SOURCE: Neste Oil Oyj

March 16, 2007 02:00 ET

NESTE OIL AND STORA ENSO TO JOIN FORCES IN BIOFUEL DEVELOPMENT

ESPOO, FINLAND -- (MARKET WIRE) -- March 16, 2007 --



Neste Oil signed an agreement today with Stora Enso, an integrated paper, packaging, and forest products company, to join forces to develop technology for producing new-generation biofuels from wood residues to replace fossil fuels and cut greenhouse gases. The first step will be to design and build a demonstration plant at Stora Enso's Varkaus Mill in Finland. The plant, owned on a 50/50 basis by the two companies, is expected to start up in 2008 and will produce heat and electricity for use locally and crude biodiesel to be refined into commercial fuel at Neste Oil's refinery in Porvoo.

Expertise from Neste Oil, Stora Enso, and VTT Technical Research Centre of Finland will be utilized to implement the development phase and commercialize wood-based biofuel production. Neste Oil and Stora Enso see the growing biofuel market in Europe as a promising and sustainable business opportunity for meeting the increasing demand for premium-quality products made from a wide variety of feedstocks. The challenges related to generation of clean synthesis gas from wood will need to be solved before wood-based biomass can be used in biofuel production. The project will also focus on using Fischer-Tropsch process to produce crude biodiesel from gas.

The EUR 14 million demonstration plant will be integrated into the energy infrastructure of the Varkaus Mill, and the gas produced will equal the energy needed to heat 4,300 homes and cut local carbon dioxide emissions significantly.

Full-scale commercial production

Following the development phase and completion of the technical solutions, and after the partners have gained sufficient experience from the demonstration plant, the joint venture will build a full-scale commercial production plant at one of Stora Enso's mills. This facility will be owned on a 50/50 basis by the JV partners.

Stora Enso will be responsible for supplying wood biomass and utilizing heat generated. Wood biomass will be supplied from forests according to ecological preconditions. Neste Oil's responsibility will final refining and marketing of the biofuel.

A natural step forward in cutting greenhouse gases

The European Union has set a target of replacing 5.75% (18 million tons) of the fossil fuels used in transportation with biofuels by 2010 and 10% by 2020, This will mean replacing 30 million tons of fossil fuels and will require significant increases in biofuel production.

Developing wood-based biofuels is a logical step for Neste Oil and underpins the company's strategic goal of producing high-quality traffic fuels from a broad base of feedstocks. The project is designed to complement Neste Oil's biofuel portfolio. The company is currently commissioning its first plant to produce 170,000 t/a of NExBTL Renewable Diesel, a high-quality fuel offering excellent engine performance and low tailpipe emissions, from vegetable oil and animal fat at its Porvoo refinery in Finland. A second similar plant is also under construction at Porvoo.


Press conference in Helsinki at 9:00 EET

You are very welcome to participate in a press conference in Helsinki today. The conference will be hosted by Neste Oil's CEO Risto Rinne and Stora Enso's CEO Jukka Härmälä, and will be held in Finnish.

Venue:   Restaurant Bank, Union Square Auditorium
Address: Unioninkatu 22
Time:    9:00 a.m. EET


Neste Oil Corporation
Osmo Kammonen
Senior Vice President, Communications

For further information, please contact:
Kimmo Rahkamo, Executive Vice President, Biodiesel, on +358 10 458
4247
Harri Turpeinen, Vice President, Research & Development, on +358 10
458 7087


Neste Oil Corporation is a refining and marketing company focused on advanced, clean traffic fuels, with a strategy that prioritizes growing its refining and premium-quality biodiesel businesses. Neste Oil's refineries are located at Porvoo and Naantali in Finland, and have a total refining capacity of approx. 250,000 bbl/d. The company's sales totaled EUR 12.7 billion in 2006, and it employs around 4,700 people. Neste Oil is listed on the Helsinki Stock Exchange. For further information, see www.nesteoil.com.


Stora Enso is an integrated paper, packaging and forest products company producing publication and fine paper, packaging board and wood products - all areas in which the Group is a global market leader. Stora Enso's sales totaled EUR 14.6 billion in 2006. The Group has some 44 000 employees in more than 40 countries on five continents. Stora Enso has an annual production capacity of 16.5 million tonnes of paper and board and 7.4 million cubic meters of sawn wood products, including 3.2 million cubic meters of value-added products. Stora Enso's shares are listed in Helsinki, Stockholm and New York.





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