CONTENTS. Gasum's business. We promote sustainable development. Particularly good security of gas supply in Change supported by our new strategy

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1 gasum's year 2014

2 CONTENTS About this report 3 Gasum in brief 4 CEO s review 6 Gasum in Key events of the year 10 Strategy 12 Business areas 14 Energy trade 15 Biogas and transport solutions 18 LNG 20 Energy services 24 Transmission services 26 Corporate responsibility 28 Innovations and future 30 Stakeholder cooperation and energy market 32 Responsible employer 34 Supply security and safety 36 Natural energy gas value chain Gasum bought a majority stake in Skangass LNG distribution business 28 6 Change supported by our new strategy 14 Gasum's business We promote sustainable development 32 We develop the Finnish energy sector and participate in energy policy Executive Management Group, Board of Directors and Supervisory Board 40 Offices and facilities and natural gas Particularly good security of gas supply in 2014

3 ABOUT THIS REPORT GASUM'S YEAR 2014 Publisher Gasum Corporation P.O. Box 21 Miestentie Espoo Finland Editor-in-Chief Anna Ailio anna.ailio@gasum.fi Editing and layout Miltton Oy Photography Tomi Parkkonen Petteri Vilkki Gasum Corporation Getty Images Gorilla istockphoto Shutterstock MCI Press Print run 500 Printing house Lönnberg, Helsinki Paper Cover Cocoon Offset 300 g/m 2 Inside pages Cocoon Offset 120 g/m 2 Address source Gasum Corporation s customer and stakeholder data file Anniversary year of gas 40 years ago in 1974 Finland gained access to a new source of energy natural gas. Originally an industrial fuel, today natural gas is also used to heat up households, industry and as a land and marine transport fuel. In its liquefied form (LNG), natural gas can also be delivered outside the gas pipeline network, and therefore LNG is expected to open up new opportunities for the development of the Finnish gas market. In addition to marking 40 years of gas in Finland, 2014 was also the 20th anniversary of Gasum. Originally established as the natural gas unit of Neste, today the Finnish State owns 75 per cent of Gasum. In addition to natural gas, 100 per cent Finnish biogas flows in the Finnish gas pipeline network. You will also find all of Gasum's other important events in 2014 in this publication. The Annual Report is available in Finnish and English on the Gasum website and in print. Gasum's Financial Statements and Corporate Responsibility Report can be found online in Finnish and English. With its financials, Gasum adopted reporting in compliance with the International Financial Reporting Standards (IFRS). With corporate responsibility, Gasum is reporting according to the Global Reporting Initiative's (GRI) G4 guidelines in READ MORE AT GASUM'S YEAR

4 GASUM IN BRIEF Gasum Cleanly with natural energy gases Gasum is a Finnish expert in natural energy gases. Gasum imports natural gas to Finland and upgrades biogas. The company transmits and supplies them for energy production, industry, homes and land and maritime transport. The company has production facilities, LNG terminal projects and terminals in Finland and Nordic countries. Gasum has approximately 300 employees. Our business areas ENERGY TRADE LNG ENERGY SERVICES TRANSMISSION SERVICES Our supply chain PRODUCTION, SOURCING AND SALES Diversification and active development of gas infrastructure and competitive supply of gas. TRANSMISSION AND DISTRIBUTION Transmission and distribution of gas with excellent supply security and safety levels and taking the customer into consideration. Emission-reducing solutions. USAGE Diverse use of natural gas and biogas in energy production, industries, households and land as well as maritime transport. 4 GASUM'S YEAR 2014

5 GASUM IN BRIEF Finnish State acquires majority holding in Gasum The Finnish State acquired majority holding in Gasum on November 3, 2014 by purchasing the 31 per cent stake of Fortum Corporation and the 20 per cent stake of E.ON of the company. Prior to the purchase, the State shareholding in Gasum was 24 per cent. The Prime Minister s Ofice transferred its shares in Gasum to Gasonia Oy, a state-owned company set up for the ownership arrangement. After the transaction, Gasonia holds 48.5 per cent, OAO Gazprom 25 per cent and the National Emergency Supply Agency 25 per cent of Gasum s shares. "We are an active developer of LNG and biogas infrastructure and production in Finland and other Nordic countries, whereby we will be able to offer more competitive energy to meet our customers' needs," says Gasum CEO Johanna Lamminen. 75% The State of Finland GASUM'S OWNERS 25% OAO Gazprom The owners are committed to Gasum s strategy and the sustained development of our company. GASUM GROUP ORGANIZATION JAN 1, 2015 REVENUE 2014 Maintenance Jarko Alanko Project Services, HSEQ Ari Suomilammi 1,079 million Strategy, Corporate Responsibility Sari Siitonen Communications, Marketing Olga Väisänen Legal Matters, HR Kristiina Vuori Finance Jussi Teijonsalo ENERGY TRADE Aleksei Novitsky LNG Tor Morten Osmundsen ENERGY SERVICES Jarko Alanko TRANSMISSION SERVICES Ari Suomilammi Gas Exchange Pekka Karinen OPERATING PROFIT million CHIEF EXECUTIVE OFFICER Johanna Lamminen GASUM'S YEAR

6 CEO S REVIEW Despite the major decrease in natural gas consumption last year, the volumes of LNG and biogas increased. We re determined to ensure our customers access to competitive energy and are constantly working hard to achieve this. 6 GASUM'S YEAR 2014

7 CEO S REVIEW STILL DRIVING CHANGE WITH A NEW GEAR Our company s new growth in 2014 was driven by our major efforts and fast-proceeding LNG investments in the market outside the gas pipeline network. The promotion of Finnish competitiveness and wellbeing requires reasonably priced energy that helps minimize the burden on the environment. Carbon dioxide and local emissions from natural gas are considerably lower than those from other fossil fuels. Natural gas plays an important role in Finland s Energy and Climate Roadmap In recent years the price competitiveness of gas has been poor against other fuels such as coal. This is due to several factors including taxation and the low price levels on emission allowances and electricity. Amendments to Finnish heat production taxation reduced the competitiveness of natural gas against other fuels in The tax increases took place in three stages in 2011, 2013 and The Government promised in conjunction with the tax increase to monitor the development of the competitive setting of natural gas and the impacts of the tax reform. Over this period, however, gas consumption in big cities has decreased by almost 8 TWh while the consumption of solid fuels has increased by 6 TWh. This has resulted in the carbon dioxide emissions from, e.g., Helsinki, Espoo, Vantaa, Tampere and Lahti energy production in 2014 being around 1 million tonnes (around 20 per cent) higher than in The restoration of price competitiveness is vital for gas consumption to increase and for gas to regain its position among the most popular fuels for combined heat and power (CHP) production. In accordance with our supply agreement, we have launched price negotiations with Gazprom Export. Major steps forward taken in our LNG business Our Skangass acquisition enables us to develop the Nordic LNG market to better serve industries, shipping and heavy-duty road transport in the region. Our expansion beyond Gasum s traditional market area guarantees larger-scale sourcing and improved logistics, allowing us to deliver energy more efficiently to our customers. The new Skangass LNG terminal in Lysekil, Southern Sweden, became operational during the year. The construction of our LNG terminal in Pori, Finland, also began right after the investment decision. We also sealed another investment decision, the construction of the Manga LNG terminal in Tornio, Finland, with our partners Outokumpu, SSAB and EVP Energy. In addition, access to LNG for land and maritime transport in particular must be improved in Southern Finland. We will explore the opportunities to advance the Southern Finnish LNG terminal project. In order for the project to be implemented, it must be commercially viable, the Baltic Rim gas market further developed, and sufficient financial support for the project ensured. The planning process for the Balticconnector offshore pipeline interconnecting the Finnish and Estonian gas markets is also still underway. The implementation of the Balticconnector pipeline project requires the realization of the Southern Finnish LNG terminal project and progress made in the major gas infrastructure projects in the Baltics. Biogas and road transport solutions to be developed in 2015 Our third biogas facility became operational in Lahti in late We see biogas as a future opportunity for all responsible enterprises and households. Therefore we will invest in our biogas and transport solutions and ensure increases in biogas capacity as well as developing ways to make environmentally friendly gas-fuelled vehicles a more common sight on the roads. We renewed our strategy Our development projects will be driven by our renewed strategy at the beginning of the year 2015 to provide our customers with competitive and intelligent gas solutions and utilize existing and underway gas infrastructure efficiently. I would like to thank our customers and stakeholders for excellent cooperation. We will continue our active debate about the role of gas in the energy portfolio of the future in order to ensure competitive and cleaner energy for our customers. I also want to acknowledge our employees for giving a kick-start to our transformation project last year. JOHANNA LAMMINEN Chief Executive Officer GASUM'S YEAR

8 GASUM IN TWh SALES OF NATURAL GAS IN FINLAND (2013: 33.2) 33,877 MWh BIOGAS INJECTED INTO THE NETWORK IN FINLAND (2013: 31,721) 3.9 TWh SALES OF LNG IN NORDIC COUNTRIES (2013: 2.6) GASUM IN 2014 CO 2 EMISSION FACTORS (T/TJ) NATURAL GAS 55.0 LNG 55.8 BIOGAS* 56.1 MOTOR GASOLINE 69.0 COAL 93.3 PEAT * Biofuel, with its carbon dioxide emissions not included in Finland s total greenhouse gas emissions or taken into account in emissions trading Natural gas has been imported to Finland non-stop for 40 years. 8 GASUM'S YEAR 2014

9 GASUM IN 2014 Comparative prices per equivalent liter of petrol, Feb 2, 2015 BIOGAS /l (2014: 0.963) NATURAL GAS /l (2014: 0.899) Year of changes in the gas market Despite a drop in natural gas sales volumes and, consequently, Group revenue, we developed our operations and launched a significant number of development projects during the year. The Skangass acquisition heightened the role played by our LNG business, and our biogas business gained several new customers. The Group s performance was modest, and we wrote off a total of 10 million in acquisitions under assets under construction in our balance sheet. See our separate Financial Statements for more figures at OPERATING PROFIT (%) REVENUE ( MILLION) 1,500 1, EMPLOYEES (2013: 273) 1,515 MEDIA HITS (2013: 805) Key figures ,079 million REVENUE 1,150 million OPERATING PROFIT 5.1 million 40.5 million BALANCE SHEET TOTAL 1,621 million 823 million CAPITAL EXPENDITURE 51.5 million 28.4 per cent EQUITY RATIO EMPLOYEES 21.6 million 51.8 per cent million TAXES PAID 7.0 million GASUM'S YEAR

10 KEY EVENTS 2014 Highlights of the year January The highest gas consumption peak of the year seen on January 24, 2014 (185 GWh/day). March Johanna Lamminen starts as Gasum s new CEO on March 1, SEE PAGE 6 Tahkoluoto, Pori, is selected as the location for Finland s irst LNG terminal. SEE PAGE 22 May Gasum and the Lyse Group complete Gasum s acquisition of Skangass on May 2, Skangass complements Gasum s LNG supply and enables the rapid development of the LNG infrastructure. SEE PAGE 20 A total of 100,000 in grants are given out to 10 researchers and students from the Gasum Gas Fund. February April June Gasum acquires the majority (51%) of the LNG distribution business from the Norwegian Lyse Group. Gasum becomes the largest LNG player in the Nordic countries. Gasum and Huntsman sign an agreement on the supply of natural gas. Gasum will construct a 12 kilometer connecting pipeline for the delivery of gas from the Pori LNG terminal. Juha Rantanen is appointed to chair the Gasum Supervisory Board. Skangass supplies LNG with a four-year contract to propel the Finnish Border Guard s new offshore patrol vessel, OPV Turva. Gasum joins the Inspired in Finland cooperation program launched by the Savonlinna Opera Festival for collaboration between culture and business. 10 GASUM'S YEAR 2014

11 KEY EVENTS IN 2014 July September The Finnish Ministry of Employment and the Economy makes a positive investment support decision on the Pori LNG import terminal. Skangass makes an investment decision and begins the construction of the Pori LNG terminal and the natural gas logistics chain. SEE PAGE 22 Gasum joins the Climate Leadership Council founded by leading Finnish companies. November The Finnish State acquires the shares of Fortum and E.ON in Gasum, raising its ownership to 75 per cent. The expropriation permit for the natural gas pipeline planned for Turku, Finland, (the Western Extension) is given up. LNG projects, including the LNG terminal project and the Border Guard s new LNG-fueled OPV Turva, achieve visibility at SuomiAreena (Finland Arena), a high-profile discussion forum on Finland s current and future challenges. Gas cookers in Helsinki households are fueled by biogas instead of natural gas for a month. The resulting cut in carbon dioxide emissions exceeds 140,000 kilos during the month. A biogas and natural gas filling station is opened in Lielahti, Tampere. Finland and Estonia reached an understanding about the locations of the LNG terminals. Skangass signs an LNG supply agreement with the Italian energy company Eni. August October December Gasum s "Biogas to fuel road transport" concept is nominated for the Energy Initiative of the Year award in an annual competition organized by the Tekniikka & Talous magazine specializing in industry issues. Gasum sells its Estonian local distribution company to Alexela Energy. This arrangement is part of Gasum s strategy of focusing on the development of the gas market in Finland and the Nordic countries. The Swedish authorities grant Skangass the permit to build an LNG terminal in the Port of Gävle. SEE PAGE 22 Gasum launches the annual innovation competition, themed this year on cleaner road transport. SEE PAGE 30 Skangass opens an LNG terminal in Lysekil, Sweden, further strengthening the Nordic LNG infrastructure. SEE PAGE 22 A subsidiary of Manga LNG Ltd, Manga Terminal Ltd, makes an investment decision on the Tornio LNG terminal. The project partners comprise Outokumpu, SSAB, EPV Energy and Skangass. Skangass and North European Oil Trade (NEOT) agree on a supply contract for LNG to NEOT s coming time-chartered vessels. The "Petrol for the price of biogas" campaign wins the Energy category of the European Excellence Awards, with Gasum the only Finnish company to achieve this. GASUM'S YEAR

12 STRATEGY SUSTAINABLY TOWARD A NORDIC GAS ECOSYSTEM Our operating environment has changed dramatically in the past few years. The Skangass acquisition made and will continue to make Gasum an even more prominent player in the Nordic gas sector. We will carry on our work toward change with our new strategy setting the core goal of providing customers with intelligent and competitive gas solutions. VISION: THE NORDIC GAS ECOSYSTEM AS A PROMOTER OF SUSTAINABLE DEVELOPMENT. MISSION: CLEANER ENERGY THROUGH EFFICIENT GAS SOLUTIONS. 12 GASUM'S YEAR 2014

13 STRATEGY The purpose of our new strategy is to stimulate growth in our business areas and strengthen our ability to deliver solid financial performance, value creation as well as improve profitability. Mission and vision clarified In order to respond to the changes in our operating environment brought about by megatrends such as resource wisdom, consumer power and digital revolution, we have rede fined the Gasum mission and vision and renewed our strategy. The new strategy was presented to Gasum personnel in January Our mission is Cleaner energy through efficient gas solutions and our vision The Nordic gas ecosystem as a promoter of sustainable development'. The Nordic gas ecosystem consists of activities relating to gas in Norway, Sweden and Finland. Gasum is at the core of the ecosystem, but there are also players who can accomplish more by doing things together than any individual player could do alone. The ecosystem evolves over time and generates new opportunities for the players involved. Our strategy consists of four Must-Win-Battles We will work toward our vision of a Nordic gas ecosystem by implementing our strategy to provide customers with intelligent and competitive gas solutions. To implement our strategy in practice, we must succeed in four Must-Win-Battles (MWBs): 1. We promote sustainability 2. We provide competitive gas solutions 3. We develop a Smart Gas System 4. We create a new Gasum These MWBs focus on Gasum s advocacy, customer work, building the gas system and utilizing it as efficiently as possible, and enhancing our own competencies and wellbeing. Values determined together with Gasum personnel To create a strong value foundation for strategy implementation, we also revised our values to reflect our current operating environment. Our new values were formulated on the basis of a survey among our entire personnel and summed up in a single value proposition: Purposefully and responsibly moving towards new opportunities. Creating the Nordic gas ecosystem will call for the identification of new opportunities and determined effort to utilize the opportunities. Responsibility encompasses corporate responsibility as well as responsibility on the part each individual employee has. Gasum aims at being an exemplary player from the economic, social, safety and security as well as environmental perspective alike. In our company everyone is treated fairly. Every Gasum employee also acts responsibly in their work toward customers, coworkers and other stakeholders. MEGATRENDS AND CHANGE IN OUR OPERATING ENVIRONMENT The changes in our operating environment are best described by the following three megatrends: Resource wisdom Population growth and climate change call for increased efficiency in resource use. Improved energy efficiency and circular economy play an important role. Consumer power As consumers, individuals and communities can and want to decide on their type of energy production and control their energy consumption, which leads into an increase in the energy technologies available and the diversification of energy production. We provide our customers with intelligent and competitive gas solutions. Digital revolution The energy sector is also shaped by mobile technologies and the rise in digital services. GASUM'S YEAR

14 GASUM'S BUSINESS Gasum's business In 2014 Gasum operated in four business areas, promoting the sales of natural energy gas solutions in different customer segments. ENERGY TRADE Sourcing and sales of natural energy gases Biogas and transport solutions Trading services Energy Trade sources and sells natural energy gases and provides wholesale customers with energy trading services. The business also covers biogas and transport solutions. LNG Sourcing and sales Storage Distribution The LNG business, i.e. the Gasum subsidiary Skangass, sources, stores, sells and distributes liquefied natural gas. PAGE 15 PAGE 20 ENERGY SERVICES Natural energy gas sales and solutions Appliance sales TRANSMISSION SERVICES Gas network development and maintenance Biogas upgrading and network injection Energy Services provides households, restaurants and other enterprises with natural gas and biogas as well as gas solutions for heating and cooking and also sells gas appliances. Transmission Services is responsible for gas transmission to customers in the transmission network, network development and maintenance, and network safety. The business also covers biogas upgrading and the Finngulf and Balticconnector projects. PAGE 24 PAGE GASUM'S YEAR 2014

15 ENERGY TRADE ENERGY TRADE SERVES Natural energy gas year 2014: Gas consumption was decreased by warm weather, inexpensive spot-priced electricity as well as cheap coal and emission allowances. The annual consumption of natural gas totaled 29.3 TWh in 2014, down 12 per cent on the year before (33.2 TWh). In terms of climate, 2014 was the secondwarmest year ever recorded in Finland, and this also had a major impact on the annual consumption of natural gas. Gasum is working actively to improve the competitiveness of natural gas. The price level of electricity in the Nordic market was quite low, which reduced combined heat and power (CHP) production based on natural gas. At the same time the competitiveness of natural gas in this traditional usage segment was also reduced due to the low world market pricing of emission allowances and coal as well as the manifold increase in natural gas taxation that has taken place over the past five years. Nevertheless, natural gas still remains an important fuel for district heating and related electricity production in Finland at a 22 per cent market share. Factors affecting the competitiveness of natural gas include the multiple-stage natural gas supply contract negotiations launched in autumn 2013 as well as domestic regulation and tax reforms. Downturn in natural gas price development in autumn The price is linked to the price of heavy fuel oil and imported coal as well as the domestic market energy price index. The strongest role in natural energy gas price development is played by the price of heavy fuel oil. The slump in the price of crude oil that began in summer 2014 could also be seen in the price of natural gas toward the end of the year, and in January 2015 the natural gas energy charge went down to a level 12 per cent below that a year earlier. According to Gasum s forecast, the clear downward trend in natural gas energy charge will persist throughout the first half of YEAR 2014 The 40th anniversary of natural gas in Finland was celebrated with customers in February. The total volume of natural gas imported to Finland by the end of 2014 amounted to billion m 3. A working group appointed by the Finnish Ministry of Employment and the Economy began preparations for the reform of the Natural Gas Market Act and the opening up of the natural gas wholesale and retail markets. Annual consumption of natural gas totaled 29.3 TWh, down 12 per cent on 2013 (33.2 TWh). Biogas production capacity increased, and 33.9 GWh of biogas was injected into the network. GASUM'S YEAR

16 ENERGY TRADE Reliable long-term cooperation with customers. NATURAL GAS AS PART OF THE BIOFUEL PRODUCTION CHAIN The decreasing price trend has also inspired more and more natural gas customers to consider the utilization of the situation by hedging the prices of their future natural gas procurement using Gasum's price hedging products. Consequently, trade in hedging products for the coming years was particularly active in Many natural gas customers have also begun to use the Gasum Report Service that provides current information about factors affecting the price of natural gas in the form of market analyses and price forecasts. Development of the gas market spearheading Gasum s operations It is stated in Finland's Energy and Climate Roadmap 2050, published in October, that the use of natural gas is favored by the retaining of infrastructure for the transmission of fuels such as biogas. The manufacture of biofuels also requires hydrogen produced from natural gas. Alongside the more traditional energy use of natural gas, it is increasingly used also as a raw material. Hydrogen is produced from natural gas in four locations in Finland. Around 4 TWh of natural gas is used in these processes each year, and this gas usage segment is anticipated to continue its growth. Demand for hydrogen has been boosted particularly by the production of high-quality transport fuels. The latest example of this is the Lappeenranta bioreinery of UPM-Kymmene where the production of biodiesel was launched in late Crude tall oil, a residue of pulp production, is used as the raw material for biodiesel. A working group was appointed by the Finnish Ministry of Employment and the Economy to prepare for the reform of the Natural Gas Market Act and the opening up of the natural gas wholesale and retail markets to competition. Gasum is actively involved in the process to influence the drafting of the new Act. Reliable long-term cooperation with customers A customer relationship survey with a large number of customers responding was commissioned by Gasum in the autumn. Reliability, ease of cooperation and professional competence of our staff were among issues in Gasum's operations appreciated by respondents. Gasum was rated highly for timely provision of information and attendance to customer relationships. Criticism was voiced about the high price of natural gas and the energy taxation of natural gas, which has increased manifold. Customers find Gasum's efforts to develop the LNG and biogas markets important and hope Gasum will continue to actively provide information about these issues. 16 GASUM'S YEAR 2014

17 ENERGY TRADE Monthly consumption of natural gas (TWh) (Total 33.2 TWh) 2014 (Total 29.3 TWh) Source: Gasum Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Natural gas consumption in Finland (TWh) Combined district heat and electricity production Industry Source: Gasum Electricity generation by energy source in 2014 District heat generation by energy source in 2014 Sales of natural gas by product in 2014* Natural gas 8% (2013: 10%) Nuclear power 35% (33%) Hydropower 20% (19%) Biomass 17% (17%) Coal 13% (15%) Peat 5% (5%) Wind power 2% (1%) Waste 1% (1%) Natural gas 22% (2013: 26%) Wood and other bio 31% (29%) Coal 24% (26%) Peat 13% (13%) Secondary heat 3% (2%) Oil 3% (2%) Other 4% (4%) Annual and monthly product 89% Small consumption tariff including Gasum s own consumption 1% Gasum Plussa and secondary market trading 6% Open delivery 4% *Due to change in reporting, 2013 data is unavailable Source: Finnish Energy Industries Source: Finnish Energy Industries Source: Gasum GASUM'S YEAR

18 ENERGY TRADE: BIOGAS AND TRANSPORT SOLUTIONS Strong growth in biogas Biogas is making an entry on Finland s roads. Biogas already accounted for 40 per cent of the total sales of gas at Gasum s public filling stations in At the same time biogas solutions are gaining ground in heating and industrial processes. Biogas reached many milestones in During the year, bio gas was included in the selection of every one of the 24 gas filling stations in Finland. There was a 50 per cent increase in biogas volumes at Gasum filling stations on the year before already two-fifths of all road fuel gas sold at Gasum s public stations was biogas in We are planning 35 new filling stations in key traffic locations. Biogas can now be utilized in a variety of industrial processes, property heating as well as gas cookers in home kitchens. This change can also be seen within Gasum. In autumn 2014 our biogas and transport solutions merged into a single business unit. Interest in cost-effective biogas solu tions is increased by deeper environ mental awareness among consumers as well as stricter emission targets. When Gasum switched all Helsinki gas cookers to biogas for September 2014, the feedback received on the campaign was highly positive. Production capacity increases The production capacity for Gasum biogas increased considerably toward the end of the year as the new biogas production and upgrading facility of Gasum and LABIO was opened in Kujala, Lahti, Finland. Its annual production potential of 50 GWh means a major increase, as the total amount of biogas injected into the Gasum network in 2014 was around 34 GWh. In addition to Kujala, Gasum produces biogas at Mäkikylä, Kouvola, and Suomenoja, Espoo, where a record production volume was reached in The development of the biogas market will open up opportunities for the introduction of new production methods. As well as from biodegradable waste, biogas can be produced from material such as grass growing on fallow land or wood obtained from forest industry by-products. Gasum has plans for a facility using fallow grass as raw material and producing roughly twice as much biogas a year as the Kujala facility in Lahti. Gasum has also looked into the construction of a biorefinery producing wood-based biogas (bio-sng) in Joutseno, Finland, in cooperation with Helen and Metsä Fibre. Bio-SNG could be transmitted along the gas network, for example, the Helen Vuosaari power plant in Helsinki. The facility s envisaged annual capacity is 1,600 GWh. GASUM INVESTS IN THE FILLING STATION NETWORK The development of the illing station network is one of Gasum s key objectives. In 2014 Tampere received another illing station, opened in early autumn in the Lielahti district. At the moment there are 24 gas illing stations in Finland, with 18 of these owned by Gasum. In late 2014 a payment system reform took place at the stations. In addition to the Gas Card, customers can also use Finnish debit and Visa Electron cards as well as MasterCard and Visa credit cards. Gasum aims to expand the network considerably in the coming years: a roadmap is being designed for 35 new illing stations in key trafic locations around Finland. Biogas and, in the future, liqueied natural gas (LNG) infrastructure solutions will help increase the illing station network outside the gas pipeline network. This development is also supported by the goal of making biogas more common as a fuel for public transport in urban areas. 18 GASUM'S YEAR 2014

19 ENERGY TRADE: BIOGAS AND TRANSPORT SOLUTIONS Foundation laid now it s time to build upwards I got the opportunity to take up a fantastic challenge in autumn 2014 and become the head of biogas and transport solutions at Gasum. I couldn't think of a nicer task. A solid foundation was laid in previous years for growth in biogas and road fuel gas, and now it s time for us to build upwards at great speed. The consumer is at the core of our business. Biogas solutions must be environmentally friendly, diverse, easy and cost-effective. This must be achieved for road transport, industrial and residential customers alike. In part we ve already succeeded: in many cases the consumer is not able to notice the difference when switching from natural gas to biogas not even in their invoice. Gasum is committed to the sustained development of gas vehicle use. Gas versions are available in more and more car models, and there is hardly any price difference between petrol- and gas-fuelled cars. In addition, the volume of gas bought for private cars at Gasum s public illing stations increased by 20 per cent on the year before. This is a good path to follow. JUKKA METSÄLÄ Head of Biogas and Transport Solutions GAS VEHICLE FILLING STATIONS Gasum filling station (number of stations) Other operator's filling station Other operator's filling station under planning/construction LIMINKA GASUM'S BIOGAS PROJECTS AND PARTNERS 1. KSS Energia and Kymen Bioenergia 2. Helsinki Region Environmental PIETARSAARI Services (HSY) 3. LABIO Biovakka Suomi 6. Joutsan Ekokaasu VAASA JEPUA FINLAND 7. MetsäFibre and Helen 8. KSS Energia Operational Under planning LEPPÄVESI KITEE 6. JOUTSA LEMPÄÄLÄ 2 TAMPERE JOUTSENO 7. IMATRA LAHTI 3. KOUVOLA LAPPEENRANTA FORSSA RIIHIMÄKI VEHMAA HYVINKÄÄ MÄNTSÄLÄ KOTKA HAMINA 4. TURKU LOHJA 2 PORVOO 2. 6 GREATER HELSINKI GASUM'S YEAR

20 LNG SKANGASS TAKING THE LEAD IN LNG DEVELOPMENT Gasum acquired a majority of the LNG distribution business of the Norwegian company Skangass in spring LNG helps achieve considerable emission cuts in a cost-effective manner. YEAR 2014 Gasum subsidiary Skangass offers competitive and environmentally friendly LNG for shipping, industries and heavy-duty road transport. The CEO of Skangass is Tor Morten Osmundsen, and the company's Board of Directors is chaired by Gasum CEO Johanna Lamminen. Skangass had 44 employees in Skangass supplied a total of 284,000 tonnes (or 3.9 TWh) of LNG in Finland, Sweden and Norway, up 35 per cent on the year earlier. Skangass is actively developing the Nordic LNG infrastructure. Gasum pursued its long-term liquefied natural gas (LNG) strategy by acquiring a 51 per cent holding in the Skangass LNG business from the Norwegian Lyse Group. Operating in energy, infrastructure and telecommunication, Lyse maintains a 49 per cent shareholding in Skangass. Gasum and Skangass have solid experience in the LNG market, with Gasum involved in the LNG business since 1996, while Skangass, a company established in 2007, launched its LNG business in The transaction resulted in the transfer of Gasum s LNG business, such as the Porvoo production facility under Skangass. The Skangass production facility in Risavika, Norway, is owned by Lyse, but Skangass has a long-term supply contract concerning the use of the facility. The Skangass Øra terminal in Norway as well as the Lysekil terminal in operation and the Gävle terminal being planned in Sweden were all transferred under the new company. Skangass is also constructing an LNG terminal in Tahkoluoto, Pori, Finland. In addition, Skangass is partnering with Outokumpu, SSAB and EPV Energy in an LNG terminal project for Röyttä, Tornio, Finland. Creating a pan-nordic market The Finnish, Norwegian and Swedish LNG markets were unified geographically by the acquisition. Skangass is actively developing the Nordic LNG infrastructure, and the pan-nordic market facilitates the development of sourcing and distribution services, improves the efficiency of the logistics chain and increases the total storage capacity available for LNG. The overall competitiveness of LNG is improved by the stricter emission limits that entered into force in January 2015 in areas such as the Baltic and the North Sea. Using LNG helps cut carbon dioxide emissions by around 25 per cent compared with heavy fuel oil. LNG does not contain sulfur or heavy metals or generate harmful fine particulate emissions when used. The switch of energy source from traditional fuels to LNG also opens up the opportunity for further positive steps: liquefied biogas (LBG) can be used in the same way as LNG. 20 GASUM'S YEAR 2014

21 LNG SKANGASS ENSURES SAFETY IN LNG DELIVERY Skangass delivers LNG to shipping customers from road tanker to ship, from terminal to ship or from ship to ship whichever is the smoothest and best solution for the customer. Skangass currently has charter parties for two LNG carriers and operates more than 20 LNG road tankers, with new stock added where necessary. One of the two Skangass carriers and the specialized bunker ship Coralius to be delivered in spring 2017 can be used for bunkering, i.e. refueling, LNG directly from ship to ship at sea. The bunkering vessels improve customers access to LNG and reduce the need for ships to visit ports. The ship-to-ship delivery option is an essential element in the development of the LNG distribution infrastructure, and the vessels used by Skangass provide customers with LNG at sea safely and lexibly. LNG offers option for cleaner maritime transport TOR MORTEN OSMUNDSEN Chief Executive Officer, Skangass AS Skangass is a leading supplier in the Nordic LNG markets. The company provides customers with LNG for shipping, industrial and heavy-duty land transport needs. LNG must be a competitive and wellfunctioning way of reducing environmental emissions from energy use. For LNG to reach a strong position in the Nordic energy portfolio, the infrastructure must be in perfect condition. LNG is a way of extending the environmental beneits of gas to users outside the gas pipeline network, and therefore we ll be investing strongly in the development of the LNG terminal network and seamless LNG delivery solutions in the Nordic countries in the coming years. The new boost to the infrastructure will enable the increased frequency of LNGfuelled cargo and passenger ships in the Baltic and North Sea, which will result in emission cuts in maritime transport in particular. We also believe irmly in the rise of environmental perspectives in the fuel choices made by heavy-duty road transport operators. Several truck manufacturers have already responded to the new market situation by launching gas-fueled heavy-duty vehicles. By using LNG, enterprises make a choice they will beneit from right away today and also tomorrow as the next revolution in the gas sector liqueied biogas (LBG) is already just around the corner. GASUM'S YEAR

22 LNG INFRASTRUCTURE Several Skangass terminal projects opened for Finland and other Nordic countries The Gasum subsidiary Skangass is actively developing the Nordic and Finnish LNG infrastructure. The Tahkoluoto LNG terminal constructed in Pori, Finland, will be the third Skangass terminal in the Nordic countries. In 2014 a terminal of the same capacity was opened in Lysekil, Sweden, where natural gas is supplied by Skangass directly to the customer, via a connecting pipeline. LNG is also delivered from the terminal to other local industrial facilities by LNG road tankers, and also supplied to shipping customers. Skangass has invested more than 85 million in the terminal. The Øra LNG terminal in Norway Located in Southern Norway, the Øra LNG terminal has a storage capacity of 6,500 m 3. The terminal design allows the annual throughput of around 100,000 tonnes of LNG. Most of the LNG distribution to customers takes place by LNG road tanker over distances up to 350 kilometers. One-third of the gas can be distributed directly via the connecting pipeline to industrial customers in the local area. LNG terminal planned for Gävle, Sweden In August 2014 Skangass received permission from the County Administrative Board of Dalarna to construct an LNG terminal. The planned LNG terminal is an important element in the expansion of the LNG infrastructure in Sweden. The investment decision will probably be made in The terminal is developed in cooperation with the Port of Gävle, which will invest in infrastructure construction in the port area. Skangass LNG supply efficiency increased by production facilities Skangass also has a long-term supply contract with the Norwegian Lyse Group concerning the use of the LNG production plant located in Risavika, Norway. Operational since 2011, the LNG plant has a storage capacity of 30,000 m 3 and production capacity of 300 kilotonnes. Skangass also has a small 20-kilotonne LNG production facility opened in 2010 in Porvoo, Finland, which has a storage capacity of 2,000 m 3. TORNIO MANGA LNG TERMINAL CONSTRUCTED AS A JOINT PROJECT An LNG import terminal as well as an efficient supporting logistics chain is being constructed in Röyttä, Tornio, Finland, by Manga Terminal Ltd. The company is owned by Outokumpu, SSAB, Skangass and EPV Energy. Once completed, the Tornio LNG terminal will be a regional supplier of LNG for industrial and shipping customers in Northern Finland as well as Northern Sweden while also diversifying the Finnish gas and fuel market in Northern Finland. The terminal tank capacity will be 50,000 m 3, and the project is estimated to cost around 100 million. The company has received around 33 million in LNG terminal investment support from the Finnish Ministry for Employment and the Economy for the construction of the terminal. The terminal will be supplied by Wärtsilä Corporation. The construction project is estimated to provide 260 full-time equivalents of employment and, once operational, the terminal will employ 7 people directly and around 30 people indirectly. Building Finland s first LNG terminal in Pori STANISLAV LYSAK Project Manager, Pori LNG terminal I m the project manager in Finland s first ever LNG terminal construction project, which is making rapid progress on the western coast of Finland in the Tahkoluoto chemicals and oil harbor in Pori. Our project also involves the creation of an efficient logistics chain and a natural gas pipeline connecting the terminal with an industrial area. The connecting pipeline will serve the local M20 Industrial Park as well as other Skangass customers. The project s total investment amounts to around 80 million. Energy support at 23 million was granted for the terminal project by the Finnish Ministry for Employment and the Economy. This support enables Skangass to construct a terminal for the Satakunta re gion through which environmentally friendly and sulfur-free energy will be provided for shipping and Finnish industries to replace fuel oil and liquefied petroleum gas. At the same time, Skangass is creating alternative sourcing channels for industries using gas. It s been estimated that the use of LNG in maritime transport and industry has particularly high market potential in the Satakunta area. The Pori terminal will be able to serve the entire Western Finland region. The irst Finnish LNG terminal is estimated to be completed as soon as in the autumn of The Skangass safety irst policy plays a key role and has been taken into account in the design phase and the various construction stages. It will also be the guiding principle in commissioning and operation. Safety regulations are stringent: our goal is zero accidents. The site employs 40 to 200 people daily. Following completion, the operations of the terminal will be controlled and supervised from a central control room. The employment effect of the construction project is estimated to be 250 man-years. Once operational, the terminal will employ around 10 people directly and around 50 other people indirectly. 22 GASUM'S YEAR 2014

23 LNG INFRASTRUCTURE SKANGASS LNG INFRASTRUCTURE IN NORDIC COUNTRIES TORNIO LNG TERMINAL Joint project of Manga LNG Ltd, Outokumpu, SSAB, EPV Energy and Skangass Storage capacity 50,000 m 3 Construction started Due for completion in 2018 SWEDEN FINLAND NORWAY GÄVLE LNG TERMINAL Storage capacity 30,000 m 3 Under planning PORI LNG TERMINAL Storage capacity 30,000 m 3 Construction started Due for completion in 2016 RISAVIKA LNG PRODUCTION PLANT IN LYSE S OWNERSHIP Storage capacity 30,000 m 3 Production capacity 300 kilotonnes Operational since 2011 ØRA LNG TERMINAL Storage capacity 6,500 m 3 Operational since 2011 LYSEKIL LNG TERMINAL Storage capacity 30,000 m 3 Operational since 2014 PORVOO LNG PRODUCTION FACILITY Storage capacity 2,000 m 3 Production capacity 20 kilotonnes Operational since 2010 GASUM'S YEAR

24 ENERGY SERVICES ADVANCED ENERGY SOLUTIONS Gasum Energy Services offers energy-efficient gas solutions. Clean-burning natural gas, Finnish biogas and LNG enable the development and introduction of new types of technical concepts as emission targets are becoming stricter. YEAR 2014 Distribution sales of biogas became possible for all customers connected to the distribution network. The number of Energy Services customers increased despite the challenging market situation. The development of hybrid solutions was at the core of our activities. Energy Services was involved in the construction of an ecological residential area in Sundsberg, Kirkkonummi, Finland. Energy Services provides gas solutions for a diverse group of customers from industrial operators to restaurants, households as well as housing companies. The role of Energy Services has been transformed in recent years into a developer and provider of energy-efficient and resource-wise solutions. Our business activities no longer need to be limited to the area covered by the gas pipeline network either: new opportunities are opened up by LNG in the Western- Finnish energy sector once our LNG import terminal becomes operational in Pori in The switchover to gas, appliance installation, maintenance and servicing as well the construction of new distribution networks are the strengths of Energy Services in the new market area. Biogas distribution sales launched Biogas enables the development of a new market. In 2014 the distribution sales of biogas became possible for all customers connected to the distribution network. In the autumn our biogas campaign allowed 30,000 Helsinki kitchens to use clean biogas to fuel their cookers. Housing companies Customer numbers increased in 2014 despite the economic recession and tax solutions unfavorable to gas. can already opt for biogas and Gasum will install a remote-read housing company-specific meter at no expense to the customer. Our online application available later on will enable housing companies to monitor gas consumption almost in real time. Hybrid solutions accessing the market Energy Services is also actively developing heating solutions such as hybrid solutions, that com bine renewable energies with gas. In practice these may include solar panels, collectors or heat pumps acting as the primary source of energy, with gas providing the system with the additional energy needed for periods of low supply of renewable energy. In 2015 a new type of solution will be launched in the market, utilizing different sources of heat and minimizing the quantity energy purchasing and losses. Hybrid solutions can also be utilized in heating, including the combination of geothermal heat and gas. Gasum has built a district heating plant for the seafront residential area of Sundsberg, Kirkkonummi, featuring two gas-fuelled geothermal heat pumps and gas-fuelled condensing boilers. Any shortages in geothermal heat production during winter will be automatically compensated for by gas. The residents will be able to enjoy an energyefficient heating solution without having to worry about maintenance or servicing, as a 24/7 service with control room and on-call service is included in the product package. 24 GASUM'S YEAR 2014

25 ENERGY SERVICES We are actively developing hybrid solutions combining renewable energies with gas. Our customers needs are becoming more diverse and so are the solutions we offer Our customers needs have become clearly more diverse in recent years. Individual, tailored solutions have also arrived in the energy sector. At Gasum Energy Services we are making every effort to be able to continue to offer open-minded energy solutions for industrial, property and home needs. We are focusing even more on customer relationships and working together with our customers to ind the best solution to every challenge. To support this aim, we changed our approach in 2014 and introduced customer group managers in our organization to sharpen our service delivery. We are now able to focus more on understanding the operating environment of gas users. I believe active listening and fresh ideas are the recipe for success. We are determined to develop products and service solutions that our customers need and appreciate. Energy eficiency, supply security, scalability and low emissions are what natural energy gas solutions are about. At the same time renewable and resource-wise Finnish biogas adds to our energy palette. Building on gas is sustainable today and tomorrow. PETRI NIKKANEN Head of Customer Relationships and Sales, Energy Services HJK JUNIOR FOOTBALL TRAINING FACILITY HEATED WITH BIOGAS The winter training opportunities of junior footballers improved dramatically when a new air-supported indoor football facility was set up in Töölö, Helsinki, in spring Used exclusively by HJK football club junior players, the dome is heated energyeficiently with environmentally friendly, 100 per cent Finnish Gasum biogas. Biogas is an excellent choice for the heating of a large facility. The heating system enables speedy temperature control and can also cope with subzero temperatures: this means temperature in the training hall can be lowered considerably during periods such as nights, resulting in cuts in energy bills. In addition to the 2,500 HJK junior foot ballers, the new indoor training facility can also be enjoyed by pupils from primary schools participating in HJK s afternoon clubs as well as kids attending the HJK football school. Pictured here is the Valio Vantaa factory steam plant that uses natural gas to produce 12,000 MW of energy a year. GASUM'S YEAR

26 TRANSMISSION SERVICES ENERGY ON THE MOVE Transmission services is responsible for transmitting gas to customers as well as maintenance and development of the gas network. The focus in 2014 was on improving operational efficiency. Measures related to biogas injection into the natural gas transmission network, such as biogas balancing and certificate system maintenance roles, were also developed. YEAR 2014 The gas transmission network control system was renewed. A gas pipeline rerouting project was completed in Santalahti, Tampere, and the expropriation permit planned for a pipeline in Turku was given up. Plans relating to the supply security of natural gas were updated, and extensive analyses of the impacts of potential gas supply disruptions were conducted. The design of the Balticconnector gas pipeline and the Southern Finnish LNG terminal continued. The Energy Authority launched the preparation of the regulation of transmission network activity for the regulatory period. Gasum owns the Finnish gas transmission pipeline network and is the transmission network operator with system responsibility for the Finnish natural gas transmission system. The pipeline network is Gasum s largest asset, and a major part of Gasum's personnel work in pipeline maintenance tasks. Gas pipeline network maintained regularly The overhaul of the automation systems of the Imatra and Kouvola compressor stations built in 1997 was considered in 2014, and its possible implementation will be planned in High-quality biogas Biogas is injected into the gas network from three facilities, located in Kouvola, Espoo and Lahti. For biogas to be transmitted in the network, it must have properties that meet the composition requirements set for gas injected into the natural gas transmission network. The quantity and quality of biogas as well as the biogas balance are monitored closely to gain information about the volume of biogas available and delivered to customers. Biogas Certificate system launched As part of the development of the gas market, Gasum has created a Biogas Certificate system. The system is available in the area covered by the Finnish natural gas network. Gas users can obtain Biogas Certificates from the certificate system, denoting that the gas used is environmentally friendly biogas. Expropriation permit for natural gas pipeline planned for Turku, Finland, given up A decision has been made not to go ahead with the natural gas pipeline planned from Mäntsälä to the Turku economic area. The construction of the pipeline would have required sufficient volumes of natural gas consumption along the route. Potential customers have invested in other forms of energy or made other production decisions. Any need for gas in small and medium-sized industries and power and heat production can be responded to through LNG solutions of the future. 26 GASUM'S YEAR 2014