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About This Report

Objective of This Report

This sustainability report was prepared to objectively ascertain the overall

management performance of Hyundai Oilbank with regards to economic

profitability, environmental soundness and social responsibility for the calendar

year of 2009. Some data from 2010 are also included. Going forward, Hyundai

Oilbank will more actively pursue sustainability management by taking into

consideration stakeholders’ opinions on this Report and incorporating them

into its management activities.

Latest Reporting Year and Reporting Guidelines

Hyundai Oilbank published its first Sustainability Report in 2007 and will

continue to do so on an annual basis. As the fourth Sustainability Report, this

one was prepared based on the business-specific G3 guidelines (logistics &

transportation) of the GRI (Global Reporting Initiative). A special task force

comprised of 34 specialists from the various divisions and departments of the

company was formed to prepare this report. In the hopes of representing the

viewpoints of its various stakeholders, this Report was structured centering on

their concerns.

Materials and Information Used in This Report

All indicators and units used in this Report are those applied to domestic

accounting standards and international oil industry standards. Data and

information officially disclosed to the public have been used for the contents

including forecasts.

Assurance

To ensure accuracy, completeness and credibility, this Report was verified by an

independent outside auditor. The verification results can be viewed on page 80

of this Report.

Additional Information

Major sustainability related performances and activities not included in this

Report can be accessed through the Hyundai Oilbank website [http://<strong>oilbankstrong>.

co.kr] and the FSS (Financial Supervisory Service) electronic disclosure system

[http://dart.fss.or.kr]. For additional information or questions, please contact

the following:

Website www.<strong>oilbankstrong>.co.kr

E-mail seung10222@<strong>oilbankstrong>.co.kr

Tel +82-2-2004-3907

Fax +82-2-2004-3908

Team in Charge Environment Policy Team (Business Support Division)


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Message from the CEO

02 03

Hyundai Oilbank will once again

embark upon a powerful takeoff

by joining the Hyundai Heavy

Industries family,

the world’s most fully diversified

heavy industries company.

I would like to extend my deepest appreciation to the customers and shareholders of Hyundai Oilbank for their

continued support and encouragement. It is a great pleasure for me to present to you Hyundai Oilbank’s fourth

annual Sustainability Report.

Since its founding in 1964 as the first privately held oil refining company in Korea, Hyundai Oilbank has been leading

the domestic petroleum and petrochemical industries while continuously endeavoring to build and achieve the

qualities and competitiveness required of a socially responsible and environmentally sustainable company. The

result is that last year Hyundai Oilbank realized KRW 10,860 billion in gross sales and KRW 220 billion in net profit.

Since establishing its ‘Oilbank’ brand of service stations in 1994 as the first in the industry, Hyundai Oilbank has

built approximately 2,400 service stations nationwide through which eco-friendly and high-quality products are

provided to consumers.

Hyundai Oilbank continues to grow and expand. In particular, the facility and petrochemical BTX extension

projects, promoted with the full attention of our skilled engineers, are the core projects leading Hyundai Oilbank’s

sustainable development and growth. At the same time, through these projects, Hyundai Oilbank will significantly

contribute economically not only to local communities, but also to the nation as a whole.

Also known as the ‘second onshore oilfield’, the recently expanded facilities will commence commercial operation

within the first half of next year advancing Hyundai Oilbank even further as the highest standard oil refining

company in Korea in terms of advancement rate in comparison to refinery capacities. Furthermore, Hyundai

Oilbank will once again embark upon a powerful takeoff by joining the Hyundai Heavy Industries family, the world’s

most fully diversified heavy industries company.

Hyundai Oilbank is keenly aware of its responsibility to secure and develop a stable supply of petroleum resources,

the foundation of all economic activities for the welfare of our nation, as well as to safeguard the environment and

contribute to our communities. Valuing all our stakeholders and prioritizing the environment, Hyundai Oilbank,

through transparent and responsible management, will strive to become a company endeared by the entire nation.

Once again, I would like to thank all our customers for the support and encouragement they have consistently

extended to us over the years.

July 2010

President & CEO of Hyundai Oilbank

Oh Gap Kwon


06 _ COMPANY PROFILE

08 _ ORGANIZATION AND BUSINESS FIELDS

10 _ MANAGEMENT VALUE SYSTEM

12 _ CORPORATE GOVERNANCE

14 _ RISK MANAGEMENT

16 _ SUSTAINABILITY MANAGEMENT SYSTEM

17 _ SUSTAINABILITY MANAGEMENT PERFORMANCE

18 _ DEFINITION OF STAKEHOLDERS AND MAJOR

COMMUNICATION CHANNELS

19 _ KEY ISSUES PER STAKEHOLDER AND MAJOR

PERFORMANCES IN 2009

WITH AN ENERGETIC AND FRESH

SPIRIT, HYUNDAI OILBANK IS

DREAMING OF

A WORLD OF PLENTIFUL ENERGY.

To enhance stakeholder value, Hyundai Oilbank

pursues sustainability management through

ceaseless efforts at innovation on the basis of

our core values: partnership, trustworthiness,

integrity, innovation and professionalism.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Company Profile

06 07

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● INTRODUCTION

Hyundai Oilbank Co., Ltd. is an oil refining and marketing company that produces and distributes petroleum products for the

public and raw materials for the petrochemical industry. Established in 1964 as Korea’s first oil refining company, Hyundai

Oilbank was the first in the industry to establish a brand name for its network of service stations in 1994 with the name

‘Oilbank’. In 1999, Hyundai Oilbank solidified its foundation to increase its competitiveness by securing USD500 million in

foreign investment from IPIC of the United Arab Emirates. Currently, with a daily production capacity of 390,000 barrels,

Hyundai Oilbank has achieved a market share of 18.5% in the light oil market of Korea and is operating approximately 2,300

service stations nationwide.

Hyundai Oilbank seeks to ‘maximize customer satisfaction through customer-centered value creation’ as its basic goal

by not only providing petroleum and petrochemical products essential to the national economy and people’s lives, but also

endeavoring to establish service stations that can complement the increasingly sophisticated lifestyles of its customers.

In order to advance as an oil refining and marketing company of the highest standard, Hyundai Oilbank initiated its #2 HOU

(heavy oil upgrading) project scheduled for completion in June 2011. This is a facilities extension project to convert heavy oil

(Bunker-C) into high value-added and eco-friendly low-sulfur light oil. In addition, in a joint venture established in 2009 with

Cosmo Oil of Japan capitalized at USD1.2 billion, Hyundai Oilbank plans to complete an aromatic BTX plant extension project

by the end of 2012. Once production commences in 2013, the BTX plant will produce 1.18 million tons of paraxylene and

220,000 tons of benzene annually. This will give Hyundai Oilbank a production capacity three times higher than before and

therefore will usher in the second phase of advancement.

General Profile As of Dec. 31, 2009

Company Name

Hyundai Oilbank Co., Ltd.

Establishment 1964

CEO

Major Products

Oh Gap Kwon

Petroleum and petrochemical products

Sales (annual) KRW 10,868.2 billion (2009)

Crude Oil Refining Capacity

390,000 barrels daily

No. of Employees 1,870

Size of Workplace 2,733,000m 2

Workplace Status As of Dec. 31, 2009

Facility

Seoul Office

Head Office in Daesan (Plant) Research Center

Location

20th Floor, Yonsei Severance Bldg., 84-11 Namdaemunro-5ga, Jung-gu, Seoul, Korea

640-6 Daejuk-ri, Daesan-eup, Seosan-si, Chungcheongnam-do, Korea

Hyundai Oilbank Singapore Pte., Ltd. 50 Raffles Place #28-02 Singapore Land Tower, Singapore 048623

Market Status As of Dec. 31, 2009

Major Markets

Customers

Domestic Consumption and Exports

(based on 2009 sales volume)

Wholesale: Sales agencies, service stations, general dealers, etc

Commercial Sale: Direct sale to industries, government and military, etc

Gas: Sales agencies (charging stations), direct sale to industries

General consumers: Household and industrial use

Direct Sale: Government and military use, industrial use

Domestic consumption (48.9%): Household and commercial fuel,

power generation, government and military

Exports (51.1%): Direct export, marine and jet fuel, U.S military, etc

● HISTORY

1964 Established as Kukdong Oil Industrial Company (registered as a petroleum

product refining company)

1965 Completed construction of Busan Plant

1968 Completed construction of M.E.K facilities

1977 Changed name to Kukdong Oil Co., Ltd.

1978 Completed construction of facilities with capacity to refine 10,000 barrels

of crude oil per day

1981 Obtained permit for an additional refining capacity of 60,000 barrels of

crude oil per day

1982 Obtained permit to build a hydro-cracking facility

1984 Participated in a joint venture with U.S.-based Getty Oil

1988 Obtained permit for expanding base oil refining facilities

Changed name to Kukdong Oil Refining Co., Ltd.

Commenced operation of an atmospheric distillation facility with a capacity

of 60,000 barrels per day

Completed construction of a hydro-cracking facility for heavy oil

Completed construction of the Daesan Plant

1989 Obtained permit to increase crude oil treatment capacity to 100,000 barrels

per day

1993 Changed name to Hyundai Oil Refinery Co., Ltd.

Hyun Young Shim appointed as President of the company

Obtained permit to expand refining facilities to a capacity of 200,000 barrels

of crude oil per day

1994 Hyundai Oil Refinery selected as a core company by the Hyundai Group

Launched the service station brand ‘OILBANK’

1995 Mong Hyeok Jeong appointed as President and CEO of the company

1996 Completed construction of refining facilities with a capacity of 200,000 barrels

per day

1997 Completed construction of BTX facilities with an annual capacity of 400,000

tons in the Daesan Plant

1999 Secured foreign investments from IPIC of the UAE

2000 Branched off from the Hyundai Group

Designated as the 13th largest business group in Korea

2002 Young Tae Seo appointed as President of the company

Name changed to Hyundai Oilbank Co., Ltd.

Declared OPEN 2005 vision and code of ethics

Signed a voluntary agreement for soil pollution recovery

2005 Completed clean fuel project

Promoted the Singapore branch to a local subsidiary

2006 Signed the Atmospheric Environment Improvement 5-18 voluntary agreement

2007 Commenced U-Project and declared ‘VISION 2012’

2008 Concluded a strategic affiliation with Cosmo Oil of Japan

Garnered KRW 1.2 trillion through syndicated loan

Daesan Plant-‘Service contract for the second advancement of project plant

construction’

2009 Founded HC Petrochem (50:50 JV comprising Hyundai Oilbank and Cosmo Oil)

Signed a contract to supply HSFO (high sulfur fuel oil) to Exxon Mobil

2010 Oh Gap Kwon appointed as President of the Company Incorporated into

Hyundai Heavy Industries Group


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Organization and Business Fields

08 09

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● ORGANIZATION AND BUSINESS FIELDS

Organization As of Jun 30, 2010

Workplace in Korea As of Dec. 31, 2009

Seoul Office

Head Office in Daesan

and Research Institute

Retail Headquarters (15 regions)

Seoul, Southern Gyeonggi-do,

Northern Gyeonggi-do,

Incheon, Gangwon-do, Daejeon,

Chungcheongnam-do,

Chungcheongbuk-do,

Gwangju/Jeollanam-do, Jeollabuk- do,

Busan, Gyeongsangnam-do, Daegu,

Gyeongsangbuk-do, Jeju

Headquarters under Direct

Management in 8 regions

Seoul, Gyeonggi-do, Gangwon-do,

Chungcheong-do, Honam,

Busan/Gyeongsangnam-do,

Daegu/Gyeongsangbuk-do, Jeju

Oil Storage Facilities in 8 Regions

Incheon, Yeoju, Okgye, Gunsan, Daegu,

Busan, Mokpo, Jeju

Service Stations and Charging Stations As of Dec. 31, 2009

Seoul/Gyeonggi-do 25.0%

Gangwon-do 7.0%

Chungcheong-do 22.0%

Jeollabuk-do/Jeollanam-do 17.0%

Daegu/Gyeongsangbuk-do 12.0%

Busan/Gyeongsangnam-do 16.0%

Jeju 0.9%

2009

CEO STAFF

• Secretariat

• PI Dept.

• Corporate Secretary

Team

• Public Relations

Team

●BUSINESS FIELDS

Petroleum Refining Business

◉ Hydro Skimming

• HR Dept.

• Finance Dept.

Hyundai Oilbank refines crude oil to produce LPG, gasoline, naphtha, jet fuel, kerosene, Diesel, heavy oil and asphalt.

Following the first atmospheric distillation process with a daily production of 110,000 barrels, Hyundai Oilbank completed

its second refinery with a daily production volume of 280,000 barrels in 1996. Current petroleum refining capacity is 390,000

barrels. To secure quality competitiveness to prepare for the impending opening of the domestic market, Hyundai Oilbank

has now completed ultra-low-sulfur light oil desulfurization facilities with a daily production capacity of 60,000 barrels and

gasoline desulfurization facilities with a daily production capacity of 20,000 barrels in 2005. With these high-tech refining

facilities, Hyundai Oilbank has achieved a stable supply of low sulfur products which will halt the need to fill temporary

shortfalls with imports.

◉ Heavy Oil Upgrading (HOU)

In 1988 Hyundai Oilbank introduced state-of-the-art refinery technologies in Korea with its heavy oil upgrading (HOU) unit.

The refinery comprises a hydro-cracking process that eliminates even the finest impurities found in light oil and therefore

does not require a separate desulfurization treatment and delayed-coking process enabling light oil production through heat

cracking of vacuum residues.

Petrochemical Business

MANAGEMENT

SUPPORT

DIVISION

• Business Support

Dept.

• Internal Audit Team

SALES AND

MARKETING

DIVISION

• Network Development

Dept.

• Retail Dept.

• Sales Planning &

Coordination Dept.

• Commercial Sales

Dept.

• COCO Dept.

• LPG Dept.

• Marketing Team

CEO

S&T

DIVISION

• Production Control

Completed in 1997, the BTX plant with an annual capacity of 470,000 tons produces high-purity paraxylene (360,000 tons per

year) and benzene (110,000 tons per year). The continual process centering on paraxylene and benzene (with the exception

of toluene having relatively lower added value) is internationally competitive in terms of production cost and operational

efficiency. By exporting 80~90% of total production to China, Taiwan and Southeast Asian countries, Hyundai Oilbank is

contributing greatly to improving Korea’s balance of trade. And now the company is building out its facilities to provide a

stable, uninterruptable supply of petroleum products to domestic users and for continuous expansion of supply global

markets.

Team

• Supply Team

• Logistics & Terminal

Operation Team

• Crude Trading Team

• Product Trading Team

• Quality Management

Team

• Singapore Subsidiary

* S&T: Supply & Trading

* PI: Process Innovation

* ESDM: Emergency Shutdown Management

PRODUCTION

DIVISION

• Operation Dept.

• Production Support

Dept.

• Technical Service

Dept.

• ESDM Team

• Research Institute

NO. 2 HOU

DIVISION

• Process Dept.

• Engineering Dept.

• Project Management

Team


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Management Value System

10 11

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● MANAGEMENT PHILOSOPHY

VISION 2012 FRAMEWORK

Hyundai Oilbank has established a basic philosophy for business administration in order to fulfill its founding goal and to

fulfill the company’s social responsibilities as well as contribute to development of society and the nation as a whole. The

management philosophy of Hyundai Oilbank consists of seven essential principles: ‘Love the company, love the customers,

love the employees, love the stockholders and contribute to society.’ —for enhancing stakeholder value-- as well as

‘transparent and open management’ for active communication.

HYUNDAI OILBANK MANAGEMENT PHILOSOPHY

Strategies

•Maximizing cash generation capabilities

•Increasing network efficiencies

•Operational Excellence

Appreciation of

Company

Appreciation of

Customers

Appreciation of

Employees

Partnership

Teamwork

Trust &

integrity

Core

Values

Innovation

Efficiency

Professionalism

Recognizing that Hyundai

Oilbank is the foundation

of our life, we strive to

further enhance the

company’s reputation and

value.

Recognizing that customer

satisfaction is the foundation

of our business, we strive

to create customer values

with integrity and sincerity.

Recognizing that employees

are the assets of the highest

value, we respect and

cooperate with each other

to exercise the power of

creativity.

THE MOST EFFICIENT PETROLEUM REFINING AND MARKETING COMPANY IN KOREA

Business Model

• To complete competitive

refineries and distribution

networks by 2012

• To advance as a petroleum

refining and marketing

company of the highest

efficiency in Korea

A Trusted Company

• To provide top-quality

products and services

• To be a company trusted by

customers

A Respected Company

• To give back to the local

communities

• To fulfill environmental

responsibilities

• To advance as a respected

company through ethical

management

Appreciation of

shareholders

We pursue value creation

through efficient management

to maximize stockholder

values.

SOcial

Contributions

Recognizing that Hyundai

Oilbank is the mainstay of

the nation’s backbone

industry, we strive to

contribute to the development

of our society and

the national economy.

Transparent

Management

We embrace lofty ethical

standards to observe social

norms and order, and strive

to realize fair and transparent

management.

Open

Management

We disclose information

necessary for company

management and practice

open management allowing

all employees to participate

freely. transparent

management.

● VISION 2012 SLOGAN (RUN TO U)

The slogan of ‘Vision 2012’ is ‘Run to U’. The ‘U’ stands for our continual upgrade strategy which consists of 4 tracks, facility

upgrading, distribution network upgrading, core competency upgrading and operation process upgrading. ‘Run to U’

represents Hyundai Oilbank’s will to maximize the efficiency of the entirety of the company’s resources.

● CORE VALUES

● VISION 2012

The core values of ‘Vision 2012’ are partnership, trust and integrity, innovation and professionalism. Partnership, trust

and integrity form the basis for effective teamwork. Innovation and professionalism are the most important elements for

enhancing efficiency and are standards for action and determination to achieve the vision.

Guided by its ‘Vision 2012’ declared in March 2007, Hyundai Oilbank has successfully secured new growth engines in the

fast-changing global economy and oil refining industry and is continuously pursuing innovation to advance as a petroleum

refining and marketing company of the highest efficiency in Korea.

‘Vision 2012’ declares the will of Hyundai Oilbank to complete the competitive refinery facilities and marketing networks by

2012 and to advance as a company respected by customers through top-quality products and services based on advanced

production facilities. Furthermore, this vision forms the foundation of Hyundai Oilbank’s endeavor to become an esteemed

company that leads environmental and ethical management and strives for mutual prosperity with local communities.

VISION 2012 SLOGAN

STRATEGIES TO ACHIEVE THE VISION

Sales Network

Refinery Facilities

Human Resources

Achieving

Vision 2012

To achieve the vision, Hyundai Oilbank concluded contracts for its 2 nd plant upgrade project with Hyundai Engineering &

Construction and Daelim Industrial in November 2008 and is currently building new HOU facilities to process 52,000 barrels

of oil per day at the Daesan Refinery located in Chungcheongnam-do.

Process


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Corporate Governance

12 13

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● BOD OPERATION SYSTEM

To enhance corporate value through fair and transparent management and to fulfill the company’s responsibilities and

obligations for all stakeholders, the Board of Directors (BOD) of Hyundai Oilbank supervises all management activities and

makes important decisions that guide the company’s business operations. The board meets on a quarterly basis (and when

necessary) to review management performance, decide all short and long term management plans and goals as well as

develop annual business plans.

● SHAREHOLDER STRUCTURE AND GENERAL SHAREHOLDERS MEETING

Shareholder Structure

As of August 2010, Hyundai Heavy Industries was by far the majority shareholder of Hyundai Oilbank with 223,331,529

shares, which is 91.13% of all shares outstanding. Individual shareholders hold only 0.0024% with the remainder held by

domestic corporate entities.

DECISION MAKING PROCESS BY THE BOD

OWNERSHIP OF SHARES AS OF AUGUST 2010

BUSINESS

DIVISION

CEO

BOD

● BOD ORGANIZATION AND ACTIVITIES

BOD Organization

2010

Hyundai Heavy Industries. (91.13%)

Hyundai Motor Co. (4.35%)

Hyundai Steel Co. (2.21%)

Hyundai Development Co. (1.35%)

Others (0.97%)

The BOD of Hyundai Oilbank consists of five directors, of which one is appointed as the representative director. The

representative director also serves as the CEO and President of the company providing general operational supervision. The

Chairperson of the Board is appointed at the first BOD meeting after the annual general shareholders meeting. As of August

2010, Hyundai Oilbank has one auditor. The auditor supervises the operations of the directors and is empowered to make

statements by attending the BOD meetings.

BOD Organization and Operations

Members

Chairperson

Resolution

Compensation for Members

2 Standing directors, 3 Non-standing directors, 1 Auditor

Chairperson with one-year term of office appointed at the first BOD meeting

after the annual general shareholders meeting

Resolutions are made with a simple majority vote from among the board members attending the meeting

Compensation for members is based on the company’s senior management compensation policy

and consists of a base salary and performance-based bonuses,

Bonus payments are linked to the company’s overall management performance

General Shareholders' Meeting

Numerous key and important issues are resolved and voted on at the general shareholders meeting such as approval

of financial statements, appointment of directors and auditors, revisions to the Articles of Incorporation and approval of

changes to compensation limits for directors and auditors. The convocation of a general stockholders meeting is carried out

within 3 months after the end of each fiscal year, while additional meetings can be convened at any time at the discretion of

the BOD. Each shareholder is entitled to the basic right of reviewing the company’s financial statements. For shareholders

having over 10% ownership, the company provides annual budgetary plans prepared in accordance with Korean GAAP

(General Accepted Accounting Principles) as well as all monthly, quarterly and annual financial statements and any and all

other information concerning the company.

BOD Activities in 2009

In principle, Hyundai Oilbank’s BOD meeting is held once

every quarter or as deemed necessary. In 2009, Hyundai

Oilbank organized a total of 8 BOD meetings and deliberated

on 23 Agenda.

STATUS OF BOD MEETING

No. of Agenda

25

13

4

No. of Meetings

23

8 8

07

08

09


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Risk Management

14 15

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System

Definition of Stakeholders and Major Communication Channels

16

18

● INTEGRATED RISK MANAGEMENT

Risk Management Organization

Hyundai Oilbank endeavors to presciently handle changes in the domestic and international oil markets and stabilize supply

through comprehensive risk analysis and prediction to ensure a steady flow of energy to the nation. To achieve this, Hyundai

Oilbank operates an Integrated Risk Management Committee chaired by the CEO which effectively and systematically

manages various risks. The Integrated Risk Management Committee holds four regular meetings annually in January,

April, July and October together with additional meetings whenever deemed necessary. Any resolution on an item presented

before the Committee is carried out only with a 2/3rd majority vote among the attending members. In addition, for effective

management of all possible risks, such as an imbalance in petroleum trade, the Integrated Risk Management Committee

operates sub-committees, such as the Foreign Exchange Risk Management Committee, Operational Risk Committee,

Refinery Margin Risk Management Committee and Bidding Committee.

COMMITTEES UNDER THE INTEGRATED RISK MANAGEMENT COMMITTEE AND THEIR ROLES

Foreign Exchange Risk

Management Committee

• Efficient management

of foreign exchange risk,

securing financial stability

Operational Risk

Committee

• Minimizing of operational

risks regarding new projects

Integrated

Risk

Management

Committee

Refinery Margin Risk

Management Committee

• Efficient management of

refinery margin risk

Bidding Committee

• Implementation and management

of bidding operation in a

fair and transparent manner

Full-time Risk Management System

◉ Preventing Adverse Impacts upon Local Communities

Before embarking on its facility upgrade project, Hyundai Oilbank prepared a report on how the project would affect the

ecosystem and local residents. When the report was completed, Hyundai Oilbank organized a town hall meeting and listened

to the concerns and opinions of relevant organizations, such as local administrative offices. While implementing the project,

Hyundai Oilbank has been continuously concentrating on implementing measures to maintain the standards specified by the

final environmental impact assessment and will continue to do so even after project completion.

◉ Preliminary Review and Follow-up Management of Contracts

Since October 2003, Hyundai Oilbank has been operating a management system for all contracts concluded in order to

minimize the company’s legal risks. According to the contract review and management guidelines, any team intending to

conclude a contract must request a contract review to the Legal Affairs Team at least seven days before contract conclusion.

The Legal Affairs Team then requests the Accounting Team for a review regarding tax-related matters in order to eliminate

tax risks. In addition, Hyundai Oilbank inspects the activities of each team at least once a year to make sure that the laws and

regulations are being properly observed and whether the preliminary review of contracts is being carried out, contents of the

review are properly reflected and legal procedures are followed if the contents of the review are not incorporated.

◉ Evaluation of Business Partners

In order to expand ethical management and to strengthen risk management, Hyundai Oilbank conducts a preliminary

evaluation on candidate business partners prior to engaging in any business with them. For this evaluation, the related

teams and handling officers of the Purchasing Team directly visit the business partners. The evaluations, which cover ethics,

compliance, work environment and human rights issues of business partners, are aimed at minimizing all potential risks

from occurring.

BUSINESS PARTNER EVALUATION CRITERIA

Risk Management Process

For integrated risk management, Hyundai Oilbank administers operational management for efficient execution of

operations, regulation management for compliance to policies, rules, guidelines, regulations and laws, device management

for the company’s assets, and information management for the company’s information. In addition, Hyundai Oilbank

systematically manages marketing risk, financial risk, asset risk, operational risk and reputation risk, —all classified

in detail by the risk management system. Furthermore, Hyundai Oilbank administers company-wide environmental

management regulations for environmental risk management.

Hyundai Oilbank has implemented an internal control system to achieve operational effectiveness goals, improve the

reliability of financial reporting, and ensure compliance with related laws and regulations. The company has been developing

its risk management master plans annually since 2008 with responsibility lying in the hands of the director of each

headquarters. Every quarter the status of fulfilling the plans is reviewed.

RISK MANAGEMENT PROCESS

Perception

Identify possible

sources of risks

Measurement

and Assessment

Decide calculation

method according to

risk type, measure

risk grade and

assess the level of

appropriateness

Control

Control risks by

regular or additional

reporting

Monitoring,

Reporting

Continuously monitor

risk level and

determine reporting

channels, contents

and cycle

Ethics

and

Human

Rights

• Ethical management

• Violations

• Work environment

• Workers’ rights

• Compliance with security

regulations

◉ Inspection of Corporate Regulations

Quality

Management

• Work quality

• Schedule management

• Technology level

• Equipment utilization

capability

• Compliance with work

procedures

• Work reports

Safety

Management

• PSM items

• Compliance with safety

regulations

• Safety-related accidents

• Industrial safety

management costs

Environmental

Management

• Environmental accidents

• Compliance with

environmental

regulations

• Worksite waste

management

Hyundai Oilbank conducts inspections of its corporate regulations CHANGES OF CORPORATE REGULATIONS IN 2009

semi-annually to ensure compliance with various laws and

regulations and minimize risk. The purpose of the inspection is

to determine whether enactments, amendments, and repeals

of corporate regulations have been appropriately reported and

executed, and whether regular and additional meetings have been

held. Furthermore, a corporate regulator is selected from each of the

Classification

Regulation

Guideline

Established

2

3

Revised

3

6

handling teams to conduct regular reviews on compliance, appropriateness and effectiveness of the corporate regulations.

If an amendment is required, swift action is taken to maintain the original objective of the corporate regulations. In addition,

administrators may hold training sessions to promote greater understanding among all employees, and communicate

regularly with the corporate Legal Affairs Team to minimize risks.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Sustainability Management System

Sustainability Management

Performance

16 17

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● SUSTAINABILITY MANAGEMENT COMMITTEE

The core of Hyundai Oilbank’s sustainability management is rooted at the Ethics Committee established in 2002 together

with the full-on commencement of the ethical management policy. Since the importance of ethics, the environment and

corporate responsibilities has only increased, Hyundai Oilbank decided in February 2006 to integrate the management

functions of ethics, the environment and corporate responsibilities by reorganizing the Ethics Committee into the

Sustainability Management Committee. With the CEO and 5 directors from headquarters as its members, the Sustainability

Management Committee deliberates and decides on basic policies and implementation plans relating to the company’s

systematic environmental and safety management, corporate ethics, social contribution activities and publishing of the

sustainability report. Regular meetings are held annually on the fourth Friday of November with additional meetings held

whenever necessary.

SUSTAINABILITY MANAGEMENT COMMITTEE ORGANIZATION

MID- TO- LONG- TERM STRATEGIES OF SUSTAINABILITY MANAGEMENT COMMITTEE

•Company-wide Strategies

Operational

Excellence

• HR management

• Organization and process

management

• Risk management, cost

efficiency

• ERP implementation,

ethical management

Maximizing

Fund

Management

for NO.2 HOU

PROJECT

• Asset utilization and

product value increase

• Asset rationalization,

cost reduction

• Efficient funding,

Company-wide strategy

Enhancing

Network

Efficiency

• Enhanced channel

efficiency

• Enhanced export network

• Brand value improvement

•STRATEGIES BY DIVISION

Sustainability Management Committee (Chairman: CEO)

Coordinator

Working Consultative Council

Management

Support

Sales and

Marketing

Supply and

trading

Production

No.2

HOU

• Composition: Head of Business Support Division,

Head of Support Dept.

• Role: Monitor, coordinate and report sustainability

management execution Guide working-level

Consultative Council and assist the Committee

Committee Members

• Composition: Handled by related teams, such as

the Environmental Policy Team, Public Relations

Team and Legal Affairs Team

• Role: Establish and implement sustainability

management plans

• Efficient funding

• Support for

No. 2 HOU Project

• Increasing

company-wide support

• Improvement of

ethical management

• Core personnel

development

• Enhancement of

channel efficiency

• Differentiated service

model

• Improvement of HR

competencies

• Market-oriented

sales and marketing

organization

• Optimization of

facility operation

• Improvement of

product marketability

• Improvement of

strategic affiliations

• Improvement of

overseas sales

• Development of

experts

• Maximization of

profitability

• Stable operation

• Environmentalfriendly

management

• Prepare for

No. 2 HOU Project

• Facility upgrade

construction

• Expansion of key

national industries

• Improvement

of national

competitiveness

• Stimulation of local

economies

Management Support

Division Head

Sales and Marketing

Division Head

S&T Division Head

Production

Division Head

No. 2 HOU

Division Head

SUSTAINABILITY MANAGEMENT PERFORMANCES

● SUSTAINABILITY MANAGEMENT STRATEGIES AND GOALS

Hyundai Oilbank clearly recognizes and fulfills its responsibilities as a sustainable enterprise that is essential for peoples’

lives and the national economy by expanding and installing petroleum and petrochemical products manufacturing and

distribution facilities while minimizing impacts to local communities and the environment. In addition, Hyundai Oilbank is

actively searching for and implementing systems to faithfully fulfill its role as a responsible corporate citizen in the areas of

social contribution as well as of employment, safety, welfare and health of employees.

In order to advance while fulfilling the company’s responsibilities for the economy, environment and society, Hyundai Oilbank

established mid-to-long-term strategies. Divided into company-wide strategies and strategies to be pursued by each

headquarters, the sustainability management strategies contribute to achieving the vision based on Hyundai Oilbank’s core

values: ‘partnership, trust and integrity, innovation and professionalism.’

Field Index 2008 2009

Economic Performance Sales (KRW million) 14,766,964 10,868,219

Net Income (loss) (KRW million) (254,155) 222,134

CP Rating (Korea Information Service) A2+ A2+

R&D Achievements (case) 26 25

Management innovation results (KRW million) 8,984 14,132

Environmental Performance Environmental investment 7,222 9,209

Fuel Consumption (1,000 TOE) 742,678 736,244

Power consumption (1,000 MHW) 742.7 736.2

Greenhouse gas emission basic unit (ton CO 2 /100 Bbl) 2.16 2.05

Social Performance Education cost per person per year (KRW 10,000) 68 60

KSCI-Call center (point) 89 (2nd) 95 (1nd)

Social contribution activities cost (KRW million) 2,195 3,421

Social contribution activities participation hours (hour) 6,027 6,517


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Definition of Stakeholders and

Major Communication Channels

Key Issues PER Stakeholders and

Major Performances in 2009

18 19

INTRODUCTION

Company Profile 06

Organization and Business Fields 08

Management Value System 10

Corporate Governance 12

Risk Management 14

Sustainability Management System 16

Definition of Stakeholders and Major Communication Channels 18

● DEFINITION OF STAKEHOLDERS AND COMMUNICATION

Definition of Stakeholders

The major stakeholders of Hyundai Oilbank are the customers, employees, shareholders, business partners, local

communities and the government who have voluntary agreements with the company. Hyundai Oilbank is also

influenced by and is influencing citizens’ organizations, research centers and NGOs (Non-government Organization)

in diverse ways. Hyundai Oilbank is keen to listen to the concerns of all its stakeholders and endeavors to incorporate

their ideas into the company’s management activities.

HYUNDAI OILBANK STAKEHOLDERS

Customers

Hyundai Oilbank’s customers

are largely divided into retail and

corporate, from individual drivers to

industry, government and the military.

Business Partners

Hyundai Oilbank’s business partners

are domestic and international

businesses that supply the company

with everything from machinery,

equipment, construction, installation,

outsourcing and row materials.

Communications with Stakeholders

◉ Communications with Customers

Hyundai Oilbank satisfies customers' key interests with top-quality products and services. The company periodically

analyzes customer satisfaction to enhance service quality, understand customer needs, provide systematic customer

management and effectively collect customer feedback. Hyundai Oilbank searches for ways to strengthen company-wide

customer satisfaction and sales competitiveness by comparatively analyzing customer satisfaction survey results.

◉ Communications with Employees

To better understand the major concerns of employees, such as improving the quality of life, HR development, strengthening

competencies and stable labor-management relationship, Hyundai Oilbank is encouraging communication through surveys

and opinion gathering. Hyundai Oilbank tries to enhance individual employees sense of accomplishment through work

improvements, creative mindset, opinion gathering and work efficiency enhancement. This is being carried out through

the Labor–Management Council, Industrial Safety & Health Committee, distribution of the employee ethical management

guidebook and professional development plans.

◉ Communications with Shareholders’

Employees

As of 2009, the employee count of

Hyundai Oilbank is 1,870. 73 parttime

employees are also included as

internal stakeholders.

Local Communities

Local communities refer to residents,

NGOs and universities in areas where

the Hyundai Oilbank head office and

production plants are located.

Shareholders

As the owners of the company,

Hyundai Oilbank’s shareholders

include domestic and international

corporate and individual shareholders

as well as Hyundai Heavy Industries,

which is the majority shareholder.

Government

Organizations

Referring to the central & local

governments and public organizations

Hyundai Oilbank's stakeholders

especially inclued associations and

groups concerned with enviromental

issues.

Hyundai Oilbank pursues the interests of its shareholders through management oriented toward their concerns and

providing diverse management information. Individual shareholders are entitled to basic rights, such as reviewing the

company's accounting books. Shareholders with at least 10% ownerships are provided with annual budget plans prepared

in accordance with Korean GAAP (Generally Accepted Accounting Principles) in addition to annual financial statements,

monthly financial reports, quarterly financial information and other information concerning the company. Shareholders

approve financial statements and compensation ceilings for directors and auditors, nominate directors and auditors,

deliberate on changes in the Articles of Incorporation and supervise management activities through general shareholders

meetings and BOD meetings.

◉ Communications with Business Partners

Hyundai Oilbank is committed to active communication with its business partners in order to establish a win-win culture and

fair trading practices. The company organizes workshops and informal meetings through its ‘ 知 (Jee) Café’, introduced an

electronic bidding system, improved the compensation and payment system, and established fair trade compliance (vendor)

practices. As an effort to prevent industrial accidents, Hyundai Oilbank concluded a ‘partnership agreement of cooperation

for mutual prosperity’ in March 2007 with 14 business partners based near the Daesan Plant. According to the agreement,

Hyundai Oilbank aggressively provides support for partners to establish a safety & health management system.

◉ Communications with Local Communities

As an active member of the local community, Hyundai Oilbank has been promoting social contribution activities through its

company-wide social contribution program, social contribution activities website and local economy support program. After

an onsite survey of the local communities, the company implemented several initiatives including income enhancement

projects for local residents, public interest projects for local organizations, and support for eco-friendly agriculture to

enhance income levels of local farmers. To support the local economy and to assist in the growth of small businesses,

Hyundai Oilbank has made it a principle to purchase urgent materials that cost less than KRW million monthly locally and to

source construction services locally for construction activities that cost less than KRW 30 million.

◉ Communications with Government- related Organizations

Hyundai Oilbank endeavors to cooperate with government organizations in order to realize eco-friendly management and

minimize environmental impacts. Hyundai Oilbank reports environment issues to government organizations and voluntarily

participates in various environment improvement agreements. Hyundai Oilbank also participates in KEMCO's (Korea Energy

Management Corporation) pilot project to reduce greenhouse gas emissions and in the industrial climate change countermeasure

activities sponsored by the Ministry of Knowledge Economy.

● KEY ISSUES FOR STAKEHOLDERS

Key issues for stakeholders were selected

based on various laws and regulations including

the company’s internal rules, direct &

indirect economic effects, benchmarking of

advanced enterprises abroad, media analysis

and discussions with stakeholders. Going

forward Hyundai Oilbank will strive to derive

more significant issues by expanding communication

channels to survey stakeholders and

petroleum industry experts.

STAKEHOLDER VALUE IMPROVEMENT

• Eco-friendly management

• Minimizing environmental impacts

• Social contribution activities

• Local purchasing

• Local hiring

Discussion and reporting,

• Providing top-quality products and services

Government

-related

Organizations

Voluntary agreements

Onsite examination

Local

Communities

• Active support

• Satisfying customers

• Creating customer value

Analyzing

c

Customers

Business

Partners

Regular

ustomer

satisfaction

discussion session

• Fair trade practices

• Sharing information

• Gathering opinions

Employees

Shareholders

Survey and opinion

gathering

• Stable labor-management relations

• Strengthening competencies

• Developing human resources

• Improving quality of life

IR Activities

• Stable profit creation

• Maximizing shareholder value

• Transparent management


22_ DISCLOSURE OF MANAGEMENT APPROACH

23_ MANAGEMENT DISCUSSION & ANALYSIS

24_ MAJOR ECONOMIC PERFORMANCES

26_ INNOVATION ACTIVITIES

28_ KNOWLEDGE MANAGEMENT AND R&D ACTIVITIES

30_ FUTURE PLANS

HYUNDAI OILBANK, A STRONG

FOUNDATION FOR KOREA’S

ENERGY INDUSTRY

Building a responsible energy future with creative

and innovative technologies, Hyundai Oilbank is

dedicating its utmost efforts to leading the energy

industry of Korea and advancing as a sustainable

enterprise.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Disclosure of management approach

Management Discussion & Analysis

22 23

ECONOMY

Disclosure of Management Approach 22

Management Discussion & Analysis 23

Major Economic Performances 24

Innovation Activities 26

Knowledge Management and R&D Activities 28

Future Plans 30

Hyundai Oilbank endeavors to become a respected company that earns customers’ trust by providing them

with the highest quality products and services based on its advanced competitive refineries and distribution

network.

Hyundai Oilbank is pursuing an company-wide business strategy to maximize economic

efficiency, an innovation strategy to improve productivity, and a product strategy to

achieve competitive product quality and develop next-generation technologies.

| BUSINESS STRATEGY | • Improving the quality of petroleum products

and achieving stable supply

• Maximizing asset efficiencies through ‘Run to U’ activities

| INNOVATION STRATEGY | • Establishing ‘action learning’ by activating the

‘Let’s’ performance compensation system

• Improving productivity and process

stability, and maximizing profitability

through production innovation

| PRODUCT STRATEGY | • Securing quality competitiveness in

line with the petroleum market opening

and liberalization

• Developing and commercializing nextgeneration

key technologies

● PERFORMANCE ANALYSIS

In 2008 Hyundai Oilbank recorded a deficit of KRW 254.1 billion, but in 2009 succeeded in turning in a surplus with a net

income of KRW 222.1 billion. Although sales declined from the previous year due to the fall of international oil prices,

economic recovery led to an improvement of the basic refinery margin which resulted in the increase of gross profit. In

addition, while sales and administrative expenses stayed unchanged, non-operating expenses drastically decreased from

the previous year. These factors led to the successful conversion into a surplus.

In 2009, the average international price for a barrel of oil was USD61.92 (Dubai exchange), which was a significant drop by

USD32.37 from the USD94.29 average price of the previous year. Accordingly, the price of refined petroleum decreased by

approximately 30% from the level of the previous year. In addition, the price of light oil with high industrial demand also

decreased by 40% from the previous year. As a result, sales in 2009 were KRW 10,868.2 billion, which decreased by KRW

3,898.7 billion (26.4%) from the previous year. In terms of sales per item, light oil used as industrial and automotive fuel

represented 32.19% of overall sales. That was followed by bunker-C oil used for industrial purposes, jet fuel and naphtha

with 21.69%, 11.24% and 10.70% respectively. Based on the cumulative total of 2009, domestic market share by all oil

products was slightly higher than the previous year. Recording 15.5%, the domestic market share displayed a continuous

increase.

Despite a decline in sales, the increases of gross profit and operating profit are attributed to the favorable trend in the

basic refinery margin. In addition, this result was possible due to optimization of the marketing network through full-time

management innovation, efficient operation of the organization, strengthening of foreign exchange risk management,

reduction of production costs and improved refinery efficiency. Resultantly, operating profit of 2009 was KRW 168.4 billion

recording an increase of 169.8% from the previous year.

Based on the net amount, Hyundai Oilbank recorded a non-operating deficit of KRW 397.4 billion in the previous fiscal year.

However, the figure was turned into a surplus of KRW 51.1 billion in the current fiscal year. This was largely because the

company recorded a net foreign exchange profit in the current term by overcoming the huge loss in the previous term caused

by foreign exchange instability. As a result, Hyundai Oilbank recorded a pretax profit of KRW 219.5 billion and a current net

profit of KRW 222.1 billion in 2009.

Sustainability Management Performance

Index 2007 2008 2009

Sales (KRW million) 9,458,996 14,766,964 10,868,219

Net Income (loss) (KRW million) 198,233 (254,155) 222,134

Debt-to-equity ratio (%) 212.94 226.28 238.36

Credit rating of Commercial paper A A A

Commercial paper A2+ A2+ A2+

General refinery capacity (barrel/day) 390,000 390,000 390,000

Petrochemical capacity (ton/day) 470,000 470,000 470,000

‘Let’s performance (KRW million) - 8,984 14,132

R&D achievements (case) 18 26 25

● ASSETS AND LIABILITIES

As of the end of 2009, total assets of Hyundai Oilbank were KRW 5,622.8 billion, which is a 17.0% year-on-year increase. Total

liabilities also showed a year-over-year increase with an 18.8% rise of KRW 3,961 billion, as well as total capital with a 12.8%

rise of KRW 1,661.8 billion. The main areas showing an asset increase were inventories and tangible assets. Inventories were

KRW 1,309.5 billion, which increased by KRW 299.6 billion from the end of the previous year. The increase of inventories is

mainly attributed to the increase of crude oil, the main ingredient, and this, in turn, is attributed to the rise of the price of oil.

Tangible assets increased by KRW 503.3 billion from the end of the previous year to KRW 2,445.7 billion. This increase was

mainly due to the investment in facility upgrades for the crude oil refining business. In 2009, a total of KRW 723 billion was

invested into assets under construction including facility upgrades.

Of liabilities, trade payables, debentures and borrowings increased sharply. The increase of trade payables was due to the

increase in purchasing of raw materials. For debentures and borrowings, the increase was attributed to a corporate bond

issuance for completion of facility upgrading and an increase in borrowings for facilities. While there was no fluctuation in

capital, retained earnings increased by the amount of current net profit. With a decline in profits relating to assessment of

derivatives, accumulated other comprehensive income decreased from the previous year.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Major Economic Performances

24 25

ECONOMY

Disclosure of Management Approach 22

Management Discussion & Analysis 23

Major Economic Performances 24

Innovation Activities 26

Knowledge Management and R&D Activities 28

Future Plans 30

summary of financial position

Unit: KRW million

Stability Index Unit: %

Particulars 2007 2008 2009

[Current assets] 2,892,530 2,354,835 2,762,008

Cash and cash equivalents 486,494 351,573 412,998

Trade receivables 839,851 644,278 799,170

Inventories 1,296,476 1,009,810 1,309,457

Otherss 269,709 349,174 240,383

[Non-current assets] 2,221,513 2,452,283 2,860,784

Investment assets 7,203 18,033 15,231

Tangible assets 1,893,587 1,942,368 2,445,685

Intangible assets 174,453 158,524 144,936

Other non-current assets 146,270 333,358 254,932

Total assets 5,114,043 4,807,118 5,622,792

[Current liabilities] 2,598,444 2,174,982 2,417,990

[Non-current liabilities] 881,429 1,158,841 1,543,006

Total liabilities 3,479,873 3,333,823 3,960,996

Capital 1,225,412 1,225,412 1,225,412

Accumulated other comprehensive income 459 93,739 60,105

Retained earnings 408,299 154,144 376,279

Total capital 1,634,170 1,473,295 1,661,796

Total liabilities and capital 5,114,043 4,807,118 5,622,792

Particulars 2007 2008 2009

Current ratio 111.32 108.27 114.23

Debt-to-equity ratio 212.94 226.28 238.36

Dependence on borrowings 27.09 38.86 43.08

Interest coverage ratio (times) 5.35 0.63 2.15

Profitability, Growth and Activity Index Unit: %

Particulars 2007 2008 2009

Operating profit margin 4.53 0.42 1.55

Net profit margin 2.10 (1.72) 2.04

Return on assets 3.88 (5.12) 4.26

Operating profit growth rate 212.32 (85.43) 169.76

Net profit growth rate 189.55 To deficit To surplus

Return on equity 12.13 (16.36) 14.17

● CREDIT RATING

Corporate Bond Ratings

National Information and Credit Evaluation Korea Ratings Korea Information Service

Summary of income statements

Unit: KRW million

Particulars 2007 2008 2009

Sale 9,458,996 14,766,964 10,868,219

Operating profit 428,539 62,447 168,455

Net profit before income tax (loss) 293,636 (334,972) 219,523

Net profit (loss) 198,233 (254,155) 222,134

Growth Index Unit: %

Particulars 2007 2008 2009

Sales growth rate 3.15 56.12 (26.40)

Total asset growth rate 14.74 (6.00) 16.97

Distribution of Economic Values

Unit: KRW million

Particulars 2007 2008 2009

Wages and welfare expenses 170,808 129,677 159,047

Interest expense 80,037 99,807 78,514

Tax 102,141 (73,080) 2,309

Commercial paper ratings

Korea Ratings Korea Information Service

Rating/Year 2003 2004 2005 2006 2007 2008 2009

A1

A2+

A2

A2-

A3+

A3

A3-

B+

B


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Innovation Activities

26 27

ECONOMY

Disclosure of Management Approach 22

Management Discussion & Analysis 23

Major Economic Performances 24

Innovation Activities 26

Knowledge Management and R&D Activities 28

Future Plans 30

● ACTION LEARNING–LET’S (LEARNING BY EXECUTING TOGETHER FOR SOLUTIONS)

◉ Definition of Let’s and Activities in 2009

‘Let’s’ is the core innovation activity of Hyundai Oilbank in which small teams are formed for real work-level or management

problem solving and to assist personal growth and development. Let’s promotes growth and change of the organization and

individual members through questioning, self-reflection and learning guided by coaches in each team.

Since its launch in 2002, Let’s completed a total of 2,973 tasks and produced financial results to the scale of KRW 459.7

billion over the previous 8 years. In 2009, approximately 70 teams participated in Let’s activities. In addition, through an

company-wide contest of 157 tasks, 9 excellent tasks including ‘FBC boiler business optimization’ a CFT organized by

Planning Team, were acknowledged of their performance and awarded accordingly.

● PRODUCTION INNOVATION ACTIVITIES

The Production division is currently undertaking 3 strategies, 7 strategic tasks and 20 execution tasks for 2010~2012. These

production innovation activities aim at improving productivity and process stability as well as at increasing profitability.

◉ Activities to Discover Profit Generation Items

During the course of 2009, Hyundai Oilbank discovered over 30 profit generation items to increase the company’s profitability

and therefore achieved KRW 52.1 billion in profits. In addition, Hyundai Oilbank plans to discover additional profit generation

items in order to cultivate KRW 300 billion in profits from December 2008 to the end of 2012.

◉ Activities to Minimize Process Safety Accidents

Let’s Performance–Excellent Tasks

Team

Corporate Planning Team

Technical Service Team

Incheon Retail Sales Dept.

Busan and Gyeongsangnam-do COCO Dept.

Quality Management Team

Extension Project Management Team

Power Team

Network Development Team

IT Team

Tasks

FBC boiler business optimization

Hydrogen production basic unit reduction

HDO’s CRM model customized to service stations

Profit increase by developing marine fuel niche market

Purchasing cost reduction by biodiesel operational improvement

#2 HOU project design, purchasing and construction improvement

Plans to increase #4 and #5 steam turbine efficiencies

Efficient resource appropriation and management plans for new service stations

Efficient SAP ID management

Hyundai Oilbank newly established the ESDM (Emergency Shutdown Management) Team to minimize accidents and

potential injuries related to the production processes. By improving the ESDM system and introducing the advanced

maintenance system, Hyundai Oilbank administers strict accident prevention and response management and therefore

provides stable operation of production processes with ‘ESD Zero’ as the final objective.

◉ Community of Practice Activities

‘Community of Practice’ a voluntary problem solving group meeting, is carried

out by onsite employees. Through these activities, employees share knowledge

and experiences while building new knowledge and increasing organization

competencies. Since 2007, over 170 improvement tasks have been implemented

through the Community of Practice activities.

COP ACTIVITIES PER YEAR

86

Case

◉ Let’s Activation System

Hyundai Oilbank has been actively encouraging innovation activities by all employees through the Let’s program. Each

year, excellent tasks were awarded through the company-wide contests. Since 2007, in line with the company’s new vision,

Hyundai Oilbank converted the Let’s operation system to be based on autonomous activities and introduced the Let’s

performance compensation system to award excellent tasks producing outstanding financial achievements. Up to KRW 50

million or 3% of the quantitatively measured performance amounts are awarded to the prizewinners. As a result, in 2009,

12 tasks produced economic gains of KRW 14,132 million, which were reflected in the company’s financial statements as

management achievements. For these tasks, a total of KRW 323 million was awarded in compensation.

MANAGEMENT INNOVATION PERFORMANCE

Tasks (case)

233

141

Financial Results (KRW 100 million)

571

178

641

157

Let’s Performance Compensations in 2009

Task performance Compensation

Reduced hydrogen production basic unit 3,086 50

Produced high value-added HSBC 2,189 50

Produced #2 CDU heat exchanger MP steam 2,737 50

Improved profitability by BTX optimization 1,725 50

Created profits by reducing HSBC production costs 1,232 37

Achieved operational efficiency and lowered financial

Unit: KRW million

expenses by changing crude oil clearance methods 637 19

Created profits by improving steam turbine idle running 491 159

Increased heat recovery in the #2 water process 487 15

Optimized #2 LER DeC2/DeC3 439 13

Optimized additive (PDA) injection 336 10

Plans to remove 1.0% B/C for heavy oil profit improvement 594 9

Maximized the use of berthing facilities at the Daesan Terminal 179 5

◉ Worksite Improvement Activities

Diverse operational efficiency improvement activities have been carried out, such

as placing identification marks on pipelines and facilities. In 2008, a focus was

placed on stable operation of facilities and prevention of safety-related accidents.

◉ New Proposal System

Through the new proposal system, Hyundai Oilbank collects creative opinions,

designs or suggestions regarding daily inspection, preservation and cleaning

activities at worksites in order to improve product quality, operational efficiency

and profitability by enhancing operational methods or processes. The new

proposal system is significantly contributing to increasing employees’ changes

and innovative mindset.

◉ Process Safety Management System

Since obtaining the highest level ‘P’ of the Process Safety Management (PSM)

system, Hyundai Oilbank has been continuously promoting safety management

and working to establish and amend safety data. As a result of these efforts,

Hyundai Oilbank received a silver prize in 2009 at the Process Safety Excellence

Award organized by KOSHA.

MAJOR INNOVATION ACTIVITIES BY THE PRODUCTION DIVISION

Community of Practice

• Organizing voluntary learning

groups

• Improving problem solving abilities

• Enhancing operational efficiency

Worksite Improvement

Activities

• Organizing a steering committee

for each team

• Reforming signs on facilities

• Improving operational safety and

efficiency

ESDM System Improvement

• Improving the ESDM system

• Adopting advanced maintenance

system

• Achieving ESD Zero for safe

operation

38

07

1,886

47

08

09

PROPOSALS RECEIVED PER YEAR

2,962

1,501

07 08 09

Case

Maintaining the Highest Level in

Process Safety Management

• Prioritizing process safety

• Reassessing risks of new technique

application

• Maintaining PSM level P

07

08

09

* As an outside verifer, Deloitte Anjin LLC ensures objectivity in awarding compensations.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Knowledge Management and R&D Activities

28 29

ECONOMY

Disclosure of Management Approach 22

Management Discussion & Analysis 23

Major Economic Performances 24

Innovation Activities 26

Knowledge Management and R&D Activities 28

Future Plans 30

● KNOWLEDGE MANAGEMENT ACTIVITIES

◉ Knowledge Management Status

As a part of its company-wide management innovation activities, Hyundai Oilbank introduced its knowledge management

system in 2003 and has since been seeking excellent knowledge discovery. Hyundai Oilbank’s knowledge management

activities focus on management change to achieve tangible results.

After establishing a mid-to-long-term knowledge management strategic goal to ‘create results by enhancing the use

of knowledge assets’ in 2008, Hyundai Oilbank then focused on discovering excellent knowledge in 2009 and therefore

reestablished knowledge management processes to define knowledge assets, to establish a knowledge categorization

system, and to enhance the quality of knowledge secured.

For this, Hyundai Oilbank further upgraded its ‘ 知 (Jee) Café’, its knowledge management system, as a core knowledge field

to strengthen knowledge creation activities in connection with daily operations and innovation activities including ‘Let’s’, best

practices and CoP (Community of Practice) activities. On this foundation, Hyundai Oilbank organized KM expert conferences

and KM academy sessions in order to uplift the quality of the listed knowledge and to strengthen knowledge creation

activities, activated CoP (renamed as ‘ 知 (Jee)-Club’), a voluntary learning group, and strengthened document management

to prevent loss of the company’s knowledge assets.

In addition, to establish knowledge management as a corporate culture, Hyundai Oilbank publishes a monthly ‘Change and

Innovation Newsletter.’ Through regular and irregular events, the company is enhancing employees’ voluntary participation

in knowledge management activities and increasing awareness of knowledge management.

◉ Best Practice in 2009

The Best Practice (BP) system was introduced as a part of the knowledge management activities in February 2007 for

the purpose of improving results by fostering the sharing of diverse experiences and ideas. The system has since been

instrumental in the discovery of numerous improvements that have led to tangible results.

● R&D ACTIVITIES

Hyundai Oilbank is focusing on development and commercialization of next generation core technologies to enhance

quality competitiveness and secure future growth engines. The professional staff at the R&D center is continually carrying

out research to develop eco-friendly products and reduce environmental pollution. Among their achievements, they have

improved the quality of the 2.0% bio-diesel compound fuel (BD 2.0) and the 5% bio-ethanol compound gasoline (BE 5).

◉ Research on Next Generation Core Technologies and Environmental Improvement

Hyundai Oilbank’s research activities focus on energy production using the petro coke of the delayed coker to enhance

energy utilization and reduce waste, such as ash, a byproduct of the BFC boiler. In addition, Hyundai Oilbank is conducting

extensive research into technologies to treat non-degradable substances for water quality improvement.

◉ R&D Investments and Results

In 2009, approximately KRW 4.6 billion was invested into R&D activities. In order to secure research competencies of a global

scale, Hyundai Oilbank plans to gradually increase investment into testing and analysis automation, petrochemical product

quality improvement, and new and renewable energy fields.

R&D Performance

Classification 2007 2008 2009

Tasks Petroleum product additives (3)

New and renewable energy

commercialization (2)

Government-supported technology

research (1)

Product mix optimization (2)

Process catalyst assessment (4)

Test and analysis automation (4)

Automotive fuel quality improvement (2)

New product development (1)

Product quality improvement (13)

Process improvement technology (4)

Government-supported technology

research (1)

New and renewable energy

commercialization (2)

Test and analysis automation (3)

Air/water quality improvement (2)

Product quality improvement (9)

Product mix optimization (1)

Process improvement technology (9)

Test precision improvement (4)

New and renewable energy

commercialization (2)

In particular, BP sales & marketing activities in 2009 improved qualitatively leading to substantially increased results. The

activities are contributing to enhancing relationship with business partners through diverse channels including the BP

community. In addition, the BP activities are being actively used as a way of consulting for business partners.

Actual cases include:

• Enhancing brand value through emotive marketing, sponsoring of music concert for people with physical and mental

disabilities: Chungcheong-do Headquarters under direct management

• Attracting regular customers by presenting gifts of flower pots (a flowerbed was created and customers were invited

to select plant pots from it): Gyeonggi-do Headquarters under direct management

• Increasing sales by activating idle land: Northern Gyeonggi-do Retail Headquarters

Achievements

Petroleum product quality improvement

Petroleum product refining efficiency

improvement

Efficient use of energy resources

Environmental improvement (CO 2 reduction)

Securing automation technology

Manufacturing cost reduction

Petroleum product quality improvement

Fuel manufacturing technology

improvement

Petroleum product refining efficiency

improvement

Efficient use of energy resources

Global warming prevention (CO 2 reduction

technology)

Environmental improvement (air/water

quality)

Petroleum product quality improvement

Fuel manufacturing technology

improvement

Petroleum product refining efficiency

improvement

Efficient use of energy resources

Global warming prevention

(CO 2 reduction technology)

Financial Achievements of Best Practice Activities

Classification Sales Improvement Rate (%) Sales Increase Volume (Drum) Margin Improvement (KRW million/year)

Retail 52 137,936 2,311

Direct Management 48 79,387 583

Direct Sales - - -

LPG 44 11,604 -

Total 51 228,927 2,894


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Future Plans

30 31

ECONOMY

Disclosure of Management Approach 22

Management Discussion & Analysis 23

Major Economic Performances 24

Innovation Activities 26

Knowledge Management and R&D Activities 28

Future Plans 30

● HOU AND PETROCHEMICAL FACILITY EXTENSION PROJECTS

As a core business that is expected to be a mid-to-long-term growth engine, a facility upgrade project is to be undertaken

to construct #2 HOU (heavy oil upgrading) facilities, which convert bunker-C oil, a by-product of the oil refining process, into

high value-added and eco-friendly low sulfur heavy oil. The facilities are being built on an area of approximately 1 million m 2

within the Daesan Regional Industrial Complex with a goal of construction completion of February 2011. The key processes

to be commenced in 2011 are the ‘atmospheric residue hydro-desulfurization (ARHDS)’ and ‘residue fluid catalytic cracking

(RFCC).’ This facility will help expand the nation’s basic industries, strengthen national competitiveness, increase the supply

of low sulfur light oil and contribute to the local economy.

Hyundai Oilbank has also a joint venture agreement with Cosmo Oil of Japan to construct new paraxylene and benzene

production facilities near the Daesan Plant by 2012. Once construction is completed, Hyundai Oilbank will be able to

significantly enhance production of paraxylene, a high value-added aromatic product. This will enable the company to

achieve global competitiveness in terms of production cost and operational efficiency.

● LET’S DIRECTION

The PI Division, the supervising division of management innovation, consists of a PI (process innovation) Team and a PE

(Performance Enhancement) Team. However, the PI Team, after successfully implementing a project, has been disbanded.

Instead, going forward the Let’s activities will be undertaken by the PE Team. In 2010, Let’s will achieve the goal of

performance creation by ‘pursuing long-term innovation for continuous growth’ and ‘strengthening monitoring of execution.’

In addition, efforts will be made to strengthen the competencies of learning coaches in order to increase support in deriving

creative and highly executable ideas.

Let’s Learning Coach Development Results and Plans

Development Results (Plans) 2006 2007 2008 2009 Total 2010

Practitioner 26(23) 40(20) 29(58) 15(57) 110(158) (19)

Professional 2(2) 1(16) (15) 3(33) 2(4)

Master (2) (1) (3)

* Professional/master coaches are selected from practitioners.

Figures in ( ) refer to persons for coach development plans

Let’s Promotion Plans per Year

Classification 2009 2010

Focus

Major Activities

To discover high-performance tasks and to strengthen

execution

• Discovering tasks by task discovery methodologies

• Strengthening task review

• Improved quality of tasks by further strengthening task

reviews

• Strengthened quantitative task derivation

• Encouraged development of exhaustive solutions for high

performance tasks

Unit: Persons

To create performances by strengthening solution executions

• Promoting long-term innovation for sustainable growth

• Monitoring executions

• Continuously strengthening task review to create high

performance

• Creating performance by strengthening monitoring of

execution

• Strengthening support for deriving creative and highly

executable ideas through professional development

● NEW NETWORK DEVELOPMENT STATUS AND RESULTS

To continuously expand the domestic service station network and to improve operational efficiency, Hyundai Oilbank

operates an organization that focuses on new service station development. The organization prioritizes development in the

metropolitan regions where local development is active and in areas where Hyundai Oilbank’s network is weak. As a result,

in 2009 alone, Hyundai Oilbank was able to develop 105 new service stations, resulting in a total of 2,401 service stations

nationwide as of the end of December 2009. In response to the high price of oil in recent times, Hyundai Oilbank is also

actively encouraging conversion of existing and new service stations into self-service stations in order to provide benefits

to a greater number of customers. There are approximately 20 self-service stations as of the end of 2009. Hyundai Oilbank

will increase the count to 60 by the end of 2010 and will continue to increase the number going forward. By continuously

increasing the high-quality service station network, Hyundai Oilbank is confident it will gradually enhance the company’s

market share in Korea.

● INTERVIEW WITH THE LET’S EXCELLENT TASK TEAM IN 2009

Q.

A.

Q.

A.

HOW WAS THIS TASK SELECTED? ALSO, BRIEFLY EXPLAIN THE PROCESSES OF THE LET’S TASK COMPLETION.

There was an company-wide recognition of the high economic values of the FBC boiler before we began the Let’s

task. However, it was only about the use of the FBC boiler for cost reduction of self-consumed fuel. We needed

to reach an company-wide agreement on additional investment. Through this task, we reviewed the investment

time, scale and promotion methods in various ways. In particular, we believe it was a refreshing change of idea to

search for ways to realize additional profit by entering the ‘integrated energy business’ surpassing the issue of ‘cost

reduction.’

WHAT DO YOU THINK ARE THE POSITIVE IMPACTS EXERTED ON EMPLOYEES BY THE COMPANY’S KNOWLEDGE

MANAGEMENT (INNOVATION ACTIVITIES)?

The company’s innovation activities are continuously evolving and systemized rather than stopping as a one-time only

slogan. We regard innovation activities as a part of our job requirements. Through systemized innovation activities, we

are building the power of thinking, developing problem solving skills, and creating new ideas. We have now become

accustomed to these activities, so we believe our knowledge management program has significantly contributed not

only to improving the company’s competitiveness, but also to enhancing individual employees’ competencies.

Letʼs 우수과제 선정팀 기획팀

Q.

A.

Q.

A.

WHAT KIND OF IMPACT DO YOU HOPE THE TEAM’S TASK WILL HAVE ON THE

COMPANY IN THE FUTURE?

We received the prize for a ‘searching for opportunities’ task rather

than a ‘problem solving’ task. We hope more of the ‘searching for

opportunities’ tasks will be created so that Let’s will make greater

contributions to the company’s bottom line.

WHAT KIND OF SUPPORT WOULD YOU LIKE FOR THE COMPANY TO PRODUCE

GREATER INNOVATION PERFORMANCES?

The success of Let’s was based on the company’s continuous

interest in efficiency and efforts to achieve better systemization.

So, to produce greater innovation results, we would like systematic

support to continuously implement all innovation activities.


34 _ DMA

35_ BASIC DIRECTION AND SYSTEM OF ENVIRONMENTAL

MANAGEMENT

36 _ ENVIRONMENTAL INVESTMENT

37 _ ENVIRONMENTAL PERFORMANCE

41 _ ECOSYSTEM MANAGEMENT AND ENVIRONMENTAL

POLLUTION PREVENTION

44 _ ENERGY SAVING ACTIVITIES IN RESPONSE TO

CLIMATE CHANGE

HYUNDAI OILBANK,

THE INNOVATOR OF GREEN

ENERGY TO PROTECT THE EARTH

With advanced technological capabilities and our

employees’ love for the environment, Hyundai

Oilbank will strive to conserve the precious

environment of planet earth, our eternal home.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

ENVIRONMENT

DMA

Basic Direction and System of

Environmental Management

34 35

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

Hyundai Oilbank is implementing company-wide environmental management to minimize environmental

impacts stemming from all areas of the company’s business activities. The environmental

vision of Hyundai Oilbank emphasizes that, “all business activities must be carried out in an environment-friendly

manner to achieve sustainable management for harmony between the environment

and the economy. All employees are expected to have pride in the company’s environment-friendly

management.” Through continuous environment-related investments, Hyundai Oilbank is not only

improving the environment in terms of air, water and soil quality, but also expanding development of

eco-friendly products. In particular, in line with the global trend of ‘low carbon green growth’, Hyundai

Oilbank has newly installed an Environmental Policy Team within the supporting division to actively

respond to the government’s ever stricter environmental protection policies. Furthermore, by establishing

and executing company-wide environmental policies, Hyundai Oilbank is solidifying a foundation

for continuous environmental management. Hyundai Oilbank has also initiated safety and health

management to minimize the effects of its business activities upon the safety and health of people and

the community at large.

● ENVIRONMENTAL, SAFETY AND HEALTH MANAGEMENT

Hyundai Oilbank is promoting environmental management in order to minimize environmental impacts caused by all its business

activities by declaring an environmental vision emphasizing that, “all business activities must be carried out in an environmentfriendly

manner to achieve sustainable management for harmony between the environment and the economy. All employees are

expected to have pride in the company’s environment-friendly management.” In particular, for preservation of a clean environment,

Hyundai Oilbank continues to abide by the government’s policies and regulatory standards regarding air, water and soil quality. By

actively undertaking research activities, Hyundai Oilbank is cooperating in securing more advanced environmental standards.

BASIC DIRECTION OF ENVIRONMENTAL, SAFETY AND HEALTH MANAGEMENT

Declaration of Environmental,

Safety and Health Management Goals

Compliance with Environmental,

Safety and Health Regulations

Accident Minimization

• Regularly monitoring, reviewing and auditing environmental, safety and health

management performances

•Declaring the environmental, safety and health management goals

•Complying with the international and domestic laws and regulations in

addition to the company’s internal regulations regarding environmental,

safety and health management

•Strengthening accident prevention safeguards and encouraging employees’

safety awareness

Risk Assessment

•Assessing operational risks and continuously seeking ways to minimize risks

Work Environment Improvement

•Assessing the work environment to protect the health of employees exposed

to harmful elements and continuously improving the work environment

Major Environmental Performance

Index 2007 2008 2009

Environmental investments (KRW million) 6,874 7,875 4,209

Air pollutant emissions basic unit (kg/kl) 0.454 0.432 0.366

Raw water reuse basic unit (ton/kl) 0.238 0.200 0.204

Count of marine pollution prevention training programs 4 3 7

Energy savings (KRW million) 4,489 4,624 2,958

Greenhouse gas emissions basic unit (ton/100 Bbl) 2.31 2.28 2.05

Fuel consumption basic unit (1000 FOEB/Bbl) 4.33 3.95 3.81

Waste generation basic unit (ton/kl) 0.298 0.205 0.172

Waste treatment cost (KRW million) 421 395 245

● INTEGRATED ENVIRONMENTAL MANAGEMENT SYSTEM

The integrated environmental management system is centered on establishing an integrated environmental, safety and health

system, disclosure of environmental information, training to prevent environmental accidents, expansion of green purchases and

outsourcing of waste treatment.

Together with environmental management, Hyundai Oilbank announced its safety vision to ‘advance as a leading company that

maintains employees’ safety and health and protects the company’s properties and human life by comprehensively managing industrial

safety and health-related matters.’ With this vision, Hyundai Oilbank promotes safety and health management in order to minimize

impacts exerted by all business activities upon the safety and health of people. In 2007, Hyundai Oilbank established its SHE (safety,

health and environment) integrated system and therefore achieved company-wide sharing of information previously dispersed to

individual divisions. Accordingly, it is now possible to effectively address internal and external issues and to formulate a composite work

process. The SHE integrated system is subdivided into several sectors, including health, safety, environment, and training. The SHE

integrated system can be efficiently managed because it is closely connected to existing systems for organic data sharing.

INTEGRATED ENVIRONMENTAL MANAGEMENT SYSTEM

Integrated Environmental Management System

INTEGRATED SYSTEM

IMPLEMENTATION

•Implementation of an

integrated system for

efficient management of

environmental, safety and

health related matters

ENVIRONMENTAL

INFORMATION

DISCLOSURE

•Transparent disclosure

of various environmental

data and information on

environmental activities

EDUCATION AND

TRAINING

•Training and education to

handle fire, injuries and

environmental accidents

EXPANSION OF

GREEN PURCHASES

•Expansion of green

purchases in accordance

with the Green Purchase

Agreement signed in 2005

OUTSOURCED

WASTE TREATMENT

•Disposing and managing

of by-products and

industrial waste through

specialized service

providers


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Environmental Investments

Environmental Performance

36 37

ENVIRONMENT

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

In addition to installation of the fluid catalytic cracking facility in 1988 to produce clean eco-friendly fuel, Hyundai Oilbank has

been continuously investing in VOC (volatile organic compounds) prevention facilities every year, which include electric dust

collectors, a discharge outlet TMS (tele-monitoring system), and waste water treatment and storage facilities.

ENVIRONMENTAL IMPROVEMENT INVESTMENT ROADMAP

Environmental investment in 2009

Field Unit Process BOD

Air

Water

Voluntary conclusion

of agreements to

lower air pollution

Entire process

#2 power generation

Entire process

#2 power generation

#1 plant

Entire process

Entire process

● REDUCING AIR POLLUTION

Installed LDAR

Installed denitrification facility (SCR)

Replaced pump seal

Improved combustion system in #6 boiler

Introduced HR1001/HF1801 CO analyzer

Improved CSS/OWS

Improved wastewater treatment plant

Hyundai Oilbank is continuously working to reduce air pollutants by converting to cleaner burning fuels, improving processes

and installing and replacing air pollution prevention facilities including a flue gas denitrification unit. In addition, Hyundai

Oilbank carried out onsite survey of emission sources to initiate a pilot project to develop process test methods for the

petroleum refinery industry and to establish emission inventories as a part of the government’s ‘Specific Atmospheric

Hazardous Substance Basic Management Plans (2004~2013).’ In 2006, after concluding a voluntary agreement with the Ministry

of Environment for air pollutant reduction, Hyundai Oilbank established investment plans and has since been implementing

and reviewing them annually. Hyundai Oilbank is continuously investing in technologies to reduce NOx, SOx and VOC emissions

by 24%, 14% and 32% respectively by 2011 in comparison with emission levels of 2004. In preparation for the facility and

management policy initiatives to reduce HAPs (benzene, toluene and xylene) emissions, Hyundai Oilbank will incorporate the

potential changes in the company’s basic facility designs. The changes will gradually be applied to existing facilities each year.

● REDUCING SOIL CONTAMINATION

Investment

Amount

180

3,000

500

200

80

165

40

Unit: KRW million

Improvement Effect

Reduced VOC

Reduced nitrogen oxide

Reduced VOC

Increased combustion efficiency

Increased combustion efficiency

Water pollution prevented

Reduced water pollutants

Waste Entire process Purchased food waste treatment unit 9 Reduced amount of waste generation

Others Entire process Purchased environmental measuring unit 35

2007 2008 2009~2013

Invested KRW

2.8 billion for

installation of the

#2 SCR furnace

Invested KRW 7.2

billion for installation

of the #1 and 2 SCR

boilers and

wastewater

treatment RTO

Increased efficiency of

environmental monitoring

Invested KRW 37.6

billion to reduce

pollutant emissions

by 20%

ENVIRONMENTAL COST

Environmental Investment (KRW 100 million)

Environmental Operation Cost

For prevention and prompt handling of soil contamination, Hyundai Oilbank has been implementing its company-wide

environmental improvement plans since 2004 and therefore is administering an environmental hazard elimination program.

With this program, precision inspection and leakage tests are conducted at service stations presumed to be contributing

to soil contamination. By investigating the causes, Hyundai Oilbank thoroughly administers soil purification and follow-up

management activities. In addition, by participating in the Ministry of Environment's 'Voluntary Agreement for Soil Pollution

Investigation and Restoration’, Hyundai Oilbank regularly carries out soil contamination tests and purification activities.

In 2007, by organizing a CFT for implementation of a soil contamination prevention system, Hyundai Oilbank established

standards for facility management and replacement of old facilities and computerized the facility history management data.

In 2008, Hyundai Oilbank drew up guidelines for repair and replacement of hazardous substance storage facilities at service

stations, and produced a manual for soil contamination inspection and reclamation for service stations to continue with its

strict soil contamination management and prevention policies for its service stations.

214

69

07

234 232

79

08

42

09

● AIR QUALITY MANAGEMENT

◉ Installing Optimal Emission Prevention Facilities

Hyundai Oilbank installs and operates optimal pollution prevention facilities to lower NOx, SOx and dust emissions

discharged during production. An FBC boiler has been installed with a desulfurization facility that achieves 98% elimination,

while electric duct collectors have been installed in boilers and incinerators. In addition, an SCR (selective catalytic reduction)

unit and a denitrification (De-NOx) facility were installed at the #2 CDU incinerator in 2007 and in the #1 and #2 boilers in

2008. According to the amendment of the Clean Air Conservation Act, the SCR was additionally installed in the #4, #5 and #6

boilers from the second half of 2009 in order to satisfy the stricter emission standards to be put into effect in 2010. Additional

SCR installation was completed in the first half of 2010.

◉ Using Clean Fuel

In principle, the plants of Hyundai Oilbank use natural gas, a clean burning fuel, for all its incinerators. By installing a TMS

(tele-monitoring system, Clean Sys) in the stacks of all the boilers and incinerators as well as in areas close to the plants, the

emission status and effects on the surrounding environment can be monitored on a real-time basis. In particular, air quality

data for areas along the plant borders are disclosed to the public on a real-time basis through an electronic board installed

at the front gate of the Daesan Plant. Upon completion of the #2 HOU project, old equipment will be replaced with new ones

featuring the latest in air-pollution reduction technology.

◉ Replacing Fire Extinguishers

To minimize the use of refrigerant and freon & halon gas inserted into fire extinguishers, Hyundai Oilbank is gradually

replacing halon gas fire extinguishers with CO 2 fire extinguishers. As a result, halon gas fire extinguishers only account for

12% of all fire extinguishers as of the end of 2009. Halon gas fire extinguishers are partially used in interior work areas where

other fire extinguishers cannot be used and for handling of electrical fires.

◉ VOC (Volatile Organic Compounds) Reduction Facilities

Hyundai Oilbank is increasing the use of VOC prevention facilities in storage facilities*, service stations* and tank trucks. VOCs

are the main cause of environmental pollution that generates smog, foul odors and increased ozone levels in urban areas. To

suppress VOC emissions, collected samples are entirely recycled and open valves or flanges are redundantly installed. Using

VOC measuring devices (FID), leakages from production and storage facilities are periodically measured to create a database

to track performance for repair and maintenance and therefore foster systematic management procedures. In addition,

internal floating roof tanks have been installed with double-sealing devices, and facilities storing highly volatile products, such

as BTX, are sealed off with nitrogen (N2) filler. As such, Hyundai Oilbank is making thorough efforts to lower VOCs.

* Storage Facilities: KRW billion was invested in the Busan oil storage facilities to install a VRU (vapor recovery unit), and introduce a BLS (bottom

loading system) to prevent environmental pollution and lower the risk of safety-related accidents.

* Service stations: In 2004, a VRS (vapor recovery system) was installed to recover VOCs generated during the unloading of fuel from tank trucks to the

storage facilities. VOC emissions were further reduced in 2008 by sealing the sample system at the #1 process, installing pipes at the top of the VDU

(vacuum distillation unit), and improving pump seals.

◉ Foul Odor Reduction Facilities

In order to reduce foul odors around plants, Hyundai Oilbank invested

KRW 750 million in sealing the sampling system at the #2 process and

improving 52 pump seals in 2007. In 2008, Hyundai Oilbank further

reduced foul odor emissions by decontaminating the facilities during

regular maintenance at the #1 crude distillation process and by

installing an RTO (regenerative thermal oxidizer) at the #2 wastewater

treatment facility. In 2009, a total of KRW 180 million was invested to

install an LDAR (leak detection and repair) system in the areas of the

#1 process to lower VOC emissions. Hyundai Oilbank is currently in the

process of installing an LDAR system in the areas of the #2 process.

AIR POLLUTANT DISCHARGE BASIC UNIT

(DAESAN PLANT)

0.222

0.178

0.051

0.003

Annual Pollutant Discharge/Crude Oil Input

0.224

0.153

0.052

0.003

0.182

0.125

0.055

0.004

07 08 09

Sox Nox VOC Dust


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Environmental Performance

38 39

ENVIRONMENT

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

● WATER QUALITY MANAGEMENT

◉ Using Recycled Water

Through its internal water treatment facility, water acquired from the Daeho Reservoir and Boryeong Lake is filtered through

a 5-step process before use. Hyundai Oilbank continues to expand its water recycling efforts and is engaged in research

activities to improve related processes. In addition, backwashed water is recycled and reused by installing a recovery pipe in

the sand filtration unit. Since 2003, Hyundai Oilbank has been replacing the cleaning water for the #2 CDU (crude distillation

unit) de-mineralizing facility with water recycled from the production processes and therefore is reducing overall expenses.

◉ Introducing Biological Wastewater Treatment Facilities

As the first in the industry, Hyundai Oilbank introduced biological wastewater treatment facilities in an effort to completely

treat pollutants through consolidated sewage and wastewater treatment. Wastewater is processed through 8 steps and

discharged into the West Sea. The discharged water has on average a pollutant concentration level that is less than 20%

of the legal permissible standards. Through continuous effort for process improvement and water conservation, Hyundai

Oilbank is lowering the amount of wastewater generation.

◉ Real-time Monitoring

After 2005, the amount of wastewater increased in proportion to the increase in the amount of low sulfur petroleum being

processed. However, for strict water quality management, Hyundai Oilbank is working hard to lower the amount of wastewater

generation. As part of its efforts the company invested KRW 320 million in December of 2007 to install a water quality TMS for realtime

monitoring. As a result, it was found in a recent environmental impact survey that there was no impact of wastewater on the

related habitats, marine ecosystem and fishing industry.

● MARINE POLLUTION PREVENTION

Hyundai Oilbank has implemented a strict safety and damage prevention system to prevent refinery disasters such as

explosions, fires and oil spills either on land or at sea. In addition, a special safety team has been organized and highly trained

to prevent accidents and swiftly respond to any that may occur. As a part of the Daesan Plant’s oil spill prevention and response

plans, marine contamination management procedures have been established covering the responsibilities of the accident

prevention team, roles of each team member, and information on prevention equipment and warning procedures. In addition,

to quickly respond to and handle any oil spill incident, a marine contamination prevention team was organized to establish

emergency response plans and provide training. Furthermore, Hyundai Oilbank has concluded an agreement for mutual

support and cooperation for marine contamination prevention with the Taean Coast Guard and nearby companies to establish a

network that will provide support in case of an accident and exchange information related to the marine environment.

MARINE CONTAMINATION PREVENTION TEAM

Crisis Management Committee

• CEO

Prevention Control HQ

• Director of Production HQ

Committee Members

• Heads of required divisions

• Such as of Production HQ

• Management Support HQ

• S&T HQ

• Support Division and Finance Division

Prevention Planning Team

Water Pollutant Discharge Basic Unit

Unit: Discharge/Crude oil input

• Head of Environmental Management Team

• Head of Production Management Team

• Head of Safety Management Team

Year COD boD ss

2007 0.00315 0.00135 0.00112

2008 0.00363 0.00116 0.00148

2009 0.00289 0.00046 0.00106

Marine

Prevention Team

• Head of Operation

Team

Seacoast

Prevention Team

• Head of

Environmental

Safety Team

Support Team

• Head of Labor

–Management

Cooperation Team

General Affairs

Team

• Head of General

Affairs Team

Total Water Intake by Source

Unit: ton

Marine Pollution Prevention Training

Unit: Count

Year Daeho Reservoir Asan Lake boryeong Lake Total water intake

2007 5,832,660 540,775 695,691 7,298,218

2008 4,139,324 - 1,601,526 5,740,850

2009 3,567,301 - 1,646,015 5,213,316

TOTAL AMOUNT OF RECYCLED AND

REUSED WATER AND RATES

62.3

4,401,881

67.8

3,891,347

71.4

3,722,571

07 08 09

Recycled

Rate

WASTEWATER TREATMENT VOLUME

AND DISCHARGE BASIC UNIT

0.1515

2,805,682

Wastewater Treatment (ton/year)

Wastewater basic unit (ton/kl)

0.1507

2,931,160

0.1500

2,731,647

07 08 09

PROCESS WATER AND PROCESS

WATER RECYCLING BASIC UNIT

0.394

Process water basic unit (ton/kl)

Process water recycling basic unit (ton/kl)

0.238

0.295

0.200

0.286

07 08 09

0.204

Classification 2007 2008 2009

Internal Training (organized by Operation Team) 3 2 4

Public–Private Joint Training (Organized by Taean Maritime Police) 1 1 3

● CHEMICAL SUBSTANCE MANAGEMENT

Petroleum refining involves the use of toxic chemicals, such as sulfuric acid,

caustic soda, liquor ammoniac, hydrochloric acid, PCEs (tetrachloroethylene),

nickel oxides and sulfides. Accordingly, Hyundai Oilbank is continuously

working to reduce the amount of chemical use by improving each process.

At the same time, Hyundai Oilbank, in accordance with not only government

regulations but its own internal rules, is administering strict management of

the use of all chemical substances in all processes from purchasing, use and

storage to their use in production and waste management. In addition, studies

are being conducted to replace as many toxic chemicals with eco-friendly

substances as possible. In 2007, Hyundai Oilbank participated in a voluntary

agreement to reduce chemical emissions and appointed toxic substances

managers to complete the related training courses in an effort to ensure strict

control of the toxic substances.

TOXIC SUBSTANCES HANDLING BASIC UNIT

0.02682

0.02766

Unit: ton/Crude oil input kl

0.03507

07 08 09

* Basic unit increased due to increase in the use

of ammonia, a reagent for denitrification facility

(SCR) removing NOx.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Environmental Performance

Ecosystem management and

environmental pollution prevention

40 41

ENVIRONMENT

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

● SOIL CONTAMINATION PREVENTION

Hyundai Oilbank actively participates in the Minister of Environment’s voluntary agreement for soil contamination prevention.

Thoroughly recognizing the importance of green and environmental management, Hyundai Oilbank, by organizing a separate

CFT (cross functional team), regularly administers soil contamination inspection and prevention as well as prompt handling

of damage recovery.

◉ Implementing Preventative Measures and a Pollution Expansion Prevention System

Through its history management system, Hyundai Oilbank computerized the support and history management of facility

control, repair and maintenance. In addition, a 5-year mid-to-long-term environmental system was implemented to prevent

soil contamination and expansion of pollution. In addition to regular leakage inspection, Hyundai Oilbank conducted thorough

inspections on 602 facilities in 2009 as a part of its soil contamination prevention and inspection activities. For areas of

weakness found during an inspection, repair measures were promptly administered. The main cause of soil contamination

is oil leakage resulting from corrosion of the pipes. As a handling measure, steel pipes were replaced with double pipes. In

addition, the company is testing an oil leakage detection system for commercialization in the near future.

● WASTE MANAGEMENT

There are essentially 17 different types of waste generated in the production

and business activities of Hyundai Oilbank including construction waste,

wood, dust, waste catalysts and waste oil. The 17 types are divided into 4

specified wastes and 13 general wastes.* The wastes generated are either

recycled, buried in landfills or incinerated. Hyundai Oilbank is making efforts

in diverse ways to reduce waste generation or to increase the waste recycling

rate by improving facilities and processes.

* Refer to the company’s website (www.<strong>oilbankstrong>.co.kr) for the MSDS (material safety data sheet) of major products.

Waste treatment methods

WASTE GENERATION

BASIC UNIT AND TREATMENT COST

421

0.298

07

Waste generation basic unit (ton/kl)

Treatment cost (KRW million)

395

0.205

08

245

0.172

09

Unit: ton

◉ Soil Environment Monitoring

Hyundai Oilbank is endeavoring to minimize and prevent soil contamination by installing underground water sensors and

soil pollution monitoring devices that will provide constant monitoring of the environment. As a result of the efforts made,

there has never been an incident of harmful substance leakage since 2004. In addition, Hyundai Oilbank periodically inspects

soil qualities using measuring networks installed inside the plants and established plans to immediately respond to soil

contamination upon detection. When purchasing new sites for service stations soil contamination is monitored internally, if

the pollution level exceeds minimally acceptable standards, soil purification activities are carried out accordingly.

Classification 2007 2008 2009

Recycling 3,496.39 1,623.30 1,241.48

Land Filling 1,345.03 1,729.17 1,244.31

Incineration 676.80 645.48 656.05

Total Amount of Wastes Generated 5,518.22 3,997.95 3,141.84

● CLEAN SERVICE STATION

Hyundai Oilbank operates clean service stations with strict soil contamination

prevention measures. Centering on service stations under direct management,

pollutant spillage prevention facilities, such as double-walled tanks and pipes

as well as overflow prevention units, are installed. This not only prevents

soil contamination, but also minimizes economic loss caused by having to

purify the contaminated soil. Furthermore, Hyundai Oilbank is continually

increasing the number of clean service stations by applying clean equipment

and specifications to newly opened service stations as well as to upgrading the

storage facilities of service stations currently in use.

In 2009, Hyundai Oilbank started replacing the aged steel pipes with semipermanent

double-walled pipes. 2 of the 6 stations installed with doublewalled

pipes have been renovated as clean service stations. In 2010, Hyundai

Oilbank drastically increased the installation of double-walled pipes and clean

service stations. By 2015, 83% or more of the overall service stations under

direct management will be converted into clean service stations or stations

with storage facilities using double-walled pipes. As such, Hyundai Oilbank will

continue to focus on soil contamination prevention and management activities.

◉ Maximizing Oil Recovery and Converting Waste to Product

By improving oil storage tank cleaning methods, Hyundai Oilbank maximizes oil recovery and thoroughly administers

separate waste collection at worksites. In addition, previously treated as waste, the entire 30,000 tons of FGD gypsum

generated annually from the FBC boiler is now converted into construction materials. This led to a cost reduction of KRW 2

billion in 2008 and KRW 2.6 billion in 2009.

◉ Reusing Wastewater and Recycling Byproducts

Hyundai Oilbank, through its continued efforts at process improvement, is reducing or fundamentally removing waste by

reusing the entire amount of wastewater as industrial water for production processes. For effective management and

treatment of by products and wastes generated from the plants, waste treatment is outsourced to specialized companies.

For chemical substances contained in raw materials, interim products, catalysts, finished products, additives and laboratory

chemicals, a system has been implemented to share the latest information on the substances among all the individual

employees handling and using them. In 2007 and 2009, Hyundai Oilbank recycled 258 tons and 404 tons of waste catalysts

respectively. In 2009, 130 tons of waste catalysts were recycled.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

ECO SYSTEM MANAGEMENT AND

ENVIRONMENTAL POLLUTION PREVENTION

Stakeholder Interviews

42 43

ENVIRONMENT

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

● ECOSYSTEM MANAGEMENT

The wild flora and fauna preservation zone in Seosan City totals 3.199 ha and is only 10km away from the Daesan Plant,

which is also the head office of Hyundai Oilbank. The zone is divided into a migratory wildlife protection area, wildlife habitat

area and wildlife observation area. In addition there is a water preservation zone in Wunsan-myeon of Seosan-si, and the

area to the south of the Daesan Plant is designated as an urban natural park. Natural ‘Level 7’ green zones represent 52% of

the overall area, so special attention is paid to preserving the ecosystem. However, the surrounding mountains and forests

are at the sub-climax stage with an extremely low possibility of wildlife habitation. Therefore, the effect upon these areas is

very low.

Animals, birds and insects inhabit the area, but because the area around the plant is occupied by a petrochemical industrial

complex it is not functioning properly as a habitat for animals. Considering this, Hyundai Oilbank has planted rows of trees,

shrubs and hedges to act as a shield against fire and wind to help protect the surrounding environments. For harmony

between the buildings and external space, lawns, flowerbeds and small green zones have been created nearby offices, work

areas and welfare facilities. The lawns, flower beds and promenades built serve as areas for exercise, rest and leisurely

strolls so that people may experience and realize the need to preserve the environment. By planting scenic trees alongside

roads, comforting shade has been provided and noise and dust reduced which greatly enhances the overall quality of life.

● ENVIRONMENTAL POLLUTION PREVENTION ACTIVITIES

Environmental Protection Measures for Inland Transportation

Hyundai Oilbank’s products are first stored in finished product tanks after passing through the blending tank which is

operated to the highest possible quality management standards. Then the products are supplied to service stations under

direct management and storage facilities located nationwide through either onshore or offshore forwarding facilities or

long-distance oil pipelines. In addition, Hyundai Oilbank uses these facilities to minimize pollutant discharge in the process

of product transportation.

◉ GPS Vehicle Positioning to Prevent Water Pollution in Water Source

Conservation Areas

On October 1, 2007, a GPS logistics information system was implemented

to monitor the routes of vehicle movements and to enable real-time vehicle

tracking. This system also helps in preventing water pollution by restricting

entry of vehicles carrying hazardous substances into restricted areas, such

as a water quality environment preservation zone.

BOTTOM-LOADING TANK TRUCK OPERATION

50 vehicles

in total

Q.

A.

Q.

A.

Q.

A.

IN 2010, HYUNDAI OILBANK NEWLY INSTALLED ITS ENVIRONMENTAL POLICY TEAM WITHIN THE MANAGEMENT SUPPORT

DIVISION TO FURTHER ACCELERATE THE COMPANY’S ENVIRONMENTAL MANAGEMENT. WHAT IS THE SIGNIFICANCE OF

THE ENVIRONMENTAL POLICY TEAM?

In Vision 2012, Hyundai Oilbank declared its intent to fulfill its environmental responsibilities. The entire world,

including Korea is pursuing low carbon green growth. Therefore, the importance of environmental policies is being

emphasized more and more each day. In an active response to this, Hyundai Oilbank installed the Environmental

Policy Team. The team will actively respond to the government’s environmental protection policies that are

becoming increasingly stricter and, at the same time, will establish and execute company-wide environmental

policies. In addition, by efficiently managing environmental risks, the team will secure a foundation for the

company’s continuous growth going forward.

BRIEFLY EXPLAIN THE ENVIRONMENTAL MANAGEMENT PURSUED BY HYUNDAI OILBANK OVER THE YEARS.

For the petrochemical industry, which has imparted a serious impact upon the environment, environmental

management is the most important element to enable a company’s sustainable growth. In 1989, Hyundai Oilbank,

was the first in Korea to introduce fluid catalytic cracking facilities and developed the latest refinery technologies

in Korea. In 2006, we also installed a desulfurization process to produce ultra-low-sulfur light oil. As such, Hyundai

Oilbank has been the leader of environmental management. At the same time, we implemented an integrated

environmental management system to provide environmental education, to expand green purchases and to

systematically administer outsourced waste treatment. In addition, we are disclosing environmental information to

our stakeholders. Hyundai Oilbank is dedicating the utmost effort to handing over a clean environment to our future

generations while securing sustainable growth by controlling soil, marine and air pollutions caused by our industry.

WHAT ARE HYUNDAI OILBANK’S PLANS FOR ENVIRONMENTAL INVESTMENT IN THE FUTURE?

Since 2004, we have been promoting environmental investment plans in order to fulfill responsibilities and to

efficiently eliminate environmental risks. The plans are being implemented according to roadmaps set for the

Daesan Plant as well as for each of the storage facilities and service stations. To continuously discover and

eliminate environmental risks, Hyundai Oilbank will invest a total of KRW 63.9 billion by 2015. As for detailed plans,

we will install an SCR at the Daesan Plant in order to satisfy stricter emission control levels. In addition, Hyundai

Oilbank will install VOC (volatile organic compounds) prevention facilities and an LDAR to prevent fugitive emissions.

To prevent soil contamination by service stations and storage facilities, we will invest in double-walled pipes and

clean service stations each year.

◉ Bottom-loading Tank Trucks to Prevent Air Pollution

Since January 2005, Hyundai Oilbank has been converting 55 tank trucks

into bottom-loading types in order to recover VOCs generated when loading

products in service stations and handling them in special focus areas and

air environment restriction zones.

◉ Safety Training for Transportation

Hyundai Oilbank provides safety training once a month to transportation

companies in each region according to the SLA (service level agreement).

Through regular safety training, Hyundai Oilbank is making sure to

prevent environmental pollution accidents during product handling and

oil spills caused by vehicle accidents, etc. Hyundai Oilbank is endeavoring

for safe transportation without the possibility of accidents and pollution

by continuously developing systems and administering diverse training

programs.

Loading Point

Incheon/Seongnam/Goyang

Busan

Daegu

Ulsan

Yeosu

BLTT

31 vehicles

7 vehicles

7 vehicles

6 vehicles

4 vehicles

* BLTT (bottom loading tank truck): Bottomloading

trucks prevent VOC leakage

Hwi Jun Joh, Head of the Environmental Policy Team


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

ENERGY SAVING ACTIVITIES FOR RESPONSE TO CLIMATE CHANGE

44 45

ENVIRONMENT

DMA 34

Basic Direction and System of Environmental Management 35

Environmental Investment 36

Environmental Performance 37

Ecosystem Management 41

Response to Climate Change 44

● CLIMATE CHANGE RESPONSE

Raw Material Consumption

(Unit: 100 Bbl)

To minimize greenhouse gas (CO 2 ) emissions Hyundai Oilbank is actively participating in the greenhouse gas reduction

efforts made throughout the world by achieving direct and indirect energy savings and enhancing energy efficiency

throughout all its processes and improving waste heat recovery.

At the time of establishing the Daesan Plant, Hyundai Oilbank installed a co-generation facility to secure the capability of

producing 100% of the electric power necessary for plant operations. At the same time the company is actively leading emission

reduction by supporting and participating in nationwide efforts as a business registered for greenhouse gas reduction.

The ‘business registered for greenhouse gas reduction program’ is a reporting and verification system that monitors

reduction performance in all processes of business activities with the aim of quantifying the efforts by converting data into

a CO 2 amount. Hyundai Oilbank participated in the pilot project initiated by KEMCO in 2005. In addition, Hyundai Oilbank

has been participating in the activities of the Industrial Climate Change Response Team led by the Ministry of Knowledge

Economy. In 2007, Hyundai Oilbank was acknowledged of registration in 3 businesses and therefore obtained KCER

certification for the greenhouse gas reductions achieved. Hyundai Oilbank has successfully completed registration for 3

greenhouse gas reduction businesses for which it applied in 2008 and 2009.

Classification 2007 2008 2009

Raw materials (crude oil) 1,164,900 1,221,361 1,158,871

Major supplementary materials (reformate, MTBE, C5C6) 48,813 64,954 67,848

Direct, Indirect Greenhouse Gas Emissions and Greenhouse Gas Emissions Basic Unit

Classification 2007 2008 2009

Direct emissions (ton-CO 2 ) 2,516,526 2,450,545 2,107,089

Indirect emissions (ton-CO 2 ) 144,803 193,519 263,571

Total emissions (ton-CO 2 ) 2,638,793 2,644,064 2,370,660

CO 2 emission basic unit (ton-CO 2 /100 Bbl) 2.28 2.16 2.05

Greenhouse Gas Reduction Technology Application to KEMCO

Technology

CO 2 reduction through fuel saving in the incinerator based on improved heat

recovery by the VDU

CO 2 reduction by increasing waste heat recovery from the incinerator based on

#2 naphtha reformation heating

CO 2 reduction by replacing the catalyst in the BTX Tatoray process

CO 2 reduction by additional installation of #1.2 TGU WHB

CO 2 reduction by fuel saving in the hydrogen production process with

introduction of STC surplus hydrogen

CO 2 reduction by fuel saving through #2 CDU incinerator structure improvement

Status

Registration completed in 2008/Cumulative KCER (12,613tCO 2 )

Registration completed in 2008/Cumulative KCER (7,708tCO2)

Registration completed in 2008/Cumulative KCER (9,452tCO2)

Registration completed in 2009/Cumulative KCER (11,008tCO2)

Registration completed in 2009/Cumulative KCER (163,278tCO2)

Registration completed in 2009/Cumulative KCER (14,423tCO2)

Fuel Basic Unit

Classification 2007 2008 2009

Fuel consumption (FOEB) 5,047,381 4,828,193 4,420,222

Fuel basic unit (FOEB/100Bbl) 4.33 3.95 3.81

Electric Power Basic Unit

Classification 2007 2008 2009

Electric power consumptions (MWH) 741,851 742,678 736,244

Electric power basic unit (MHW/100Bbl) 0.64 0.61 0.64

Energy Saving Performance

Direct Energy Consumption per Primary Energy Source

Year project saving Amount (KRW million)

2007 #2 CDU incinerator improvement 2,303

#5/6 boiler eco upsize 2,186

2008 #1/2 TGU WHB installation 2,119

#2 wastewater turbo blower installation 51

Steam tracing service change 1,713

Turbine operation standby steam reduction 741

2009 LER DeC4 Reboiling Steam Reduction 619

DeC3 Reboiling Steam Reduction 149

Tol. Column Temp Optimization 250

Bz Column Temp Optimization 77

TAU Stripper Pressure down Operation 128

Reformate Hot Feed Maximize 182

AS-C0505 Reboiling Steam Reduction 76

FBC Boiler S/B Steam Reduction 127

H.C.L increase/Stripper pressure reduction 564

Tol. Column load reduction–OVHD TOL formation reduction 12

R.S.U column load reduction–Btm toluene spec reduction 168

H.A column reflux ratio (R/D*) reduction 606

Classification 2007 2008 2009

B-C (Kl) 417,490 407,282 315,282

Naphtha (Kl) 30,025 29,069 23,124

Fuel gas (TOE) 313,140 284,734 281,982

Coke (ton) 100,680 98,311 112,026

Indirect Energy Consumption per Primary Energy

Classification 2007 2008 2009

Electric power consumption (MWH) 741,851 742,678 736,244

Power from outside (MWH) 341,518 417,698 568,899

Other Indirect Greenhouse Gas Emissions

Classification 2007 2008 2009

Light oil use (l) 143,999 198,349 124,769

Emissions (ton-CO 2 ) 400 519 323


49 _ EMPLOYEE SATISFACTION: STATUS AND HR POLICY

51 _ EMPLOYEE SATISFACTION: ASSESSMENT,

COMPENSATION AND BENEFITS

52 _ EMPLOYEE SATISFACTION: HUMAN RESOURCES

DEVELOPMENT

55 _ EMPLOYEE SATISFACTION: HEALTH & SAFETY

56 _ EMPLOYEE SATISFACTION: HUMAN RIGHTS

57 _ EMPLOYEE SATISFACTION: LABOR-MANAGEMENT

COOPERATION

59 _ ETHICAL MANAGEMENT

63 _ CUSTOMER SATISFACTION AND QUALITY MANAGEMENT

67 _ MUTUAL PROSPERITY

69 _ LOCAL COMMUNITY AND SOCIAL CONTRIBUTIONS

HYUNDAI OILBANK,

SHARING GREEN HOPE,

PROVIDING ENCOURAGEMENT TO

NEIGHBORS

As a trusted citizen creating happiness, Hyundai

Oilbank will strive to bring trust and hope to local

communities.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

DMA

Employee satisfaction:

status and Hr policy

48 49

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

Recognizing that communication with stakeholders is the top priority for corporate management,

Hyundai Oilbank is keen to accurately ascertain the demands and needs of its stakeholders and to

incorporate them into the company’s management activities. Hyundai Oilbank is striving to provide diverse

welfare services as well as fair assessment and compensation for employees’ satisfaction and is

not sparing any effort for the development of its human resources. In addition, by strictly observing the

laws and regulations concerning safety, health and human rights, Hyundai Oilbank is endeavoring to

achieve a stable labor-management relationship. For customers, Hyundai Oilbank is dedicating every

effort to achieve quality improvement by providing them with top-level products and services. For business

partners, Hyundai Oilbank is striving to establish a basis for trust as a foundation for fair trade

and mutual prosperity and to build a cooperation system to jointly advance as a principled partner. Furthermore,

while supporting public interest projects promoted by local organizations, Hyundai Oilbank

is organizing various activities and programs for cultural and educational support as well as contributing

to local communities to increase income levels of local residents.

● HR PHILOSOPHY

Guided by the philosophy to ‘have a passion for excellence, and challenge the future’, Hyundai Oilbank strives to develop

its human resources who ‘create synergy with open minds, fulfill responsibilities by observing principles, passionately

challenge problems, and achieve results through strategic thinking.’ These are all connected to each of the company’s 4 core

values: partnership, trust & integrity, innovation and professionalism. Hyundai Oilbank has derived 8 basic principles (winwin

mentality, teamwork, sense of ethics, responsibility, passion, creative thinking, professionalism and strategic thinking)

and 16 behavioral guidelines and is reflecting them in the overall HR processes including recruitment, development and

assessment.

HYUNDAI OILBANK’S HR PHILOSOPHY

VISION 2012

Core

Values

Partnership Trust & integrity Innovation Professionalism

Ideal

Employee

Passion for excellence, challenges the future

SOCIAL CENTRIBUtion

Creates synergy with an

open mind

Fulfills responsibilities

by observing principles

Passionately challenges

problems to search

solutions

Achieves results through

strategic thinking

Classification 2007 2008 2009

Annual training cost per person (KRW 10,000) 71 68 60

Accident rate (%) 0.00 0.25 0.13

Basic

Competencies

Subsidies for the disabled (KRW million) 44.6 75.4 77.6

Win-win mentality

Sense of ethics

Passion

Professionalism

Service stations receiving consulting service 18 21 24

KSCI-call center (point) 94 (1 st ) 89 (2 st ) 95 (1 st )

Teamwork

Responsibility

Creative thinking

Strategic thinking

Social contribution activities participation hours (hour) 6,465 6,027 6,517

Behavioral

Guidelines

• Pursue benefits for all

• Actively communicate

with all stakeholders

• Observe the basics and

core principles

• Understand and practice

the company’s ethical

management

• Pursue new and higher

goals without fearing

failure

• To have passion and

positive thinking

• Endeavor to completely

fulfill one’s duties

• To pursue learning in order

to achieve the vision and

greater future

• Understand common

goals and actively

participate in achieving

the goals

• Acknowledge diverse

individualities of team

members and cooperate

with each other

• To challenge problem

solving through

perseverance by

overcoming difficulties

• Take responsibilities for

outcomes

• To try new approaches

without being encumbered

by conventional ways

• To suggest solutions with

new perspectives and

ideas

• To identify core issues in

and outside the company

and establish handling

measures

• To analyze current trends

and therefore to discover

future values


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Employee Satisfaction:

STAtUs and hr policy

Employee Satisfaction:

Assessment, compensation and benefits

50 51

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity

Local Community and Social Contributions

67

69

● EMPLOYEE STATUS

As of December 2009, a total of 1,870 employees were working at Hyundai Oilbank. Of them, 1,765 are male employees

(94.7%) with an average period of continuous service of 12.9 years. Non-regular employees are hired based on whether

specific work duties need to be maintained and according to the eligibility requirements. There are 73 non-regular

employees working, which is 3.9% of the overall employee count. The wage level of non-regular employees may differ from

that of regular employees since the non-regular employees are assigned to specific duties. However, similar employment

benefits are provided to both non-regular and regular employees.

In abidance with the Labor Standards Act and ILO Standards, Hyundai Oilbank endeavors to create a workplace without discriminations.

Hyundai Oilbank does not discriminate against gender, education, ethnicity, religion, age and disabilities. Employees are not

discriminated against gender for recruitment and promotion. The starting wage for the same job group is the same for both male

and female. The wages increase based

on individual employee’s performance EMPLOYEE STATUS

Unit: Person

levels. Over the last 3 years, Hyundai

Oilbank hired 24 new female employees, Classification 2007 2008 2009

which represents 7% of the overall new Male/Female 1,577/199 1,565/104 1,771/99

recruitment. Based on the Labor Standards

Regular/Non-regular 1,604/92 1,601/68 1,797/73

Act of Korea, Hyundai Oilbank gives a 90-day

maternity leave (before and after childbirth)

Newly hired (Male/Female) 63/13 34/2 245/8

and the term of leave is recognized as a part

of continuous service.

Retiring or leaving (Male/Female) 36/14 49/14 40/10

● ASSESSMENT

Since 2002, Hyundai Oilbank has been administering a new HR system centering on individual performances, roles and

competencies in connection with the company’s management performances. The new HR system simplified the position system

and assesses employees fairly and objectively based on their performances and competencies. The assessment is carried out

in terms of MBO (management by objectives) assessment, competency assessment and multi-source assessment. In 2004,

Hyundai Oilbank established the assessment system centering on development through diagnosis of basic competencies,

occupational competencies and leadership competencies together with performance assessment according to MBO, a

management method based on individual results and achievement of goals. Competency assessment is carried out by weighting

positions or job class. Through this, the rate of level distribution is determined. Then, after ranking the selection process,

assessment is completed through level adjustment review per division (by the heads of a team or division) and level adjustment

review per HQ (by the heads of a division or HQ).

ASSESSMENT SYSTEM

Team member

Competency assessment

Head of team

Multi-source assessment

Promotion qualification

points (office workers)

● COMPENSATION

Assessment level

Annual salary adjustment

(office workers)

MBO

assessment

* Hyundai Oilbank Singapore Pte. Ltd.: 3 from head office, 2 locally hired (open for application year round)

Key personnel

selection

Ability assessment

Promotion: Average

assessment points over

4 years (production and

professional workers)

Individual development

plans

HR development

(training and education)

* CDP: Career Development Program

CDP–Refer to job

rotation system.

According to the organization results and individual assessment based on the new HR system, Hyundai Oilbank provides

graded compensation in a fair and objective manner. Assessment results are applied to wage compensation, promotion and

key personnel selection. Fairness of compensation is assured by administering interviews for assessment and collecting

employees’ opinions at all times.

● WELFARE

To enable employees to enjoy a balance of work and personal life, Hyundai Oilbank provides diverse welfare support. In

addition to the benefits stipulated by law, such as health insurance, pension requirements, employment insurance and

accident compensation insurance, Hyundai Oilbank provides support in various ways to help employees enjoy residential

stability, culture and leisure activities, and health improvement.

Hyundai Oilbank provides financial support to employees purchasing or leasing homes. For employees working at the

Daesan Plant, Hyundai Oilbank offers company housing for use. In case an employee has to transfer to another area due to

a position or job change, the employee is provided with moving expenses together with additional financial support for home

purchasing or leasing. In 2009, the number of company housing units increased from the existing 470 to 540 in an effort

to increase benefits. As for housing loans, the limit was increased from KRW 40 million to KRW 50 million for employees

working at the Daesan Plant in order to promote employee’s residential stability.

In addition, Hyundai Oilbank is providing recreational facilities and supporting various club activities all year round so that

employees can enjoy culture and relaxation. Employees are provided with 20% discount coupons to be used at service

stations within the amount of KRW 3 million a year. In addition to financial support for education of employees’ children,

consolation funds are presented in case of employee fatality as a result of an industrial accident. For children attending

college, educational funds are provided as long as the employee currently holds a position within the company. To assist

in improving the health of employees and their families, Hyundai Oilbank organizes special medical examinations once

every six months for construction workers in addition to the legal medical screening. For employees aged 40 or higher and

their spouses, the company supports the cost of general health examinations. Within the limit of KRW 3 million, Hyundai

Oilbank provides 100% of medical expenses for employees. For employees’ spouses and children, up to 50% of the medical

expenses are supported within the prescribed level. Hyundai Oilbank encourages flexible use of vacations and leaves, such

as ‘sandwich’ day and half-day leave, to enjoy a balance between work and personal life.

WELFARE SYSTEM

Classification

Residential

Stability

Living Stability

Culture,

Leisure Activities

Health

Improvement

Details

Company Housing: Daesan Plant (540 units)

Housing Loan: Within KRW 20 million (Daesan Plant: Up to KRW 50 million)

Relocation and moving expenses (Short-term Loan: Up to KRW 20 million)

Support for dispatch expenses

Support for children’s education expenses

Financial support for congratulatory and condolatory events

Kindergarten on premises of company housing (Daesan Plant)

Service station discount coupons of 20%

Condominium membership (Daesan Plant: recreational facilities separately

operated in July/Aug.)

Sports center (2005, as part of the company housing at the Daesan Plant

complex)

Financial support for club activities (20 clubs in Seoul, 17 at the Deasan

Plant)

R&R leave

Financial support for self-development (including language studies)

Total financial support for MBA programs in Korea and abroad

Bi-annual special medical examination (persons handling benzene, etc.)

Medical screening once a year (100% for employees, 50% for spouses)

Support for medical costs


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Employee Satisfaction:

Human Resources Development

52 53

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● COMPETENCY DEVELOPMENT

Under the rapidly changing management environment and fierce competition that characterizes business all over the

world, securing and developing outstanding human resources is more important than anything for a company to achieve

sustainable growth. With company-wide recognition of this necessity, Hyundai Oilbank is developing human resources

equipped with global competitiveness. The employees are actively participating in self-development activities to develop the

skill sets needed to manage the company for the 21 st century.

Hyundai Oilbank provides competency development programs consisting of leadership, organizational and professional

excellence tracks in order to spread the company’s core values and to form a wholesome organization culture. At the same

time, through thematic education course, the key personnel development program, Hyundai Oilbank supports employees to

continuously produce high performances and to advance into experts and business leaders with high growth potentials.

Each employee’s competency development is based on his or her individual development plan, which is drawn up according

to the results of a competency assessment. Through regular observation and coaching by managers, employees are

encouraged to pursue career development to improve their individual competencies and to maximize the company’s growth

potential.

● OILBANK ACADEMY

The Oilbank Academy was first established in 2003 for the purpose of sharing

the knowledge of distinguished persons from various social, economic and

cultural fields. The program is offered every quarter to learn from the most

respected and influential figures of our time. Lectures are given in a variety

of subjects including business administration, leadership, communication,

culture and health. Using diverse media such as web-casts and video lectures

in the ‘ 知 (Jee) Café’ large numbers of employees participate in the Oilbank

Academy activities. Since establishment, 70 sessions have been held including

5 in 2009. Approximately 1,200 employees participate in this program annually

through online and traditional channels.

◉ Leadership Excellence

Leadership development at Hyundai Oilbank progresses in 5 phases. Centering on the competencies required in each phase,

a promotion preparation course, a new leader course and a leadership improvement course are offered.

◉ Organizational Excellence Track

This program consists of an introduction course for beginners, basic competency improvement course for extensive

competency improvement and organizational competency improvement course according to strategic organizational issues.

◉ Professional Excellence Track

Employees can develop necessary occupational competencies through Hyundai’s own professional course, online

professional education and outsourced training.

●KEY PERSONNEL DEVELOPMENT

From 2003 to 2009, Hyundai Oilbank developed a total of 45 professional managers and key personnel. For this, the company

has been supporting employees to attend MBA courses in local and international universities, specialized graduate school

courses, graduate courses and intensive courses. Since 2009, Hyundai Oilbank has been carrying out its ‘Up-Grade’ program

where graduates of these courses are used to provide the company’s internal lectures. Through this program, the lecturers

provide assistance in connecting the knowledge learnt in school to job performance at worksites.

Held 11 times a year on the third Wednesday of each month, Up-Grade sessions enable employees to share the knowledge of

the company’s key personnel. In addition, the lecturers can further strengthen their competencies by reviewing the contents

studied while preparing for the lectures.

EDUCATION AND TRAINING

EDUCATIONAL SUPPORT

Competency-based HRD System

Classification 2007 2008 2009

Education hours per person per year (hour) 72.4 56.8 52.5

Education and training expenses per person per year (KRW 10,000) 71.0 68.0 60.0

Company-wide education and training costs (KRW 100 million) 12.0 10.9 11.1

* Outsourced education/training excluded

Leadership

Excellence

Track

• Promotion

preparation course

• New leader course

• Leadership

improvement course

Organizational

Excellence

Track

• Basic competency

improvement course

• Organizational

competency

improvement course

Training program profile, OJT program, individual development plans (IDP)

HRD Supporting Tools

Professional

Excellence

Track

• General course

• Professional course

Education

Support

competencybased

hrd

system

• Key HRㆍmid to

long-term HR

development course

● INTERNAL LECTURER SYSTEM AND DEVELOPMENT

To secure professionalism of employees and develop human resources,

Hyundai Oilbank introduced an internal lecturer system in 2003. In 2009,

there were 173 internal lecturers teaching in the company. The lecturers

are classified into trainer, senior trainer and master trainer levels according

to their lecture performances and the status of completing the related

educational courses. Internal lecturers develop their own professionalism

through competency improvement education provided for each level. In

addition to professional education, the lecturers perform various roles

from course developer to lecturer in a number of internal education

programs including presentation, strategic academy and negotiation power

improvement courses.

INTERNAL LECTURERS PER LEVEL

Internal Lecturer Level Lecturer Count

Master Trainer 8

Senior Trainer 18

Trainer 147


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Employee Satisfaction:

Human Resources Development

Employee Satisfaction:

Health & Safety

54 55

STAKEHOLDERS

DMA 48

Status and HR Policy 51

Employ Satisfaction 50

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● SELF-INITIATED LEARNING CULTURE

● INDUSTRIAL SAFETY AND HEALTH COMMITTEE

In order to establish a self-initiated learning culture, Hyundai Oilbank opens approximately 240 online courses each month

in the fields of professional development, general business administration, OA and foreign languages in line with the diverse

needs of the employees for self-development. The company assists employees in freely selecting and attending the courses

offered. In 2009, Hyundai Oilbank opened the online HR philosophy course to discuss the vision and values of the company.

With all employees taking the course, Hyundai Oilbank shares the company’s management goals with its employees. In

addition, Hyundai Oilbank offers foreign language study support to strengthen the employees’ global competencies. In

2009, approximately 120 employees took courses in the company’s own language school, telephone English courses or

at institutes outside the company according to their preferences. Together with financial support for tuition, the company

assists employees in improving their foreign language skills by monitoring through regular testing. Hyundai Oilbank also

provides special lectures in English on a regular basis under various subjects.

●RISK MANAGEMENT TRAINING

For company-wide risk management support, Hyundai Oilbank administers internal training and provides education on

related laws and regulations within the educational course organized by the HR Development Team. The internal training

centers on ‘ethical management’ and on related laws of the petroleum refining industry, such as the Monopoly Regulation

and Fair Trade Act and the Petroleum and Petroleum Substitute Fuel Act. To enhance employees’ awareness of the

company’s internal regulations, essential rules per job class are selected for which employees are tested during education.

● COMMUNICATION WITH EMPLOYEES

Hyundai Oilbank makes sincere efforts to provide diverse venues and systematic methods for smooth communication within

the company. Each year, management makes a presentation to disclose the company’s management status and major

policies to all employees. At the same time, Hyundai Oilbank ascertains employees’ difficulties and issues through various

channels including informal talks.

◉ MBO/Self-development Learning Conference

Each year since 2004 the Personnel Team and HR Development Team visit the

company’s facilities located all over the country, including the Daesan Plant,

and hold presentations to communicate to employees the company’s MBO

(management by objectives) system for guidance on self-development learning.

Opinions on the system collected through Q&A with employees are used as the

foundation for system improvement.

◉ Management of Non-regular Employees

Hyundai Oilbank periodically inspects the management status of non-regular

employees in order to prevent discrimination against non-regular employees

and violation of any related laws. For this, Personnel Team reorganized the

related systems on July 1, 2007 according to execution of the Act on Protection,

etc. of Fixed-term and Part-time Employees and held presentations on the

laws targeting managers of divisions using non-regular employees. Through

visitations, the team is strengthening communication with and management of

non-regular employees by identifying difficulties experienced by non-regular

employees and administering improvement measures accordingly.

As an organization that oversees employees’ safety and health, the Industrial Safety and Health Committee consists of

8 members each from labor and management. Through quarterly meetings, the committee deliberates and resolves

important issues concerning industrial safety and health. In addition, the Daesan Petrochemical Safety Management Council

consisting of 8 member companies holds meetings every other month to share safety management knowledge among the

participating companies. Safety handling officers from the related organizations are invited to inspect the application of

changes in the safety regulations and facilities, and also attend lectures on safety-related accident prevention.

● HEALTH

Considering the characteristics of the industry, Hyundai Oilbank offers special medical examination in relation to each of the

hazard factors for employees who have the possibility of being exposed to harmful elements. For employees diagnosed with

work-related diseases, a second examination is carried out together with follow-up management through period interviews

and education. As of 2009, there were no employees found to have any occupational diseases. In areas where hazardous

elements are handled, safety signs are posted and wearing of appropriate protective gears is encouraged to prevent

occurrence of occupational diseases from the source. In addition, first aid training is provided and risk handling methods

taught in order to build employees’ abilities of handling emergency situations.

● SAFETY

As a result of the company-wide safety management activities, Hyundai Oilbank achieved 2 million accident-free man-hours

over 435 days from June 9, 2008 to August 17, 2009. However, after an accident in which an employee fell from a motorbike

due to a flat tire, counting of the accident-free days restarted on November 27, 2009. Accordingly, the accident rate in 2009 is

0.13%. The accident-free performance since November 27, 2009 produced the result of 857,413 accident-free man-hours as

of May 30, 2010. To create an accident-free workplace, Hyundai Oilbank has been implementing an integrated SHE (safety,

health and environment) system since 2007 to prevent accidents throughout the company. To improve the work environment

and protect employees’ health, work environments are regularly inspected to strictly control noise, organic solvents,

benzene, welding fumes and dust levels within the allowable limits. At the same time, continuous efforts are being made

to prevent the falls that may occur when employees are working in elevated areas by identifying risk factors, such as safety

rails and work stands. All employees are provided with online safety and health education monthly. In addition, safety experts

are invited once a year to provide lectures and conduct basic fire drills. Furthermore, MSDS (material safety data sheet)

education on harmful and hazardous substances is carried out quarterly to increase employees’ safety awareness. Hyundai

Oilbank is dedicating effort to prevention of safety-related accidents by inspecting various facilities including environmental

inspection. The company also operates medical offices open to employees and workers from business partners. In

particular, Hyundai Oilbank provides business partners with environmental safety inspection services and special safety

training when necessary in order to ensure safety for its business partners.

IMPROVEMENT OF RISK ELEMENTS PER YEAR

168

Items

ACCIDENT RATE PER YEAR

Disaster rate (%)

◉ ERM (Employee Relationship Management)

The Personnel Team regularly communicates with employees to collect their

opinions on the company’s HR-related policies and systems. With the opinions

collected, the team handles individual employees’ difficulties and problems.

Through ERM, Hyundai Oilbank is developing HR policies and systems that

satisfy the needs of all employees.

16

19

07 08 09

0.25

0.13

0.00

07 08 09


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Employee Satisfaction: HUMAN RIGHTs

Employee Satisfaction:

Labor–Management Cooperation

56 57

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● HUMAN RIGHTS

Hyundai Oilbank respects the human rights of all stakeholders and abides by all related laws and regulations. A collective

agreement was concluded based on mutual agreement between labor and management to prescribe the labor conditions

and human rights of employees, who are the internal stakeholders. Hyundai Oilbank thoroughly observes all labor-related

laws and ILO Standards and applies them to setting labor conditions for employees. The company has never been subject to

punishment, fines or disciplinary measures in relation to violation of labor laws or human rights.

In addition, to improve the sense of ethics and human rights, ethical management education is provided to all employees.

Each year, new employees are to complete the ethical management course during the orientation process. After allocation

of duties, the new employees continuously apply themselves to education through online courses.

Hyundai Oilbank organizes ethical management field training quarterly to collect employees’ opinions from the worksites.

Furthermore, an educational course for sexual harassment prevention is organized once a year for all employees. In 2009,

Hyundai Oilbank distributed educational materials and videos to all employees to study and discuss the contents. 100% of

employees completed the training course. Together with preventative education, newsletters containing the procedures and

measures to remedy the cases of sexual harassment were published. In addition, Hyundai Oilbank operates a counseling

center as part of the ‘ 知 (Jee) Café’ in an effort to prevent sexual harassment and assist employees in following the

procedures of handling sexual harassment cases.

● CHILD LABOR AND FORCED LABOR

The characteristics of the industry preclude the use of child labor at the refineries. As for the staff at service stations directly

run by the company they are not employees of Hyundai Oilbank but are workers contracted by an outsourced company.

Hyundai Oilbank provides guidance and inspection so that the labor-related laws and ILO Standards are strictly observed

in relation to these workers. Minors wanting to work in service stations are required to obtain written consent from their

parents. However, it is absolutely prohibited to hire persons under the age of 15 even with parental consent.

● EMPLOYING THE PHYSICALLY IMPAIRED

Hyundai Oilbank, in connection with the Korea Employment Promotion Agency for the Disabled (KEPAD), actively hires

physically impaired persons including those with severe disabilities in not only the head office, but also service stations

nationwide in an effort to stabilize employment among that social group. In July 2003, Hyundai Oilbank organized a workinglevel

team for employment of the physically impaired. The company provides physically impaired workers with the same

wages and work environments as those in the same job category. Although the monthly average requirements of employing

the physically impaired were 36 in 2007, 51 in 2008 and 36 in 2009, Hyundai Oilbank actually employed 48 in 2007, 53 in 2008

and 54 in 2009. For this, the company received subsidies from the government.

● LABOR-MANAGEMENT CULTURE OF MUTUAL PROSPERITY

Founded in 1988, the Hyundai Oilbank labor union is comprised of an execution committee with 3 full-time labor union

members and 41 representatives. Hyundai Oilbank guarantees that employees are free to join the union and also guarantees

freedom of labor union activities. As of December 2009, 798 employees have joined the labor union.

Hyundai Oilbank assiduously abides by labor-related laws and the collective agreement concluded with the labor union.

Through various communication and cooperation channels with organizations such as the labor council and KOSHA (Korea

Occupational Safety & Health Agency), opinions and suggestions are gathered from the labor union. Based on these ties,

Hyundai Oilbank has been securing a stable labor–management relationship without disputes since the establishment

of the labor union in 1988. Following declaration of labor–management unity in 2002, Hyundai Oilbank conducted various

council activities to achieve trust between labor and management and to build a wholesome labor–management culture.

In addition, the company has been benchmarking companies with outstanding performances in terms of labor relations,

organizing labor-management workshops and holding of sporting events to promote unity between labor and management.

As a result of the efforts, Hyundai Oilbank was selected as a company having an excellent labor–management culture by the

Ministry of Labor in 2004. In 2007, the Industrial Safety and Health Committee was installed to promote employees’ safety

and health.

In case there are critical issues affecting stability of employment for labor union members, the company is obligated by the

collective agreement to discuss the issues with the labor union and take appropriate measures. In case of major changes

in the company’s management and business activities, such as a merger, transfer or divestiture, the collective agreement

prescribes for deliberation with the union in advance.

LABOR-MANAGEMENT MEETINGS AND ISSUES

DELIBERATED

4

07

16

Labor-Management Council Meetings

4

08

7

Issues Deliberated

4

09

18

INDUSTRIAL SAFETY AND HEALTH COMMITTEE

MEETINGS AND ISSUES DELIBERATED

Industrial Safety and Health Committee Meetings

4

07

34

4

08

18

Issues Deliberated

4

09

29

Annual Receipt of Subsidies by Employing of the Physically Impaired

LABOR-MANAGEMENT RELATIONS IMPROVEMENT ACTIVITIES

Classification 2007 2008 2009

Mandatory Employment (persons/month) 36 51 36

Physically Impaired Workers (persons/month) 47 53 54

Subsidies (KRW million) 44.6 75.4 77.6

Transparent

management

information sharing

Actively incorporation

of field opinions in

management activities

Open Management

Diversification of

communication channels

between labor and

management

Benchmarking of

companies having an

outstanding labormanagement

relationship

Labor-management

workshops

Achieve trust between labor and management


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Stakeholder Interviews

Ethical Management

58 59

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

Q.

A.

Q.

A.

Q.

A.

WHAT ARE THE SYSTEMS FOR EMPLOYEES’ HEALTH AND SAFETY INSTALLED IN THE WORKPLACES OF HYUNDAI OILBANK?

I have been working at the Daesan Plant since 1988. I think the company does not spare either tangible or intangible

efforts for the safety of employees. The integrated SHE (safety, health and environment) system implemented

in 2007 helps greatly to prevent accidents in workplaces. As tangible measures, the company installed safety

signs in areas where hazardous materials are handled. Also, the company encourages the use of protective gear

and safety rails and work stands have been installed to prevent falls. Through regular worksite inspection, the

company thoroughly controls employees’ exposure to noise, solvents, benzene, welding fumes and dust. As tangible

measures, the company regularly provides safety and health education. Hyundai Oilbank makes the best effort to

remove risks in advance.

WHAT KIND OF EDUCATION IS BEING OFFERED FOR THE SAFETY OF WORKERS?

All workers must complete online safety and health training once a month as well as group training and basic fire

drills with safety experts at least once a year. Workers of partner companies must receive safety education via

video in order to enter our worksites. In addition, Hyundai Oilbank provided education on first aid and risk handling

methods to build employees’ risk handling abilities in emergency and dangerous situations.

DUE TO THE CHARACTERISTICS OF THE BUSINESS, THE WORKSITES OF HYUNDAI OILBANK HAVE THE POTENTIAL OF BEING

EXPOSED TO HARMFUL ELEMENTS. HAVE THERE BEEN SUFFICIENT PREVENTION AND SUPPORT ACTIVITIES FOR THIS?

The company is preventing occupational diseases by organizing special medical examinations for each of the

hazardous elements. The special medical examination is carried out once or twice a year. For employees found to

be subject to occupational diseases, secondary examinations are carried out together with regular interviews and

education. Also, the company has onsite medical offices open at all times to care for the employees’ health.

● COMPANY-WIDE ETHICAL MANAGEMENT

Recognizing that ethical management is an essential element for the company’s sustainable development, Hyundai Oilbank

began practicing ethical management in 2002. In the earlier phase, the company focused on implementing a foundation

for ethical management and enhancing employees’ sense of ethics. Since 2005, the endeavor has been strengthened and

expanded. Hyundai Oilbank will advance as Korea’s best ethical management leader by earning the trust of stakeholders

through transparent decision making, accounting transparency, voluntary ethical management activities, improving of

unethical practices, and implementation of a risk management system.

Awards for Ethical Management

Year

Details

2003 Selected as the best ethical management company by the MoCIE: Capital market category (financial structure reliability)

2004 Selected as the best ethical management company by the MoCIE: CEO and local communities category

2005 Grand prize for ethical management at the Korea Management Awards (KMAC)

Grand prize for ethical management in the private enterprise manufacturing industry category by the MoCIE

2007 Ethical management category at the Korea Economy Leader Award (Chosun Monthly)

2009 Top prize at the Korea Ethical Management Award (New Industry Management Center)

KOBEX SM* AAA (The Institute for Industrial Policy Studies)

* KOBEX SM: Sustainability management status survey

● ETHICAL MANAGEMENT SYSTEM

Guided by the ethical management philosophy to fulfill social responsibilities

in order to increase value for customers, employees, shareholders, the

environment and the society, Hyundai Oilbank established a code of ethics in

2002 and has been strictly preventing violations in relation to the company’s

business activities by strengthening its ethical management policies,

inspecting voluntary compliance with fair trade regulations, inspecting

compliance with related laws and regulations and administering job rotations

on a regular basis.

In addition, to increase employees’ understanding of ethical management,

Hyundai Oilbank published and distributed its ‘Ethical Management Guidebook’

containing the major regulations and Q&As to all employees.

To observe fair trade laws and regulations, the company introduced a

compliance program (CP) in 2002. Through company-wide environmental

management regulations, efforts are also being made to comply with

environment-related laws.

Refinery Team 1 Lee Hyung-Kwon

To detail the ethical management philosophy, Hyundai Oilbank specifies 7 essential principles (love the company, love

the customers, love the employees, love the stockholders, transparent management, open management and social

contribution) and 13 behavioral rules (compliance with laws and regulations, upholding of dignity, diligence, mutual respect,

accident reporting, refusal of bribes, protection of customers, fair trading, prohibition of trading with the company, security

preservation, open management, preventing safety-related accidents and environmental protection, contributing to the

development of the society and nation). The basic principles of the ethical management and behavioral rules can be found at

the Hyundai Oilbank website (www.<strong>oilbankstrong>.co.kr).


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Ethical Management

60 61

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● ETHICAL MANAGEMENT REGULATIONS AND SYSTEMS

◉ Regulation on Customer Relations

All employees including the CEO are required to disclose the details of entertainment expenses and are prohibited of

self-approval of the expenses to ensure transparency of fund use. For entertainment expenses, the CEO must obtain an

authorization by the Director of Support HQ. Hyundai Oilbank operates a ‘Gift Return Center’ as part of the company’s 'No

Giving or Taking of Gifts' campaign carried out since 2004. Gifts that were inevitably not returned are sent to social welfare

facilities. In 2009, 11 gifts were returned by the Gift Return Center and 3 were delivered to social welfare facilities.

◉ Informant Protection and Incentives

Hyundai Oilbank protects informants who report violation of laws or unethical conduct, a practice which has increased the

effectiveness of the internal reporting system. To encourage whistle-blowing, Hyundai Oilbank provides parts of the amount

of monetary loss recovered or prevented as an incentive.

◉ Shinmungo System

The Shinmungo (petitioner's drum) program was established to help employees to make suggestions for and inquire about

ethical management as well as report ethical management violations, unfair trading and dishonest or corrupt behavior. Even

anonymous reports are investigated thoroughly as long as they are detailed and supported by clear evidence. (Please refer to

the Shinmungo section of the website [www.<strong>oilbankstrong>.co.kr].)

◉ Ethical Management Self-examination System

Hyundai Oilbank administers an ethical management self-examination program through the ‘ 知 (Jee) Café’ to help

employees determine by themselves whether they are observing various laws and the company’s regulations at worksites.

● ENHANCING EMPLOYEES' SENSE OF ETHICS

◉ Ethical Management for e-mail Transmission

To enhance employees’ sense of ethics as well as to promote compliance with laws and fair execution of operations, Hyundai

Oilbank has arranged to allow e-mail transmissions only when the sender clicks a message window so that employees can

practice ethical management during general operation processes.

◉ Ethical Management Board at the Jee-Café

In addition to the ethical management website, Hyundai Oilbank opened an ethical management board at the ‘ 知 (Jee) Café’

so that employees may review ethical management practice cases and engage in Q&A with ethical management experts.

Through this, the company is practicing ethical management together with employees.

PROMISES OF ETHICAL MANAGEMENT

Hyundai Oilbank will strengthen ethical management communication

•We will continuously foster ethical management communication both internally and externally.

Hyundai Oilbank will further strengthen voluntary ethical management practices.

•We will establish ethical management performance measurement programs.

Hyundai Oilbank will practice ethical management together with business partners.

•We will provide preferential treatment to business partners practicing ethical management.

● ETHICAL MANAGEMENT WITH STAKEHOLDERS

◉ Ethical Management Newsletter

In the quarterly Oilbank Management Guidelines distributed to all service stations and regional headquarters, ethical

management concepts are introduced to help stakeholders better understand them. In addition, through ethical management

news and ethical management best practices, Hyundai Oilbank is motivating employees to practice ethical management.

◉ Fair Trade Compliance Agreement

Before signing an agreement with business partners, Hyundai Oilbank concludes a fair trade compliance agreement in the

form of an electronic contract that prescribes prohibition of debt write-offs and provision of guarantees and gifts together

with measures to prevent violation of the provisions. Through this process, Hyundai Oilbank encourages business partners

to actively participate in ethical management and fair trade voluntary compliance program.

◉ Official Letters to Business Partners

Hyundai Oilbank searches for ways to achieve mutual development with partners in cooperative relationships and to spread

the will for ethical management by sending official letters bearing the CEO’s name to business partners that contain the

company’s determination and will for ethical management and compliance with the law.

● CP (COMPLIANCE PROGRAM)

By adopting the fair trade voluntary compliance program in 2003, Hyundai Oilbank announced to the public its strong will to

voluntarily comply with fair trade practices. In all areas of the company’s business practices, Hyundai Oilbank respects and

complies with related regulations and commercial practices. Based on the principle of free competition, Hyundai Oilbank

respects the order of market competition both domestically and internationally. In addition to contributing to increasing social

values as a part of ethical management, the CP (compliance program) produces effective and systematic results for preventing

risks that accompany violation of the laws and regulations of fair trade. Hyundai Oilbank establishes behavioral rules and

administers education to employees and therefore actively practices compliance with fair trade related laws and regulations.

* Fair Trade Laws and Regulations: Laws and regulations established to promote the order of fair trade and to accelerate competition, such as the Monopoly Regulation and Fair

Trade Act, the Regulation of Standardized Contracts Act, the Act on Fair Labeling and Advertising, the Fair Transactions in Subcontracting Act, the Installment Transactions Act,

the Door-to-door Sales, etc. Act, the Act on the Consumer Protection in the Electronic Commerce Transactions, etc., the Fair Transactions in Franchise Business Act

Practicing Core Elements

Classification

Declaration of the CEO’s commitment

to voluntary compliance

Appointing and operating CP

managers

Publishing and distribution of CP

handbook

Employee education program

Internal supervision system

Disciplinary system for violators

Document management system

Contents

Declares commitment to voluntary compliance (electronic document, website)

Operating of a bidding committee

Appointing Director of Support HQ as CFO

CP Division: Energy Policy Team

Allotting of education budget for CP operation

Working manager reporting to CEO and BOD

CP handbook published in Dec. 2003

Updated through CP website

CP, online education, outside education

Internal education system

Cyber training center

Fair trade voluntary compliance management regulations

Expanding internal reporting system (CP consulting center, ethical management Shinmungo)

Disciplinary measures according to HR regulations (awards, punishments)

Deliberation and decision by Personnel Committee

On/offline document management through web-storage, document box and CP news

Updated through the CP website


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Ethical Management

Customer Satisfaction

and Quality Management

62 63

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● ETHICAL MANAGEMENT EDUCATION

● COMMUNICATION WITH CUSTOMERS

Hyundai Oilbank provides regular ethical management education in order to raise employees’ sense of ethics at the same

time as establishing related rules and systems to eradicate unethical business practices. In addition, the company conducts

inspections on a regular basis and provides extensive education tailored for each business field that has a potential of being

in conflict with the fair trade related laws and regulations.

Practicing Core Elements

Subject Contents Cycle

Understanding and practicing ethical

management

Major company regulations

HDO ethical management for

all employees

HR philosophy of Hyundai Oilbank

Specialized education management

education per position

Fair trade education

● ETHICAL MANAGEMENT SURVEY

Since 2003, Hyundai Oilbank has been conducting ethical management surveys in order to check the level of ethical

management practiced by the company and related activities. Results of the survey in December 2009 are shown below.

RESULTS OF ETHICAL MANAGEMENT SURVEY 2009

Q. Is ethical management essential for the company’s

sustainability management?

Yes 90% (84%)

So-so 8% (12%)

No 2% (4%)




Promotes an understanding of and methods to practice ethical management for

new recruits

Risk management and practicing transparent management in accordance with

major regulations and applying them to operations

Cyber education for all employees to promote understanding of ethical

management and build an company-wide consensus on ethical management

Cyber education for all employees to introduce the company’s HR philosophy

to contribute to realizing the company’s vision and core values together with

information on ethical and sustainable management

Education specialized for employees promoted to higher positions to help them

actively and voluntarily practice ethical management

Biannual education together with inspection of all divisions and regional

headquarters

Q. Do you always think of ethical management when performing

duties

Yes 92% (88%)

So-so 8% (12%)

No 0% (0%)




ETHICAL MANAGEMENT SURVEY OUTLINE

•Survey Method

Through the ‘ 知 (Jee) Café’ ethical management board

•Survey Period

Dec. 14 ~ Dec. 31, 2009 (18 days)

•Survey Target

Hyundai Oilbank employees

•No. of Respondents

968 (55%)

Once a year

Once a year

All year round

All year round

Once a year

Once a year or more

per HQ

Hyundai Oilbank is working hard to satisfy customers’ major interests and to create customer values by providing them with

the best products and services. The company conducts a customer satisfaction survey on a regular basis in order to improve

service quality, identify customer needs, achieve systematic customer management and gain feedback on the company’s

activities. By comparatively analyzing the survey results, Hyundai Oilbank is able to identify changes in customer satisfaction

and accordingly implement marketing programs. As such, Hyundai Oilbank is endeavoring to strengthen its business

competitiveness by conducting company-wide customer satisfaction activities.

● CUSTOMER POLICY

● CUSTOMER MARKETING

Hyundai Oilbank practices quality management and maximizes customer

satisfaction by thoroughly observing its code of ethics prescribing that “(employees)

shall recognize that customer satisfaction is the foundation of the business and

therefore endeavor to create customer values with sincerity and integrity.” To

realize this, the company promotes behavioral rules prescribing that “(employees)

shall provide customers with top-level services and quality, protect customers’

personal information, and fulfill promises under all circumstances.”

Hyundai Oilbank promotes various marketing activities in order to enhance customer

convenience and satisfaction. To satisfy customers’ needs, the company efficiently

allocates marketing resources and provides customers with substantial benefits

through a strategy of ‘concentration and differentiation.’ In addition, Hyundai Oilbank

operates programs separately for service station operators, the primary customers,

and for general consumers, the secondary customers. For its 10 million Oilbank

Bonus Card members (as of the end of 2009) the company is providing differentiated

benefits as a result of thorough scientific customer analysis. Furthermore, while

dedicating its utmost to protect customers’ personal information, Hyundai Oilbank

conducts preliminary reviews before launching marketing events to ensure compliance with fair trade laws and regulations.

● CUSTOMER SATISFACTION

Hyundai Oilbank has been working hard to enhance customer satisfaction and, as a result, achieved continuous

improvement in the customer satisfaction level. For example, the GSI (guest satisfaction index) assessed by mystery

shoppers and regular customers of individual service stations has been showing a trend of continuous improvement. In

addition, in the KSQI (Korean Service Quality Index) survey conducted by KMAC, the Hyundai Oilbank customer call center

was selected as the industry No. 1 in 2009, following 2007, in the call center category. This is especially noteworthy as it is

one of the largest in terms of customer contacts.

GSI (GAS STATION SERVICE INDEX)

KSQI (KOREAN SERVICE QUALITY INDEX: CALL CENTER CATEGORY)

Q. Do you think you perform duties fairly and transparently?

Yes 97% (95%) ⇢

So-so 2% (5%) ⇢

No 1% (0%) ⇢

66.9

56.4

Service Station

70.5

64.1

Charging Station

70.0

63.6

2 nd Point Rank

1 st 1 st

94

89

95

* Figures in ( ) are the results of 2008.

2 nd in 2008

1 st in 2009

2 nd in 2009

07

08

09


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Customer Satisfaction

and Quality Management

64 65

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● QUALITY MANAGEMENT FOR CUSTOMER SATISFACTION

Major Products

All Hyundai Oilbank products are developed with consideration paid to customer convenience and environmental protection.

From fuel for cooking to automobile, ship and aircraft use, Hyundai Oilbank provides top-quality products that meet or

exceed customer expectations. The company is endeavoring to create and supply eco-friendly products that care for users’

health and the environment by minimizing the use of substances harmful to the human body and the environment. Hyundai

Oilbank ceaselessly endeavors to comply with customers’ wishes for product reliability, stability and satisfaction before,

during and after product use.

◉ Premium Gasoline-KAZEN

This high octane gasoline (98 or higher) is formulated with the latest engine

performance enhancing agents to prevent loss of output and increase fuel

efficiency even during severe operation for long periods of time. The product

also remarkably lowers harmful emissions as well.

◉ Unleaded Gasoline

The optimal formulation of this product provides outstanding performance and

fuel efficiency. The added cleansing agent cleans the inside of the engine and

removes sludge buildup for improved engine output and fuel efficiency, thus

reducing harmful emissions and enhancing driving performance.

◉ Ultra Low Sulfur Diesel

This is Korea’s first eco-friendly ultra-low-sulfur diesel blend bereft of the

problems of smoke and noise associated with conventional diesel products.

With its premium diesel additives suitable for train engines and diesel vehicles

this product provides outstanding output and fuel efficiency. In addition, the

level of harmful gas emissions is very low. Since 2006, all diesel products have

been formulated with bio-diesel for greater eco-friendliness.

◉ Kerosene

Eco mark certified, this product is low in irritating foul odor and produces

almost no smoke or soot when burned, so it is quite suitable as an indoor

heating fuel. Produced by advanced refining processes, this product is very

economical with excellent caloric value and burn properties.

◉ LPG

Through strict quality control by thorough engine testing to minimize sludge

buildup in vaporizers, a common cause of breakdowns of LPG vehicles,

Hyundai Oilbank supplies LPG products outstanding in fuel efficiency and

output.

Basis of Customer Quality Satisfaction

Hyundai Oilbank conducts regular quality inspections to enhance customer satisfaction with respect to product quality.

As the first in the industry, Hyundai Oilbank introduced a system to identify and inspect the company’s own products and

therefore is minimizing quality-related problems.

◉ Customer Complaint Handling

In March 2007, a Quality Operation Team was installed with the task of

improving product quality competitiveness. Through professional handling

of customers’ complaints, this team processes all complaints received by

consulting with the related divisions. Complaint handling is completed only

after the team communicates with customers on the results of the handling

activities. In addition, by eliminating causes for delay in complaint handling,

the operation procedures have been greatly improved from the customers’

point of view.

For swift handling of customer complaints at all times, Hyundai Oilbank

operates technical support centers in Pangyo, Daejeon, Daesan, Busan and

Gwangju. In particular, the technical support centers in Pangyo and Busan

operate laboratories equipped with the latest testing and analysis equipment.

At the same time, Hyundai Oilbank provides support for onsite quality control

to ensure customer satisfaction regarding the results.

Even when the cause of a complaint is not clear, a Hyundai Oilbank representative will visit the customer within 72 hours

according to the company’s internal regulations. The representative discusses the issues with the customer and then

determines the best course of action. The company then analyzes samples collected and the results are promptly notified to

the customer. For customers’ health and safety, Hyundai Oilbank provides detailed information on the potential harmfulness

of its products and services. In relation to this, the company is thoroughly observing all safety and health related regulations.

COMPLAINT HANDLING PROCESS

Telephone,

Internet

Complaint

report

Business

division

concerned

Call center, service

station, storage

facilities

handling completion

complaint report, approval

for handling expenses

Input into

computer system

ceo

Quality Operation

Team, technical

support center

Investigating causes

Guideline

proposals

Deliberation

progress

Investigating

and reporting

causes

Business

division

concerned

Notification

progress within

72 hours

Discussion for

compensation

Division subject to the

cause of complaint


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

CUSTOMER SATISFACTION

AND QUALITY MANAGEMENT

Mutual Prosperity

66 67

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

◉ Quality Control

Prioritizing customer satisfaction, Hyundai Oilbank administers strict quality inspection on all products from the first stage

of receiving crude oil to the final stage of selling at service stations. As a result of the strict quality control conducted at each

and every stage of production, Hyundai Oilbank passed all the fuel quality inspections regularly carried out by the Ministry of

Knowledge Economy and the Ministry of Environment for the entire year of 2009. In addition, at the ‘Fuel, LPG and Asphalt

Precision Comparison 2008’ organized by Korea Institute of Petroleum Management and participated by 22 petroleumrelated

laboratories including those of the 5 petroleum companies of Korea, Hyundai Oilbank was objectively certified for its

reliability in quality tests for all oil types and test categories.

◉ KOLAS Acknowledgment and Achievement

The Quality Assurance Team of Hyundai Oilbank was acknowledged for its

chemical testing skills by the Korea Laboratory Accreditation Scheme (KOLAS).

In 2006, the team added LPG testing to its roster of duties. The company has

also improved various test equipment and facilities to satisfy international

standards. In 2009, as an internationally accredited testing organization,

Hyundai Oilbank faithfully fulfilled and satisfied all quality management

requirements and therefore received acknowledgement once again.

If a testing organization is deemed to meet international standards, KOLAS specifies the related test criteria and methods

based on international standards and therefore recognizes the test organization as an ‘internationally accredited test

organization.’ Since all test results published by the test organization are accepted domestically and internationally, there is no

need for the test organization to undergo separate testing or to obtain an additional acknowledgement for exporting products.

Since the KOLAS acknowledgement, Hyundai Oilbank has continuously been participating in various comparative product

tests organized by the Korea Institute of Petroleum Management and the U.S. Defense Energy Support Center. Through these

activities the company has been able to verify the accuracy levels of each test facility. In addition, the company is endeavoring

to improve testing accuracy and credibility by analyzing causes of errors and calibration equipment. To develop worldclass

professionals, the company administers competency exams four times a year and testing personnel are required to

complete systematic training courses from officially recognized training organizations. In addition, Hyundai Oilbank is taking

every measure to initiate quality management through regular internal and external audits and management reviews.

● COOPERATION WITH AUTOMOBILE AND AUTO PARTS

MANUFACTURERS

In 1995, through a joint effort with Hyundai Motor Company, Hyundai Oilbank

developed MG-2, a gasoline for priming cars being prepped for export to

the U.S. The company has since been supplying Hyundai Motor Company

and Kia Motors with fuel for automobiles shipped for export and domestic

consumption. Hyundai Oilbank maintains a cooperative relationship with

automobile manufacturers in carrying out research on automobile fuels, such as the next-generation eco-friendly diesel

fuel for train engines as well as analysis of fuels from various countries. The company is continuously developing, producing

and supplying special fuels for a variety of purposes for the automobile companies. In 2007, Hyundai Oilbank participated in

a joint study with Bosch, the world’s most reputable automotive parts manufacturer, on the characteristics of Korean-made

bio-diesel. The results of the study were incorporated into the designs of automotive parts and for formulas for fuels. These

are examples of how Hyundai Oilbank is preparing for the future through technological development and cooperation with

automobile and auto parts manufacturers.

● BUILDING A WIN-WIN CULTURE

For stable growth of any industry, joint advancement with business partners is essential. Also, overcoming the gaps and

imbalances between large corporations and small businesses will play an increasingly important role with regards to

social integration. Through active communication measures, such as workshops, informal meetings and the ‘ 知 (Jee) Café’,

Hyundai Oilbank is sharing its management policies with business partners and jointly searches for improvement measures

by incorporating the difficulties faced by its business partners into the company's management policies. The result is greatly

enhanced trust among its business partners.

Hyundai Oilbank cooperates with its business partners with regards to economic, social and environmental concerns to

achieve mutual development. Hyundai Oilbank is also offering diverse support programs to its business partners to help

them improve their competitiveness as well as working conditions and business environments. In March 2007, Hyundai

Oilbank concluded an agreement for a ‘cooperative win-win relationship’ with its business partners located near the Daesan

Plant in an effort to prevent industrial disasters. Through this agreement, the company has supported a total of 14 business

partners with their implementation and execution of safety and health management systems.

● SUPPORTING SERVICE STATION OPERATORS

As the first in the industry, Hyundai Oilbank began organizing discussions

with excellent overseas service station operators in 2003. Organized

to promote field-centered management through sharing of local

and international environmental changes and strengthening of win-win

relationships, this event was held annually until 2008. A total of 1,669

service station operators attended the discussions. In 2009, the event

was not held due to the company’s emergency management priorities.

However, the program will recommence soon to provide education opportunities

for improving operational competencies and sharing of visions

and goals with the company.

● OVERSEAS TALKS WITH EXCELLENT OPERATORS

SERVICE STATION OPERATOR SUPPORT

Consulting targets Sales increase (%)

As the first in the industry, Hyundai Oilbank began organizing discussions with excellent overseas service station operators

in 2003. Organized to promote field-centered management through sharing of local and international environmental changes

and strengthening of win-win relationships, this event was held annually until 2008. A total of 1,669 service station operators

attended the discussions. In 2009, the event was not held due to the company’s emergency management priorities. However,

the program will recommence soon to provide education opportunities for improving operational competencies and sharing

of visions and goals with the company.

18

4.5 4.5 4.5

07

7.0

Satisfaction level (max. of 5 points)

21

25.1

24

08 09

8.2

In addition, Hyundai Oilbank designed a membership program for customers owning Hyundai or Kia vehicles to provide

them with all of the vehicle-related services required. During the term of owning a vehicle, customers can take advantage of

diverse and unique services and benefits. The program has proven to be hugely successful and is significantly improving the

company’s relationship with its customers.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Stakeholder Interviews

Local Community

and Social Contributions

68 69

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

Q.

A.

Q.

A.

Q.

A.

Q.

A.

Q.

A.

Q.

A.

IS HYUNDAI OILBANK CONTINUOUSLY MAKING EFFORTS TO IMPROVE THE MARKETING ABILITIES OF SERVICE STATION

OPERATORS?

We, the MJ Service Station, were selected as an excellent operator in 2009. To us, the diverse systems of Hyundai

Oilbank have been very helpful. We were able to learn about the advanced techniques necessary for service station

operation by attending the annual seminars and reading the ‘Oilbank Management Guide’ published monthly

by Hyundai Oilbank. We also shared and took hints from the best practice cases of service stations previously

designated as excellent operators. The regional communities are also helpful. I believe Hyundai Oilbank is providing

diverse support, such as arranging for our staff to tour and inspect other excellent service stations.

WHAT KIND OF WIN-WIN RELATIONSHIP DO YOU BELIEVE MUST BE MAINTAINED BETWEEN SERVICE STATIONS AND

HYUNDAI OILBANK?

A service station operator is an independent businessperson. But, we are also the sales representatives of Hyundai Oilbank

because we meet general customers up front. So, we would like the diverse support systems to be more widely applied.

Petroleum is a precious resource that is indispensable in people’s lives. As important as it is, it is selected scrupulously in

terms of price or quality. Therefore, we would like more active field-centered education in terms of changes in marketing

or international environments that surround us so that each operator can increase his competitiveness.

DO YOU HAVE A PERSONAL VISION TO CREATE A SUSTAINABLE SERVICE STATION?

As I have said, we not only meet the general customer up front, but also have influence over the local communities. I

think Hyundai Oilbank’s Clean Service Station program has a positive impact on the environment and also on society.

I believe making everyone happy with friendly service would be a way for me to play a part in creating a beautiful

society. So, rather than a huge vision, I will try to keep my MJ Service Station clean and will strive to make every one

of our customers happy each and every day.

Seung Man Choi Hyundai Oilbank MJ Service Station

OF ALL THE BUSINESS ACTIVITIES OF HYUNDAI OILBANK, HOW DO YOU THINK ETHICAL MANAGEMENT ACTS AS AN

ACQUIRED CULTURE?

Dongmyeong Enterprise is a general environmental consulting firm that specializes in management of service

station environments and in prevention of air, soil and underground water pollution. I believe the win-win corporate

culture of Hyundai Oilbank is possible because it is based on strict ethical management. For contract services, a fair

trade compliance agreement is concluded in the form of an electronic contract prescribing prohibition of debt writeoffs,

provision of guarantees, and gifts together with measures to prevent violation of the provisions. At the same

time, we participate in Hyundai Oilbank’s ethical management and voluntary fair trade compliance programs in order

to realize a clean and transparent partnership.

DOES HYUNDAI OILBANK HAVE A VISION AND STRATEGIES FOR JOINT DEVELOPMENT WITH BUSINESS PARTNERS?

We actively participate in Hyundai Oilbank’s workshops and discussions to establish a relationship of trust. In particular,

Hyundai Oilbank is making the maximum use of communication tools, such as the ‘ 知 (Jee) Café’, in an effort to listen to the

voices of its business partners. At the same time, the company is sharing its management policies with business partners,

incorporating opinions of business partners in their management policies and searching for improvement measures.

DO YOU HAVE A PERSONAL VISION TO CREATE A SUSTAINABLE SERVICE STATION?

I believe the relationship of mutual benefits and development with business partners is more important than

anything that Hyundai Oilbank can do to achieve continuous growth. So, I am very pleased to see that Hyundai

Oilbank is actively practicing ethical management that serves as the basis of this relationship. As a business partner,

we would like Hyundai Oilbank to further develop its ethical management and eliminate the wrongful practices of the

past, such as violation of laws and unfair trade, by using the ‘Shinmungo’ system, etc.

● BASIC PHILOSOPHY OF SOCIAL CONTRIBUTION

Guided by the slogan, ‘hopeful energy full of love’, Hyundai Oilbank is pursuing a variety of social contribution activities.

‘Hopeful energy full of love’ represents the company’s three hopes, to become a company that gives hope to children and

youth (future hope+), to become a company that shares with neglected citizens (neighbor hope+), and to become a company

that protects and loves green nature (nature hope+).

HOPEFUL ENERGY FULL OF LOVE–EMBLEM

Hopeful Energy Full of Love

● SOCIAL CONTRIBUTION PROGRAMS

FUTURE

HOPE

+

Hyundai Oilbank promotes social contribution activities in

three directions which are officially recognized as Nature

Hope (environment), Future Hope (children) and Neighbor

Hope (neglected citizens and local communities). Based on

the principle of partnership, Hyundai Oilbank tries to build

a sense of reliability with local communities in fulfilling

its social contribution activities. Using every resource, the

company focuses on achieving maximum benefit. For this,

Hyundai Oilbank operates strategic programs linked to the

characteristics of each project as well as programs that are

beneficial to the company, local communities and employees.

In 2009, Hyundai Oilbank sponsored the ‘Oilbank Social

Service Award’ to confer prizes to service teams and persons

who had performed most passionately over the year. This

award also encourages employees’ voluntary participation in

the company’s social contribution activities.

Through the motive involving the two persons smiling brightly face

to face, we convey a message of hope to customers and society by

serving them.

NEIGHBOR

HOPE

+

NATURE

HOPE

+

COST OF SOCIAL CONTRIBUTION ACTIVITIES PER YEAR

KRW million

The social service teams of Hyundai Oilbank assiduously pursue cause-related marketing, ‘gift in kind’ charitable giving, and

employee volunteerism in order to deliver ‘hopeful energy’ to neighbors and environments that are in need of helping hands.

5,466

07

2,195

08

3,421

09

Du Han Kim Dongmyeong Enterprise


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Local Community

and Social Contributions

70 71

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● OILBANK HOPE+

◉ One Team One Hope+

Hyundai Oilbank refines crude oil to produce LPG, gasoline, naphtha, jet fuel, kerosene, light oil, heavy oil and asphalt.

Followi

Hours of Employees’ Participation in Social Contribution Activities

Classification 2007 2008 2009

Hours of Participation in Social Contribution Activities (Unit: Hour) 6,465 6,027 6,517

◉ Personal · Division Donations

To encourage a ‘culture of giving’ and to enable employees to experience the joy of sharing, Hyundai Oilbank provides a

1:1 matching grant for donations provided by employees and divisions to the organizations and facilities designated. The

company’s active donations together with those of individual employees and divisions, are fostering a ‘culture of giving’

providing greater benefits to the organizations that are in need of helping hands.

◉ Ten Million+Love

Ten Million+Love is a program in which the company makes matching grants that equal the amounts raised through

employees’ contributions of smaller units of one-thousand · ten-thousand won increments, as a result, a donation twice the

amount raised by employees is provided to social welfare organizations. The program started in 2004 with 60% of employees’

voluntarily participating. In 2007, Hyundai Oilbank donated to the recovery support fund of Taean County to help pay for the

cleanup costs of the oil spill that occurred along the West Coast. In 2008, donations were provided to expand school facilities

in Seosan County and for helping neglected citizens in Taean County. In 2009, Hyundai Oilbank donated funds to Daesan-eup,

Chungcheongnam-do for marginalized citizens not receiving government subsidies.

● SPONSORSHIP

With funds raised through matching grants, Hyundai Oilbank sponsors social welfare organizations and makes donations for

disaster aid and recovery efforts. The details of Hyundai Oilbank’s sponsorship activities are listed below.

Sponsorship in 2007 ~ 2009

House of Hope, a facility for the disabled

Citizens Institute for Environmental Studies

2007 Seoul Association of Welfare Institutes for the Disabled

Catholic University Graduate School of Business Administration

Recovery fund for oil spill along the West Coast

House of Hope, a facility for the disabled

Seoul Association of Welfare Institutes for the Disabled

2008 Future Partnership Foundation

Child Watch Korea

Korea Green Foundation

House of Hope, a facility for the disabled

Seoul Association of Welfare Institutes for the Disabled

Ewha Woman’s University Industrial–Academic Cooperation Team

2009 Korea Green Foundation

2009 Fax Forum of the Catholic Education Foundation

The National Theater of Korea

● NEIGHBOR HOPE+

◉ One Employee, One Service Team Campaign

By actively supporting voluntary service activities of the service teams together

with the company-wide social contribution activities, Hyundai Oilbank is

practicing love for neighbors together with its employees. At present, over 1,000

employees are serving as members of 80 service teams to help out citizens

in need. The employees participate in voluntary service activities during work

hours and over the weekends. To encourage employees’ voluntary service

activities, Hyundai Oilbank is making donations to organizations and facilities in

which the employees have performed service activities for over 16 hours a year

(KRW 10,000 per every hour of service). In 2007 and 2009, the company conducted its ‘Hopeful Energy Full of Love Voluntary

Service Campaign’ for the month of December in which the company and employees participated extensively in service

activities. In celebration of its 45th anniversary, the company also conducted the ‘Hyundai Oilbank Social Service Relay 45’

campaign to actively practice love for neighbors.

◉ Oilbank Social Service Award

Hyundai Oilbank established its ‘Oilbank Social Service Award’ in 2009 in order

to promote the activities of service teams and to enhance employees’ sense of

social contribution. Each year, service teams and individuals who participated

most passionately are recommended. The list is reviewed by a panel of outside

experts who make the final recommendations and the awards are conferred at

the end of each year. In 2009, the award winners were ‘Team Araenmok’ of the

Facility Improvement Team of the Production HQ, and Subsection Chief Tae

Mok Song of the Power Team. Hyundai Oilbank will continue to organize this

event to establish a culture of social volunteerism within the company.

◉ Seeing is Wanting! Love Neighbors Campaign

Having already established significant social contribution programs, Hyundai Oilbank developed new ones in 2007. The

‘Seeing is Wanting! Love Neighbors Campaign’ is one of them. This is a program that raises funds through auctions of

memorabilia donated by outside organizations. A variety of items are auctioned to employees and for the amount raised the

company provides a matching grant. In 2007, the proceeds were delivered to Taean County for their oil spill recovery fund to

clean up the damage caused by the Hubei Spirit accident that occurred off the west coast. In 2008, the fund was donated to

support marginalized citizens in Taean County and to develop facilities in schools in and around Seosan. In 2009, Hyundai

Oilbank used the funds to financially support the marginalized citizens of Daesan-eup, Chungcheongnam-do who do not

receive government subsidies.

◉ Heating Fuel of Love Campaign

As a social contribution activity based on the characteristics of its business,

Hyundai Oilbank provides support by donating heating fuel to persons in need.

To assist low-income families to overcome their concerns of having enough

heating fuel to see them through the cold winters, Hyundai Oilbank, through

a joint effort with the Children’s Foundation, has been delivering ‘hopeful

energy full of love’ in the form of free heating oil. Around yearend, customers

inform us of children in difficult conditions through the company’s website.

The company then delivers heating fuel worth KRW 100 million to the children in an effort to deliver love to neglected

citizens. In 2009, 428 children and 130 organizations were recommended. After verification by the Children’s Foundation,

Hyundai Oilbank delivered heating fuel to 300 children and 60 organizations. The ‘Heating Fuel of Love Campaign’ story was

presented by MBC as part of its ‘New Life to Children’ program televised in 2009. Through this, Hyundai Oilbank’s will to

share love with its neighbors was shown to the nation.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Local Community

and Social Contributions

72 73

STAKEHOLDERS

DMA 48

Status and HR Policy 49

Employ Satisfaction 51

Ethical Management 59

Customer Satisfaction and Quality Management 63

Mutual Prosperity 67

Local Community and Social Contributions 69

● CONTRIBUTION TO LOCAL COMMUNITIES

◉ Purchasing Locally-produced Rice

Each year, Hyundai Oilbank purchases locally produced rice at prices set by the

government in order to help farmers in the Seosan region secure stable sales channels.

Through this, Hyundai Oilbank is contributing to increasing the income levels of farmers

in the Seosan region and therefore building a friendly and cooperative relationship with

local residents. In 2009, Hyundai Oilbank purchased approximately KRW 700 million

of rice. The company aims at increasing the amount by KRW 100 million annually to

eventually reach KRW 1 billion. By providing farmers with opportunities for self-support

and enabling economic development in rural villages, Hyundai Oilbank will help reduce

the gaps between rural and urban areas and therefore contribute to the economic development of the nation.

◉ Supporting Public Interest Projects of Local Communities

To support public interest projects of local communities, Hyundai

Oilbank provides epidemic prevention equipment and supplies,

rescue vehicles and equipment as well as financial support for

voluntary crime prevention activities. In addition, the company is

providing various support for the community including support

for organic farming in order to contribute to development of local

communities and increase income levels of rural residents.

◉ Contributing to the Development of Local Communities

To contribute to the development of local communities, Hyundai Oilbank allows local

procurement of emergency materials up to KRW million, or hiring of local persons for

construction services up to KRW 30 million. Through this, the company is contributing

to enhancing the general welfare of local residents of Daesan where the plant and

research center are located.

Various service teams organized with the employees of Daesan Plant are helping

children with disabilities and elderly persons living by themselves or afflicted with

dementia. The ‘Wives’ Group’ of employees living in company housing regularly

organize bazaars and events for the elderly in order to encourage the underprivileged to sustain a determination to live and build a positive

mindset. Hyundai Oilbank also tries to console local residents who have lost loved ones by providing funeral necessities.

◉ Scholarship Foundation

◉ Releasing Fingerlings and Cleaning Costs

SUPPORTING LOCAL COMMUNITIES IN 2009

Financial support for the Jishinbalgi performance on the First Full Moon Day

Support for Big Catch Festival/Yearning for Home Festival

Financial support for the Daesan Lifesavers Team

Support for outstanding farm produce development project

Financial support for Daesan voluntary firefighters and crime prevention activities

Support for epidemic prevention activities

Support for bi-annual village heads talks

Financial support for heating costs in nearby villages

Launched in 2003, Hyundai Oilbank’s Scholarship Foundation is organized with

assistance from the heads of local community organizations as the primary managers

and field-level advisors in order to increase transparency and independence of the

organization. The foundation raises KRW 100 million annually with an ultimate goal to

secure KRW 1 billion in financial resources in the future. Of the funds raised, KRW 50

million has been used for educational development in local communities. In 2009, a

total of KRW 48.5 million was delivered as scholarship funds to 91 students. As such,

Hyundai Oilbank is actively fulfilling the company’s social responsibilities.

For 8 years, Hyundai Oilbank has been releasing the fingerlings of black rock fish into the sea near Garorim Bay and along the coast of

Samgilpo and Bigyeong Island situated near the Daesan Plant located in Chungcheongnam-do. Started in 2002 as an environmental

conservation effort to benefit the local community, this activity supports the marine ecosystem and helps increase income levels of local

residents. So far, a total of 900,000 black rock fingerlings have been released. In 2009 alone, Hyundai Oilbank released 100,000 fish worth

approximately KRW 140 million. At the same time, 50 employees of Hyundai Oilbank participate in nature conservation activities each

month with local residents to clean the coastal areas near Samgilpo.

● Nature Hope+

◉ Love Nature and Cultural Heritages UCC Contest

◉ ‘Green Thoughts, Green World’ Drawing and Writing Contest

Until 2008, Hyundai Oilbank had been organizing ‘Love the Environment’

competitions to generate plausible eco-ideas. In 2009, this event was changed

into a UCC competition in line with web 2.0 trends. As a UCC competition

featuring beautiful cultural assets and heritages, a total of 59 entrants

competed for the top prize in 2009. The contest is carried out through Hyundai

Oilbank’s social contribution website, ‹csr.<strong>oilbankstrong>.co.kr› and prizewinning

works are exhibited through U-Tube and other such websites.

Hyundai Oilbank started the 'Green Thoughts, Green World' drawing and

writing contest to help instill in the minds of children the importance of

environmental protection. Held annually, this online creative writing and

drawing contest fosters a spirit of love for the environment. In 2009, 127

creative essays and 310 drawings were submitted for appraisal. The school

with the largest number of entrants was presented with an ‘Oilbank’s One Day

Eco-School’ program as a prize. Through this program, eco-teachers visited

the school and provided students with an opportunity to experience various

environmental activities. Hyundai Oilbank will unsparingly provide support so that growing children can practice love for the

environment starting at their schools.

◉ Eco Star Photo Contest

To emphasize the beauty and preciousness of the environment, Hyundai

Oilbank jointly organizes a photo contest together with the UNEP (United

Nations Environment Programme) National Committee for the Republic of

Korea. Held for a month in celebration of Environment Day, this contest is

organized with two themes, ‘green environment in Korea’ (well-preserved

natural environment) and ‘red environment in Korea’ (natural environment

neglected and damaged). Participants submit photographs expressing

their love for nature under either of the two themes. In 2009, a total of 598

photographs were appraised of which 11 were selected for prizes by a panel of judges comprised of recognized art experts.

The top two prize winners were presented with medals and gasoline coupons valued at KRW 7.5 million. The selected

photographs were then exhibited in the ‘American Museum of Natural History Exhibition in Seoul’ held at the Seoul National

Science Museum in Hyehwa-dong. Hyundai Oilbank will continuously organize such events that foster a love for the

environment and in which anyone may participate.

● CONTRIBUTIONS FOR CULTURE · ART · SPORTS

◉ Mecenat for the National Orchestra of Korea

Hyundai Oilbank is participating in a variety of mecenat activities to promote the arts and cultural industries. From 2007 to

2008, CEO Young Tae Seo organized a team named ‘Demuse’, and sponsored annual charity concerts. At the end of each

year, Demuse shares its love for humanity by donating the entire proceeds collected from an annual public concert titled

‘Love Shared in December’ to pediatric cancer patients.

In 2009, Hyundai Oilbank sponsored the 51st regular concert of the National Orchestra of Korea in order to help promote

Korean traditional music. And in its continuing efforts to fulfill its social responsibilities for culture and the arts, Hyundai

Oilbank is endeavoring to sponsor more such events each and every year going forward.


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

Stakeholder Interviews

Q.

A.

Q.

A.

Q.

A.

WHAT IS YOUR EVALUATION OF THE ACTIVITIES HYUNDAI OILBANK IS PERFORMING WITH THE UNEP NATIONAL COMMITTEE

FOR THE REPUBLIC OF KOREA?

The relationship between Hyundai Oilbank and the UNEP National Committee for the Republic of Korea began with

a UCC contest and Eco Star Photo Contest. It was all the more significant since it was the first time for us to organize

a UCC and photo contest. Both contests aimed at promoting people’s awareness through experience and artistic

expression. Rather than simple corporate support of NGOs, we hope that Hyundai Oilbank will develop a variety of new

programs to contribute to all of humanity through which everyone can recognize the importance of the environment.

AS AN ENVIRONMENTAL EXPERT, WHAT WOULD YOU LIKE TO SAY TO HYUNDAI OILBANK AND ABOUT THE ENVIRONMENTAL

MANAGEMENT ACTIVITIES PROMOTED BY BUSINESSES IN RECENT TIMES?

We believe it is very meaningful that as many employees as possible participate in cleaning our mountains and rivers

together with local residents. The releasing of fingerlings project is a good example. We hope that all businesses will

remember that the environmental activities must be carried out for all humanity and the planet, rather than merely

enhance their corporate image. Environmental activities must be carried out based on a vision and roadmap for the

future. For this, we would like the companies to make efforts for not only environmental purification activities for

today, but also development of environmental technologies and training of employees for the future.

IN WHICH CORPORATE ENVIRONMENTAL ACTIVITIES IS THE UNEP NATIONAL COMMITTEE FOR THE REPUBLIC OF KOREA

MOST INTERESTED?

One of our key areas of operation is to conduct environmental campaigns through cooperation with companies in

Korea. We find it very encouraging that many companies are engaged in environmental activities whether it be with an

organization like us or independently. As for the projects we have been promoting over the years through cooperation

with companies, there are publications, tree planting and children’s eco-camp projects. In addition, with communication

service providers, we have successfully completed a campaign for conversion to electronic bills. Recently, we have

been particularly interested in the company’s project of planting trees. Hopefully, Hyundai Oilbank will continuously

engage in environmental activities and will advance as the representative environmental company of Korea.

APPENDIX

Q.

A.

A FRIENDLY SERVICE STATION ENCOUNTERED ON A TRIP?

Yu Na Choi Head of Communications Team UNEP National Committee for the Republic of Korea

It was on a hot summer day in August 2009. At the time, I was traveling through the country on a bicycle. It was when I was passing

through the outskirts of Cheonan I reached for my water bottle for a drink of water. But the bottle was empty. I looked around, but

there was only a vast plane surrounding me without a single store in sight. I became anxious and had to pedal on to find a store.

“Sir! On the bicycle!”

As I was moving by, a young man called me from a service station. He handed me a bottle of water and a can of coffee, which

were gifts to the service station customers. I gulped down the water and was relieved of thirst instantly. The man from the service

station gave me more bottles of water to take with me. I was extremely grateful. Since I did not have anything to give to him in

return, I gave him well-wishing remarks.

“I wouldn’t go anywhere else to get my car fueled. I will always come to this service station run by such a considerate man as you!

Right then, as if by magic, several cars drove in one after another. The service station was filled with cars and the kind man began

attending to them busily. I did not want to bother him. So, I just said goodbye and pedaled on. I left in such a hurry that all I can

remember is the signboard bearing the Oilbank logo.

Thanks to this kind man, I was able to finish my trip well. Like those cars, I was refueled at the generous Oilbank. I would like to

take this opportunity to thank the kind man from the service station.

“Because of you, I could enjoy a great trip! Thank you.”

Letter from customer Dong Wun Gwak from the ‘Hello Oilbank, Letters from Customers’

76 _ 2009~2010 SUSTAINABILITY MANAGEMENT NEWS

78 _ AWARDS AND CERTIFICATES

79 _ MEMBERSHIP STATUS

80 _ GRI INDEX

85 _ GRI G3 APPLICATION LEVEL

86 _ KMAR VERIFICATION REPORT


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

2009~2010 Sustainability Management News

76 77

APPENDIX

2009~2010 Sustainability Management News 76

Awards and Certificates 78

Membership Status 79

Materiality Test 79

GRI Index 80

GRI G3 Application Level 85

KMAR Verification Report 86

● HYUNDAI OILBANK-COSMO OIL OF JAPAN AGREE ON CONSTNETION OF A BTX PLANT WITH AN

ANNUAL CAPACITY OF 910,000 TONS AND ESTABLISHED HC PETROCHEM

On the 6th of November, 2009, Hyundai Oilbank and Cosmo Oil (Representative:

Kimura Waichi), an oil refining company of Japan, concluded an MOU

at the head office of Cosmo Oil in Tokyo to establish a joint-venture to be

known as HC Petrochem. The newly formed enterprise will construct a BTX

plant on the premises of the Hyundai Oilbank Daesan Plant complex located

in Seosan-si, Chungcheongnam-do. The facilities are slated to commence

operation in April 2013 with an annual production of 800,000 tons of paraxylene

and an additional 110,000 tons of benzene.

Once the new plant is completed, Hyundai Oilbank’s paraxylene production scale will increase from the current 380,000

tons to 1.18 million tons a year. For benzene, the production volume will increase reach 220,000 tons a year. As such,

overall BTX production will reach 1.4 million tons, which is three times higher than current capacity.

In 2008, BTX sales represented only 4.3% of Hyundai Oilbank’s overall sales. However, the percentage will drastically

increase as much of the production will be exported. Therefore, the company’s profitability, which has been largely

dependent on oil refining, will significantly improve. Cosmo Oil, which previously did not have any BTX facilities, has been

exporting most of its mixed xylene products. However, the new BTX plant will produce paraxylene, which is higher in added

value than mixed xylene, and therefore will enable Cosmo Oil to achieve improved profitability.

● TOP PRIZE AT THE 3 rd ANNUAL ‘BEST COMPANY TO WORK FOR’ CEREMONIES

Hyundai Oilbank received the top prize at the ‘Best Companies to Work

for in Korea in 2009.’ This award selects prizewinning companies based

on their financial status, welfare benefits and social responsibility

management in terms of employees’ commitment to high performance,

pride of corporate culture and outstanding human resources. Despite the

difficult management environments, Hyundai Oilbank became the top

prize winner by being highly evaluated in terms of fulfilling the company’s

social responsibilities, endeavoring for development of outstanding human

resources and leading job creation by employing interns as regular staff.

Organized by Hankyung Magazine and sponsored by the Seoul Metropolitan City, Korea Chamber of Commerce, University

News Network and Job Korea, the ‘Best Companies to Work for in Korea 2009’ was held for the third year in 2009 with the

purpose of establishing respected corporate cultures, to provide correct information on companies to job seekers, and to

build the foundation for fair management.

●HYUNDAI OILBANK CONCLUDES 45 th NON-DISPUTED WAGE AGREEMENT ON ITS 45TH BIRTHDAY

● 45 DAYS OF SOCIAL SERVICE RELAY

For celebrating its 45 th anniversary, over 1,600 employees of Hyundai Oilbank

participated in a 45-day social service relay program. Marking the beginning

of the ’45-day social service relay’ campaign, Hyundai Oilbank employees in

the Seoul office and Deasan plant joined the ‘Blood Donation of Love’ event

on May 18. Since then, the employees continued with 45 days of a social

service ‘relay’ involving 75 company service teams that lasted until July 1,

the company’s foundation anniversary. The company provided a matching

grant of KRW 10,000 for every hour of service performed and donated the

funds to social service organizations. The 45-day social service relay ended meaningfully with a ceremony that reflected

upon the activities performed by Hyundai Oilbank as a sustainable company.

● HYUNDAI OILBANK SERVICE STATIONS, UBIQUITOUS HIGH-TECH BASES

Together with Hyundai–Kia Motors, the largest carmaker of Korea,

Hyundai Oilbank’s service stations are advancing as high-tech automobile

management centers. In May, Hyundai Oilbank launched a new concept

wireless vehicle management service together with Hyundai–Kia Motors.

When a customer driving a vehicle mounted with a vehicle information

collection terminal visits a Hyundai Oilbank service station installed with

Bluetooth® access, the customer’s vehicle information collected by the

ECU (engine control unit) is directly sent to Hyundai–Kia Motors through the

Bluetooth® connection. With this, accurate and customized remote management service is provided. Customers using

this service can receive information on vehicle diagnosis, maintenance history and economic and safe driving tips through

Hyundai–Kia Motors Mozen and navigation units installed in vehicles.

Accordingly, Hyundai Oilbank will soon be able to systematically provide service station customers with vehicle

management information directly related to drivers’ safety and lifestyles. With such ubiquitous services based on

convergence of IT networks and digital content, Hyundai Oilbank will further enhance its competitiveness by providing a

variety of customized information services to customers.

● CONTRACT TO SUPPLY BUNKER-C TO EXXON MOBIL

In March, Hyundai Oilbank concluded a contract with Exxon-Mobile, the

world’s largest oil company, to supply USD64 million worth of HSFO (high

sulfur fuel oil) for one year. With this contract, Hyundai Oilbank succeeded in

diversifying bunker-C exports and once again had its reputation for top-level

product quality verified.

While celebrating its 45 th anniversary, Hyundai Oilbank also concluded its 45 th non-disputed wage agreement. Having

agreed on a wage freeze in July, labor and management both continued with the 45-year tradition of non-disputed wage

agreements. CEO Young Tae Seo said, “Under the emergency management situation, the determination shown by the

labor union will be of significant support for the company’s two huge projects, the HOU project and BTX installation project

with Cosmo Oil of Japan. Together the two represent approximately KRW 3 trillion in investment.” He added, “The labormanagement

harmony based on mutual trust and employees’ love for the company will be written in the history of Hyundai

Oilbank.”

Chairman Tae Gyeong Kim of the Labor Union made encouraging remarks for the company’s future growth and

advancement. “I would like to thank the union members for their understanding and active support for our decision to

overcome the tasks the company faces. We believe that success of the HOU and BTX projects will eventually lead to the

mutual growth of labor and management.”


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

APPENDIX

AWARDS AND CERTIFICATES

MAMBERSHIP STATUS

78 79

2009~2010 Sustainability Management News

Awards and Certificates

76

78

Membership Status

79

Materiality Test

79

GRI Index

80

GRI G3 Application Level

85

KMAR Verification Report

86

● AWARDS STATUS

● MEMBERSHIP STATUS

Category Date Details Awarded By

Economy &

Sustainability

Management

1997.12

2003.10

2003.12

2004.11

2005.03

2005.07

2005.12

2006.10

2007.05

2007.09

2008.09

2008.12

2008.12

2009.03

2009.05

One-billion-dollar Tower of Export on Trade Day

Plaque of appreciation for contributing to the Silver Employment Expo

Prize of excellence in the petroleum refinery category at the

Korea Green Management Awards

Top prize at the Customer Satisfaction Management Awards

Top prize in the service marketing category at the Korea Marketing Awards

No. 1 in sustainability index in the domestic refinery industry category

Top prize in the promotion category at the Web Awards Korea

No. 1 in service station category at the NCSI

Top prize at the 1 st Global HR Management Awards

No. 1 in service station category at the KS-SQI

No. 1 in service station category at the KS-SQI

Three-billion-dollar Tower of Export on Trade Day

Prime Minister’s Prize at the Korea Management Innovation Awards

Presidential Citation on the 43 rd Taxpayers’ Day

Top prize at the Best Companies to Work for Awards

KOTRA

Seoul Metropolitan City

KMA

KMAC

Korea Marketing Association

Korea Federation for Environmental Movement

Web Awards Committee

Korea Productivity Center

Korean Academy of Organization and Management

Korean Standards Association

Korean Standards Association

KOTRA

Ministry of Knowledge Economy, Korea Chamber of

Commerce

Ministry of Strategy and Finance, National Tax Service

Hankyung Magazine

Nature &

Environment

1997.05

1998.11

1999.11

2003.11

Prize of excellence at the Green Energy Company Awards

Prize of excellence at the Green Energy Company Awards

Prize of excellence at the Green Energy Company Awards

Gold Tower Order of Industrial Service Merit for energy saving

Korea Federation for Environmental Movement, the

HanKook Ilbo

Korea Federation for Environmental Movement, the

Hankook Ilbo

Korea Federation for Environmental Movement, the

Hankook Ilbo

Ministry of Commerce, Industry and Energy

Society &

Ethics

2004.11

2004.11

2004.12

2005.12

2006.03

2006.09

2007.06

2009.03

2009.03

Plaque of appreciation for employing the disabled

Outstanding company for new labor-management culture

Top prize at the We First Awards

Top prize in the ethical management category at the

Korea Management Awards

Best ethical management company in the private manufacturing

company category

Prime Minister’s Prize at the Promotion of Employment of the Disabled

Prize in the ethical management category at the Korea Economic

Leaders Awards

Top prize at the Korea Ethical Management Awards

Top prize in the transparent management category at the

Global Leaders Awards

Korea Employment Promotion for the Disabled

Ministry of Labor

We First Promotion Association

KMAC

Ministry of Commerce, Industry and Energy

Korea Employment Promotion for the Disabled

Chosun Monthly

New Industry Management Academy

Hankyung Daily

Registered Organizations

Korean CEO’s Association of Multinational

Corporations (KCMC)

Korean Industrial Health Association

Korean Chamber of Commerce

Korean Petroleum Association

Korean Red Cross

World Petroleum Congress

(Korean Committee)

BEST Forum (Business Ethics and Sustainability

Management for Top Performance)

BEST CEO Club (Business Ethics and

Sustainability Management for CEOs)

FKI (The Federation of Korean Industries)

Korean Business Council for Sustainable

Development

Korean Gas Union

The Institute of Internal Auditors

Korean Employers Federation

The Korean Fair Competition Federation

Korean Customs Logistics Association

Korean Military Contractors Association

Korean Management Association Corporation

Korean International Trade Association

Korean Oil Association

Korean Fire Safety Association

Korean Energy Foundation

Korean Oil Station Association

Korean Chemicals Management Association

Korean Association for Chief Financial Officers

Korean LPG Industry Association

KAIST Knowledge Management Research

Center (special member)

* Hyundai Oilbank is registered as a full member in all organization with an exception of the KAIST knowledge Management Research Center.

Materiality test

● MATERIALITY TEST

The materiality test is a process conducted to identify information important to stakeholders and, on the basis of the information

identified select issues that are to be preferentially and extensively reported. In order to analyze the major issues

for sustainability management and to identify priorities, Hyundai Oilbank actively collects opinions of all stakeholders

whether they be directly employed, shareholders, government officials or members of the community.

This report was prepared by a TFT organized with working-level officers from the Environmental Policy Team and the supervising

team of the sustainability report, as well as from the Seoul office and Daesan Plant. The report was finalized and

published after being reviewed by the divisions concerned, inspected by management and verified by a third party organization.

STEP 4

● CERTIFICATION STATUS

STEP 3

Preparation of

the report

Category Certification Type Certification Date Certified by

Designation as a Korean institute of the Laboratory Accreditation Scheme KOLAS Nov. 2004 KATS

Ouality management system ISO 9001 Nov. 1995 LRQA

STEP 1

STEP 2

Analysis of interest

Evaluation of

interest

Environmental management system ISO 14001 May 1997 LRQA

Safety and health management system OHSAS 18001 Nov. 1999 BSI

KOSHA 18001 Dec. 1999 KOSHA

Analysis of issue

• Identification of internal and

external issues

• Classifying issues

• Analysis of level of social

interest

• Analysis of business impact

• Review by TFT

• Review by outside expert

• Review by the management

• Participation by TFT

• Verification of data

• Level assessment


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

GRI INDEX

80 81

APPENDIX

2009~2010 Sustainability Management News 76

Awards and Certificates 78

Membership Status 79

Materiality Test 79

GRI Index 80

GRI G3 Application Level 85

KMAR Verification Report 86

●: Disclosed ◐: Partially disclosed ○: Not disclosed N/A: Not applicable

GRI Index Performance Indicators Reporting Status Page Remarks

Strategy and 1.1 Declaration by the chief decision maker about organization and strategies that are ●

2-3, 10

Analysis

Organization

Profile

Report

Parameters

Governance

Structure,

Obligations and

Commitments

related to sustainability

1.2 Statement on major impacts, risks and opportunities

2.1 Name of the organization

2.2 Primary brands, products and/or services

2.3 Structure of the organization including main divisions, operating companies,

subsidiaries and/or joint ventures

2.4 Location of head office/HQ

2.5 Number of countries where the organization operates and names of countries with

either major operations or those specifically relevant to the sustainability issues

covered in the report

2.6 Nature of ownership and legal format

2.7 Markets served (including geographic breakdown, sectors served and types of

customers/beneficiaries)

2.8 Scale of the reporting organization

2.9 Significant changes during the reporting period regarding size, structure or

ownership

2.10 Awards received during the reporting period

◉ Report Profile

3.1 Reporting period (e.g.: Fiscal year/calendar year)

3.2 Date of most recent report (if applicable)

3.3 Reporting cycle (yearly, bi-yearly)

3.4 Contact for questions regarding the report

◉ Scope and Limitations of the Report

3.5 Process for defining report content

3.6 Limits of the reporting procedure (e.g.: Country, business division, subsidiary, leased

facility, JVC, supplier)

* Additional Guideline: Refer to GRI Limits Rules

3.7 Limitations on the scope of the report

* For description on the scope, refer to the Principle of Completeness

3.8 Report criteria on entities that may significantly affect comparability between

organizations or per period, such as JVC, subsidiary, leased facility or outsourced

company

3.9 Data measurement techniques and the basis of calculations including assumptions

and techniques underlying estimations applied to the compilation of indicators and

other information in the report

3.10 Explanation of the effect of any re-statements of information provided in the earlier

reports and the reasons for such re-statements (e.g.: M&A, change of base year/

period, nature of business, measurement method)

3.11 Significant changes in the scope, limits or measurement methods of the report in

comparison to the previous report period

◉ GRI Content Index

3.12 Table indicating the location of the standard disclosures in the report

◉ Assurance

3.13 Policy and current practice with regard to seeking external assurance for the report

◉ Report Profile

4.1 Organization’s governance structure

4.2 Indicate whether the BOD chairperson is also an officer (If performing jointly as

an officer, specify roles within the management and reasons for appointment as

chairman.)

4.3 For an organization that has a unitary board structure, state the number of members

that are independent of BOD or state the number of non-executive members

4.4 Mechanisms through which shareholders and employees make suggestions or

propose directions to the BOD

4.5 Relevance between compensation for members of the BOD, senior managers and

executives (including arrangement per division) and the organizations’ performance

(including social and environmental performance)










N/A











N/A

N/A








3, 14-15

6

6, 9, 64

6, 9

6

6, 8

12

6

6, 9

7, 8 No change

1

1

1

1

18-19, 79

1

1

1

82-85

80-81

12-13

12-13

12-13

12-13

12-13

Suggested per

indicator

Not applicable

Not applicable

●: Disclosed ◐: Partially disclosed ○: Not disclosed N/A: Not applicable

GRI Index Performance Indicators Reporting Status Page Remarks

4.6 Procedures to prevent conflicts of interests within the BOD


12-13

Management

Approach and

Performance

Indicators

4.7 Procedures for determining qualifications and expertise of the BOD members to assist

in economic, environmental/social strategies

4.8 Internally prepared mission/core value statements, code of conduct and principles in

relation to economic/environmental/social responsibilities and activities

4.9 Procedures through which the BOD identifies and manages economic/environmental/

social activities

4.10 Process to evaluate the performance of the BOD itself, especially in relation to

economic/environmental/social sectors

◉ Obligations towards External Initiatives

4.11 Implementation of precautionary principles and approaches as well as explanation on

the implementation methods

4.12 External initiatives, such as economic/environmental/social charters or principles

the organization subscribes to and/or supports

4.13 Membership in associations (e.g.: industry association) and/or national/international

political organizations

◉ Stakeholder Commitment

4.14 List of stakeholders engaged by the organization

4.15 Criteria of identification and selection of stakeholders to be engaged

4.16 Status of stakeholder engagement, such as type and frequency of engagement per

group

4.17 Key concerns and interests raised through stakeholder engagement and handling

methods

◉ Economics

- Management approach disclosure

Economic performance

EC1 Direct economic value creation and distribution (e.g.: profit, operating expenses,

employee compensation, donations, investment to local community, earned surplus,

capital cost and taxes, etc.)

EC2 Financial impact with relation to climate change and risks and opportunities of

business activities

EC3 Scope of pension support

EC4 Public service financial benefits

Market presence

EC5 Ratios of standard entry level wage to local minimum wage at major business

locations

EC6 Ratios of local procurement and practices in major business locations

EC7 Ratios of local employment and senior management hired from the local community

in major business locations

Indirect economic effects

EC8 Infrastructure investments and services provided for public benefit (including support

type classification)

EC9 Understanding and description of indirect economic effects (including scope of

impact)

◉ Ecology

- Management approach disclosure

Materials deployment

EN1 Materials used by weight/volume

EN2 Percentage of materials used that are recycled

Energy use

EN3 Direct energy consumption by primary energy sources

EN4 Indirect energy consumption by primary energy sources

EN5 Energy saved by conservation and efficiency improvement




























12-13

11, 60

12-13

12-13

14-15

78

79

18-19

18-19

18-19

18-19

22, 26-31

24-25

44

51

56

72

50

69-70

6

34-35

45

44-45

45

45

44


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

GRI INDEX

82 83

APPENDIX

2009~2010 Sustainability Management News 76

Awards and Certificates 78

Membership Status 79

Materiality Test 79

GRI Index 80

GRI G3 Application Level 85

KMAR Verification Report 86

●: Disclosed ◐: Partially disclosed ○: Not disclosed N/A: Not applicable

GRI Index Performance Indicators Reporting Status Page Remarks

Management

Approach and

Performance

Indicators

EN6 Energy saved by initiatives to supply and/or use energy-efficient or recyclable energybased

products and services

EN7 Lowering of indirect energy consumption and achievement

Water

EN8 Total water extraction by source

EN9 Water sources significantly affected by extraction

EN10 Total volume and ratio of water reused and recycled

Biodiversity

EN11 Locations and size of land owned, leased and managed in protected areas, areas of

high biodiversity or the surrounding areas

EN12 Impacts on biodiversity by activities, products and services in protected areas and

areas of high biodiversity

EN13 Protected or restored habitats

EN14 Biodiversity management strategies, current measures and future plans

EN15 Number of nationally-designated endangered species and IUCN Red List species

inhabiting areas affected by operations and the risk of extinction

Emissions, wastewater and waste

EN16 Total direct and indirect greenhouse emissions

EN17 Other relevant greenhouse gas emissions

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved

EN19 Emissions of ozone-depleting substances by weight

EN20 NOx, SOx and other significant air emissions by weight

EN21 Wastewater discharge and collection at final discharge site

EN22 Waste by type and disposal method

EN23 Release of hazardous substances by number and volume

EN24 Weight of transported, imported, exported or treated waste deemed hazardous

under the terms of the Basel Convention Annex I, II, III and VIII and percentage of

waste shipped internationally

EN25 Identity, size, protection status and biodiversity value of water resources and related

habitats significantly affected by the organization’s wastewater discharge

Products and services

EN26 Initiatives to mitigate environmental impacts of products and services and the

results

EN27 Percentage of reuse of the products sold and packing materials

Legal compliance

EN28 Count of fines and non-monetary sanctions for non-compliance with environmental

regulations

Transport

EN29 Significant environmental impact by transportation of products and raw materials

and movement of employees

Overall

EN30 Total environmental protection expenses and investments by type



















N/A



N/A

N/A



29, 38, 44

29, 45

38

38

38

42

42

42

42

42

45

45

44-45

37

37

38

41

40

38

63

45

36

No shipment

No packing

material needed

No violation

●: Disclosed ◐: Partially disclosed ○: Not disclosed N/A: Not applicable

GRI Index Performance Indicators Reporting Status Page Remarks

◉ Social Performance–Working Conditions and Practices

- Management approach disclosure

Employment

LA1 Breakdown of workforce by employment type, employment contract and region

LA2 Workforce fluctuation (by age group, gender and region)

LA3 Benefits provided only to full-time employees and not to temporary or part-time

employees (by major business location)

Labor-management relations

LA4 Percentage of employees covered by collective wage agreements

LA5 Minimum notice period(s) regarding significant operational changes (including status

of specification in the collective wage agreements)

Occupational health and safety

LA6 Percentage of employees represented by the joint labor-management public and

health committee

LA7 Injuries, occupational diseases, absentee rates and work-related fatalities (by region)

LA8 Education, training, consultation, prevention and risk control programs to support

local residents as well as employees and their families in relation to serious diseases

LA9 Health and safety issues covered by formal agreements with trade unions

Training and education

LA10 Annual average training and education hours per employee by employee category

LA11 Occupational education and lifelong learning programs for continuous employment

and retiree support

LA12 Percentage of employees subject to periodic performance evaluation and career

development review

Diversity and equal opportunity

LA13 Composition of senior management and employee structure (various indicators,

such as age, gender and ethnicity)

LA14 Basic wages by gender and employee category

◉ Social Performance-Human Rights

- Management approach disclosure

Investment and procurement

HR1 Count and ratio of major investment decisions that include human rights clauses or

screening

HR2 Percentage of suppliers that have undergone screening on human rights

HR3 Employee training hours on work-related human rights policies and procedures

(including percentage of employees to complete the training)

Anti-discrimination

HR4 Incidents of discrimination and action taken

Freedom of association and right to collective bargaining

HR5 Businesses with significant risk of infringement on the rights to exercise freedom of

association and collective bargaining and actions taken to guarantee the rights

Child labor

HR6 Businesses with significant risk of child labor and actions taken to eradicate child

labor

Forced labor

HR7 Businesses with significant risk of forced labor and actions taken to eradicate forced

labor

Security practices

HR8 Percentage of security personnel completing education on work-related human rights

policies and procedures

















N/A








48

50

50

50

57

57

55

55

51, 55

57

53

52-54

50, 52

50

50

51

15

56

56

56-57

56

56-57

55, 56

No investment in

the reporting year


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

APPENDIX

GRI INDEX

GRI G3 application level

84 85

2009~2010 Sustainability Management News

Awards and Certificates

76

78

Membership Status

79

Materiality Test

79

GRI Index

80

GRI G3 Application Level

85

KMAR Verification Report

86

●: Disclosed ◐: Partially disclosed ○: Not disclosed N/A: Not applicable

● NO VIOLATION

GRI Index Performance Indicators Reporting Status Page Remarks

Indigenous rights

HR9 Incidents of violating the rights of indigenous peoples and actions taken

◉ Social Performance–Social Performance Indicators

- Management approach disclosure

Local community

SO1 Characteristics, scope and validity of program to assess and manage impacts on local

communities at the beginning of, during and completion of an operation

Corruption

SO2 Percentage and number of business areas analyzed for risk of corruption

SO3 Percentage of employees trained in corruption prevention policies and procedures

SO4 Action taken in response to incidents of corruption

Political affairs

SO5 Public policy positions and participation in public policy development and lobbying

SO6 Total donations in cash or ‘in kind’ by country to political parties, politicians and

related organizations

Anti-competitive behavior

SO7 Legal sanctions against unfair competition and monopolistic behavior and the results

Legal compliance

SO8 Count of fines and non-monetary sanctions for non-compliance with laws and

regulations

◉ Social Performance–Product Liability

- Management approach disclosure

Customer health and safety

PR1 Product lifecycle stage in which the health and safety impact of a product or service

was assessed for the purpose of improvement & ratio of conducting the assessment

on major products and services

PR2 Count of violations of regulations and voluntary rules related to impacts upon customers’

health and safety during the lifecycle of the product or service (by result type)

Products and services

PR3 Type of product and service information necessary in terms of procedures, and

percentage of products and services that are subject to the information requirement

PR4 Count of violations of regulations, voluntary rules related to product service

information, and labeling (by result type)

PR5 Customer satisfaction activities, such as customer satisfaction survey results

Marketing communication

PR6 Programs for compliance with laws, standards and voluntary codes related to

marketing communication, such as advertising, endorsement and sponsorship

PR7 Count of violations of laws, standards and voluntary codes related to marketing

communication, such as advertising, endorsement and sponsorship

Protection of customers’ personal information

PR8 Count of complaints raised in relation to violation of customers’ personal information

protection and customer data loss

Legal compliance

PR9 Fines for non-compliance with laws and regulations concerning the use of products

and services

N/A







N/A





N/A


N/A



N/A

N/A

N/A

48, 59, 69

15

60

60

60

35, 79

59

59

63

63, 65

65

63

60, 63

No violation

No donation

No violation

No violation

No violation

No violation

No violation

Standard Disclosures

Hyundai Oilbank independently declared that GRI G3 guidelines were applied in preparation of the 2009

Sustainability Report and that this report satisfies the requirements of level A in accordance with the application

level evaluation criteria listed below.

The KMA, as a result of its review, confirmed that the report qualifies for an A+ ranking in accordance with the GRI

G3 ranking system of A, B and C.

*The symbol ‘+’ indicates that this report was verified by a third party.

GRI G3 APPLICATION LEVELS TABLE

Report Application Level C C+ B B+ A A+

G3 Profile

Disclosure

G3

Management

Approach

Disclosure

G3 Performance

Indicators and

Additional

Industry

Indicators

Output

Output

Output

Disclosure Items:

1.1, 2.1-2.10, 3.1-3.8,

3.10-3.12, 4.1-4.4, 4.14-4.15

Not necessary

At least 10 performance

indicators must be reported

(including one or more for each

of the following indicators:

economic, environmental

and scial)

Outside Report Verification

Disclosure Items:

All items of level ‘C’ and 1, 2,

etc. 1.2, 3.9, 3.13, 4.5-4.13,

4.16-4.17

Disclosure of management

approach for each indicator

At least 20 performance

indicators must be reported

(including one or more for

each of the following

indicators: economic,

environmental, human

rights, labor, society and

product liability)

Outside Report Verification

Disclosure Items:

Same as level ‘B’

Disclosure of management

approach per each indicator

According to the principle

of importance, all G3 core

performance indicators and

industry guide indicators

must be a) reported or b)

explained why they are not

being reported

Outside Report Verification


HYUNDAI OILBANK SUSTAINABILITY REPORT 2010

86 87

APPENDIX

2009~2010 Sustainability Management News 76

Awards and Certificates 78

Membership Status 79

Materiality Test 79

GRI Index 80

GRI G3 Application Level 85

KMAR Verification Report 86

For the attention of the readers of the Hyundai Oilbank Sustainability Report 2010

◉ Verification Procedures and Conclusion

◉ Forward

The Korea Management Association Registrations and Assessments (KMAR) has been requested to verify the

contents found within the Hyundai Oilbank Sustainability Report 2010 (‘the report’). The management of Hyundai

Oilbank is responsible for preparation of this report, and the responsibility of KMAR lies in issuing a verification report

on specific information within the scope specified below.

◉ Independence of Verification

With the exception of providing a third party verification service, KMAR is not involved in any way with Hyundai Oilbank

in terms of its business operations that are aimed at making profits in order to avoid any conflicts of interest and to

maintain independence.

◉ Verification Scope

Through this report, Hyundai Oilbank states its strategies, activities and performance with regards to its sustainability

management endeavors. This verification has been designed to provide readers with the following information.

• Economic Sector

As defined in the Verification Procedures and Conclusion, this is to verify whether the financial performance data

have been appropriately extracted from the audit and business reports on Hyundai Oilbank’s individual financial

statements of 2009.

• Environmental Sector

This is to verify whether the information contained in the following parts of the report has been appropriately stated.

- Environmental preservation activities and climate change response

- Development of high-quality eco-friendly products and handling of environmental regulations

• Social Sector

This is to verify whether information contained in the following parts of the report has been appropriately stated.

- Ethical management

- Sustainability management system

- Stakeholders (customers, employees, shareholders and business partners)

- Social contributions

KMAR undertook the steps outlined below to verify the facts of the report within the agreed upon scope of verification

as well as Hyundai Oilbank’s internal processes for data and report preparation.

•Surveyed economic, social and environmental media information concerning Hyundai Oilbank’s products,

activities and services during the reporting period

•Reviewed the systems and processes used in producing the data

•Reviewed internal documents and data

•Interviewed persons related with the disclosed activities and performances

Based on the results of the document review, visits to divisions and interviews, the verifier held several discussions

with Hyundai Oilbank’s handling officers concerning revisions proposed for the report and reviewed the final draft

version of the report to check whether the recommendations and revisions were incorporated.

• Economic Performance

Comparison was made against Hyundai Oilbank’s financial statements of 2009. The data on financial performance

listed in the report have been appropriately extracted from Hyundai Oilbank’s individual financial statements of

2009.

• Environmental and Social Performance

Information listed in relation to Hyundai Oilbank’s environmental and social performance has been appropriately

stated and no significant error was discovered.

• Recommendations for Improvement

The verifier, hoping that the Hyundai Oilbank Sustainability Report will be actively made use of as a means of

communication with stakeholders, recommends the following for continuous improvement of the report.

- Establishment of sustainability management strategies in connection with the company’s management strategies

- Establishment of a more systematic process and standards for environmental and social data

‘Stated appropriately’ means that the contents of the report have been appropriately reflected with actual data

and source information and presented in a consistent and reliable manner. For the economic sector, the rational

verification is of a level higher than that of the limited verification in terms of the characteristics and extent of the

operations administered.

◉ Verification Standards

KMAR conducted the verification based on verification standards that have been developed in accordance with the

Accountability “AA1000 Assurance Standard.” In addition, KMAR used the ‘International Standard on Assurance

Engagements (ISAE 3000): Assurance Engagements other than Audits or Reviews of Historical Financial Information’

issued by the International Auditing and Assurance Standards Board as a supplementary guide.

CEO Ki Ho Park


INTRODUCTION

Sustainability Report Publication TFT

Seoul Office

ㅣ Internal Audit Teamㅣ Corporate Secretarial Teamㅣ Public Relations Teamㅣ

ㅣ PE Team ㅣ General Affairs Teamㅣ Procurement Teamㅣ Corporate Planning Teamㅣ

ㅣ Energy Policy Teamㅣ Legal Affairs Teamㅣ HRM Teamㅣ HRD Teamㅣ Treasury Teamㅣ

ㅣ Accounting Teamㅣ Knowledge Production Teamㅣ Network Development Teamㅣ

ㅣ Marketing Teamㅣ Sales Strategy Teamㅣ Sales Support Teamㅣ Detail Sales Divisionㅣ

ㅣ COCO Divisionㅣ Commercial Sales Divisionㅣ LPG Teamㅣ Supply Teamㅣ

ㅣ Logistics & Terminal Operation Teamㅣ Crude Oil Trading Teamㅣ

ㅣ Quality Management Teamㅣ Business Management Teamㅣ

Daesan Plant

ㅣ Technical Service Teamㅣ Labor Relations Teamㅣ Production Control Teamㅣ

ㅣ General Affairs Teamㅣ Quality Assurance Teamㅣ Environment & Safety Teamㅣ

Supervision

ㅣ Environmental Policy Teamㅣ

FORWARD-LOOKING STATEMENTS

In stating its sustainability management activities, Hyundai Oilbank used forward-looking

terminologies, such as ‘anticipate’, ‘predict’, ‘schedule’ and ‘plan’, based on predictions,

assumptions, estimations and plans as of the present point in time. These statements

have been especially used to express the future plans of activities including management

strategies, performance goals, R&D and investments. It is cautioned to not place undue

reliance on these forward-looking statements, which reflect the management's current

analysis of future events. For events or developments occurring after publication of this

report, Hyundai Oilbank will reflect them in the next sustainability report.

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