market share Percent, 2003 Finland Sweden Gasoline Diesel Gasoline Diesel 73 83 27 15 Source: Fortum estimate 4
Slide 5: Oil Refining has competitive refineries
Oil Refining has competitive refineries Nelson’s complexity index European refineries Porvoo refinery’s complexity ~11 (estimate) after the Diesel project 12.0 10.0 European average complexity 7.1 8.0 6.0 4.0 Source: Oil and Gas Journal, .,0 2003, Fortum Oil estimate for Porvoo refinery complexity 0
Slide 6: Assets in Oil Refining
Assets in Oil Refining Nynäs 50% Three special oil products refineries and one 50% stake Iso-octane plant Two refineries (50%) in Edmonton, - Porvoo Canada - Naantali Terminals Neste Engineering Base oils / PAO plant in Beringen, Belgium MTBE plant in Sines, Portugal Ibn-Zahr MTBE pl
Slide 7: North-West European markets are increasingly short of diesel
North-West European markets are increasingly short of diesel Diesel / gasoil balance in key North-West European markets Million tonnes / year Germany France UK 4.0 1.4 2002 2006 2010 2002 2006 2010 0.03 2002 2006 2010 -10.6 -10.8 -12.6 -13.1 -15.5 -16.9 Source: PFC for demand, Fortum estimate for pr
Slide 8: Highly attractive upgrade of the Porvoo refinery - Diesel project
Highly attractive upgrade of the Porvoo refinery - Diesel project • Increased production of sulphur-free diesel from less expensive crude oil • Installation of a heavy residue hydro-cracking unit and hydrogen production unit • Proven and tested technology • Investment of approximately EUR 500 millio
Slide 9: Main drivers for Diesel project
Main drivers for Diesel project Price and freight differences Price difference diesel vs fuel oil*) Brent dated vs Russian crude*) USD/bbl Ventspils Primorsk USD/t 6 140 5 120 4 100 80 3 60 2 40 1 20 0 0 1998 1999 2000 2001 2002 2003 1Q 2004 1998 1999 2000 2001 2002 2003 1Q2004 *) Export Blend cif P
Slide 10: Diesel Project takes full advantage of market trends
Diesel Project takes full advantage of market trends Russian crude replaces North Sea crude Diesel replaces heavy fuel oil Crude oil sourcing, Porvoo (Percent) Production, Porvoo (Million tons / year) 100%= 12.0 Mtpa 11.5 11.5 Other 1.4 1.4 Other 17 18 Gasoline 3.7 3.7 North Sea Impact on 47 crude r
Slide 11: AB Nynäs Petroleum - bitumen and naphthenic base oils
AB Nynäs Petroleum - bitumen and naphthenic base oils z Jointly owned by Fortum and the Venezuelan national oil company PdV S.A. on a 50:50 basis z The third largest bitumen supplier in Europe and the leading manufacturer of naphthenics in the world z Consolidated using the equity method z In 2003 ―
Slide 12: Components have growth opportunities
Components have growth opportunities Growth opportunities in promising niche markets that also enable Fortum Oil to differentiate Components itself as a refining company Oil refining Core of the company Oil Retail Shipping 12
Slide 13: There are promising growth opportunities in components
There are promising growth opportunities in components Business characteristics Current businesses • Focus on high growth, clean traffic niche markets Top-tier base oils • Based on competence and technology Biofuels • Partnership approach to develop businesses • Fortum Oil has a Iso-octane, MTBE com
Slide 14: Components have major links to Oil Refining
Components have major links to Oil Refining • Components (VHVI and ETBE) give a significant contribution to the refining margin • Components enable product differentiation and thus enhance implementation of the "oil products for clean traffic" strategy • Components capitalize on the refining know-ho
Slide 15: Aiming at market leadership in VHVI base oils
Aiming at market leadership in VHVI base oils The VHVI market is expanding rapidly Fortum VHVI Group III sales Thousand tons / year Thousand tons / year 4,000 250 200 2,500 150 100 550 50 0 2000 2008 2015 1998 2000 2002 2004 2006 Fortum Oil aims to grow Increased requirements with the VHVI market •
Slide 16: VHVI merchant market position in 2003
VHVI merchant market position in 2003 *) Europe Shell Global Shell 20% 17% Total Total 10% 15% SK Exxon SK Mobil 25% 30% 8% Others 9% Others 12% Fortum Fortum 31% 23% *) Fortum Oil estimate 16
Slide 17: Fortum aims to develop a forerunner position in the biofuels business
Fortum aims to develop a forerunner position in the biofuels business EU-15 biofuels market based on EU indicative directive* Million tons / year • Biofuel markets growing 14.0 • EU indicative targets exist Biodiesel 12.0 mandate possible Fortum needs to secure 10.0 Biogasoline biocomponents supply
Slide 18: Oil Refining - Potential to excel
Oil Refining - Potential to excel • high quality assets and products • strong market position • premium refining margin strengthened by Diesel project • attractive growth opportunities • committed to operational excellence 18
Slide 19: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. 19