FORTUM PLANS TO LIST ITS OIL BUSINESS

FORTUM PLANS TO LIST ITS OIL BUSINESS

Significant Investment in the Porvoo Refinery

Fortum has decided to commence preparations to separate its oil

business into a new company and subsequently to list the new

company on the Helsinki stock exchange through an initial public

offering. Fortum has also decided to invest EUR 500 million to

upgrade the Porvoo refinery, in order to take advantage of well

established market trends and thereby further improve its

competitiveness and profitability. These strategic decisions will

enable Fortum to further increase its Nordic utility focus and to

continue to participate actively in the restructuring of the

Nordic power and heat markets. These measures will also improve

the competitive position and commercial prospects of the oil

business.

Fortum has assessed how to further develop its businesses in the

context of the continuing changes in the utility and refining &

marketing industries. In light of the capital intensive nature of

both industries, Fortum wants to ensure the availability of

sufficient resources to fund the attractive investment

opportunities which exist in both businesses. Fortum has concluded

that an IPO of the oil business best positions both businesses to

take advantage of the strategic opportunities they face and

provides them with access to separate pools of capital. These

measures will create two leading Nordic companies with strong

competitive positions in their respective markets.

Preparations to separate the oil business have started and Fortum

aims at completing the internal reorganisation during the first

half of 2004. This will enable a subsequent listing and sale of

shares subject to market conditions. The new company will include

all of Fortum’s oil refining, marketing, shipping and production

assets and operations. Existing employee benefits will remain

unchanged following the separation.

The creation of an independent refining & marketing company and

subsequent stock exchange listing will enable the new company to

best pursue an independent strategy and will facilitate the EUR

500 million investment in the Porvoo refinery. The upgrade will

further strengthen the refinery’s position as a highly efficient

refinery in Northern Europe.

The high expected return from the upgrade investment is driven by

the Porvoo refinery’s ability to produce more high margin,

environmentally benign products from less expensive crude oil. The

demand for these products is rapidly growing in Fortum’s key

markets.

While the total production capacity will remain unchanged, the

refinery will be able to significantly increase the production of

high margin products, such as sulphur-free diesel, utilising for

example more Russian crude. Fortum expects to increase its

refining margin premium by at least USD 1/bbl and thus achieve an

attractive return on investment using relatively conservative

assumptions.

The investment is expected to be completed by the end of 2006. The

building and engineering works related to the investment amount to

approximately 3,000 man-years and the project is expected to

result in 100 new permanent jobs.

According to President and Chief Executive Officer Mikael Lilius,

Fortum has significantly developed its businesses over the past

few years. “We have improved profitability markedly. Now we can

take advantage of new opportunities in both industries. Today’s

decisions will allow us to continue to develop Fortum as the

leading utility company in the Nordic region. At the same time, we

can ensure the long term competitiveness of the new, independent

refining & marketing company.ö

Fortum will arrange a press and analyst conference in relation to

the announcement today at 3:30pm Finnish time at its head office

in Keilaniemi, Espoo. A teleconference for international analysts

and investors will be arranged at 5:00 pm Finnish time (GMT+2). To

listen to the call please dial +44 (0) 1452 560068.

Fortum Corporation

Carola Teir-Lehtinen

Senior Vice President, Corporate Communications

For further information please contact

Carola Teir-Lehtinen, tel. +358 10 452 4118

Juha Laaksonen, CFO, tel. +358 10 452 4519

Distribution:

Helsinki Exchanges

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