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Semelhante a Neste Oil Investor Presentation 29 April 2009
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Neste Oil Investor Presentation 29 April 2009
- 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
- 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 quot;use byquot; -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