Neste Oil Investor Presentation 29 April 2009

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    Neste Oil Investor Presentation 29 April 2009 - Presentation Transcript

    1. UPDATED: 29 April 2009 1
    2. Contents 5 Overview 11 Strategy 21 Production and logistics 41 Businesses 100 Financials 119 Share & Funding 127 Global Oil Industry 157 Social Responsibility 168 Appendix 2
    3. Safe Harbor Statement The following information contains, or may be deemed to contain, “forward-looking statements”. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties and other factors that may cause Neste Oil Corporation’s or its businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. All forward-looking statements made in this presentation based on information presently available to management and Neste Oil Corporation assumes no obligation to update any forward-looking statements. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity. 3
    4. 4
    5. Overview
    6. 6
    7. VISION: The leading provider of cleaner traffic fuels 7
    8. Neste Oil in Brief 1) ● Oil refining & marketing 2008 Comparable EBIT company with focus on high € 602 MM quality refined petroleum products with reduced Other -29 (and eliminations +5) Oil Retail 22 environmental impact Renewable Fuels 2 ● Listed in the Helsinki Stock Exchange under the symbol NES1V ● Approximately 5,000 employees ● Market capitalization approximately EUR 3 billion ● Included in the Dow Jones Oil Products 602 Sustainability World Index as of September 2007 1) Excludes “Oil Other” 8
    9. Neste Oil's Global Presence Naantali Porvoo Focus in Northern Europe St Petersburg Nynäs Estonia Latvia Moscow Toronto Lithuania Rotterdam Edmonton Beringen (under deveploment) Long Beach Geneva Poland Houston Sines Bahrain (under deveploment) Production and logistics Dubai Renewable Fuels Singapore Singapore (under deveploment) Oil Retail Oil Products Refinery, plant, or other facility Office Finland Production outside Finland Atlantic Basin Baltic States, Poland and JV Nynäs: Sweden/UK St. Petersburg  Ownership of the only Porvoo  Shipping fleet of average 30 crude Finnish refineries  Top-tier base oil production, and product tankers with a carrying  Extensive retail network  Three refineries in Sweden and the UK, - Porvoo: 205,000 bbl/d 250,000 t/a capacity of almost 1.3 MM tons - Over 200 stations as well as stakes in other sites - Naantali: 56,000 bbl/d Beringen, Belgium specializing in production and  Leading wholesale market  50,000 t/a base oil plant marketing bitumen and napthenics positions across refined products Sines, Portugal (through Nynäs 50/50 JV with PdVSA)  Market leader in Finland  50,000 t/a ETBE plant  - Bitumen volumes about 2.5MT and - Almost 900 outlets Edmonton, Canada napthenics close to 0.8MT (2006) - Direct sales of petroleum  530,000 t/a iso-octane plant 9 products to end customers (50% ownership)
    10. 10
    11. Strategy
    12. 12
    13. We will reinforce the key elements of our strategy Delivering high-quality products for cleaner traffic Increasing the Leveraging range of refining feedstocks excellence 13
    14. Group structure Refining the future The leading supplier of products for cleaner traffic Renewable Renewable Oil Products Oil Products Oil Retail Oil Retail Fuels Fuels Customer orientation Customer orientation Common approaches Excellent operational and financial results Responsibility Cooperation Innovation Excellence 14
    15. Key financial targets: Leverage between 25-50% Leverage 1), % 50 target: between 25-50% 40 30 20 10 0 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 1) Net debt/Net debt + equity 15
    16. Key financial targets: ROACE at least 15% Return on average capital employed after tax (ROACE) 2),% 25 target: at least 15% 20 15 10 5 0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 2) After tax, rolling 4 quarters 16
    17. Competitive payout policy Payout ratio Payout EUR/share Target of at least 33% EUR 60% 1.20 50% 1.00 Proposal to AGM Proposal to AGM 40% 0.80 Proposal to AGM Proposal to AGM 30% 0.60 20% 0.40 10% 0.20 0% 0.00 2005 2006 2007 2008 2005 2006 2007 2008 Adjusted for non-recurring items 2007 dividend Payout from reported EPS 1.00 € /share 17
    18. Neste Oil has very complex refining assets Western Europe refinery configuration factors Neste Oil 2007 (after Diesel-project) Neste Oil 2006 Complex Refineries Hydroskimming Refineries 0 2 4 6 8 10 12 14 16 Solomon refinery configuration factor Data collected from: Solomon 2007 18
    19. Higher margins expected for complex refiners 2015 supply curve vs demand Western Europe Relative Expected Illustrative Zero Cost margin Demand 2015 Price level Average margin Highest margin Low Our position Medium Conversion High Conversion refineries Conversion refineries 27% Refineries 48% 25% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Refining Capacity (Kbpd) Notes: Low Conversion < 25%, Medium Conversion >25% <50%, High Conversion >50% Relative Normalised Conversion Capacity Sources: Oil and Gas Journal; Internal Analysis 19
    20. Investment Projects 2009 – 2011 Segment Location Capacity Investment Schedule Other (total budget) Renewable Fuels NExBTL plant Porvoo 170,000 t/a > 100 Meur 2009 Under construction NExBTL plant Singapore 800,000 t/a 550 Meur 2010 Under construction NExBTL plant Rotterdam 800,000 t/a 670 Meur 2011 Under construction Oil Products Base oil plant Bahrain 400,000 t/a 115–135 2011 JV: Neste share is 45% → 180,000 Meur t/a Isomerization unit Porvoo 600,000 t/a 80 Meur Project is Processes 600,000 t/a of low-value postponed gasoline into high-quality gasoline. before Increases refinery´s total gasoline market output by 200,000 t/a situation improves Base oil plant Abu Dhabi 500,000 t/a Open Open JV: Neste share is 20% → 100,000 t/a No final investment decision made 20
    21. Production and logistics
    22. Oil Refining: Porvoo refinery Porvoo refinery 22
    23. Porvoo Refinery • Porvoo is Neste Oil’s principal refinery, in operation since the mid 1960s • An atmospheric distillation capacity of 205,000 bpd • The Diesel Project increased the refinery’s complexity: - from 10.5 to approximately 14.5 (Solomon refinery configuration factor) - from 10.4 to approximately 12.1 (Nelson complexity index) • Very extensive bedrock cavern capacity and tank farm combined with deep sea harbour Fluid Process Units Current Licensor/ Start-Up Year of Major capacity 1) Process Designer Year Modifications Atmospheric Crude Distillation 206,000 Lummus/Neste Oil 1975 1993 Vacuum Distillation 1 52,300 Lummus/Neste Oil 1972 1993 Vacuum Distillation 2 23,000 Lummus/Neste Oil 1988 Visbreaking 26,050 Shell 1979 Fluid Catalytic Cracking 42,300 Texaco 1972 1993 Hydrocracking 21,500 UOP/Unocal 1965 1989 Continuous Catalytic Reforming 41,700 UOP 1986 Hydrogen Plant (thousands of standard cubic feet per day) 22,300 Power Gas 1965 ETBE / MTBE 2,235 Neste Oil/ Snamprogetti 1993 1993 Alkylation 7,750 Phillips 1988 1993 TAME 2,880 Neste Oil 1995 Hydrotreating/ Naphtha 67,100 Exxon 1975 1993 Distillate Aromatics Saturation 16,500 Neste Oil 1992 Hydrotreating/Distillate 2 24,800 Shell 1972 Hydrotreating/Distillate 3 54,100 Shell 1993 1999 VGO Desulphurization 55,600 Unocal 1975 1999 EHVI Unit 6,690 Chevron 1997 1997 LCF(2) 41,800 ChevronLummus 2006 MHC(2) 33,500 ChevronLummus 2006 New Hydrogen Plant(2) (thousands of standard cubic feet per day) 118,385 Unde GmbH 2006 1) bpd, except for hydrogen plants Note: capacity barrels streamday basis Note: capacity barrels streamday basis 23 2) These new units will be started-up in connection with the Diesel Project.
    24. Porvoo Refinery complexity ratio is approximately 14.5 (Solomon) Oil Refining Process at the Porvoo Refinery 24
    25. The New Diesel Production line in Porvoo Existing refinery Desulfurization and conversion of HFO Gas to Crude oil process 11 Mt/a HFO 2 Mt/a Sulfur free diesel 1 Mt/a Natural Gas Off Gas / Propane HFO DEMI water 0,5 Mt/a Hydrogen production unit 25
    26. Naantali refinery 26
    27. Naantali Refinery • The Naantali refinery began operations in the late 1950s and refines gasolines, diesel fuels, LPGs, aviation fuels, heating oil, heavy fuel oil, bitumens and solvents • An ongoing investment program at the Naantali refinery has focused on increasing the production of specialty petroleum products, such as specialty gasolines, solvents and bitumen • An atmospheric distillation capacity of 56,000 bpd (crude and other feedstocks) • The complexity of the Naantali refinery: - 8.4 (Solomon refinery configuration factor) - 7.1 (Nelson complexity index) Process Units Current Licensor/ Start-Up Year of Major capacity, bpd Process Designer Year Modifications Crude Distillation (Unit 1) 28,300 Lummus 1957 1996 Crude Distillation (Unit 2) 28,300 Lummus 1962 1996 Light Naphtha Dehexanizer 9,700 Neste Oil 1982 Naphtha Dehexanizer 10,800 Neste Oil 1995 Solvent Distillation 2,200 Neste Oil 1982 2003 Arosat 500 Lummus 1971 1998 Special Gasoline (BEL) unit 1,800 Neste Oil 1989 1994 Reformer Unit 7,700 UOP 1985 JET fuel unit 3,000 UOP 1998 TCC Gasoline Desulphurization 6,600 Axens 2002 Catalytic Polymerization 600 Chevron/UOP 1957 1987 Solvent Hydrotreater 5,700 Neste Oil 1991 2003 Solvents Dearomatization 5,200 Neste Oil 1993 2003 Middle Distillate Hydrotreater 2 19,800 Lummus 1981 2002 TCC-Feed Hydrotreater 7,200 Neste Oil 1987 Thermofor Catalytic Cracker 14,300 Mobil Oil/Neste Oil 1957 1982 Vacuum Distillation Unit 16,900 Lummus 1957 1982 Visbreaker 8,800 Shell 1979 Bitumen Distillation Unit 5,700 Neste Oil 1963 2003 Sulphur Recovery Unit 60 Comprimo 1973 1995 Naphtha Hydrotreater 9,000 Neste Oil 1963 1982 Mild Vacuum Unit 5,700 Neste Oil 1963 2003 Bitumen Unit 7,800 Neste Oil 1998 200 Vapor Recovery Unit N.A. Lummus 1957 Note: capacity barrels streamday basis Note: capacity barrels streamday basis 27
    28. Oil Refining Process at the Naantali Refinery HEXANE PROPANE SOLVENT BUTANE REMOVAL DISTILLATION AROSAT UNIT LIGHT SPECIALITY SOLVENTS GASOLINE UNIT SPECIALITY GAS GASOLINES CRUDE RECOVERY POLYMERI- OIL H2 SATION GASOLINE NAPHTHA DESULPHURISATION CRUDE MOTOR- REMOVAL OF GASOLINE OIL SOLVENT GASOLINE DISTILLATION DESULPHUR- AROMATIC REFORMATION 1 AND 2 ISATION COMPOUNDS HEAVY FROM SOLVENT SOLVENTS OTHER FEED JET FUEL TREATMENT JET H2 HYDRO- TCC- FUEL GENATION UNIT GAS OIL CITYDIESEL DESULPHUR- LIGHT H2 ISATION VACUUM FUEL OIL DISTILLATION VISBREAKING HEAVY BITUMEN FUEL OIL UNIT SULPHUR BITUMEN H2S-FEED RECOVERY SULPHUR UNIT 28
    29. Use of Russian Heavier Crude Continues to Increase Share of REB out of total feed of Neste Oil´s refineries European average 100% 100% 90% 25 90% 80% 36 43 37 53 53 49 46 48 46 80% 70% 57 66 70% 60% 70 60% 50% 50% 40% 75 30% 64 57 63 40% 47 47 51 54 52 54 20% 43 30% 34 10% 20% 30 0% 10% 2003 2004 2005 2006 2007 2008 2008 2008 2008 2008 2009 2009e 0% Q1 Q2 Q3 Q4 Q1 2008 Russian Export Blend Other • Neste Oil is procuring approximately 2/3 of its feedstock under one-year term contracts and 1/3 on a spot basis – Pricing under term contracts is based on market prices • Neste Oil’s largest suppliers are major Russian oil companies – No supplier represents more than 20% of total procurement • Apart from tankers, Russian crude is also transported by rail (around 1.3 million tons in 2006) Source: Neste Oil, BernsteinResearch 29
    30. Russian crude oil is very close to Porvoo and Naantali Naantali refinery Porvoo refinery Primorsk oil harbor 80 74.2 74.3 60 Million tons 66.1 57.4 40 44.8 20 17.7 0 2003 2004 2005 2006 2007 2008 Oil export from Primorsk 30
    31. Our product slate and use of Russian crude have changed Russian crude replaces Diesel replaces North Sea crude heavy fuel oil Total feedstocks (%) Total output (1000 tons) 100% 17,000 Other 16,000 90% Other Other feedstock feedstock 15,000 Heavy 14,000 Other prodducts 80% Other 13,000 Heavy Heavy prodducts 70% Other 12,000 prodducts Gasoline crudes 11,000 60% 10,000 Gasoline 9,000 Gasoline 50% 8,000 7,000 40% Urals 6,000 5,000 Middle 30% Middle distillates Urals 4,000 Middle distillates 20% 3,000 distillates 2,000 10% 1,000 0 0% 2007 2009e 2011e (after 2007 2009e Singapore and Rotterdam Heavy products: Heavy fuel oil, bitumen etc. NExBTL-plants Gasoline: gasoline, gasoline components are up and Note: very rough 2009-estimate is based on 2005/2006/2007 Middle distillates: diesel, jet fuel, heating oil, NEXbTL production yields added by diesel project running) Other: base oils, lpg, solvents, naphta 31
    32. High crude oil prices favor cracking margins Historical prices Brent cracking margin (Brent Crude annual average price) Yearly average (1995-2007) - North West Europe Crude oil price from 1960 1960-1986: Arabian Light, 1987-today: Brent Dated Refining Margin ($/bbl) Up to Jan 19, 2008 $/bbl 140 6 120 5 100 4 80 3 60 2 40 1 20 0 0 10 20 30 40 50 60 70 80 90 100 110 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Brent Crude price ($/bbl) Crude price nominal Crude price in 2008 money 32
    33. Large scale storage facilities and modern marine terminals are supporting our business Rock caverns Tank farms Harbour Porvoo refinery 24 bedrock caverns, capacity 5.6 Capacity 1.6 million cubic Approach route up to million cubic meters meters 15.3 meters deep, capacity to accomondate vessels up to160,000 cargo tons Naantali refinery 1 becrock cavern, capacity 0.25 Capacity 0.82 million cubic Approach route up to million cubic meters + 7 steel meters 15.3 meters deep shell tanks inside bedrock, capacity 0.03 million cubic meters Refineries 25 caverns (+7 steel shell tanks Tank farm capacity together inside bedrock), capacity 5.88 2.42 million cubic meters million cubic meters • Storage system and harbour capacity together with our own shipping fleet are key drivers for Neste Oil´s superior logistics • Flexibility; we can keep products as components (e.g. gasoline) and blend them just before shipment fulfilling buyer’s requirements even with very short notice • Large scale contango storaging in favourable market conditions • Modern harbour and bedrock caverns are also safery elements 33
    34. Shipping guarantees safe and secure crude supplies and product shipments. 34
    35. Shipping supports our growth strategy Security of supply and exports, especially winter time Shipping plays an Capability to schedule important role in our crude supply and product exports growth in refining and renewable diesel Leverage scale benefits by using larger cargo sizes 35
    36. Successful risk management in growing market Neste Oil Shipping fleet split by categories Our shipping Number of ships flexibility 40 35 • Flexible portfolio – increasing role of time 30 charter vessels 25 • Port calls: 3741 calls in 2008 • Neste Shipping average 20 vessel age is below 5 years • More than 40 million tons of 15 cargo transported annually (50% for Neste) 10 • Operations in Baltic Sea, 5 North Sea and Intercontinental routes 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Time charter Bareboat Own 36
    37. Commoditization of the Baltic tanker market Ice class capacity supply and demand Monthly shipping freight rates & Russian oil export from Primorsk Number of ships WS Mt 80 700 7.0 70 600 6.0 60 500 5.0 50 400 4.0 40 300 3.0 30 200 2.0 20 10 100 1.0 0 0 0.0 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 A p r-0 8 A p r-0 7 J u l-0 8 A p r-0 6 J u l-0 7 A p r-0 5 J u l-0 6 A p r-0 4 J u l-0 5 J u l-0 4 J a n -0 8 J a n -0 7 J a n -0 6 J a n -0 5 J a n -0 4 O c t-0 8 O c t-0 7 O c t-0 6 O c t-0 5 O c t-0 4 Required number of ships Monthly Crude freight rates (Primorsk/NWE), WS Available number of ships Monthly Russian oil exports from Primorsk, Mt 37
    38. Tanker Freight Rates World Scale points 400 300 200 100 0 2005 2006 2007 2008 2009 North Sea Crude freight rates Transatlantic Product freights 38
    39. Neste Shipping Fleet Crude Carriers Product Carriers Product Carriers Product Carriers Stena Arctica -05, FI, Palva -07, FI, Turid Knutsen -93, NIS, Kiisla -04, FI, 117000 DWT, 1A S 74999 DWT, 1A 22617 DWT, 1A 14750 DWT, 1A S Ek-River -94, S, Suula -05, FI, Proteas -06, GR, Stena Poseidon -07, FI, 17259 DWT, 1A 14665 DWT, 1A S 117055 DWT, 1A 74999 DWT, 1A Sten Bothnia -08, NIS, Astoria -99, S, Apollon -05, BS, 16661 DWT, 1A 12712 DWT, 1A Propontis -06, GR, 53000 DWT, 1A 117055 DWT, 1A Astina -06, S, Sten Nordic -06, NIS, Ariadne -05, BS, 11283 DWT, 1A 16613 DWT, 1A 53000 DWT, 1A Mastera -03, FI, 106208 DWT, 1A S Scorpius -06, S, Sten Baltic -05, NIS, 11249 DWT, 1A Futura -04, FI, 16613 DWT, 1A 25084 DWT, 1A S Tempera -02, FI, Tärndal -98, NIS, 106034 DWT, 1A S Sten Aurora -07, NIS, 8300 DWT, 1A S Neste -05, FI, 16600 DWT, 1A 25080 DWT, 1A S W Amanda -05, PT, e 7000 DWT, 1A ca Jurmo -04, FI, Sten Hidra -07, NIS, Pushers, Barges, Tugs re 25049 DWT, 1A S 16600 dwt, 1A ho Bitpro 2 / Aulis -90, FI, w Purha -03, FI, Tärnhav -02, S, 4088 DWT, 1A w 25000 DWT, 1A S 14796 DWT, 1A e ca Bitpro 1 / Kari -89, FI, 4088 DWT, 1A rr Sidsel Knutsen -93, NIS, y 22625 DWT, 1A Esko -81, FI Ukko -02, FI, 1A Updated 19.1.2009 Ahti -02, FI, 1A 39
    40. 40
    41. Businesses
    42. 42
    43. Oil Products
    44. Long track record of superior refining margins USD/bbl 16 16 15.05 14 14 13.54 13.39 12 12 12.38 11.92 11.91 10 10 10.46 10.2 9.88 9.62 9.44 8 8 6 6 4 4 2 2 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Q1/2007 Q2/2007 Q3/2007 Q4/2007 Q1/2008 Q2/2008 Q3/2008 Q4/2008 Q1/2009 Neste Oil Total Refining Margin IEA Brent Cracking benchmark margin ● Key drivers of Neste Oil’s superior refining margin:  Ability to use heavier crude and other feedstocks  Refinery configuration and high-value product slate (including base oils)  Location and logistics (transport differential in domestic and export markets) Note: Margins are calculated in different ways and are not directly comparable 44 Refining margins include variable costs
    45. Product margins USD/bbl 50 50 40 40 30 30 20 20 10 10 0 0 -10 -10 -20 -20 -30 -30 -40 -40 -50 -50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 Diesel 2) Gasoline 3) Heavy Fuel Oil 4) (price difference to crude oil price 1), USD/bbl) 1) Brent Dated 2) ULSD 10ppm CIF ARA 45 3) Premium Unleaded 10 ppm CIF ARA 4) HSFO 3.5% CIF ARA
    46. Brent crude oil and Brent/Urals differential Brent dated USD/bbl 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 0 0 -1 -1 -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 -7 -7 -8 -8 46
    47. Neste Oil is a middle distillate producer 2007 2007 2009e 100% 13% 90% 19% 80% 39% 70% 33% 60% 46% 50% 19% 40% 30% 54% 20% 42% 36% 10% 0% European average US average Neste Oil Middle distillates Motor gasoline Other Sources: EIA, Wood Mackenzie, Neste Oil 47
    48. Neste Oil is a middle distillate producer 100% 90% 80% 70% 35% 33% 60% 54% 52% 50% 50% 47% 44% 40% 30% 44% 46% 20% 33% 28% 24% 10% 22% 22% 0% Neste Saras OMV Petroplus PKN Orlen TSO VLO Gasoline Middle Distillates Heavy products (mainly heavy fuel oil) Other Data: Neste Oil = 2009e / Other companies = 2007-2008 Data source: company based data 48
    49. Sales from in-house production 14.2 MT 13.0 MT 14.3 MT 14.3 MT 14.6 MT 3.3 MT 3.8 MT 3.8 MT 3.8 MT 3.4 MT 10 0 % 95% 14 14 13 15 15 17 16 11 12 90% 18 85% 6 9 7 8 8 7 6 10 80% 6 8 75% 70% 29 65% 24 29 60% 34 36 35 31 30 30 55% 35 50% 45% 40% 35% 30% 25% 52 54 49 43 43 44 46 48 47 20% 40 15 % 10 % 5% 0% 2004 2005 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 2008 2008 2008 2008 2009 Middle distillates Gasoline Heavy Fuel Oil Other 49
    50. Sales by geographical area 14.2 MT 13.0 MT 14.1 MT14.3 MT 14.6 MT 3.3 MT 3.8 MT 3.8 MT 3.8 MT 3.4 MT 100% 11 10 10 12 13 8 10 12 14 90% 19 80% 15 15 18 16 21 20 23 19 16 70% 20 15 16 14 14 60% 13 14 16 16 14 13 50% 40% 30% 58 57 57 56 55 52 54 52 54 48 20% 10% 0% 2004 2005 2006 2007 2008 Q1 Q2 Q3 Q4 Q1 2008 2008 2008 2008 2009 Finland Nordics Other Europe USA & Canada Other 50
    51. Strong wholesale market positions in Finland and Sweden Wholesale market shares in Finland Wholesale market shares in Sweden Gasoline Diesel Gasoline Diesel 100% 96% 16% 25% Neste Oil market share in 2008 NOTE: Neste Oil estimate 51
    52. Iso-octane - a bespoke component for the US gasoline pool 1. Gasoline blend-stocks Specialty Gasoline that from main refinery units + gasoline components = meets stringent specifications • Lower than desired octane Our focus 2. Bio-components blended per regulation • Increasing use of ethanol as blending components increases 1. or 2. without addition of specialty gasoline components X Gasoline that vapour pressure DOES NOT meet stringent specifications 52
    53. Base Oils’ Business Concept Co-development of new products / formulations Base oil and Car Neste Oil lubricant formulation manufacturers Base Oils (First fill) Lubricant Additive and manufacturer lubricant formulation Additive Retail channel companies (Service fill) 53
    54. Demand for high quality base oils is growing  OEM needs • Engine cleanliness • Fuel economy  Legislation • Emission reduction • Fuel economy  Consumer preferences • fuel economy 54
    55. Market shift increases attractiveness of high-quality base oils Global Base oils capacity outlook Mtpa 50 45 40 35 Industrial 30 Group I usage 25 20 15 10 Group II Automotive usage 5 Group III 0 Group IV 1998 2001 2004 2007 2010 2013 Our focus Sources: ExxonMobil; Neste Oil; Fuels & Lubes is Group III 55
    56. Supply-demand balance forecast for group III base oils is lucrative t/a 6,000,000 5,000,000 4,000,000 3,000,000 Demand Supply 2,000,000 1,000,000 0 2005 2007 2009 2011 2013 2015 Sources: Press releases, Neste Oil estimates 56
    57. We will leverage our market position to exploit those growth opportunities Company 4 European merchant market (group III) 2007 48% Global merchant market (group III) 2007 Competitors Company Competitors Neste Oil 3 Neste Oil 53% 12% 82% 18% 47% Total market Total market 430 ktpa 1120 ktpa Key strategic advantages • Focus on higher quality base oils • Extensive portfolio of car industry approvals • Broad customer portfolio • Leading position in Europe 57
    58. Uses of NEXBASETM Base Oils Example: Where are lubricants used in the Mercedes C series In addition to automotive uses, base oils are used in industrial lubricants and as process oils 58
    59. Nynas is a specialized global company ● Sales around 3 000 M$ Typical ● Crude processing: oil company approx. 3 million tons. 12% Fuel 96% Fuel ● Most important products: 18% Specialty oils bitumen, base oil, transformer 4% Bitumen, oil, process oil. Specialty oils and Lubes ● Percent of sales outside 70% Bitumen Sweden: 88%. ● Employees: Around 850 in more than 30 countries all Customer logos over the world. 59
    60. Renewable Fuels
    61. Neste Oil's approach on sustainable biofuels True GHG savings over entire life cycle Sustainable feedstock NExBTL and full traceability renewable diesel Lower tail pipe emissions 61
    62. The challenge of the energy industry: Increasing demand, climate change and energy security ● Total world energy demand continues to grow ● New energy solutions are urgently called for ● Future energy supply will be based on multiple technologies and feedstock ● Minimizing environmental effects and ensuring sustainability are driving the development ● Significant new feedstock for transport fuels include: vegetable oils, tallow, forest residues, side products, waste Total transport etc. Source: EIA 2007 & IEA 2008 62
    63. Renewable diesel – A global market view 2010 2010 8 Mt 13 Mt 2010 ~8 Mt EUROPE US and Canada - Dieselized automotive market - Gasoline driven market - Regulatory framework supporting biodiesel - Regulatory framework supporting biofuels > Main market for biodiesel and NExBTL > Growing market for NExBTL 2010 3 Mt ASIA - Gasoline driven market - Legal framework mainly under development > Growing market for NExBTL LATIN AMERICA - Gasoline driven market - Global leader in ethanol (Brazil) - Biodiesel market expected to grow Biofuel in > Market to follow up diesel target for2010 Neste Oil internal analysis. Based on KBC regional diesel demand estimates and national biofuel targets (data collected from market information sources). 63
    64. Government policies further boost demand – increasing targets EU biofuel regimes (2008) EU biofuel regimes (2010) >/= 2% > 5% >7% Source: Neste Oil 64
    65. Status of the Renewable Energy Directive RENEWABLE ENERGY DIRECTIVE ● Setting binding targets for the use of biofuels in transport within EU ● Clear, shared rules for sustainability of biofuels KEY RESULTS ● Biofuel target in transportation maintained at 10 % by 2020 ● Use of renewable electricity in transport supported heavily (2.5 x liquid bioenergy) ● Waste, residues, non-food cellulosic and ligno-cellulosic material supported (2 X liquid bioenergy) ● GHG threshold 35% by 2010, rising to 50 % by 2017, and even further to 60 % in regard to new plants ● Principle of harmonized legislation across EU member states applied CONCLUSIONS ● The directive has a positive approach to feedstock trade with 3rd countries ● The directive will allow our current feedstock base ● Palm oil has a low default value on GHG savings (26% compared to the 35% threshold); we will use the actual value, to be calculated still (preliminary indications 40-60%) ● Current approval process has two steps: harmonized sustainability legislation across the EU, and formal product appproval process at member state level ● General: the directive is more positive than what was expected based on Parliamentary discussion; the sustainability criteria are seen as reasonable and manageable from operators’ point of view 65
    66. EU: Biodiesel production and capacity in 2004-2007 and Commission proposal for 2010-2020 Renewable Energy Directive Historical and targeted EU biomass based diesel production ● 10% of energy Mt 25 consumption in transport 10.0% 10.0% from renewable sources 21 by 2020 ● GHG saving -35% in 20 2010; 50% in 2017 and 60% for new installations 5.75% 5.75% 2017 15 ● Member States 13 11.6 legislations to include the RED within 18months 10 from official publication ● Open questions to be 6.1 5.7 resolved in Comission led 5 4.9 Comitology -process 3.2 2 0 2004 2005 2006 2007 2010e 2020e production total capacity EU 5.75% and 10% targets means ~13 Mt capacity need in 2010 and 21 Mt in 2020 Note: Assumes that both gasoline and diesel have 5.75% biocontent in 2010 and 10% in 2020 : Sources: European Biodiesel Board, EU Commission 66
    67. NExBTL renewable diesel by Neste Oil FLEXIBLE FEEDSTOCK NExBTL PROCESS Vegetable oils and animal fats, Commercial scale production already in place feedstock base expanding SIGNIFICANT LIFE CYCLE GREENHOUSE GAS SAVINGS AND IMPROVED AIR QUALITY 67
    68. Renewable diesel volume growth nameplate capacity t/a 2,000,000 1,750,000 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0 2007 2009 2010 2011 2015 Porvoo I Porvoo II Singapore Rotterdam 68
    69. Product NExBTL renewable diesel is the best fuel of its type available anywhere, and can be used in all diesel • NExBTL is the cleanest diesel available, and its technology is several engines. years ahead of any competitors in the renewable fuels market • Can be produced in large volumes on an industrial scale • NExBTL renewable diesel significantly reduces both tailpipe and greenhouse gas emissions • NExBTL renewable diesel can be used in all modern diesel engines, hence there is no need to replace existing vehicles • Can be used as such or as a blending component in conventional diesel • Performance and ease of use is equal to that of fossil diesel • NExBTL renewable diesel is engine-friendly  High cetane number  A pure hydrocarbon 69 May 6, 2009 Renewable Fuels 69
    70. Neste Oil's NExBTL renewable diesel • Key advantages: feedstock flexibility, excellent fuel properties • High quality (energy value, cetane number, cold properties) justifies premium pricing Biodiesel NExBTL renewable Fischer-Tropsch Fossil diesel FAME / RME diesel Vegetable oils & Vegetable oils & animal fats animal fats Kasviöljyt Biomass Biomassa Mineral Oil Feedstock (mainly rapeseed oil) & Eläinrasvat Gasification & Esteröinti Hydrogenation Kaasutus Fischer-Tropsch & Refining Technology Esterification Vetykäsitte Fischer- Ester-based ly Bio-based Tropsch Bio-based Hydrocarbon Esteri - biodiesel hydrocarbon hydrocarbon End product O biodiesel II CnH2n+2 H3C-O-C-R CnH2n+2 CnH2n+2 70
    71. NExBTL is a hydrocarbon renewable diesel In Mineral Oil Natural gas Vegetable oils Vegetable oils Biomass Coal Animal fats Refining Gasification Esterification Hydrotreating Gasification Fischer- Fischer- Tropsch Tropsch Out Gasoline Gasoline FAME = Renewable: Renewable: Jet Jet Biodiesel Gasoline Gasoline BTL BTL Jet GTL Jet Diesel Diesel Diesel Diesel CnH2n+2 CnH2n CnH2n+2 CnH2n+2 CnH2n+2 Paraffins Aromatics Paraffins Esters Paraffins Paraffins Polyaromatics Commercial Commercial Commercial Commercial Development by Neste Oil phase 71
    72. Comparing key fuel properties NExBTL characteristics • CO2 reduction Fuel Sulphur-free RME NExBTL • Cleaner emissions properties Diesel fuel1) • No implications for Density at +15°C (kg/m3)  885  835 775 ... 785 existing car pool • No need to relax Cetane number  51  53  84 ... 992) specifications to achieve Cloud point (°C) -5 -5  - 5 ... - 30 high bio content Heating value (lower) • Distribution within  38  43  44 (MJ/kg) existing oil refinery Sulfur content (mg/kg) < 10 < 10 0 logistics Unstabl • No need to compromise Product stability Stable Stable e fuel quality (1) EN590/2005 (2) Blending cetane number 72
    73. NExBTL renewable diesel is superior to traditional biodiesel NExBTL renewable diesel Traditional biodiesel • Technically possible to • Maximum blend of 5 % blend up to 100% (EN590 diesel specification) • No need to relax • Bio targets not achievable specifications to achieve without specification changes high bio-content • NOx increase • All emissions reduced • Limited storage possibilities • No \"use by\" -date • Problems with engine • No implications for end cleanliness users • Ash formation blocks exhaust • No implications for vehicle after treatment filters technology 73
    74. NExBTL´s competitive position product market price $/ton - Price premium due to higher quality and energy content >90% of world’s NExBTL biodiesel production is FAME/RME renewable diesel FAME/RME biodiesel Sulphur-free diesel fuel 0 product quality illustrative example 74
    75. NExBTL´s competitive position feedstock price $/ton FAME/RME biodiesel -mainly rapeseed oil NExBTL renewable diesel - flexible feedstock base Sulphur-free Diesel fuel -crude oil 0 investment cost & operating cost $/ton illustrative example 75
    76. Illustrative pricing for NExBTL renewable diesel Components of NExBTL price Assumptions Assumptions NExBTL ● NExBTL premium includes: ● NExBTL premium includes: Cost / price difference (in $/t) Premium • density premium 100-200 • density premium • energy content premium • energy content premium 100-200 FAME over • premium for higher cetane, better • premium for higher cetane, better Rapeseed Oil cold properties and branding cold properties and branding Rapeseed Oil value value 500 over Palm Oil ● Illustrative base price for palm oil is ● Illustrative base price for palm oil is 500 USD/t 500 USD/t Palm Oil (CPO) 76
    77. We have the flexibility to use cheapest feedstock available Price development of different feedstocks Feedstock flexibility U SD /t 1800 1800 1700 1700 1600 1600 • Rapeseed oil 1500 1500 availability 1400 1400 restricts first 1300 1300 generation 1200 1200 biodiesel 1100 1100 production from 1000 1000 meeting EU 900 900 800 800 targets 700 700 600 600 • NExBTL can use 500 500 almost any 400 400 vegetable oil or 300 300 animal fat as 200 200 feedstock 100 100 0 0  Can fulfil EU target Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09  Provides a Soya Oil Dutch fob ex mill Palm oil crude cif nwe competitive Tallow US b.f. cif Rott Rapeseed Oil Dutch fob ex mill cost position Source: Oil World 77
    78. Significant reduction in tailpipe emission Using NExBTL renewable diesel improves the quality of the air we breathe. • Engine tests have proven that particulate, carbon monoxide, and nitrogen oxide emissions released by NExBTL renewable diesel are all lower than with traditional diesel • Regulated emissions are significantly reduced  NOx 10% lower  Particulates 28% lower  CO 28% lower  HC 50% lower Source: Scania, MAN, VTT 78 May 6, 2009 Renewable Fuels 78
    79. Significant reduction in GHG emissions Fossil diesel NExBTL diesel Annual production of the first NExBTL plant in Porvoo is Crude oil Vegetable oil 170 000 tons production, production, processing processing and and transportation GHG emissions of NExBTL transportation 0.95 - 2.25 t CO2 renewable diesel over the entire lifecycle are 40-60% lower than Refining those of fossil diesel Production and processing Majority of emissions are generated during raw material End use End use production Potential to reduce GHG 1.3 -2.6 t CO2 emissions in raw material 3.8 t CO2 per ton production per ton of of diesel NExBTL • optimising fertilizer use • waste water treatment • use of waste Source: Concawe/Eucar WTW 2004, IFEU 79
    80. Commitment to sustainability ● We believe that by acting responsibly the industry can make a change and therefore sustainability is at the heart of all biofuel operations: ● Working with governments to develop policies on sustainable development ● Comply with highest standards (e.g. RSPO, RSB, RTRS) ● Work with raw material suppliers to continuously improve sustainability performance ● Search for new competitive non-food feedstock alternatives and implement them as soon as possible ● Continuously improve the greenhouse gas balance and environmental impacts of the whole lifecycle ● Production growth of vegetable oils must be based on increasing yields of currently used land area and utilisation of wasteland 80
    81. Global biomass potential Million hectares Ton/hectare Million tons crude oil equivalent globally yield production 2007 1. existing crops (sugar cane, 100-200 5-20 250-500 sugar beet, oil crops, wheat, maize, palm) 2. energy crops (Miscanthus, 200-400 15-20 1000-2000 Reed canary grass, eucalyptus etc.) 3. agricultural wastes (straw, cornstover, bagasse, rice hulls, palm 300-600 5-15 700-2000 wastes) 4. forestry wastes (sawdust, 100-200 10-20 500-800 logging residues, black liquor) Conclusion: Many studies put potential at 2000-5000 Mtoe/a Compare: Current global traffic fuel need ~ 2000 Million ton crude oil equivalent / year 81
    82. Among existing crops palmoil yield is superior (in crude oil equivalent) End product: Yield (ton/hectare) as crude oil equivalent: rapeseed oil NExBTL / 0.9 (EU) (FAME) soya oil NExBTL / 0.54 (US) (FAME) palm oil NExBTL / 4.2 (Malaysia) (FAME) wheat EtOH 1.1 (EU) barley EtOH 0.6 (Finland) corn EtOH 1.2 (US) sugar beet EtOH 3.1 (EU) sugar cane EtOH 3 (Brazil) Jatropha* NExBTL / 1 - 1,5 (FAME) Algae* NExBTL / 30 (FAME) Source: Several sources & Neste Oil internal analysis * Alternative feedstock, commercial volumes not yet available 82
    83. From plantations to our site: The palm oil we use is fully traceable HARVEST Oil palm trees bear fruit for approximately 30 years. At harvest the fruit bunches are SEEDLINGS cut down and transported to TRANSPORT The seedlings are grown in a the extraction plant adjacent Neste Oil’s palm oil is nursery adjacent to the to the plantation. loaded into ships, sealed plantation The separation of Neste Oil’s and shipped to Europe. fruit ensures traceability. PLANTATION CULTIVATION OIL PRESSING REFINERY Plantations are set up 12-month old trees are The palm fruit is freed from At the NExBTL according to RSPO’s planted. Proper care the bunches and mashed. Oil plant at Neste Oil's sustainable development guarantees well-being and is extracted by mechanical refinery in Finland, criteria long life of the palms. pressing and stored in tanks palm oil is used as which are sealed until one of the raw transportation. The rest of materials for the bunch is recycled or used NExBTL renewable towards energy. diesel. Audited by SGS 5/2007 Audited by SGS 3-4/2008 83
    84. Auditing our supply chain SGS audited the supplier against the QUALIPLAM Programme. It looked at 6 oil plantations within Sandakan region in May 2007. Key findings: ● Full compliance in 6 areas, e.g soil fertility, avoiding of use of fire, no use of child labour and protection of sexual harassment, transparency and contribution to sustainable development ● High compliance in 10 areas, e.g such as land ownership and operation procedures, land preservation, conservation of endangered species and working conditions for employees and their contractors ● Medium compliance for 12 criteria e.g appropriate use of agrochemicals, health and safety plans, trainings as well as information and management issues ● Low compliance for 4 criteria - energy efficiency, emissions reduction and a monitoring system for improved operations. ● Non compliance: none Development Plan established, full compliance by 2008, check points, follow-up audit 84
    85. R&D ● Neste Oil is working with over 20 research institutions in Finland and around the world ● Neste Oil has six research initiatives under way, aimed at identifying new raw material suitable for use as biofuel inputs ● The research initiatives include non-food vegetable oil, such as jatropha, algae, and microbes ● A pilot plant to demonstrate the use of forest residuals is under construction in Finland An example of the opportunities and challenges involved: algae ● A growing amount of algae research is being carried out worldwide ● Oil has already been produced from algae on a laboratory scale ● Scaling up production to meet the volumes required by an industrial plant is a major challenge 85 May 6, 2009 Renewable Fuels 85
    86. Use of edible and nonfood raw materials 86
    87. Bio-based diesel technology and feedstock evolution: new feedstocks will enter the market illustrative 12 2020: Equal to 25 Mton 10 % of diesel pool Rapid development of ALGAE and 8 other non-food 3rd Generation feedstock 6 2nd Generation 1st Generation 4 Hydrocarbons from biomass Hydrocarbons from bio-oils 2 Rapeseed methyl ester 0 2006 2010 2015 2020 2% 5.75% 8% 10% 2% 5.75% 8% 10% 87
    88. Neste Oil’s six research initiatives Nonfood vegetable oil Algae Microbes Forest residuals and biomass gasification 88 May 6, 2009 Renewable Fuels 88
    89. NOSE: Joint venture with Stora Enso to develop biofuels from wood residues ● First step • Demonstration plant at Stora Enso’s Varkaus Mill in Finland • Develop technology for purification of syngas • Start-up in 2009 ● Second step • Expand production to commercial scale ● The project combines expertise from Neste Oil, Stora Enso, and VTT (the Technical Research Centre of Finland) 89
    90. NOSE: Joint venture with Stora Enso to develop biofuels from wood residues Steam (energy equivalent to 100 000 t/a fuel oil) REFINING WAX INTO Gas purification to Fischer-Tropcsh Ultra Clean Gas Gasifier Drying Forest biomass Biodiesel crude FUEL Synthesis 1 000 000 t/a) wax to refining 100 000 t/a Joint Venture 90
    91. Drivers supporting lignocellulose-based renewable fuels Wood residues as an example – StoraEnso/Neste Oil 1. Climate change  Renewable diesel made from lignocellulosic feedstocks such as wood residues by Biomass to Liquids (BTL) technology is very greenhouse gas (GHG) efficient, i.e. resulting in low net CO2 emissions throughout the cycle  GHG balance is expected to have a direct impact on price level 2. Feedstock availability  Lignocellulosic feedstocks need to be taken into use as current farming- based biomass is not sufficient for the targeted growth  Strong pressure to find non-food raw materials 3. Product quality  Cleaner tailpipe emissions targeted  The properties of renewable diesel made using a BTL process are comparable or above those of conventional diesel  Automotive companies appreciate BTL as the quality and compatibility are better than those of 1st generation biodiesel = FAME (Fatty Acid Methyl Ester) 91
    92. Oil Retail
    93. Strong retail position Neste Oil Retail • The leading petroleum products marketer and distributor in Finland 881 881 • Important player in the growing markets in Baltic Rim including the St. Petersburg area • Approx. 1,170 retail outlets, of which 2/3 in Finland Note: 03/2008 93
    94. Significant restructuring on the Finnish market Development Of Market Shares Development Of Market Shares Gasoline 2002 - 2008 Diesel 2002 - 2008 100% SEO 100% SEO 95% 95% 90% Shell 90% Shell 85% 85% St1 80% St1 80% 75% 75% Esso1) 70% 70% ABC Esso1) 65% 65% JET 60% 60% 55% ABC 55% 50% 50% Teboil 45% JET 45% 40% 40% 35% Teboil 35% 30% 30% 25% 25% 20% 20% Neste Oil 15% 15% 10% Neste Oil 10% 5% 5% 0% 0% 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 Note : Sale of Esso and JET has resulted in significant redistribution of market shares Sources: Oil & Gas Federation; Neste Oil; BAH analysis 94
    95. Project to strengthen position in Finland Retail market shares in Finland 2008 • Build network concepts for customer segments 100% • Improve loyalty system 80% 60% • Refresh brand image 40% • Optimize network 20% 41.8 30.8 44.1 27.3 • Enhance functional quality 0% Gasoline Diesel Heating Heavy • Improve cost efficiency oil fuel oil Neste Oil market share Competitor market shares Source: Neste Oil and Finnish Oil and Gas Federation 95
    96. Neste Oil's retail network in Finland Unmanned stations D-stations 21% 29% Dealer owned, Company owned, Dealer operated 36% 13% Dealer operated Note: 12/2007 96
    97. Footprint in attractive growth markets Baltic Rim sales volumes 1,000 m3 Retail position outside Finland • A significant player in the 1,600 Baltic Rim – especially in the 1,400 St. Petersburg area 1,200 1,000 • Growing market with healthy 800 margins 600 400 • We continue to grow in this market 200 0 2001 2002 2003 2004 2005 2006 2007 Gasoline Diesel Fuel Heating Oil Notes: Baltic rim = Estonia, Latvia, Lithuania, Poland, St. Petersburg area. Figures include both direct sales and sales through retail network. 97
    98. Our market share in growing markets Estimated Baltic Rim total market growth in 2009 Estimate for our market shares in Baltic Rim area in 2009 25% 6% Highest margin and 4% our first 20% 1) priority 2% 15% 0% 2) 10% -2% -4% 5% -6% 0% St. Estonia Latv ia Lithuania Poland St. Estonia Latvia Lithuania Poland Petersburg Petersburg Gasoline Diesel Gasoline Diesel 1) Gasoline and diesel together 2) Market share is around 10% in selected areas 98
    99. 99
    100. Financials
    101. Key figures by segments Sales Comparable operating profit 16000 700 15,043 602 Group 14000 600 Group 12,030 510 12000 500 Oil Refining Oil Refining 10000 Specialty Products 400 Specialty Products 8000 Renewable fuels Renewable fuels 300 6000 Shipping Oil Retail Shipping 4,073 200 4000 Oil Retail 100 2000 50 55 591 437 22 116 2 0 0 2008 2008 Neste Oil's reporting segments are the five business divisions as well as Other segment consisting of Group administration, shared service functions as well as Research and Technology and Neste Jacobs. 101
    102. Key figures by segments Net assets Comparable return on net assets, % 4000 25% 21.7% 3500 3,363 Oil Refining 20% 19.2% Group 3000 Shipping 2500 15% Specialty Products 13.9% Renewable fuels 1,972 Oil Retail Specialty Products 2000 Renewable fuels Oil Refining 10% 1500 Oil Retail Shipping 6.0% 1000 5% 500 371 327 351 272 0.9% 0 0% 31.12.2008 31.12.2008 Neste Oil's reporting segments are the five business divisions as well as Other segment consisting of Group administration, shared service functions as well as Research and Technology and Neste Jacobs. 102
    103. Indicative Comparable EPS 2.00 1.87 1.80 1.72 1.58 1.60 1.40 1.20 1.00 0.80 0.65 0.60 0.56 0.60 0.52 0.51 0.49 0.46 0.40 0.34 0.30 0.26 0.27 0.21 0.20 0.09 0.00 Q1 Q2 Q3 Q4 Q1- Q1 Q2 Q3 Q4 Q1- Q1 Q2 Q3 Q4 Q1- Q1 Q4 Q4 Q4 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2009 Comparable EPS = comparable EBIT – reported financial costs – taxes (26%) / reported number of shares 103
    104. Q1/09 comparable EBIT of EUR 56 million 2006 2007 2008 MEUR 250 225 202 199 200 189 181 158 159 150 119 119 103 100 87 84 56 50 0 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 1) Excluding inventory gains/losses, changes in the fair value of oil- and freight 104 derivatives and capital gains/losses
    105. First quarter 2009 in brief  Comparable operating profit EUR 56 million (119 million) Results  Total refining margin 9.44 usd/bbl (11.91)  Operational cash flow EUR 17 million (-113 million)  Liquidity position remained healthy with total liquidity* of 1,485 million euros Investments  Renewable diesel projects proceeded according to plan &  Special attention to fixed costs fixed costs  Major organizational restructuring was started Organizational  Target to improve efficiency, customer orientation and changes implementation of the corporate strategy 105 * Cash and cash equivalents and commited, utilized credit facilities
    106. 2008 comparable EBIT of EUR 602 million MEUR % ROACE 640 20 630 626 18 620 15.5 16 610 602 14 13.1 600 597 12 590 10 580 8 570 565 6 560 4 550 540 2 530 0 2005 2006 2007 2008 2007 2008 106
    107. Key Figures EUR million unless otherwise noted Q1/09 Q1/08 2008 2007 Revenue 2,053 3,297 15,043 12,103 Operating profit before depreciation 150 263 409 996 Operating profit 95 204 186 801 - comparable operating profit 1) 56 119 602 626 Profit before income taxes 81 191 129 763 EPS, EUR 0.24 0.56 0.38 2.25 Net cash from operating activities 17 -113 512 541 Capital expenditure and investments in shares 174 82 508 334 31 Mar 09 31 Mar 08 Interest bearing net debt 1,216 1,212 Capital employed 3,491 3,591 ROCE, (Pre-tax), % 11.7 24.0 ROE, % 11.1 24.2 Personnel, average 5,252 4,912 1) Excluding inventory gains/losses, changes in the fair value of oil- and freight 107 derivatives and gains/losses from asset sales
    108. Balance Sheet Total assets Total equity and liabilities 6000 6000 4,980 5,246 4,980 5,246 5000 5000 4000 4000 2,316 2,793 2,229 3,112 3000 3000 1,275 1,263 2000 2000 2,453 1000 1,868 1000 1,488 1,655 0 0 31 Mar 2009 31 Mar 08 31 Mar 09 31 Mar 08 Non-current assets Non-current assets Equity Int-bear. liabilities as classified as held Current assets Int-free liabilities for sale 31 Mar 09 31 Mar 08 Capital employed, MEUR 3,491 3,591 Equity-to-assets, % 44.9 44.2 Leverage, % 35.3 34.3 Gearing, % 54.6 52.3 108
    109. Cash Flow MEUR Q1/09 Q1/08 2008 2007 Profit before taxes 81 191 129 763 Adjustments total 108 78 249 184 Change in working capital -224 -337 248 -189 Cash from operations -35 -68 626 758 Net finance costs 14 -23 -29 -40 Taxes 38 -22 -85 -177 Net cash from operations 17 -113 512 541 Capital expenditure and investments in shares -174 -82 -508 -334 Other -53 -15 13 -13 Cash flow before financing activities -210 -210 17 194 Net change in loans 201 468 244 20 Dividends paid 0 -245 -256 -231 Net increase/decrease in cash -9 13 5 -17 Cash at the end of the period 109
    110. Outlook for 2009 (28-4-2009) ● The global economy has not improved and oil demand forecasts have been revised down ● Drop of demand will coincide with new refining capacity coming onstream, which will continue to put pressure on refining margins ● Diesel margins are expected to stay well lower than in previous years ● Slightly better gasoline margins expected compared to the previous outlook ● Demand for base oils to stay weaker compared to 2008. Personnel at the PAO plant in Belgium will be laid off for four weeks in May ● Oil freight rates seem to remain very weak throughout the year ● Renewable Fuels segment is unlikely to report positive results in 2009, due to increasing costs related to expansion of the business ● Low demand will continue to reflect in Oil Retail’s sales volumes and margins ● A planned two-month shutdown on Production Line 4 started in mid April to enhance the line’s productivity ● Capex estimate revised down to EUR 890 million from the previous estimate of 950 million 110
    111. Segment financials – Oil Products SEGMENT FINANCIALS SEGMENT FINANCIALS EUR million EUR million Q1/08 Q1/08 Q2/08 Q2/08 Q3/08 Q3/08 Q4/08 Q4/08 2008 2008 Q1/09 Q1/09 Oil Products Oil Products Reported EBIT Reported EBIT 197 197 272 272 15 15 -301 -301 183 183 106 106 Comparable EBIT Comparable EBIT 113 113 162 162 173 173 154 154 602 602 64 64 Depreciation Depreciation 46 46 41 41 44 44 44 44 175 175 44 44 Investments Investments 33 33 39 39 46 46 47 47 165 165 43 43 Net assets Net assets 2,951 2,951 2,436 2,436 2,660 2,660 Comparable RONA, % Comparable RONA, % 16.2 16.2 21.2 21.2 10.0 10.0 SALES VOLUMES SALES VOLUMES 1000 tons 1000 tons 3,256 3,256 3,755 3,755 3,791 3,791 3,735 14,571 3,430 3,735 14,571 3,430 Million barrels Million barrels 25 25 28 28 29 29 28 28 110 110 26 26 REFINING MARGINS REFINING MARGINS IEA Brent cracking margin, $/bbl IEA Brent cracking margin, $/bbl 2.87 2.87 5.51 5.51 5.24 5.24 4.26 4.26 4.74 4.74 2.34 2.34 Neste Oil Total Refining Margin, $/bbl Neste Oil Total Refining Margin, $/bbl 11.91 11.91 12.38 12.38 13.54 13.54 15.05 15.05 13.39 13.39 9.44 9.44 111
    112. Segment financials – Renewable Fuels SEGMENT FINANCIALS SEGMENT FINANCIALS EUR million EUR million Q1/07 Q2/07 Q3/07 Q4/07 Q1/07 Q2/07 Q3/07 Q4/07 2007 2007 Q1/08 Q2/08 Q3/08 Q4/08 Q1/08 Q2/08 Q3/08 Q4/08 2008 2008 Q1/09 Q1/09 Renewable Fuels Renewable Fuels Reported EBIT Reported EBIT -3 -3 -4 -4 -7 -7 2 2 -12 -12 1 1 12 12 -2 -2 -9 -9 2 2 -10 -10 Comparable EBIT Comparable EBIT -5 -5 -5 -5 -6 -6 3 3 -13 -13 2 2 13 13 -3 -3 -10 -10 2 2 -7 -7 Depreciation Depreciation 0 0 1 1 2 2 2 2 5 5 2 2 1 1 2 2 2 2 7 7 2 2 Investments Investments 17 17 17 17 13 13 22 22 69 69 27 27 50 50 64 64 108 108 249 249 123 123 Net assets Net assets 88 88 112 112 122 122 142 142 142 142 166 166 212 212 259 259 371 371 371 371 462 462 Comparable RONA, % Comparable RONA, % -26.3 -26.3 -22.7 -22.7 -22.1 -22.1 -12.3 -12.3 -12.3 -12.3 5.2 5.2 15.9 15.9 8.2 8.2 0.9 0.9 0.9 0.9 -6.6 -6.6 Sales volumes in 1000 tons Sales volumes in 1000 tons 0 0 0 0 5 5 23 23 28 28 18 18 35 35 23 23 70 70 94 94 31 31 112
    113. Segment financials – Oil Retail SEGMENT FINANCIALS SEGMENT FINANCIALS EUR million EUR million Q1/07 Q2/07 Q3/07 Q4/07 Q1/07 Q2/07 Q3/07 Q4/07 2007 2007 Q1/08 Q2/08 Q3/08 Q4/08 Q1/08 Q2/08 Q3/08 Q4/08 2008 2008 Q1/08 Q1/08 Oil Retail Oil Retail Reported EBIT Reported EBIT 11 11 18 18 22 22 9 9 60 60 11 11 11 11 9 9 -6 -6 25 25 12 12 Comparable EBIT Comparable EBIT 11 11 17 17 21 21 10 10 59 59 9 9 11 11 7 7 -5 -5 22 22 12 12 Depreciation Depreciation 6 6 7 7 7 7 7 7 27 27 8 8 8 8 9 9 6 6 31 31 7 7 Investments Investments 7 7 11 11 9 9 24 24 51 51 8 8 15 15 18 18 22 22 63 63 4 4 Net assets Net assets 319 319 318 318 368 368 381 381 381 381 362 362 385 385 351 351 351 351 351 351 321 321 Comparable RONA, % Comparable RONA, % 13.4 13.4 17.3 17.3 19.5 19.5 17.1 17.1 17.1 17.1 9.7 9.7 10.7 10.7 9.7 9.7 6 6 6 6 14.3 14.3 Sales volumes, 1000m3 Sales volumes, 1000m3 1,144 1,144 1,097 1,097 1,087 1,087 1,190 1,190 4,519 4,519 1,056 1,056 1,051 1,051 1,104 1,104 1,141 1,141 4,353 4,353 1,021 1,021 113
    114. Key sensitivities for 2009 Approximate Effect on Neste Oil’s 2009 EBIT before hedges Annual change ● EUR/USD-rate +/- 10% +/- 100-120 MEUR ● Total Refining Margin +/- 1.00 USD/bbl +/- 110 MUSD ● Crude oil price +/- 1.00 USD/bbl +/- 10 MUSD ● Crude oil freight rates +/- 10 Aframax WS points +/- 10 MUSD 114
    115. Capex, investments by gategory 890 890 1000 900 800 700 668 668 600 535 535 508 508 500 400 334 334 300 200 223 195 100 153 153 0 2005 2005 2006 2006 2007 2007 2008 2008 2009e 2009e Maintenance Productivity Strategic Depreciation Capital expenditure • Maintenance related expenditure at or below depreciation also in the coming years • Significant growth related investments expected 115
    116. Net working capital and inventories million EUR 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 31 Dec 2006 31 Dec 2007 30 June 2008 31 Dec 2008 31 Mar 2009 Inventories Net working capital 116
    117. Sources and uses of cash 2005 2006 2007 2008 million EUR 900 800 700 600 500 400 300 200 100 0 sources uses sources uses sources uses sources uses sources uses Net cash from operations Maintenance capex Divestments Strategic and productivity investments Dividend 117
    118. Key Costs ● Material costs have increased as a result of increased crude oil prices EUR million 2005 2006 2007 2008 Personnel 223 224 256 315 Materials and services 8,443 11,183 10,279 13,657 (Feedstocks account for more than 99% Depreciation, amortisation and write-downs 153 153 195 223 Other operating expenses 534 597 683 719 Total 9,353 12,157 11,413 14,914 118
    119. Share & Funding
    120. 120
    121. Share performance and ownership Share price development 35.00 € 30.00 € 25.00 € 20.00 € 15.00 € 10.00 € 5.00 € 0.00 € Oct-2005 Oct-2006 Oct-2007 Oct-2008 Jun-2005 Aug-2005 Dec-2005 Feb-2006 Jun-2006 Aug-2006 Dec-2006 Feb-2007 Jun-2007 Aug-2007 Dec-2007 Feb-2008 Jun-2008 Aug-2008 Dec-2008 Feb-2009 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Shareholders by sector 17.4 % Finnish State Households 20.4 % 50.2 % Finnish Institutions Non-Finnish 12.0 % Shareholders 121
    122. Neste Oil’s credit programs in place Domestic Bonds 2005 Domestic Commercial Paper Program 2005 Senior term notes of EUR 200 million Total of EUR 400 million unsecured short term 4 years floating rate note 1/2005 notes with maturities less than one year Issued: EUR 80 million Yield: three-month euribor +0.40% Dealers: Pohjola Bank, Nordea, Sampo Bank plc, 7 years fixed rate note 1/2005 Skandinaviska Enskilda Banken AB (publ) and Issued: EUR 120 million Svenska Handelsbanken AB (publ). Coupon rate: 3.50%, issue price: 99.606%, mid-swap +0.60% Joint Lead Arrangers: Sampo Bank and Pohjola Investment Loans 2005-2007 Bank Loans from EIB and NIB totaling EUR 230 Revolving Credit Facility 2005 million EUR 1.5 billion Bilateral Loans 2008 5 years (+1+1) Loans from Scandinavian financial institutions totaling Mandated Lead Arrangers: Barclays Capital, BNP EUR 315 million, average maturity 5 y. Paribas, Citigroup, Nordea and SEB Participating Banks: Calyon, Svenska Overdraft facilities for bank accounts Handelsbanken, Danske Bank, Sampo Bank ,Pohjola with selected cash pool banks Bank, Royal Bank of Scotland, HSBC, HSH Nordbank, Dresdner Bank, Swedbank, ABN Amro Max. EUR 50 million per bank totaling EUR 150 million Bank, Bank DnB NORD, Bank of Tokyo-Mitsubishi, ING Bank, Deutsche Bank, BBVA, Societe Generale, DBS Bank 122
    123. Interest-bearing liabilities 1) Interest-bearing liabilities, Meur TOTAL 1,263 MEUR • Interest-bearing net debt EUR 110 110 LT Fin. inst 60% 1,217 million LT Fin. inst 60% Domestic Bond 10% Domestic Bond 10% • Total interest-bearing liabilities 174 174 LT Others 2% LT Others 2% Leasing 7% Leasing 7% EUR 1,263 million CP 14% CP 14% • Short-term interest bearing 83 83 ST Others 9% ST Others 9% 20 754 754 liabilities EUR 289 million 20 121 121 Maturity profile 600 Interest-bearing liablities, Meur 500 298 TOTAL 400 1,263 MEUR 300 200 100 0 974 2009 2010 2011 2012 2013 2014+ Short-term Long-term Long-term Short-term 1) At the end of March, 2009 123
    124. Liquidity and financing • Total liquidity at the end of December EUR 1,485 million • New funding during 2008 totaling EUR 365 million • Committed facilities include:  Revolving credit facilities totalling EUR 1,575 million  Overdraft facilities totaling EUR 150 million • Average interest rate 2.8% and average maturity 4.4 years • Flow risk EUR 6.2 million1) • No financial covenants in existing loan agreements • No major refinancing needs until 2012 • Short-term financing needs met by revolving credit facility and overdrafts, commercial papers (EUR 370 million) in reserve • No credit losses with counterparty banks • Syndicate banking group mainly unchanged and consists of relatively strong banks At the end of March, 2009 1) The change in interest expenses within one year if interest rates change 1% 124
    125. Financial risk management • Foreign Exchange Risks Currency structure of interest-bearing • Policy is to hedge the estimated liabilities, % net cash flow on rolling basis: TOTAL • 100% of the next 6 months 8% 1% 1,263 MEUR • 50% of the following 6 months • Both option and forward strategies in use • Interest Rate Risks • Average Interest Rate of the loan portfolio is 2.8% 91% • Flow Risk is EUR 6.2 million 1) • Duration benchmark target of EUR USD Other the loan portfolio is 12 months At the end of March, 2009 1) The change in interest expenses within one year if interest rates change 1% 125
    126. 126
    127. Global Crude Oil and Products Demand and Supply
    128. 128
    129. Crude Oil
    130. Oil consumption by market areas • Total consumption in 2009 is estimated to be 85.3 million bbl/d • Asia Pacific drives the world: • 2009 estimated growth rates •Asia Pacific -0.3% •North America -1.7% •Europe&Eurasia -1.9% •Total World growth -0.6% (-2.4 million bbl/d) World consumption by geographical area 5% 35% 29% 4% 9% 18% Source: IEA Oil Market Report 10-April-2009 Americas Europe Middle East Africa Asia Pacific FSU 130
    131. Brent crude oil and Brent/Urals differential Brent dated USD/bbl 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 2007 2008 2009 0 0 -1 -1 -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 -7 -7 -8 -8 131
    132. Qualities of The Most Important Crude Oils API gravity Sulfur Brent dated 38° 0.4% Fortis (usually sets daily Brent dtd quote) 38° 0.6% Urals 31° 1.3% WTI 40° 0.3% 100% 90% 80% 70% 60% 50% Neste Oil aims to maximize 40% Urals usage; estimate for 2009 30% is 3/4 of total feedstocks used 20% 10% 0% 2009e 132
    133. Oil transportations in the Baltic Sea area (Million tons) 0,1 1,7 7 Finland 11,7 Norway Sweden 0,1 0,7 9,5 2,1 5,2 0,5 10 2004 2005 2006 2007 29,5 22,5 27,6 20 Vysotsk 14 Primorsk 74,2 74,2 St. Petersburg 66,1 2003 2004 2005 2006 2007 57,4 Sillamäe 44,8 2,1 1,4 Tallinn 0,6 3,3 2,6 Paldisk 17,7 2007 16,0 16,1 1,9 1,7 Estonia 15,9 14,5 13,5 2003 2004 2005 2006 2007 2008 2005 2007 12,6 11,8 12,6 14,7 7,2 2003 2004 2005 2006 2007 Latvia 2003 2004 2005 2006 2007 Ventspils 10,8 Riga 7 6,1 5,9 0,1 4,6 8,4 2003 2004 2005 2006 2007 Butinge 4,4 3,2 4,7 4 KlaipedaLithuania 2003 2004 2005 2006 2007 Russia Kaliningrad 6 10 11,4 8,5 6,6 6,5 5,8 6,6 6,3 8,6 3,5 1,3 2,3 Gdansk 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 5,2 3,3 3,5 3,3 1 6,1 2,9 2,4 3,4 4,6 Belarus Germany Poland 2003 2004 2005 2006 2007 CRUDE PRODUCTS 133
    134. Russian oil production and exports Russian oil production volume, Mt Russian oil exports from Primorsk harbour, Mt 600 80 70 500 60 400 50 300 40 200 30 20 100 10 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008 Russian pipeline oil export by producer 2005 Russian pipeline oil export by destination 2005 1% 4% 0% 2% 2% 2%3% 3% 3% 7% 21% 2% 4% 31% 9% 2% 5% 7% 20% 20% 16% 36% TNK-BP Lukoil Surgutneftegaz Novorossiysk Primorsk Germany Rosneft Sibneft Tatneft Poland Hungary Butinge Slavneft Bashneft Yukos Slovakia Gdansk Tuapse Gazprom Czech Rep Odessa Pivdenne 134
    135. Top crude oil exporters 2006 note: difference between supply and demand source: Pira 2007 135
    136. Products
    137. Regional Consumption by Product Group 2008 OECD North America 24.32 MM bbl/d OECD Europe 15.17 MM bbl/d 11% 11% 10 % 6% 1% 7% 5% 11 % 16 % 21% 44% 9% 7% 41 % LPG & Ethane Naphta Motor Gasoline LPG & Ethane Naphta Motor Gasoline Jet & Kerosene Gas/Diesel Oil Residual Fuel Oil Jet & Kerosene Gas/Diesel Oil Residual Fuel Oil Other Products Other Products OECD Pacific 8,04 MM bbl/d NON OECD China 7,862 MM bbl/d 6% 12% 16% 8% 11% 10% 8% 20% 18% 21% 4% 19% 36% 11% LPG & Ethane Naphta Motor Gasoline LPG & Ethane Naphta Motor Gasoline Jet & Kerosene Gas/Diesel Oil Residual Fuel Oil Jet & Kerosene Gas/Diesel Oil Residual Fuel Oil Other Products Other Products Source: IEA Oil Market Report 16-Jan-2009 137
    138. Demand growth returns when global economy recovers • The idea of how demand growth will shape up has not fundamentally changed • At the moment we don’t know yet when one can expect oil demand growth to resume and where on the development curve demand will then be • Latest IEA medium-term forecast is from December 2008 but this month 2009 demand estimate was cut by 1 mb/d to – 0.5 mb/d, will growth then return? Global cumulative demand growth ? 138 IEA December-January 2008-2009
    139. This market environment favours diesel producers Simple refiner Complex gasoline producer in the US Complex middle distilate producer (25% of the global capacity) (Neste Oil) Gasoline Middle distillates Gasoline Middle distillates Gasoline Middle distillates Fuel Oil Other Fuel Oil Other Fuel Oil Other Fuel oil oriented producer Gasoline oriented producer Middle distillate oriented producer Weak refining margin Low refining margin at the moment High refining margin 139
    140. Resolving European product imbalances Surplus Diesel/gasoil Gasoline Deficit Jet fuel • Europe has a significant surplus of gasoline and a deficit in middle distillates • Most of excess gasoline is exported to fill the deficit existing in the USA • Russia is the most important source of heating oil and diesel, which requires sulfur removal to meet European traffic fuel emission standards • Jet fuel deficit is mostly covered through imports from the Middle East 140
    141. Transport fuels in EU - Europe is a diesel market • CO2 emissions legislation favours diesel vehicles • Growth of heavy transport based on diesel technology 389 • By 2030 over 2/3 of all European transport energy consumption • Trends similar elsewhere 180 170 Diesel 160 150 Million tonnes per year 140 130 120 110 100 Gasoline 90 80 80 1997 1998 1999 2002 2003 2004 2005 2000 2001 1995 1996 1990 1994 1991 1992 1993 2020 Source: Eurostat Source: Purvin &Gertz 141
    142. European trends Transport sector ● Largest energy consumer: 31% of total, rising to 33% by 2030. ● Largest oil consumer: 60% of total, rising to over 64% in 2030. Road transport dominates ● Over 80% of total transport energy consumption. ● By 2030 cars and trucks will account for some 50% of total European oil consumption – unless alternative transportation fuels emerge. Similar trends around the world 142
    143. Middle distillates demand to show the strongest growth million bbl/d million bbl/d 40.0 40.0 35.0 35.0 30.0 30.0 25.0 25.0 29.8 29.8 20.0 20.0 25.0 26.2 26.2 23.1 23.1 25.0 20.1 20.1 15.0 15.0 10.0 10.0 5.0 5.0 6.5 6.5 6.7 6.7 6.6 6.6 6.8 6.8 7.6 7.6 -- 2000 2000 2005 2005 2008 2008 2010 2010 2015 2015 Jet/Kerosene Jet/Kerosene Diesel/Gasoil Diesel/Gasoil • Dieselization of European car fleet likely to continue • Jet fuel demand is on the rise • Healthy demand for gasoil in power generation • Possibility of shipping moving into use of gasoil instead of bunker fuel in the future (?) Source: Wood Mackenzie January 2009 143
    144. Global supply/demand balance of middle distillates Mt Mt Diesel/Gasoil Demand/supply balance of middle distillates Diesel/Gasoil 50 50 40 40 30 30 20 20 10 10 0 0 -10 -10 -20 -20 -30 -30 -40 -40 Middle East FSU Global, Mt Greater America America Europe Saharan Asia Pacific North Africa Latin Sub- 2007 2007 2010 2010 Note: includes refinery supply + non refinery supply (for example biodiesel, ethanol and LPG from NGL production) Source: Wood Mackenzie January 2009 144
    145. Share of diesel cars of new registrations 2008 36.2 49.6 72.4 45.9 25.1 2008: 52.7 % 33.5 43.6 47.8 (EU-15, Iceland, Norway 77.0 and Switzerland) 79.0 77.3 54.6 32.3 50.7 3.6 68.4 69.3 Association of European Automobile Manufacturers 145
    146. Diesel balances in Europe 2007 and 2015 ( Mt/a ) NWE 2007 2015 Whole Europe 5 0 2007 2015 -5 0 -10 -10 -15 -20 -20 -30 Eastern & Central -40 Europe 2007 2015 5 Balances include : 0 + 7 Mt in 2007 -5 + 16 Mt in 2015 of -10 renewable diesel for whole Europe Mediterranean 2007 2015 0 -10 Source: Wood Mackenzie Source: Wood Mackenzie -20 -30 146
    147. In gasoil (diesel) road use is growing – other use is stable 35 . Gasoil Demand, Mb/d 30 25 20 15 10 5 0 2000 2005 2008 2010 2015 Road Transport Residential/Commercial Other Source: Wood Mackenzie January 2009 147
    148. Asia will be the main driver of gasoline demand million bbl/d million bbl/d 30.0 30.0 25.0 25.0 20.0 20.0 15.0 15.0 22.7 23.9 23.9 21.3 22.2 22.2 22.7 10.0 21.3 10.0 19.7 19.7 5.0 5.0 -- 2000 2000 2005 2005 2008 2008 2010 2010 2015 2015 Gasoline Gasoline • North America will remain the biggest gasoline market but growth prospects have softened - Demand destruction due to recession - Increasing use of ethanol - Urge to increase fuel efficiency Source: Wood Mackenzie January 2009 148
    149. Regional imbalances offer opportunities for export refineries Mt Mt Demand/supply balance of gasoline Gasoline Gasoline 80 80 60 60 40 40 20 20 0 0 -20 -20 -40 -40 -60 -60 Global, Mt FSU Middle East America America Europe Greater Saharan Asia Pacific North Africa Latin Sub- 2007 2007 2010 2010 Note: includes refinery supply + non refinery supply (for example biodiesel, ethanol and LPG from NGL production) Source: Wood Mackenzie January 2009 149
    150. Fuel oil use as bunker fuel is growing, other demand declining Fuel Oil Demand, Mb/d. 12 10 8 5.5 6 7.4 6.6 5.8 5.6 4 2 3.6 2.7 2.9 3.1 2.2 0 2000 2005 2008 2010 2015 Bunkers Inland • Bunker demand is expected to increase by 2% annually • Bunker specifications are stricter, especially in the North Sea and the Baltic • Power generation using more and more gasoil, renewables and other alternatives (coal, natural gas) Source: Wood Mackenzie January 2009 150
    151. Global supply/demand balance (2006 and 2010) Fuel Oil Surplus 80 Mt 60 40 20 0 -20 -40 -60 -80 Middle East FSU Greater Deficit America America Europe Saharan Asia Pacific North Africa Latin Sub- 2006 2010 Note: includes refinery supply + non refinery supply (for example biodiesel, ethanol and LPG from NGL production) Source: Wood Mackenzie 151
    152. Likely distillation capacity additions (mbd) Neste Oil view, February 2009 (now ~ 657 existing regular refineries) • Due to weak demand overcapacity occurs now and eases in the following years assuming growth returns • After 2010 most major projects delayed, some canceled such as the largest, Kuwait’s 615,000 bd Al-Zour • Some investments will be completed also in 2013 but all major ones seem to be delayed beyond that 2 Mb/d Jamnagar, India = 580,000 bd, mechanical completion 8/2008, full utilization estimated 2Q2009 1,5 1 0,5 China 2.1 mbd to meet Port Arthur, Garyville domestic demand growth Wood River, Borger > 600,000 bd in USA ? (some + slippage from earlier) 0 2008 2009 2010 2011 2012 2013 OECD China Other Asia Middle East Other Non-OECD IEA, KBC, Wood Mackenzie, Company view 152
    153. Supersites in Europe – Porvoo Refinery is one of them supersite: strategic, large scale, competitive assets usually integrated with large petrochemical operations Porvoo: 205,000 bbl/d -Nelson 12.1 / Solomon 14.5 Schwedt: 210,000 bbl/d Source: Wood Mackenzie Pernis: 416,000 bbl/d -Nelson comp. Index 10.36 -Nelson comp. Index NA. Plock: 276,000 bbl/d Anvors (Antwerp) : 360,000bbl/d -Nelson comp. index 9.5 -Nelson comp. Index NA. Notes: Leuna: bbl/d 227,000 bbl/d -Nelson comp. Index NA. 1. Supersites classification is based on Wood Mackenzie ”global Refinery View –map” Karlsruhe: 302,000 bbl/d 2. Capacities are atmospheric -Nelson comp. 9.75 Index distillation capacities Nelson complexity Raffinerie Mediterranee: 320 000bbl/d averages: -Nelson comp. Index 9.3 • Europe 6.5 Sarroch: 300 000 bbl/d • USA 9.5 -Nelson comp. Index 9.9 153
    154. Neste vs. peers’ (independent refineries) refining capacities in Europe Petroplus Holdings PKN Orlen Tupras ERG Hellenic Petroleum Mol Saras Neste Oil Motor Oil Lotos Unipetrol 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 bbl / year Source: companies 154
    155. Neste Oil’s Assets Are Highly Complex Source: BernsteinResearch 155
    156. 156
    157. Sustainability & Social responsibility
    158. 158
    159. Material balance and emissions 159
    160. CO2 emissions and emission rights 3.6 milllion tons 3.5 3.4 3.3 3.2 3.1 3 2008e 2009e 2010e 2011e 2012e CO2-emissions allocated CO2-rights • We have a short position around 0.3 million tons/a 160
    161. Sulfur content of gasoline 1000 EU Neste Futura 800 Sulfur max. (mg/kg) 600 400 200 0 1990 1995 2000 2005 2010 EU 2005 ... 2008: Sulfur max. 50 mg/kg Neste Oil 2004 ... Sulfur max. 10 mg/kg 161
    162. Sulfur content of diesel fuel 1000 EU Neste Oil 800 Sulfur max. (mg/kg 600 400 200 0 1990 1995 2000 2005 2010 EU 2005 ... 2008: Sulfur max. 50 mg/kg Neste Oil 2004 ... Sulfur max. 10 mg/kg 162
    163. Health, Safety and Environmental (HSE) policy of Neste Oil (approved by the Neste Executive Team March 11th 2005) We ● develop, make and deliver to our customers superior products and technologies which are safe and environmentally sound ● comply with all applicable regulatory requirements ● regard good handling of HSE issues as an integral part of our business activities, and aim at efficient management of related risks ● act responsibly in society and in our use of natural resources, and make decisions supportive of sustainable development ● prove our commitment to the Responsible Care Program See: www.nesteoil.com/environment 163
    164. Social responsibility ● Sustainability principles for biofuels GLOBAL CHARTER ● Supplier selection criteria CEO Declaration of Support for the Responsible Care® Global Charter ● Neste Oil follows • the recommendations covering the I support the Responsible Care® Global Charter which seeks companies to strengthen Responsible Care worldwide working operations of multinational companies with national chemical associations. issued by the OECD, By implementing the Charter, Neste Oil will: • recommendations on good corporate – – continue to improve its environmental, health and safety performance advance sustainable development governance. – champion and facilitate the appropriate extension of Responsible Care across the business value chain, and ● The company also operates in accordance – address stakeholder expectations in the continuing development of Responsible Care with As part of these commitments, Neste Oil will work with customers • the UN Charter on Human Rights and suppliers to manage its chemical products using a risk-based • the ILO Declaration on Fundamental and life-cycle oriented approach supported by sound scientific information. These commitments include making relevant risk Principles and Rights at Work. information publicly transparent and cooperating with governments and the public to promote the safe use of chemicals worldwide. • These ban actions infringing people’s By implementing the Responsible Care® Global Charter, human rights, discrimination, forced Neste Oil is playing its part in improving the quality of life of the global community. labor, and the use of child labor. ● Neste Oil abides by these requirements in Espoo, March 3, 2006 its own operations and expects its partners to do the same Risto Rinne President and CEO 164
    165. The key social, environmental and governance related risks facing the business and what Neste Oil does to minimized these risks ● Strategic risk: ability to respond to developing product market – future growth in climate benign products • Neste Oil strategy statement in Sep 2006: risk eliminated ● Ensuring renewable raw material acceptability • Sustainability criteria for biofuels, supply chain management, active work to promote certifications, flexibility of NExBTL technology: risk minimized ● Major ship wreck in the Baltic Sea: business wide image risk • Trained own crew, double-hull fleet, escort tugs, vetting process: risks controlled ● Global market with local regulations: level playing field unrealistic target for the moment ● Increased conversion rates with increased energy use at the refineries: challenging to meet simultaneously CO2 reduction targets and tightening product specifications; and maintain profitability 165
    166. Strong Commitment to the Environment ● Products meet the most stringent environmental demands ● NExBTL Diesel is produced in accordance with the principles of sustainable development ● Progressive product and process development – exporter of clean traffic fuel technology ● Highly efficient production processes, which comply with the ISO 14001, OHSAS 18001, and ISO 9001:2000 environmental, health and safety, and quality standards ● Committed to Responsible Care initiative since 1992; RC Global Charter 2006 ● Well prepared for the new European chemical legislation, the REACH 166
    167. 167
    168. Appendix
    169. Neste Executive Board President &CEO Matti Lievonen Business Areas Common functions Oil Products Renewable Oil Retail Fuels Production & Logistics Ilkka Poranen Matti Jarmo Sakari Lehmus Honkamaa Toivola Finance Deputy CEO Ilkka Salonen Human Resources Hannele Jakosuo-Jansson HSE Simo Honkanen Technology & Strategy Lars Peter Lindfors Communications Osmo Kammonen Legal Affairs Matti Hautakangas 169
    170. Management's Compensation 1) Annual salary and fringe benefits 2) A short-term incentive bonuses ● Based on both the Company's financial performance and the individual performance 3) A long-term management performance share arrangement ● Includes two three-year earning periods, which will start in 2007 and 2010, with benefits in 2010 and 2013 ● Maximum amount payable for each three-year earning period, however, will be a person's accumulated fixed gross annual salary for three years. ● Maximum amount of total rewards in the first program will be equivalent in value to 360,000 Neste Oil shares. ● Triggers for paying an incentive will be the development of Neste Oil's comparable operating profit and the total shareholder return of Neste Oil's share against an international oil industry share index (FTSE Global Energy Total Return Index) ● The plan prohibits the transfer of shares within one year from the end of the earning period, i.e. the length of the plan is four years for each lot of shares ● The company’s senior management will be required to own shares equivalent in value to their annual gross salary. This obligation to own shares relates to shares earned from these incentive programs, and will be valid as long as service or employment in the Group continues 170
    171. Personnel Employees by segment Employees by country Other 7% Finland 75% Russia 18% 25.1% 37 % 27.6% 1.1% Finland Russia Belgium US Latvia Estonia Oil Products Renewable Fuels Lithuania Poland UK Sweden Canada Singapore Oil Retail Other The Netherlands Total (average) 5,162 171
    172. Notes 172
    173. ● Market Data section on www.nesteoil.com (Investors section) ● Weekly updated data on international reference refining margin, product margins, crude oil price and heavy/light price differential ● Refining margin calculation formula and refining margin yields ● Neste Oil's feedstock and product yields 2008 ● Additional data on refining process, industry demand and supply and inventories NESTE OIL RESULTS IN 2009 Q1 28.4.2009 Q2 30.7.2009 Q3 29.10.2009 www.nesteoil.com oilinvestors@nesteoil.com 173
    174. Units and conversion multiples Crude Oil From To tons (metric) kilolitres barrels US gallons tons per year Tonnes (metric) 1 1.165 7.33 307.86 - Kilolitres 0.8581 1 6.2898 264.17 - Barrels 0.1364 0.159 1 42 - US Gallons 0.00325 0.0038 0.0238 1 - Barrels per day - - - - 49.8 (based on worldwide average gravity) Products From To convert tons kilolitres tons barrels to barrels to tons to kilolitres tons LPG 0.086 11.6 0.542 1.844 Gasoline 0.118 8.5 0.740 1.351 Kerosene 0.128 7.8 0.806 1.24 Gas oil / Diesel 0.133 7.5 0.839 1.192 Fuel oil 0.149 6.7 0.939 1.065 174
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