Neste Oyj (international name: Neste Corporation; former names Neste Oil Corporation and Fortum Oil and Gas Oy) is an oil refining and marketing company located in Espoo, Finland. It produces, refines and markets oil products, provides engineering services, and licenses production technologies. Neste has operations in 14 countries.
Neste shares are listed on the NASDAQ OMX Helsinki Stock Exchange. As of 2020, the Government of Finland is the largest shareholder in the company, owning 35.91% of shares. In 2019, Neste was the second largest company in Finland in terms of revenue.
|Nasdaq Helsinki: NESTE|
|Industry||Oil and gas industry|
|Peter Vanacker (President and CEO)
Matti Kähkönen (Chairman of the Board)
|Products||Refined oil products
|Revenue||€15.840 billion (2019)|
|€1.962 billion (2019)|
|€2.229 million (2019)|
|Total assets||€9.793 billion (2019)|
|Total equity||€5.922 billion (2019)|
|Owner||Finnish national institutions (46.49%) (2020)|
Number of employees
|Footnotes / references
Neste was founded in 1948 as the State petrol company of Finland with the purpose to ensure the availability of refined fuels in Finland. The company’s headquarters was established in Espoo. At the time, there was no oil industry or related expertise in Finland, and the company had to start operations from scratch.
In 1955, Uolevi Raade became the company’s CEO. In 1957, the first oil refinery in Finland was built at Naantali using US technology. The Porvoo refinery was built in 1965 in Sköldvik (Kilpilahti). Originally, much of the oil refined was of Soviet origin, though North Sea oil was used after the collapse of the USSR.
In the 1960s and 1970s, Neste became the largest company in Finland. In addition to oil refining, Neste began exploring and producing oil and gas and entered into the chemical industry. During the Cold War, Finland imported goods from the Soviet Union in order to retain exporting privileges to the country. Towards this end, Finland imported Russian oil, which was refined by Neste.
In the 1970s, Neste’s fleet constituted one third of Finland’s merchant fleet in terms of its load capacity (1.1 million deadweight tons). Neste Shipping’s largest tankers were the 114,000-dwt sister vessels Tiiskeri (1969) and Enskeri (1970), and the 259,000-dwt vessels Jaarli, Jatuli and Jurmo, all of which were built at the beginning of the decade and bought second-hand in 1979. Because of the operations of Neste, the oil crisis of 1973 had little effect in Finland.
In 1976, Finland’s first skyscraper, Neste’s 83.6-meter tall headquarters, was built in Keilaniemi, Espoo. It was built in Espoo because Helsinki did not issue a building license for such a tall building.
Neste held a legal import monopoly until the market liberalization in the 1990s. In 1990, Neste’s international oil trade accounted for about half of its turnover and oil refining for a quarter. In 1991, the company’s turnover stood at 53.025 billion Finnish markka, and it employed around 13,685 people. After the Soviet Union collapsed in 1991, the supply of oil from the region also dropped, and Neste had to find new sources of raw material. Neste had built several chemical plants around Europe, but as the prices of oil and chemical products plummeted, Neste decided to sell off its chemical industry operations.
In 1991, Neste became the majority owner of Finnoil. Kesoil also became a wholly owned subsidiary. In 1992, Union service stations became Neste service stations. The following year the same happened to Finnoil service stations.
In 1994, Gasum was established with Gazprom as a minor (25%) shareholder. In 1994, Neste’s polyolefin production was separated into Borealis, a joint venture with the Norwegian Statoil. In 1998, Neste’s 50% stake in Borealis was sold to OMV and IPIC.
1998–2005 (Neste as part of Fortum)
In 1998, Neste merged with the power company Imatran Voima Oy to create Fortum Oyj. After the merger the chemical operations of Neste were transferred to the newly established company Neste Chemicals, which was sold to the investment firm Industri Kapital for $535 million. In 1998, Kesoil service stations also became Neste stations.
An engineering joint venture, Neste Jacobs Oy, was established with the American Jacobs Engineering in 2004. In May 2004, Fortum Oil and Gas Corporation was split into two: the company’s oil business was renamed Fortum Oil Corporation and other operations renamed Fortum Heat and Gas Corporation. Fortum Oil Corporation was a subsidiary of Fortum Corporation.
2005–2014 (Neste Oil)
A renewable diesel plant, using second generation biofuels and NEXBTL technology and located at the Porvoo refinery, was brought on stream in 2007, together with a new conventional diesel production line. At the same year, the entire bus fleet of Helsinki Region Transport switched fully to diesel produced using NEXBTL technology. Experiments by Neste, VTT Technical Research Centre of Finland and Proventia showed that local emissions decreased significantly after the switch, with overal particle emissions decreasing by 30% and nitrogen oxide emissions by 10%, with excellent winter performance and no problems with catalytic converters. A second renewable diesel plant at Porvoo was became operational in 2009.
In 2007, Neste started a research program on algae, but this was discontinued in 2015. In 2019, the research program restarted to investigate the production of aviation fuel from algae and municipal solid waste.
In 2008, Rinne retired, with Matti Lievonen succeeding him as CEO. In November 2010, Neste launched the world’s largest renewable diesel plant, with an annual production capacity of 800,000 tons, in Singapore. The plant used palm oil and other renewable feedstocks as raw materials. Its investment costs were 550 million euros. The use of palm oil was criticized by Greenpeace for its environmental impact. Neste committed to using only sustainably produced palm oil. Neste is a member of the Roundtable on Sustainable Palm Oil (RSPO), an organization established to promote the use of certified palm oil. The organization includes producers, environmental organizations and other NGOs, as well as large palm oil consumers such as Western energy and consumer product companies.
Neste and Stora Enso ran a joint venture to research the production of renewable diesel oil from wood biomass through biomass gasification and the Fischer-Tropsch process in Varkaus, Finland. However, coming second in a bid for European Investment Bank startup funding led to the cancellation of this project in 2012.
Neste’s self-service station chain in Poland was sold to Royal Dutch Shell in April 2013. In the same month, Neste announced that it had started cooperation with The Forest Trust (TFT), an organization that focuses on combating deforestation. During 2013, Neste abandoned its shipping operations; it sold eight vessels (five tankers and three tugboats) owned by Neste Shipping to a shipping company owned by the National Emergency Supply Agency and Ilmarinen Mutual Pension Insurance Company, which began to lease the vessels to Neste. The holding company owns the vessels, which are operated by a separate ship management company. Ensuring supply security was one of Neste’s responsibilities. However, this was at odds with the company’s operations in the international market. After the change of ownership, the vessels continued to employ a Finnish crew and sail under the Finnish flag. Neste Oil kept three tankers as well as ships owned on a fifty-fifty basis with Swedish company Stena, which it intends to sell later. These ships were not needed to ensure supply security.
In 2015 the company’s name was changed from Neste Oil back to Neste to emphasize the company’s focus on the renewable energy business. In 2016, the Neste Oil chain of service stations also shortened its name. The Neste chain included nearly 800 stations in Finland, as well as 258 stations in the Baltics and several in the Saint Petersburg region in Russia.
In 2017, Neste acquired Jacobs Engineering’s 40% stake in Neste Jacobs and gained full control of the company. After the takeover, Neste Jacobs was renamed Neste Engineering Solutions Oy.
When CEO Lievonen retired in November 2018, he was followed by the Belgian–German Peter Vanacker. In December, Neste announced an investment decision of around 1.4 billion euros in Singapore, which would increase its total capacity of renewable products in Singapore by 1.3 tonnes per year. It was estimated that the company’s total annual production capacity of renewable products would increase to nearly 4.5 million tonnes by 2022.
In February 2019, Neste reported that as of May, it would divide its renewable products business area into three business units and one operating platform, namely Renewable Aviation, Renewable Polymers and Chemicals, Renewable Road Transportation, and Renewables Platform (responsible for managing and developing the production and supply chain of renewable products). In July, Neste sold its chain of service stations in Russia to Tatneft. The deal included a fuel terminal and 75 stations in the Saint Petersburg region. In 2019, Neste was the largest corporate taxpayer in Finland.
In 2019, Neste and LyondellBasell announced the commercial-scale production of bio-based plastic from renewable materials. In 2020, Neste, Covestro, and Borealis started a similar cooperation for production of polycarbonate plastics. As part of the cooperation, Neste produces hydrocarbons from renewable raw materials as a feedstock to manufacture phenol by Borealis. Phenol is used by Covestro to produce polycarbonate plastics, which would primarily be used for car headlights and window coatings.
In March 2020, Neste made an investment in the German Sunfire company, which develops high-temperature electrolysis technology. In September 2020, Neste sold its 49.99% stake in Nynas AB to Bitumina Industries.
In September 2020, Neste started cooperation negotiations concerning the closure of the Naantali refinery because of the decreasing global demand for fossil fuels and the simultaneously increasing overcapacity. The refinery is planned to close by the end of March 2021. The company’s aim was to keep its terminal and port operations in Naantali and focus refinery operations in Porvoo.