Sustainability management at S-OIL starts from understanding the expectations of C.E.O. (Customers, Employees, Owners & other stakeholders). Going forward, the Company will create economic, environmental, and social values reflecting the expectations of C.E.O. and contribute to the development of society and the nation.

At S-OIL, customer satisfaction comes before everything. We continue to build our brand value through reasonable price and utmost product quality, and focus on satisfying customer needs to secure their trust which will constitute the foundation for our sustainable growth. We also strive to sharpen our overseas marketing capabilities by enhancing strategic partnerships with key customers abroad and, at the same time, exploring new markets.

Realization of Customer Satisfaction

S-OIL concentrates its capabilities on enhancing consumer satisfaction with products of top quality and reasonable prices. S-OIL delivers practical benefits to consumers through consistent and comprehensive marketing activities while seeking shared growth with gas stations and LGP filling stations based on long term relations.

Reasonable Product Pricing

S-OIL strives to resolve consumers' suspicions and realize consumer benefits by sticking to reasonable and competitive pricing policy. Operating an independent product pricing system to take into consideration factors that affect domestic oil product prices such as fluctuations in international oil prices, F/X and domestic market conditions, S-OIL is leading the domestic pricing with fair and reasonable policy. Although consumers rarely feel the instant impact of lower crude oil price first hand due to high taxes and the lagging structure, the Price Operation Committee at S-OIL sets standard prices of gasoline, diesel, and kerosene in the domestic market. S-OIL promises to maintain this fair product pricing policy to deliver products to consumers at reasonable and competitive prices, thus contributing to stabilizing domestic oil prices and maximizing consumer benefits.

Expansion of Domestic Market Share and Enhancement of Consumer Convenience

As the slowing demand for petrochemical products, increasing market uncertainties, and intensifying competition among suppliers aggravate sales conditions, S-OIL is striving to boost its domestic market share on many fronts. For example, while securing a reliable source of demand by expanding its sales network with LPG filling stations, service stations, and direct sales offices, the Company carries out differentiated programs to enhance competitiveness by solidifying ties with existing trading partners. Despite the decreasing number of gas stations across the nation, S-OIL is the only refinery in Korea to see the number of gas stations increase, thus minimizing inconvenience for customers. As a result, S-OIL captured a 21.8% share of the domestic market for retail light oil products in 2016, record high since its establishment. S-OIL promises to expand its sales network to enhance consumer convenience and boost its domestic market share by exploring new business opportunities.

Swift and Accurate Treatment of Customer Complaints

S-OIL established an integrated VOC operation system in 2012 to handle all customer feedback received via customer centers and websites. The VOC handling period is set by VOC type and reflected in KPI for swift treatment. Also, the result of the satisfaction survey on VOC handling is reflected in the VOC operation procedure for a continued improvement of the system. The handling status is notified to customers via SMS and e-mails. We also run the "Compensation for Excellent VOC Activities," an incentive system since 2015 to boost the morale of employees who handle VOCs. The big data collected in the integrated VOC operation system are utilized to identify patterns in customer complaints. The results are shared in the customer complaints analysis report and training materials for service stations and LPG filling stations. In addition, we select particular service stations and LPG filling stations each month to support their customer complaints response program called "See You Again Call" and share tips on how to stave off customer complaints categorized by complaint type. In 2016, the "Hidden VOC" program was launched to find out customers' negative experiences they did not file with the Company in a direct manner by visiting services stations, LPG filling stations, and business partners, which contributes to preemptively responding to customer complaints.

Support for Competitiveness Enhancement for Service Stations and LPG Filling Stations

S-OIL is committed to helping service stations and LPG filling stations to enhance competitiveness and improve management by conducting a variety of supporting programs as part of efforts to promote win-win partnerships.
GOODOIL Etiquette & Clean Up Campaign
According to a survey on consumer awareness of service stations and LPG filling stations, consumers found service attitude and restroom hygiene most unsatisfactory. It is based on this result that S-OIL launched the "GOODOIL Etiquette and Clean Up Campaign" in 2016 aimed at boosting customers' revisit rate. All employees of the Company have visited affiliated gas stations and LPG filling stations 1,500 times per year to clean up restrooms and provide core services to customers as part of the "Smile Day" activities. S-OIL also launched the "GOODOIL Etiquette with U" campaign where service staff welcomed customers with smile. The Company produced three video clips for public goods to encourage customers' participation and uploaded the clips on YouTube. 20 gas and LPG stations participated in the free gas filling event for customers who greeted sales staff with smile.
Operation of the Field Management System
In order to improve service quality at gas stations and LPG filling stations to meet increasingly rising customer expectations, S-OIL launched "YES Team" for field education, "Encouragement Team" to teach employees on HR management, and "Monitoring Team" to inspect service status at gas stations and LPG filling stations. In 2017, S-OIL plans to enhance education on systematic response to customer complaints to minimize customer inconvenience.
Academy for Management Capability Enhancement
S-OIL provides a wide range of supporting programs such as on- and off-line education, consulting by in-house consultants, and the GOODOIL Family Magazine to help affiliated service stations and LPG filling stations enhance management capabilities. "Education for gas station owners" and "on-site education" are offered by District Business HQs and sales offices respectively. The bi-monthly GOODOIL Family Magazine contains information on management, relevant law and regulations, policies, and the Company's major marketing activities and support programs.
Revenue Diversification through Developing and Supplying Non-Oil Business
With the profitability of gas stations and LPG filling stations compromised by intensifying price competition, S-OIL has developed non-oil business which affiliated gas stations and LPG filling stations can adopt to diversify their revenue portfolio and secure their competitive edge. S-OIL has introduced non-store and small-budget non-oil business such as car supplies sales, brokerage business, and bottled water sales to its affiliated gas stations and LPG filling stations since 2014. Beginning in 2015, the Company is providing affiliated gas and LPG stations with quality PB products such as urea solution and ethanol washer fluid at competitive prices.
Awarding System for Gas Station and LPG Filling Station Owners
S-OIL selects owners of gas stations and LPG filling stations who achieved remarkable performance in terms of service, facility management, sales volume, and profitability, and awards the "S-OIL Champions Club" to them every year. The "S-OIL Champions Club" boosts competition in good faith and lets selected gas and LPG stations share good service cases, contributing to improving their management capabilities.
Support for Promotional Events
S-OIL supports the purchase of bottled water, wet tissue, and other promotional goods for affiliated gas stations and LPG filling stations according to the yearly promotion plan. The Company implements differentiated promotions for different regions for competitiveness enhancement.
Enhancement of Customer Relationship
S-OIL operates a No. 1 membership system in the oil refining industry. S-OIL is the only refinery in Korea that entered into partnership with all five credit card companies and launched the welfare credit card for freight car drivers. The Company also carries out customized promotions through the Customer Relationship Management System for its Bonus Card subscribers while offering a wide range of price discount in partnership with most domestic credit card companies. S-OIL will continue to conduct diversified marketing campaigns in collaboration with credit card companies and provide customers with practical benefits.

Product Quality Assurance

S-OIL operates the quality management system in observance with ISO 9001, producing quality products which meet customers' expectations. With the system, S-OIL provides consumers with products of top quality while minimizing environmental and safety impact by developing eco-friendly goods.

Enhancement of R&D Capabilities

S-OIL continues to invest in R&D activities aimed at improving product quality and advancing production facilities to build on the technology the Company has already developed. The Company also works with prestigious colleges and research institutes in many R&D projects such as high value-added product technology based on by-products from petrochemical products, benzene removal technology, BTX conversion technology, new desulfurization technology, CO2 utilization technology, high-efficiency eco-friendly fuel oil development, and more.
Development of New Products
S-OIL holds domestic patents on "long life gasoline engine oil" and "long life diesel engine oil of improved fuel efficiency" that were developed jointly with the Hyundai-Kia Automotive Group Namyang R&D Center. S-OIL continues to engage in joint R&D projects, developing engine oil as well as auto transmission engine oil. The Company also develops hydraulic oil and other types of industrial oils to meet varying consumer needs.
Technology Support through Pilot Plants
Having succeeded in operating a high pressure pilot plant, which produces clean lube base oil, and another BCC pilot plant, S-OIL possesses the most advanced research facilities and experience in the refining process. Our sophisticated facilities contribute to improving production process and catalyst assessment. As a result, the Company has raised profitability as well as minimized impact on the environment and consumer safety by manufacturing the entire products as light oil or ultra-low sulfur products.
Introduction of the Latest Analysis Equipment and Technology
S-OIL has introduced the latest analysis equipment and technology to ensure stable quality management and customer trust. The reliability of analysis is secured by regularly checking the accuracy of equipment through authorized institutions as well as in-house verification programs. We also conduct training programs to help improve our analysis ability, thereby securing industry-leading quality improvement capabilities and increasing production efficiency. Moreover, the Company participates in the comparison test on the degree of precision between laboratories at home and abroad hosted by professional agencies such as ASTM and K-Petro every year, which contributes to securing analysis reliability, verifying analysis methods, and further improving the accuracy of analysis technologies.

Production of High-quality Eco-friendly Products

S-OIL has won the highest grade for its gasoline and diesel in the environmental quality evaluation. The Company's kerosene also obtained the "Eco-Labeling" certification in 1994 for the first time among Korean refiners in recognition of its superior eco-friendliness, and has maintained the certification ever since and won the Minister Prize of Environment in 2014.
Introduction of New Processes
The Company is proactive in introducing new processes as well as revamping and upgrading them to develop and supply high-efficiency eco-friendly products. For example, the diesel dewaxing process was introduced to innovatively improve the stability of diesel performance even at low temperature in winter. Moreover, we upgraded our lube base oil production process, which dramatically reduced the emission of a hazardous chemical substance PAH (Poly Aromatic Hydrocarbon) and allowed us to supply more eco-friendly and safer lube base oil to the market. The introduction of alkylation process and RFCC process is now promoted to ensure better quality of gasoline.
Prevention of Market Distribution of Sub-quality Products
Our real-time quality monitoring system detects in advance any factor that can have negative effects on product quality throughout the entire production process from purchase of raw materials to market distribution, which ensures the supply of only the products satisfying quality standards to our customers.

Enhancement of Quality Management in the Market Distribution Process

S-OIL always pays full attention to systematic product quality management in the entire market distribution process, as well as in the production process, with the aim of preventing pollution or quality degradation of products at service stations and LPG filling station and ensuring customers' rights to purchase products with specified quality and quantity. As a result, our diesel was selected as the best customer value product by winning top marks in the diesel category of "2016 THE PROUD CONSUMER SURVEY" hosted by KMAC (Korea Management Association Consulting).
Strict Inspection on Product Quality of Service Stations and LPG Filling Stations
Quality inspection on all affiliated service stations and LPG filling stations is conducted at least six times a year, which is guided by the Inspection Team dedicated to quality inspection and the Management Team responsible for prevention activities. Diverse possible means are tried to ensure efficient quality inspection such as injecting specific markers, running onsite handy analyzers and the abnormal symptom monitoring system, and checking dealer information. Service stations and LPG filling stations found to sell fake oil face the strictest possible penalties including de-branding. In addition, S-OIL runs the "Product Quality Tracking IT System" which integrates product distribution and quality information encompassing the Onsan Refinery, service stations, and customers to trace back distribution routes. In 2017, we plan to launch the "Service Station & LPG Filling Station Quality Grade System" to provide customers with the best quality products.
Trustworthy Service Station
To build an environment where customers can easily purchase high-quality products, S-OIL operates the "Trustworthy Service Station" program that guarantees product offering according to quality and quantity specifications. At least six quality inspections and one quantity specification inspection a year are prerequisite to maintaining the qualification as the Trustworthy Service Station. The Company intends to make over 90% of affiliated service stations join this program by 2018 in order to heighten the level of trust customers will place on the Company's products.

Enhancement of Marketing Activities

Brand Marketing Activities for Customers

Brand Advertising Campaign to Provide Comfort and Inspire Courage
In 2016, S-OIL launched a TV ad campaign with the title "Good Oil Drives Us to Good Places." The ad containing beautiful images and a song represents the heart of modern people who want to go off toward their own paradise beyond the reality. The ad film racked up 11 million views on YouTube and Facebook. The Company also published a story-telling coloring book to offer customers special experiences. These efforts contributed to promoting a positive image of S-OIL, which resulted in achieving a 60.3% TOM (Top of Mind) awareness and winning the best ad award at the "2016 Korea Communication Award." Going forward, the Company will promote a series of brand ad campaigns using the GOODOIL Family characters to communicate with customers more pleasantly and creatively.
Differentiated Character Marketing
S-OIL has proactively utilized the GOODOIL character symbolizing good oil for diverse marketing activities as well as advertising campaigns since 2012 in order to more closely relate to customers and to effectively communicate with customers. In 2016, the Company produced seven 3D animated films of GOODOIL Family characters to deliver a sense of affinity and opened a pop-up store at its head office where visitors could directly take a look at and purchase the characters. Other activities included exhibiting large GOODOIL Family character structures in the International Horticulture Goyang Korea and installing a GOODOIL Christmas tree in Cheonggyecheon, Seoul, thereby offering customers more chances to enjoy with the GOODOIL characters. Particularly, the GOODOIL emoticons won popularity by being downloaded more than 250 thousand times and used over 11 million times through the Kakao Talk. S-OIL plans to create more opportunities for better communicating with customers by capitalizing on the GOODOIL characters.
Expansion of Sports and Cultural Marketing Activities
Our support for diverse sports and cultural events contributes to making our brand more dynamic and prestigious. S-OIL has been hosting the "KLPGA S-OIL Champions Invitational" since 2007 and sponsoring the "Pro-Am Golf Championship" to deliver exclusive values to customers. S-OIL has also organized cultural events such as "culture date" and "S-OIL cinema date." Moreover, we sponsored Verdi's "La Traviata" in Korea in 2016 to give customers a good chance to enjoy a high-quality cultural performance, and have started distinctive sports marketing activities in 2017 including outdoor advertising and promotions at Sajik Baseball Park in Busan, home to the Lotte Giants professional baseball team. The Company intends to expand sports and cultural marketing activities to build a friendlier brand image.
Effective Promotional Activities
S-OIL engages in a variety of promotional activities to provide more benefits to customers who visit its affiliated service stations and LPG filling stations and increase their satisfaction. As part of this, in 2016, we held the "GOODOIL Giveaway Event" at service stations and LPG filling stations all over the country twice, through which more than 2.2 million customers received diverse free gifts such as GOODOIL characters and daily supplies. We also opened a mobile point shopping mall to help our Bonus Card members easily use their bonus points, and added to the shopping mall daily supplies, such as mineral water and wet tissue, which were well-liked by customers. The Company continues to implement more effective promotional activities to increase customer satisfaction.
Creation of an Image as a Friendly Company That Fulfills Social Responsibility
We strive to build a corporate image that implies friendliness, swiftly communicates with consumers, and fulfills social responsibility through diverse advertisements. The "Useful Knowledge" series on the front page of major dailies, launched in 2016, was well received by consumers with its valuable information. In 2017, S-OIL plans to form a friendlier corporate image by carrying out the "A Safe Day" and "The Place We Want to Go" campaigns featuring the GOODOIL characters. Meanwhile, the Company has showcased creative printed advertisements featuring "For Heroes" and "For Environment" activities. In 2016, we installed a large billboard on the wall of our Head Office to deliver a message of hope to the local communities.

Protection of Customers' Personal Information / Fair Competition in the Market

S-OIL carries out systematic activities to protect personal information provided by stakeholders including customers in accordance with a strict set of policies. In recognition of its privacy protection efforts, S-OIL became the first Korean oil company to obtain the certification on Personal Information Management System (PIMS) and Information Security Management System (ISMS) from the government in 2015.

PIMS-based Systematic Personal Information Protection

Minimum Retention of Customers'Personal Information
To comply with the Act on the Protection of Personal Information and minimize personal information leakage, S-OIL deleted sensitive personal information such as resident registration number from the Company's customer DB. In addition, the IT Security Team is largely responsible for monitoring how personal information is accessed, stored, and altered. And work process was revamped to minimize the handling of personal information.
Encryption of Personal Information and Access Control
At S-OIL, customer information is encrypted and stored under rigorous control. Any unauthorized access is denied by the personal information protection system and access history is regularly monitored by security workforce. Furthermore, the Server Based Computing (SBC) system allows access only when the user is disconnected from the Internet. IT system managers can have access to our IT system only through the Virtual Desktop Infrastructure (VDI) that separates Internet and business networks. Access to the IT system is available after entering password and One Time Password (OTP).
Education on Personal Information Protection
S-OIL's employees as well as those from contractors who access the Company's customer DB are required to participate in regular education programs on privacy protection at least twice a year. The Information Protection and Management Committee presided over by the Chief Security Officer (CSO) convenes more than twice a year to raise awareness of security issues by reviewing privacy protection policies and implementation plans, monitoring personal information protection status, and creating relevant guidelines in everyday life.

Activities to Protect Crucial Corporate Information

ur information protection activities are conducted systematically in all of managerial, technical, and physical areas based on the ISMS. The latest security technologies are adopted for the corporate security system to efficiently respond to rapidly-growing hacking technologies. We also collaborate with professional information security firms to set up an information leakage response system, understand up-to-date information protection trends, and take technical advice. Moreover, to effectively control advanced persistent threats (APT), the Company introduced security equipment dedicated to blocking APT attacks, as well as virus vaccine software, to offer safer IT services to customers and employees. The end-point security solution detects abnormal situations of user PCs in advance, ensuring higher response ability to unsung malignant codes. The Mobile Device Management (MDM), Mobile Application Management (MAM), and Mobile Content Management (MCM) solutions ensure safer IT services through mobile devices. The Company's IT systems are operated at the data center equipped with the best security solutions, thereby being safely protected from intrusions.

Fair Competition in the Market

Education on Fair Trade
Boosted by the CEO's strong commitment to reinforcing compliance management, especially in relation to fair trade laws, S-OIL published a compliance manual and must-follow guidelines "Dos & Don'ts" that employees need to adhere to when conducting sales activities. S-OIL also hosts education on fair trade every year to raise employees' awareness of compliance with relevant laws. As a result of these efforts, S-OIL has recorded no violation of fair trade laws since 2012, and the Company's commitment to fair trade and protection of consumer interests is embedded in its corporate culture.
Autonomous Inspection on Fair Trade through the Compliance System
S-OIL conducts autonomous inspection on violations of fair trade in business operations regularly and irregularly by capitalizing on its compliance system. In addition, the Company not only provides employees with enactment and amendment of fair trade laws and regulations in real time, but also implements education and monitoring about detailed law articles in order to encourage employees to thoroughly comply with fair trade.
Use of Written Contracts Based on Fair Trade
We use standardized written contracts containing recommendations by the Fair Trade Commission when initiating transactions with business partners. Moreover, in accordance with the "Fair Franchise Transaction Act" enforced in December 2016, the Company has reflected mandatory trade conditions in the written contracts.

Enhance Overseas Marketing

Refining Business

S-OIL was the first Korean oil company to enter the overseas high-end product market based on its high value-added production capabilities acquired from investing in advanced facilities. As product standards constantly become stricter, we have been flexibly responding to such changes, allowing us to solidify our customer base in overseas markets and increase our brand perception. We have also been able to strengthen our position as an international oil supplier by establishing a global logistics network able to meet the diverse needs of our customers in such countries as Australia and Japan. S-OIL has been improving its relationships with core customers through direct transactions and strategic partnerships as competition in major overseas markets heightens even more. We are continuously striving to enhance our capacities for sustaining sales by securing a secondary domestic market through the establishment of a local sales network. Furthermore, we are committed to providing full support for reinforcing the marketing capacities of our employees, who play a critical role in executing such plans. Moreover, we will devote our efforts to renew the engines of growth by using the additional light oil products that will be produced from our RUC/ODC project to increase our sales in the strategic markets and also expand our sales base into such potential markets as the U.S.

Lube Business

Following the successful completion of its large-scale T&I in 2016, S-OIL has been able to maintain its 2nd largest single-plant lube base oil production capacity (42.7 MBD) in the world and once again secure its competitive edge in terms of stable and enhanced product quality. Despite the T&I, we were able to attain the highest level of profitability in our industry through the stable sales of all of the products that we produce. This has been possible as we have adjusted the production volume of our lube base oil products in line with the changes in market conditions, while also establishing and executing market strategies tailored for each overseas markets. Within our overseas lubricant business, our high-end lubricant brand, S-OIL SEVEN, has received positive responses from both domestic and overseas markets alike since its launch back in 2014 and continues to strengthen its brand perception. S-OIL SEVEN saw a sales growth of over 90% from the previous with exports extending to over 40 countries around the world including China, thanks to aggressive activities that include opening new logistics centers, penetrating overseas markets, strengthening customer-friendly services, enhancing local marketing activities such as participating in international exhibitions and hosting conferences for our agents. Going forward, we will continue to seek out ways to improve the supply capacity for each of our products in line with the changing market environment and increasing demand for high-end lube base oil. We also plan to establish a stable supply capability and implement stricter product quality controls in order to secure a solid customer base. In addition, S-OIL plans to enhance the synergies between its lube base oil and lubricant businesses through aggressive marketing activities. We further hope to solidify our position as a leader in the global lube base oil market and also expand our presence in the lubricant market by continuing to improve the overall competitiveness of our lube business through active investments.

Petrochemical Business

S-OIL conducts marketing activities that are optimized for each Aromatics market according to the different business characteristics of each product. In the case of para-xylene (PX), growth in demand continues to be solid as downstream demand in polyester remains strong despite the slowdown in the world economy. While a temporary increase in competition is expected in the near future as market players expand their production capacities, S-OIL continues to strengthen its stable customer base and profitability by seeking out and expanding business with high value-added customers in the growing polyester sector. In particular, S-OIL is expanding its direct business with high value end-users in China through long-term relationships based on trust and, accordingly, will aspire to exploit new business opportunities such as developing new markets. In the case of benzene, the demand in the U.S., which currently is the largest importer, is expected to remain strong, while imports from China will likely be expanded in line with their capacity additions of derivatives. Accordingly, S-OIL plans to maintain its supply to SM producers in the U.S. who have competitive raw materials and expand its marketing capacities centering on the Chinese market. With respect to propylene, S-OIL is currently developing and expanding its direct businesses with Chinese customers in order to ensure the stable sales of additional production supply following the commencement of its RUC and ODC projects. We are also focusing our efforts to develop new domestic and overseas customers and secure a stable logistics network for our new additional ethylene supply into the market. Likewise, S-OIL is gradually expanding its position in overseas markets by pre-emptively responding to the rapidly changing environment in the petrochemical market and plans to guide the market as the forefront leader going forward.