Stock exchange release


09 September 2003, 10:45 EEST

Fortum Corporation STOCK EXCHANGE RELEASE 9 September 2003 at 11.45 1 (1)


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

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

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

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

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