Finnish utility halts all new investments in Russia

Bloomberg

Finland’s Fortum Oyj will stop all new investment projects and cut the number of its power plants in Russia, pulling back just as it looks to bolster energy generation at home.
The utility is following global energy giants from BP Plc to Exxon Mobil Corp. in retreating from Russia after President Vladimir Putin’s invasion of Ukraine. While Fortum isn’t exiting entirely, the move marks a significant retrenchment for a company that earns about a fifth of its operating income in the country.
“Business as usual cannot continue,” Chief Executive Officer Markus Rauramo said Thursday. “We have stopped all new investment projects in Russia until further notice and we will continue to reduce our thermal exposure” there.
The Russian generating assets of Fortum and its Uniper SE unit —and exposure to the Nord Stream 2 pipeline project — carry a book value of about 5.5 billion euro , a statement showed. That’s about a third of Fortum’s market capitalization.
The company’s shares dropped as much as 4.8%, and traded down 4.6% at 16.32 euros as of 1:23 pm in Helsinki.
Russia’s war in Ukraine has jolted the European energy landscape, pushing many nations to reassess their reliance on Russian supplies. Industrial powerhouse Germany has said it could delay it’s exit from coal, while rapidly scaling up renewables and reviving plans to import liquefied natural gas.
Soaring fossil fuel prices and rising demand for clean energy have also prompted some governments to turn to nuclear power, with countries such as Germany softening their opposition to the sector while others like Finland actively seek to expand atomic output.

Extending Nuclear
Fortum said Thursday it would apply for an extension to run its two Loviisa reactors on Finland’s south coast until 2050 and invest 1 billion euros in the project. Another big reactor at the Olkiluoto plant in the southwest is due to come online this year, helping to boost the nation’s energy independence.
“Continuing production in Loviisa is above all an investment in securing the supply of clean domestic electricity,” Rauramo said in a separate statement. “The economic, political and societal aspects were factored into our decision.”
Fortum was formed in 1998 from the merger of two state-owned power and oil companies in Finland. That year, it bought a stake in Russian utility OAO Lenenergo and further acquisitions since then have boosted the company’s market share. It now owns 12 power stations in Russia — including five plants held by Uniper — and employs 7,000 people there. Fortum also owns the nation’s largest wind and solar portfolio.