June 24, 2020 / 7:49 AM / 16 days ago

Fortum's new CEO sees natural gas, hydrogen helping green transition

HELSINKI (Reuters) - The new chief executive of Fortum (FORTUM.HE) said on Wednesday natural gas and hydrogen could help Europe shift to clean energy and promised to present a strategy for the Finnish utility and its newly acquired German rival Uniper by the end of 2020.

FILE PHOTO: Markus Rauramo, CFO of Finnish utility company Fortum, poses after a news conference announcing that Fortum is set to gain control of Germany's Uniper by acquiring the stakes of activist funds Elliott and Knight Vinke in Duesseldorf, Germany, October 8, 2019. REUTERS/Thilo Schmuelgen/File Photo

The state-controlled group named Chief Financial Officer Markus Rauramo as its new chief executive on Wednesday as it seeks to integrate Uniper (UN01.DE), now 73.4% owned by Fortum after a two-year struggle to overcome resistance from Uniper managers.

Rauramo, who replaces Pekka Lundmark, said he would develop a strategy by the end of the year for the group that is phasing out coal-fired energy production and shifting to renewables.

He said natural gas could assist the transition to cleaner energy and said he saw momentum in the use of hydrogen, a clean fuel although making it from fossil fuels generates greenhouse gases while making it from water via electrolysis is expensive.

Rauramo said the group needed to be flexible.

Fortum is reviewing its district heating businesses and has to decide what to do about Uniper’s Russian subsidiary Unipro (UPRO.MM), which runs several heating power plants in Russia.

“What you can expect from us is that we continuously evaluate our positions ... and currently our focus is on the renewables programme,” he said of its Russian operations.

Rauramo, who joined the Finnish firm eight years ago, repeated Fortum’s position that it would not squeeze out Uniper’s minority stakeholders until the end of 2021.

Fortum Chairman Matti Lievonen said Rauramo “will develop and execute a joint strategy for Fortum and Uniper on their journey towards becoming a European energy transition champion.”

Rauramo has been the vice chairman of Uniper’s supervisory board for two years. Prior to joining Fortum, he worked for the Finnish forest industry company Stora Enso (STERV.HE).

(This story was refiled to add full name of new CEO in paragraph 2)

Reporting by Anne Kauranen; Editing by Edmund Blair

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