Fortum Oil

Risto RinnePresident, Oil Sector

Capital Markets DayJune 17, 2004

2

Strengthen position as the leading clean fuels refining company

Fortum focuses on the Nordic energy market as a platform for long-term profitable growth

Excel in business performance

Create the leading

power and heat company

Become the energy supplier

of choice

Strengthen position as the leading clean fuels refining

companyTargets

• Improvements in product slate

• More favourable feedstocks

• Leverage growth opportunities

3

Fortum Oil is different

• "Pure-play" oil refining & marketing company with long-term track record of superior refining margins

• Refining margin premium due to geographic location, stronghome market position and high quality of assets

• Attractive growth opportunities in components due to forerunner position based on own technology and know-how

• Strong retail market position in Finland and growth prospects in the Baltic states, Poland and St. Petersburg

• Shipping as a key element in integrated logistics system

4

Assets in Fortum Oil

Two refineries- Porvoo- NaantaliExtensive retail network

Terminals

South Shapkino oil field (50%)

Retail networkTerminals

Shipping fleet of 29vessels

MTBE plant in Sines, Portugal

Iso-octane plant (50%) in Edmonton, Canada

Ibn-Zahr MTBE plant (10%) in Al-Jubail, Saudi Arabia

Nynäs (50%)Three special oil products refineries and one 50% stake

Base oils / PAOplant in Beringen, Belgium

5

Attractive Returns for Refining and Marketing• As a result of

premium refining margins, the Refining and Marketing has earned attractive returns even at low points in the refining cycle

0

50

100

150

200

250

300

350

400

450

1999 2000 2001 2002 2003

Average: €293 MM

Operating Profit (EUR million) Return On Net Assets (%)

0

5

10

15

20

25

30

1999 2000 2001 2002 2003

Average: 18.2%

6

Operating profit and net assets by segment

Operating profitEUR million

Net assetsEUR million

Oil refining

Oil retail

Shipping and Oil other

28144

79133

3291003

Figures for 2003

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Long track record of superior refining margins

Source Fortum Oil

• Over the long-term, Fortum Oil has consistently been able to generate superior refining margins averaging $2/bbl above internationalreference margin

• The refining margin premium allows Fortum Oil to maintain solid operatingperformance even at the trough of the cycle

NW Europe Refining Margin(1) vs. Fortum Oil Margin ($/bbl)

Note1. NW Europe Refining margin is a reference margin for a complex refinery located in Northwest Europe with the margin

being the difference between product market prices and dated Brent crude price

NW Europe Refining Margin Fortum

0

1

2

3

4

5

6

1995 1996 1997 1998 1999 2000 2001 2002 2003 Q1-2004

8

NWE refining margins 1 Jan - 31 May, 2004us

d/bb

l

January February March April May

Complex Hydroskimming

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A leading refiner in the Nordic region Nordic Refining Capacities(1) (million tonnes/year)

• Fortum Oil is a market leader in refining and marketing of high-quality petroleum products in the Baltic Rim, with a total capacity of 14.5million tonnes a year

• Serving domestic and export markets with sulphur-free (10ppm) gasoline and diesel already fulfilling 2009 EU specs

0

2

4

6

8

10

12

14

16

Preem Fortum Oil Statoil Shell ExxonMobil

Source Company reportsNote1. Shell owns 21% of Statoil’s Mongstad refinery

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Strategy is supported by market trends

•Tightening refining capacity resultsin more volatile margins at higher levels

• Increasing regional product imbalances create attractive export opportunities

A leading Northern European refiningcompany withfocus on oil products for clean traffic, committed to world-class operational and financial performance

•Specification changes provideopportunities for advancedrefiners

• Increasing crude flows from Russia reposition Fortum closer to crude sources

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Refining market is tightening globally

Million barrels per dayOil consumption and refining capacity

20

30

40

50

60

70

80

90

65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03

Global Refining Capacity

World Petroleum Supply

World Petroleum Demand

Source: Goldman Sachs

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More volatile refining margins at higher levels Forecasts for North-West European refining marginsUSD / bbl

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Fortum OilBrent complexreference margin

PEL (HC net margin)

UBS (European Composite) 8/03

Pira 10/2003(NW Europe BR cracking)

Morgan Stanley 04/2004(Rotterdam refining margin)

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Increasing market imbalances create attractive export opportunities

European product balancesMillion tons / year

US* gasoline balanceMillion tons / year

Source: Wood MacKenzie

-50

-40

Total products

Deficit

-30

-20

-10

0

10

20

30

40

50

Gasoline Jet fuel/Kerosene

Gas/diesel Heavy fuel oil

Total products

2000

Surplus20052010

200020052010

Gasoline-50

-40

-30

-20

-10

0

10

20

30

40

50

Deficit

Surplus

Source: ENI

* US Atlantic basin deficit

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Stricter specifications provide opportunities for advanced refinersEvolution of traffic fuel specifications

Unleaded

Low-emission(reformulated)

Low-sulfurBio content

1980s

1990s2000s

2004 onward

0

100

200

300

400

500

600

1990 1995 2000 2005 2010

Maximum sulfur content in EU traffic fuelsppm

Diesel

Gasoline

Opportunity toleverage transitionperiods

― Taxincentives

― Temporary shortages

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Increasing crude flows from Russia reposition Fortum Oil from off-site to on-site

HistoricalNorth Sea and Russian crude oil productionMillion barrels / day

Crude oil flowsMillion tons / year Current

55

10 5010

Russian and FSU crude oil production

North Sea crude oil production

02468

101214161820

1990 1995 2000 2005 2010 2015

Source: PIRA

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Excellent platform for the future

On-site location along the export route of Russian crude and other feedstocks

Ability to produce advanced clean traffic fuels meeting all newrequirements

Strong positionin core refining

business

Technological and organisationalcapabilities to innovate and produce advanced high-margin products

Established market positions in base oils and components which support the clean trafficfuel strategy

Attractive growth opportunities

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Oil Refining

Our portfolio consists of businesses with complementary roles

Components

ShippingOil Retail

Growth opportunities inpromising niche marketsthat also enable Fortum Oil to differentiate itself as a refining company

Channel for reaching the end customersand capturing additional marginfrom refined products

Flexible crude supplyand product logisticsthat improve marginsCore of the

company

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Oil Retail - reaching the end customer

ShippingOil Retail

Oil refining

Components

Channel for reaching the end customersand capturing additional marginfrom refined products

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Oil Retail has a strong position in its key marketsRetail Finland Retail Baltic Rim

• Among three leading fuel retailers in key market areas 2003.Market shares*:• St. Petersburg (Gasoline 14%, Diesel 9%,)• Estonia (Gasoline 20%, Diesel 12%)• Latvia (Gasoline 14%, Diesel 8%,)• Lithuania (Gasoline 9%, Diesel 6%)

• Presence in Poland• Total sales volume 600 million liters, 2003

• Market leader in traffic fuel retail (gasoline market share 29%, diesel market share 43%, 2003)

• Total sales volume 1,600 million liters (gasoline and diesel altogether)

• Highest recognised retail brand in Finland

• Overall market leader in B2B and B2C sales of diesel, lubricants for traffic and industry, light fuel oil for heating and traffic, heavy fuel oil, and aviation fuels in Finland

• Market leader (70% market share) in sales of bottle and bulk LPG for household and industrial use in Finland, volume 180,000 tons per year in 2003

• Bulk sales in Sweden (~25% market share), volume 110,000 tons per year in 2003

LPG

Direct Sales

* Fortum estimate

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Assets in Oil Retail2004

• St. Petersburg: 30 stations of which 9 automated and 1 D-station, 1 terminal

• Estonia: 31 stations, 1 terminal• Latvia: 31 stations, 1 terminal• Lithuania: 28 stations Poland: 39 stations

Retail Finland• Network consisting of

– 374 traffic stations and 182 automated stations– 36 Quick shops and 22 Pikoil stations

Direct Sales• 328 D-stations in Finland• Lubes blending plant in Helsinki

LPG• LPG storage caverns in Tornio, Finland and Sundsvall,

Sweden• 50% share of Innogas LPG bottling facility in Porvoo• LPG presence in Estonia and Latvia

Retail Baltic Rim

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Shipping - flexible logistics

Flexible crude supply and product logistics that improve margins

ShippingOil Retail

Oil refining

Components

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Shipping - a key element of an integrated logistics system

Crude oil and productshipping

Refinery logistics system

Benefits for refining margin• Flexibility to schedule crude

supply and product exports to benefit from market volatility

• Using larger cargo sizes inproduct exports to gain scale benefits

• Large storage capacity for fuel products

• Deep harbours for large ships

• Modern ice-classed fleet consisting of crude oil and product tankers

• High safety standards

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Assets in Shipping

• 29 crude, product and chemical carriers– 10 own– 4 bareboat chartered– 15 time chartered

• Total capacity of approximately 1 million DWT

• 62% crude• 38% product

• 50% of capacity used internally• Main focus on operations in North-West Europe• 40 million tons of cargo with 1,800 voyages and

3,500 port calls annually

Both internal and external customers

Crude and product shipments

Ice classified tanker fleet

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SeverTEK - Oil production in Timan-Pechora

South Shapkinooil production started in July 2003

current daily production 26,000 bbl/dUSD 360 million investmentUSD 200 million project financing from EBRDproven and probable reserves ~ 20 million tons of oil

SeverTEK

a JV 50/50 owned by Fortum and Lukoilpermanent staff of more than 450additional production licence for 4 oil fieldsrecoverable reserves of 30-40 million tonsconsolidation with equity method

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Fortum Oil - potential to excel

• pure play refining and marketing company with high quality assets

• strong position in core refining business

• attractive growth opportunities

• committed to world-class operational performance

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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.