Strengthening the Oil Business to Enhance Profitability

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Strengthening the Oil Business to Enhance Profitability

Developing EPOCH 2010

Strengthening the Oil Business to Enhance Profitability

Ensuring a Stable Energy Supply, Providing Products and Services People Need

Showa Shell is striving to ensure a stable supply of safe and secure products through the

management of a supply chain that spans the range from crude oil procurement to end product

sales. It is also fulfilling its social mission as an energy company by developing products with a low

environmental impact, and by striving to further improve Showa Shell branded products and

services through close partnerships with dealers and staff training programs.

15 Showa Shell Sekiyu Sustainability Report 2011


Supply Chain Optimization and Efforts to Ensure a Stable

Supply of Petroleum Products

Fundamental Considerations

As an energy company, Showa Shell has a responsibility to do everything in its power to secure energy resources and ensure a stable

supply of the energy that is essential for everyday living and a thriving business and social environment. One of its most important

roles is to ensure a stable supply of petroleum, which is in high demand as the primary source of energy in Japan. Showa Shell will

continue to ensure stable petroleum supplies through its various efforts, including efforts to strengthen its various partnerships.

Ties with Petroleum Suppliers

Maintaining Stockpiles at Optimal Levels

Message from

the Chairman

Showa Shell’s Efforts in the

Wake of the Earthquake

Company Profile and

Business Overview

Utilizing its global partnership with the Shell Group, its principal

shareholder, Showa Shell Sekiyu K.K. is expanding its energy

menu through technology sharing and the exchange of human

resources, and has achieved efficiencies in procurement. This has

further strengthened the company’s stable and efficient procurement

system. The company’s relationship with Saudi Aramco has made

it possible to procure crude oil from Saudi Arabia more efficiently

and with greater flexibility. Having an office in Saudi Arabia is

also helping the company develop ties with oil companies in the

other oil-producing countries of the Middle East.

Safe and Secure Refining Operations

and Petroleum Product Shipments

To ensure a stable supply of products to customers, Showa Shell

is striving to maintain and improve reliability by formulating a

long-term master plan for facility investment and maintenance at

its refineries.

The group is striving to enhance the safety and security

of shipping operations by strengthening safety measures in its

maritime and tank trunk shipment practices, and by promoting its

Safety and Quality First campaign.

(For specific efforts, see p.37-38.)

It is extremely important for countries with few resources to

make the procurement of energy supplies a part of their

national strategy and to strengthen energy safety and security.

Under Japan’s Oil Stockpiling Act, both the government and

the private sector are required to stockpile supplies of oil.

Showa Shell Sekiyu K.K. stockpiles 70 days worth of its

domestic annual sales volume of crude oil and oil products (not

including LPG). The company also maintains a stockpile of 50

days worth of its annual LPG imports.

Sales Tailored to Local Needs

Showa Shell recognizes that its growth is dependent on

the growth of its dealers, and thus on a “dealer-minded”

approach, and thus strives to promote close communication

with dealers, who tailor their businesses to their local

communities. The group pursues efforts aimed at ensuring

a stable and reliable supply of products and services to

customers, including collaborative efforts to develop the skills

of SS staff and other sales personnel.

(For specific efforts, see p.19-20.)

Message from

the President

Developing EPOCH 2010:

Oil Business

Accomplishments

in Fiscal 2010

and Future Objectives

Human Resource Training

Corporate Governance and

and the Creation of

Internal Control Systems

Accommodating Workplaces

Showa Shell Sekiyu Sustainability Report 2011

16


Strengthening the Oil Business to Enhance Profitability

Showa Shell Products

Showa Shell Products Strive to Offer a Reduced Environmental Impact, High Quality

Fundamental Considerations

Showa Shell is contributing to the achievement of a sustainable society in its role as an energy solutions provider by continuing to

develop and supply high quality and environmentally sound products that satisfy customers. These products include gasoline that

helps keep auto engines clean, high performance energy-saving lubricating oils, and asphalts that can lower surface temperatures.

Shell Pura Gasoline Keeps Engines Clean

This high octane gasoline

is good both for cars and

for the environment. It was

developed to meet the

needs of customers who are

committed to keeping their

cars in tip-top shape, and who want to enjoy the comfortable

ride of a new car for as long as they own their vehicle.

This product uses a proprietary additive developed

in conjunction with Shell UK, making it considerably better

than gasoline with ordinary properties for removing buildup

in the intake valve. By working directly on this valve

build-up, this additive keeps engines clean on the inside,

enabling the engine to maintain its original properties and

contributing to reduced toxic emissions. It is currently being

sold in 26 prefectures around Japan.

V O I C E

Voice of a Shell Pura User

Web www.showa-shell.co.jp/products/shellpura/

I’ve been using Shell Pura for four years since I purchased my car. I

primarily drive to work, and put about 2,000 kilometers on the car

each month. I’m really concerned with keeping my car clean, so I’m

glad that there’s a reliable way to keep the engine clean as well.

(40-year-old male)

Toyota Crown (total mileage: 39,285 km)

Next-Generation Clean Eco Arayashiki Service Station Opened in 2010 (December 2010)

In December 2010, the Clean Eco Arayashiki Service Station, equipped

with disaster-resistant facilities and offering next-generation energy solutions,

opened in Okayama Prefecture.

This SS is equipped with a high-speed charger for electric vehicles

(EVs), enabling EVs to recharge their batteries on site. Designed to serve the duel

purposes of protecting the environment and contributing to its local community,

this disaster-ready service station is equipped with CIS thin-film solar modules

and power storage batteries that provide a portion of the energy it requires to

operate. It is also equipped with its own power-generating equipment and a

water tank, enabling it to offer a stable supply of petroleum products and water

for household use during emergency situations.

17 Showa Shell Sekiyu Sustainability Report 2011


Low-Odor Shell Eco-Toyu Kerosene

Designed specifically for fan heaters, Shell Eco-Toyu is made from natural gas and

contains almost no sulfur. It therefore lacks the odor and surface tackiness typical of

conventional kerosene. With its excellent product stability and lack of odor, it can

be comfortably used in living rooms, children’s rooms, and the rooms of the ill or

aged, and even in restaurants and hospitals. Showa Shell began expanding the

sales region of Eco-Toyu in November

2010, and it is now sold in service

stations in 120 locations across

Japan. It is also available for sale

over the Internet and can be shipped

to destinations nationwide (excluding

Okinawa and outlying islands).

Lubricating Oils

Shell HELIX: An Automotive Engine Oil

The Shell HELIX Series line-up was upgraded in September 2010

due to the adoption of stricter standards by the American Petroleum

Institute (API) and the International Lubricant Standardization

and Approval Committee, an engine oil grading organization

comprised of Japanese and American auto makers. Because of

the high fuel efficiency levels being required of automobiles due to

increasingly stringent environmental regulations,

Showa Shell has made plans to improve its lowviscosity

oil and DL-1 specifications-compliant oil.

In the future, Showa Shell will improve the fuel

efficiency and engine response of its customers’

Shell HELIX series line-up

New Mellowphalt: Colored Asphalt

This colored asphalt reduces the odor typically associated with

road paving. Because of its light shade, it blends in with the

surrounding landscape, including natural features and historical

streetscapes. New Mellowphalt

also remains up to 20°C cooler

than black asphalt during the

summer, and is attracting attention

for its ability to combat the urban

heat island phenomenon.

Dazaifu Tenmangu Shrine

Web www.shell-ecotoyu.jp/

V O I C E

Voices of Eco-Toyu Users

Because I have a bad back, I was particularly grateful to be able to

have this product delivered to my parents’ doorstep, as they live on

the 3rd floor of an apartment building. (30-year-old female, housewife)

I use a fan heater in my office, and I’ve long been concerned about

the oily odor it produces. When I went looking for kerosene with an

odor that would not get into the clothes my company sells, I came

across Eco Toyu, and was really impressed by its low odor level.

(40-year-old female, self-employed)

Web www.showa-shell.co.jp/products/lub/

cars based on the global concept behind the Shell HELIX Series:

“Clean on the Inside.”

Low Environmental Impact Oil: Shell Tellus Oil SX-Z

Shell SX-Z Tellus Oil is a hydraulic oil product that both saves

energy and boasts a flash point higher than 250°C. With

low viscosity and a high flash point, this groundbreaking

product achieves reduced energy consumption

in hydraulic systems thanks to its low density,

and received the 2009 Japan Petroleum Institute

Award for Technological Progress by the Japan

Petroleum Institute.

Shell Tellus Oil SX-Z

High Drainage, Low Noise Asphalt: Drainage Eco

Drainage ECO is a pavement with excellent drainage and low

noise properties that contributes to traffic safety during rainy

weather and reduces traffic noise. Because it can be handled

at low temperatures, it produces

fewer odors during construction,

and offers significant reductions

in energy consumption and

CO2 emissions.

(Left) High-drainage pavement (Right) Ordinary pavement

Message from

the Chairman

Showa Shell’s Efforts in the

Wake of the Earthquake

Company Profile and

Business Overview

Message from

the President

Developing EPOCH 2010:

Oil Business

Accomplishments

in Fiscal 2010

and Future Objectives

Human Resource Training

Corporate Governance and

and the Creation of

Internal Control Systems

Accommodating Workplaces

Showa Shell Sekiyu Sustainability Report 2011

18


Strengthening the Oil Business to Enhance Profitability

Showa Shell Services

Offering Value-Added Services Needed by Customers

Fundamental Considerations

Showa Shell builds strong relationships with its dealers, sales outlets, business partners, and group companies, and works with those

stakeholders to improve its services and levels of customer satisfaction. The group strives to provide internal certification and training

programs for all levels of partners who operate on the business front lines, and to offer high quality services that satisfy customers.

Communication with Partners

Showa Shell works with its dealers, group companies, and other business partners, to maintain a brand that will be forever

supported by its customers, and uses every opportunity, including various meetings, to promote good communication and to

build relationships of mutual trust.

Partnerships with Dealers

Dealers that have close ties with their communities and provide

products and services that meet customer needs are vitally

important strategic partners that play a crucial role in Showa

Shell’s business. Showa Shell holds meetings in each business

area to raise awareness about the environment facing the industry

and to share its business vision. It also holds training sessions

and competitions to help dealers learn from one another and

share information. Showa Shell will continue its efforts to provide

services that are supported and appreciated by its customers.

Applicable Dealers

National and regional Showa Shell associations: SS operators, industrial fuel dealers

National and regional Showa Shell gas associations: Gasoline dealers

National and regional Showa Shell Sekiyu Koujunkai: Dealers specializing in advanced lubricating oils

Showa Shell Sky Club: Aviation fuel dealers

V O I C E

Business Partner Comment

After the Great East Japan Earthquake, we

worked with Showa Shell in every way possible

to respond to the disaster. I am proud of the

contributions that were made.We began selling

Solar Frontier’s solar modules last year, and I am

confident looking ahead that as the times and

market changes, our partnership with Showa Shell

will grow even stronger.

Tadahiro Hamada, President Niigata Shell Co., Ltd.

In front of the company’s solar panels

19 Showa Shell Sekiyu Sustainability Report 2011


Personnel Training Program for Staff at the Forefront of Sales Activities

The real driving force behind the Showa Shell brand comes from the dealer employees who stand at the forefront of Showa Shell’s sales

activities. These include service station staff who help keep customers safe and comfortable while they drive, and employees responsible for

selling lubricating oils for factories and ships, as well as liquid natural gas. Showa Shell supports staff training by offering its own certification

and training programs, and strives to ensure customer satisfaction by developing bonds of “technological trust” with its customers.

Message from

the Chairman

Showa Shell Royal Manager Certification Program

This certification program aims to develop storefronts to earn the trust of

customers, and to cultivate leaders who will be able to manage Showa

Shell’s SS network. With more than 30 years since it was launched

in 1979, the first class of the Showa Shell Royal Manager (SRM)

certification program is recognized as one of the toughest offered by

Showa Shell, and has earned a strong reputation across the industry.

In June 2010, SRM certified managers came together at the National

SRM Meeting, which is designed to help participants further develop

their skills through the sharing of information and opinions.

No. of managers certified in 2010 :1st class 11, 2nd class 94, 3rd class 488

Number of certificate holders as of December 2010: 1st class 280, 2nd class 1,823, 3rd class 6,619

Showa Shell Oil Meister Certification Program

Nationally certified auto mechanics can become certified oil experts once

they show they have acquired in-depth knowledge of automotive oils

by completing Showa Shell’s internal training program and through their

previous experience.

No. of individuals certified in 2010: 173 Number of certificate holders as of December 2010: 1,183

Showa Shell Car Life Advisor Certification Program

This program offers additional certification to those who have already been

certified as Oil Meisters and who also possess automotive knowledge and

repair skills, as well as excellent customer communication skills.

No. of individuals certified in 2010: 268 Number of certificate holders as of December 2010: 88

Lubricant Expert Program

Under this program, which is designed to promote the sales of lubricating

oils and grease that meet customer needs, staff who have specialized

knowledge and advanced skills in this area are certified based on

their sales experience, training, and a certification exam. The National

Lubricant Expert Training Meeting held in May 2010 included lectures

by outside experts, as well as opportunities for participants to present

information and share opinions.

No. of individuals certified in 2010: 1st class 4, 2nd class 33

Number of certificate holders as of December 2010: 1st class 149, 2nd class 583

Sales Manager Certification Program

This program certifies staff who have knowledge of the Energy and Home

Solutions Business, including LPG, who are equipped to present proposals

that meet customer needs, and who demonstrate excellent leadership skills.

No. of individuals certified in 2010: 1st Class 2, 2nd class 14

Number of certificate holders as of December 2010: 1st class 16, 2nd class 109

Service Driver Certification Program

Certificate holders are primarily staff who are involved in LPG delivery,

and who have excellent LPG knowledge, accurate safety knowledge, and

strong customer service skills.

No. of individuals certified in 2010: 11

Number of certificate holders as of December 2010: 80

Showa Shell’s Efforts in the

Wake of the Earthquake

Company Profile and

Business Overview

Message from

the President

Developing EPOCH 2010:

Oil Business

Accomplishments

in Fiscal 2010

and Future Objectives

Third Oil Meister Championship

In October 2010, in an effort to further improve the

knowledge and skills of certified Oil Meisters and Car

Life Advisors, a competition was held to identify the best

Oil Meister in Japan. The 32 winners of a preliminary

round from various branches and sales offices competed

on the basis of their daily demonstration of knowledge,

technical skills, and customer service skills, through both

hands-on practice and written exams.

V O I C E

2010 Grand Champion Comment

By reviewing inspection methods and work techniques, I

was able to conduct an accurate and quick inspection,

and provide an easy-to-understand explanation for the

customer. As a result, I am thanked for giving accurate

advice in response to their needs and requests. I am

committed to provide quality service, and will strive to

continue being a trusted Oil Meister.

Hisanori Nozaki, General Manager, Okazaki Showacho

Self-Service Station, Ezaki Corp.

Human Resource Training

Corporate Governance and

and the Creation of

Internal Control Systems

Accommodating Workplaces

Showa Shell Sekiyu Sustainability Report 2011

20

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