Oil Retail's markets

The market situation in the oil retail sector continued to remain challenging in 2011. Although investment in the sector in Finland slowed, overcapacity continues to be an issue. The markets in the Baltic countries have still not recovered from the drop in demand caused by the earlier downturn, which saw demand fall back to 2007 levels. The introduction of the euro in Estonia at the beginning of 2011 kept margins tight, and the price differentials between Neste Oil and its competitors failed to stabilize. The market situation also remained tense in Poland, with margins at extremely low levels. The market in Northwest Russia continued to grow.

Despite the challenging market situation, Neste Oil succeeded in retaining its position on all its main markets and was able to grow in Finland. In Estonia, Neste Oil sold its non-core gas business, AS Reola Gaas, to Estonian-based Alexela.

Increased demand for diesel

Retail demand for diesel fuel continued to grow during 2011. Demand for diesel rose by 3.0% in Finland compared to 2010, while gasoline demand fell back 3.4%. Gasoline demand in the Baltic countries decreased, while diesel demand rose compared to 2010. Demand for gasoline and diesel both rose in Northwest Russia.

Finland shifted to 95E10 gasoline containing a maximum of 10% ethanol at the beginning of 2011. Consumers reacted suspiciously to the new fuel, and demand for 98E5 gasoline containing a minimum of 5% ethanol rose above what cars actually needed.

Read more about developments on the retail fuel market during 2011 in the Industry Overview section of the Annual Report.