S-OIL

S-OIL strives to deliver customer satisfaction with utmost product quality and reasonable prices, and to focus on building trust with customers through various communication activities carefully designed based on customer needs. Furthermore, S-OIL continues to sharpen its overseas marketing capabilities by exploring new markets and enhancing strategic partnerships with key customers.

S-OIL concentrates its capabilities on enhancing consumer benefits and satisfaction by offering premium quality products and services at a reasonable price. S-OIL is keen on communicating with its customers to identify their needs and incorporate them in its business activities.

S-OIL makes various efforts to clear up consumers' suspicions related to product prices and maximize consumer benefits by applying a reasonable and competitive pricing policy. Implementing an independent product pricing system that takes on board various factors that affect domestic fuel prices such as fluctuations in international oil prices, F/X rates and domestic market trend, S-OIL is leading the domestic pricing with fair and reasonable policy. S-OIL's Price Operation Committee convenes every day and sets standard prices of gasoline, diesel, and kerosene in the domestic market. Furthermore, S-OIL operates its own reward membership program that offers competitive fuel purchase rewards, while bringing various customized offerings to Bonus Card members based on the Customer Relationship Management system. S-OIL also offers a wide range of discounts on fuel purchases through strategic alliances with domestic credit card companies and strives to provide customers with practical benefits by cooperating with various business partners. In particular, S-OIL launched a freight reward card that offers some of the best discount benefits in the industry, and opened a dedicated menu for truck drivers on S-OIL Mobile Point Mall, making it easier for them to use accumulated points, all in an attempt to help alleviate the burden of heavy fuel-consuming truck drivers.

Amid unfavorable sales conditions, such as stagnant demand for fuel products, increasing market uncertainties, and intensifying competition among suppliers, S-OIL strives to enhance customer convenience on many fronts. Despite the downward trend in the number of service stations (S/Ss) across the country due to intensifying competition and worsening profitability, S-OIL made a continuous effort to secure bigger sales network, thereby minimize inconvenience for customers. Furthermore, S-OIL carries out differentiated programs and engages in creative brand marketing activities to boost sales, while actively explores new business opportunities. As a result of such efforts, S-OIL captured the record-high 26.0% in domestic market share for retail light oil products in spite of the decline in demand due to COVID-19 in 2020.

Since 1981, S-OIL, the first company in Korea to produce lube base oil, has positioned itself as the market leader based on reliable supply of high-quality products. S-OIL maintains a close relationship with its customers and strong foothold in the market through customized marketing utilizing various product lines, expansion of loyal customers based on stable supply capability, and cooperation on customers' export business. In addition, in order to respond quickly to the rapidly changing market, S-OIL invites customers to a technology seminar every year and continues its efforts to improve customer services and product quality in cooperation with the Refinery and TS&D Center. S-OIL will continue to maintain its competitive edge in the market and strengthen its position as the leading base oil supplier in the domestic market.

S-OIL has been making continuous efforts to reinforce petrochemical business for long-term sustainable growth by enhancing its competitiveness and expanding market share in the domestic market. In the aromatics market, S-OIL is consolidating its market presence through long-term partnership with most customers in Korea. As for para-xylene products, S-OIL boasts the largest production in Ulsan Complex and supplies products to large customers through the pipeline within the Complex in a stable manner. Additionally, S-OIL strengthens cooperative ties with its customers and domestic market presence with various business models such as SWAP and logistics optimization. For benzene, long-term relationships with its customers support a gradual sales increase in the domestic market, and S-OIL focuses on broadening its customer base to secure stable and profitable sales. Olefin monomer business presents unique challenges in terms of transportation and storage due to its volatile nature as a gas. For this reason, S-OIL has built a pipeline network that connects to major customers in Ulsan Complex and intensify domestic sales to build a stable profit structure. Regarding propylene, S-OIL has been reinforcing partnership with domestic customers and playing an important role to balance propylene supply and demand within Ulsan Complex through various SWAP deals. S-OIL expands ethylene supply to customers in Ulsan Complex through pipeline, by establishing logistics system and partnership with customers. S-OIL's reliable supply of olefin monomers within Ulsan Complex contributes not only to consolidating its presence in the chemical industry but also to strengthening competitiveness of related downstream businesses in olefin value chain by triggering downstream investments. In the olefin downstream business newly entered through the RUC/ODC project, S-OIL already signed a long-term propylene oxide sales contract with most of the major polyol clients, laying the groundwork for stable sales and profitability growth. For polypropylene, S-OIL continues to develop new products through the TS&D Center and secure new clients to build a robust sales base.

In a bid to strengthen customer communication, S-OIL has established an integrated Voice of Customer (VOC) system, through which the Company handles and analyzes all customer feedback received via various channels including customer center, Homepage, ARS and SNS, in an integrated and systematic manner. The turnaround time for VOC is set by VOC type and managed to allow for prompt handling. Also, S-OIL conducts satisfaction surveys on VOC handling and feeds the result back to the procedure for continuous system improvement. Status of each VOC is notified to customers via calls, SMS, and e-mails. Furthermore, S-OIL runs VOC Awareness Raising Program, which is an incentive system to recognize customers who raised constructive VOCs. In addition, S-OIL interacts with a prosumer group called GooDoil Friends to collect valuable opinions and incorporate them in its two-way communication with customers, while operating a 1:1 communication channel through Kakao chatbot and a chatbot system available for 24 hours. Also, S-OIL operates the direct communication service for VIP customers and senior customers over 60 years old to provide specialized services. S-OIL analyzes trend in customer complaints for recurrence prevention purposes, while offering S-OIL Notification Service to promote two-way communication with customers through messenger app. KakaoTalk.

S-OIL is committed to supporting S/Ss and LPG filling stations (F/Ss), its key customers and main customer contact channels, to enhance their competitiveness through various on-site programs and proactive communication. This effort has earned S-OIL first place in the S/Ss category of "2020 Korea Net Promoter Score" and "2020 Korean Service Quality Index" selected by the Korea Management Association Consulting, for the fifth and third year respectively. S-OIL also ranked first in the S/Ss category in "2020 National Service Awards" selected by the Institute for Industrial Policy Studies for three consecutive years.

Incorporating the feedback from consumer awareness surveys, S-OIL runs GooDoil Etiquette & Clean Up campaign to improve service attitude and restroom hygiene and make customer experience more pleasant. In addition, the Smile Together campaign, which aims to create a brighter society starting with a simple act of smiling at S/Ss, has gained tremendous recognition from customers. S-OIL runs Star Oil campaign with Yongin City that provided a fuel filling assistance at self-service S/Ss for the disabled who have a difficult in fuel filling, to improve the convenience and the awareness on them.

In order to improve service quality at S/Ss and F/Ss to meet rising customer expectations, S-OIL has operated YES Team for on-site training. YES Team consists of experts equipped with certificates and knowledge in customer satisfaction, labor relations, and other areas related to operations of S/Ss and F/Ss. In particular, S-OIL has intensified its support for customer complaint resolution by providing targeted training to respond to complaints by focusing on minimizing customer inconvenience. S-OIL provides a wide range of well-thought-out support programs, such as online training, consulting by in-house consultants, etc. to help S/Ss and F/Ss strengthen their management capabilities. Through online training and Mobile Card News, S-OIL delivers up-to-date information on management, relevant laws and regulations, policies, major marketing activities and support programs. In addition. S-OIL runs a chatbot service for S/S staff, providing a new communication channel to share information on facility management, service training, and its marketing updates.

In view of dwindling profitability due to intensifying price competition, S-OIL developed competitive non-oil businesses that S/Ss and F/Ss can adopt to diversify their revenue portfolio. S-OIL has introduced non-oil business items including smart convenient stores, coffee and fast food for S/Ss and F/Ss. And S-OIL developed quality PB products such as urea solution, ethanol washer fluid, which are supplied at competitive prices. In addition, S-OIL strengthens competitiveness and profitability of S/Ss by a premium and standardized car wash service that is most closely correlated with fuel sales. S-OIL continues to develop and introduce various non-oil business items by expanding partnerships, including car & electric bicycle sharing service and logistics platform of online shopping malls.

S-OIL unveiled a new S/S identity (SI) to differentiate its brand image in 2020. Considering visibility as well as eco-friendly trend, the new SI adopts a sleek design, high durability from light-weight aluminum, and cost efficient LED lights. In a bid to foster long-term cooperative ties with S/Ss and F/Ss, S-OIL selects S/Ss and F/Ss that achieved remarkable performance in terms of service, facility management, sales volume, and profitability, and awards S-OIL Champions Club every year. The award promotes healthy competition and shares good practices among S/Ss and F/Ss, thereby contributing to the overall improvement in station operations.

S-OIL has implemented a quality management system compliant with ISO 9001:2015 international standard, to produce quality products that satisfy customers' expectations. S-OIL makes continuous efforts across the board at S-OIL in R&D, eco-friendly product development, and quality control, with the goal to provide consumers with products of top quality in a stable manner while minimizing impact on environment and safety.

Driven by a culture of innovation without complacency, S-OIL continues to invest in R&D activities aimed at improving product quality and advancing production facilities and works with prestigious colleges and research institutes. In pursuit of sustainable growth, S-OIL TS&D Center (S-OIL Technical Service & Development Center) strives for the Company's sustainable growth through the development of high-quality, eco-friendly, and high-value added products.

TS&D Center established the infrastructure necessary for developing products and technologies in petrochemical and lube business sectors, and is now spearheading S-OIL's efforts to develop high-quality, high-value added products and improve product quality. In 2020, TS&D Center made a remarkable progress with 39 new products development including 4 polypropylene products and 4 lubricants for EV, and 10 patent applications. In addition, 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 R&D Center. S-OIL concentrates on developing lubricants for EV and continues to engage in joint R&D projects to develop new engine oil and transmission oil, along with various types of industrial oils to meet varying consumer needs. Furthermore, S-OIL provides not only technical service for general troubleshooting but also distinct support customized to each and every customer such as processability evaluation, product and material analysis support, guidelines for optimizing production process and product development. Also, S-OIL hosts product and processing technology seminars all aimed at building stronger trust with customers.

S-OIL continues to manage the product qualities by introducing the latest analysis equipment and techniques to ensure stable quality management and customer trust. Reliability of laboratory testing is assured by regularly calibrating analysis equipment through certified third-party institutes as well as in-house verification programs. S-OIL also offers training programs to improve its analysis ability, thereby securing quality testing capabilities and contributing to efficiency of production processes.

Going beyond passive response to environmental regulations, S-OIL is proactively introducing new processes as well as revamping and upgrading them to develop and supply more efficient eco-friendly products with premium quality. For example, the diesel dewaxing process was introduced to innovate the stability of diesel performance even at low temperature in winter. Moreover, S-OIL upgraded lube base oil production process, which dramatically reduced emission of Poly Aromatic Hydrocarbon, which is a hazardous chemical substance, and allowed the Company to supply more eco-friendly and safer lube base oil to the market. The additional introduction of alkylation and RFCC processes further improved gasoline quality as well.

S-OIL has in place a real-time quality monitoring system that checks in advance for any factor that may negatively affect product quality throughout the entire production process, from introduction of raw materials to market distribution. By utilizing the system, S-OIL ensures that only products that satisfy quality standards are supplied to customers. Furthermore, regular communication between Operations and Marketing & Sales organizations ensures that all products meet customer requirements. Also, S-OIL periodically participates in inter-laboratory crosscheck program organized by domestic and overseas authorities, including ASTM and K-Petro, to enhance testing reliability.

Such effort landed S-OIL numerous recognitions for highest grade gasoline and diesel products in the Environmental Quality Evaluation on Automotive Fuels by the Ministry of Environment. S-OIL's kerosene also obtained Eco-Labeling Certification in 1994 for the first time among Korean refiners, and has maintained the certification ever since. In addition, S-OIL ranked first in the diesel category of "2020 Korea Brand Recommendation Index" by the Korea Management Association Consulting for five straight years.

S-OIL is dedicated to systematic product quality management throughout the market distribution process, as well as in the production process, with the aim to prevent pollution or quality degradation of products at S/Ss and F/Ss and ensure customer's rights to purchase products with specified quality and quantity.

S-OIL takes a systematic approach to quality inspection on S/Ss and F/Ss as well as prevention activities. Diverse possible means are tried to ensure efficient quality control such as injecting specific markers, running onsite handy analyzers, abnormal symptom monitoring system, itinerant training on quality assurance by quality managers, and checking dealer information. S-OIL runs the Product Quality Tracking System which integrates product distribution and quality information encompassing the Refinery, S/Ss, and customers to trace back distribution routes. In addition, S-OIL puts efforts to provide customers with the best quality products and apply strictest penalties including de-branding to S/Ss and F/Ss selling fake oil.

S-OIL operates Trustworthy S/S program where the Company guarantees products sold at S/Ss according to quality and quantity specifications to allow customers to easily purchase high-quality products. At least four quality inspections a year and periodic quantity specification inspection are a prerequisite to be qualified as Trustworthy S/S.

S-OIL strives to contribute to the development of the national economy and society through diverse and creative marketing and communication activities that were undertaken to deliver best quality products at reasonable price as well as active interaction with customers.

S-OIL has been promoting the GooDoil character as a symbol of good oil for diverse marketing activities at S/Ss and F/Ss, events and promotions as well as advertising campaigns in order to get in closer touch with customers and more closely relate to them. In line with the evolving social trends, S-OIL has expanded brand promotion and marketing activities utilizing various SNS platforms and influencers. Taking on board customers' opinions and suggestions, S-OIL launched GooDoil characters and opened more character sales channels, while setting up GooDoil snowball trees at the Ulsan Station and Daejeon Station. Through such efforts, S-OIL offers customers more chances to meet GooDoil characters and feel good oil more. In 2020, in particular, S-OIL conducted various public campaigns and SNS marketing activities in the midst of the Coronavirus pandemic, and sponsored healthcare professionals with GooDoil character products. S-OIL also created an animation advertisement for SNS channels and produced collaboration contents using GooDoil characters to promote COVID-19 prevention messages for the public.

S-OIL builds a dynamic, friendly yet prestigious brand image through its support for diverse sports and cultural events. S-OIL hosts the KLPGA S-OIL Championship and sponsors S-OIL Championship Pro-Am to offer premium service and exclusive values to customers. To strengthen ties with customers and provide them with greater cultural benefits, S-OIL also organizes events such as Culture Date and Cinema Date.

S-OIL carries out various promotional activities to provide more practical benefits to customers who visit its S/Ss and F/Ss and increase their satisfaction. As part of this effort, S-OIL holds the GooDoil Family Sweepstake at S/Ss and F/Ss across the country every year, and gives out diverse free gifts such as GooDoil characters, daily goods, and vehicle-related supplies. S-OIL also runs a mobile point shopping mall to help its Bonus Card members easily use their bonus points, issues vouchers, and offers free giveaways for those purchasing with accumulated points, thereby enhancing customer experience in general.

Acknowledged for such efforts, S-OIL received the grand award in the brand management category at "2020 Management Grand Awards" by the Korea Management Association Consulting for four consecutive years, and ranked first in the S/Ss category in "2020 Korea Brand Hall of Fame" by the Institute for Industrial Policy Studies for two consecutive years. S-OIL also ranked 41st on the list of "2020 Best Korea Brands Top 50" selected by Interbrand Korea for four consecutive years, which highlighted its strong brand value.

S-OIL strives to build an image as a friendly company that fulfills social responsibility and interacts with various stakeholders, based on creative and unique corporate image advertisements. Not only does S-OIL run public interest campaigns on the front page of major daily newspapers, it also delivers useful information to various stakeholders in a timely manner to promote broader interaction. In 2020, customers gave positive feedback on the programs S-OIL launched, including Quote-a-day campaign, Fill-the-blank campaign, Mental Health campaign, and COVID-19 campaign. In addition, S-OIL has erected a huge panel against the external walls of the Head Office which conveys written messages of hope and consolation and strengthens cultural as well as emotional bonds with the local community. In addition, various digital channels such as SNS, digital newsletter, and online advertising are effectively utilized to strengthen communication with stakeholders.

S-OIL's efforts to play by the rules for fair competition and protect customer interest are upheld by its core value of integrity. S-OIL also preemptively responds to the increasingly stringent privacy requirements to safeguard critical information and stakeholders' personal information.

S-OIL's commitment to reinforcing compliance management is championed by top management's leadership, especially in relation to fair trade laws. To ensure that compliance management is adhered to by all employees, S-OIL published a compliance manual and must-follow guidelines "Dos & Don'ts" for sales activities. S-OIL also holds fair trade training sessions by inviting an external lecturer every year to raise employees' awareness on compliance with relevant laws. S-OIL carries out regular and ad-hoc self-assessments on its compliance system to check any violation of fair trade laws in business operations. In addition, S-OIL actively assists employees' compliance with fair trade laws by providing real-time legal updates on the latest legislation and revisions on relevant laws and regulations, conducting training sessions on major legal requirements, and regularly monitoring compliance with fair trade law. When entering into a contract with a business partner, S-OIL utilizes a standardized written contract that reflects the recommendations from Fair Trade Commission. Moreover, S-OIL has reflected mandatory terms and conditions of trade in its written contract in full compliance with Fair Agency Transactions Act. In addition, in 2020, the company introduced the block chain-based electronic contract system for the first time in the oil refining industry and improved the client order system e-Biz to preclude unfair transactions with our clients.

S-OIL has reinforced its security management system based on global industry security standards and domestic security standards such as NIST Cybersecurity Framework (NIST-CSF), Oil & Natural Gas Subsection Maturity Model (ONG-C2M2), and ISMS-P. S-OIL strives to protect technical assets and information, and improve security maturity of the organization, from information technology (IT) systems to operation technology (OT) systems.

In the managerial area, S-OIL defines the security compliance requirements and criteria required by the enhanced security management system, and utilizes the requirements to perform overall security activities. S-OIL has a dedicated Chief Information Security Officer (CISO) organization and holds Cybersecurity Management Committee chaired by CISO twice a year to review its major cybersecurity policies and action plans, and respond to cybersecurity breach incidents. Designed to raise awareness on security and information protection, mandatory cybersecurity training is provided to all employees, and online training programs are also offered. In parallel, a simulated phishing drill is carried out more than four times a year to make sure employees know how to respond to malicious e-mails. In order to stay ahead of evolving hacking technologies, S-OIL also makes continued efforts to sharpen its counter cyber-attack capabilities by acquiring latest security technologies and closely cooperating with information security companies.

On the technical side, S-OIL continues to engage in security risk management activities that collect the latest security threat information from global cybersecurity companies and continuously assess vulnerabilities of its technical assets to establish countermeasures. All IT and OT systems are safely operated as per the internal security standards and addressed for security weaknesses through periodic hacking simulations and security patch updates. S-OIL is continuously enhancing its capabilities to respond to ever-sophisticating cyber-attacks. For efficient response to Advanced Persistent Threat (APT) and unknown malware, in particular, S-OIL introduced APT attack prevention system, and monitoring solution that detects abnormal activities on user computers. In parallel, S-OIL implemented a web security solution that blocks unauthorized file modification and malicious files to raise its website security posture.

To ensure physical security, S-OIL's major IT systems are located in a data center equipped with one of Korea's best security solutions, safeguarding its IT assets from physical intrusions from outside.

S-OIL complies with Personal Information Protection Act, and protects customers' personal information in a systematic way through Information Security Management System (ISMS) and Personal Information Management System (PIMS). To minimize personal information leakage risk, S-OIL eliminates sensitive personal information, such as resident registration number, entirely from its customer database. Spearheaded by CISO, S-OIL is revamping relevant policies and processes so as to minimize handling of personal information, and monitoring in real time the status of customer data as well as changes to the database. Furthermore, in cases where personal information is shared to an outsourcing partner for the purpose of operating the bonus card system, S-OIL uses a solution that sets the expiry date for the third-party use of such information and deletes it immediately upon expiry, thereby keeping the risk of personal information leakage involving an outsourcing company to minimum. S-OIL safely stores personal information with encryption, implements control access through the personal information access control system, and systematically monitors access history accordingly. S-OIL effectively limits personal data access on an as-needed basis by allowing access rights only to IT system managers and certain teams requiring personal data access. Furthermore, access can only be made through the Virtual Desktop Infrastructure system that separates Internet and internal business networks or the Server Based Computing system that blocks Internet connectivity, thereby minimizing potential risk of customer information leakage. Additionally, system access authorization is exclusively granted with two-factor authentication requiring both password and One Time Password (OTP). S-OIL provides all employees and contractors' employees who handle customer personal information with periodic privacy protection training including online training at least twice a year. S-OIL is the first refiner in Korea to obtain ISMS and PIMS certifications from the government, and is planning to obtain the ISMS-P certification that integrate both ISMS and PIMS in 2021.

S-OIL spearheaded transformation of the refining industry from a simple manufacturing industry for domestic market into a high value-added export industry, thereby making significant contribution to the national economy and social development. At the center of this transformation stands S-OIL's strategic expansion into overseas markets, which now accounts for more than 50% of its production every year. Providing customers with excellent quality and competitive products, S-OIL is developing into the most competitive, creative and clean energy & chemical company.

Armed with production capabilities for high value-added products secured through preemptive investments, S-OIL was an early mover to expand into Japan, Australia and other major overseas markets ahead of its competitors, consequently building a strong customer base and brand awareness. S-OIL is flexibly responding to strengthened product specification requirements in those markets and meeting diverse customer needs by improving its export operation capabilities and logistics system. Such efforts have enabled S-OIL to grow into a major supplier in the region. Now in view of increased competition in key strategic markets, S-OIL established direct sales relationships and strategic partnerships with major clients, aiming to obtain stable sales networks. In addition, S-OIL makes consistent efforts to boost sustainable sales capabilities and plans to acquire local sales networks in core strategic markets in a bid to create a major market base second to Korea. In parallel, S-OIL has bolstered its influence and sales base in overseas markets and explored new business areas for additional profits by forging closer collaborative relationships with Saudi Aramco, which is its major shareholder, and its affiliate companies. Going forward, S-OIL plans to further expand its sales base by increasing production of the high value-added light oil products thanks to the successful completion of the RUC/ODC project, while continuing its efforts to promote marketing capability that will help the Company navigate through the ever volatile market environment, such as the IMO's tougher regulations on sulfuric content on marine fuel, in a more proactive manner.

S-OIL is posting stable sales of the entire production stock of lube base oil by employing marketing strategies tailored to each market. S-OIL is also actively utilizing its lube base oil production capacity, which is the second biggest single location plant in the world. In 2020, S-OIL responded quickly and flexibly through alternative market sales and volume adjustments under a volatile market environment caused by a sharp drop in demand due to COVID-19 and generated additional profits in cooperation with Aramco Base Oil Alliance through S-OIL Singapore Pte. Ltd. Also, S-OIL secured various sales outlets by signing new long-term contracts with the Middle East and global major companies, as well as expanding existing long-term contracts in Asia and Europe. TS&D Center is in operation to reinforce the Company's core capability in the lube business and S-OIL strives to keep customer loyalty based on stronger and stable product supply capacity as well as thorough quality control, in tandem with the increasing demand for premium lube base oil. For lubricant business, S-OIL has cemented a solid position in the market on top of positive response from home and abroad by integrating the lubricant brand as "S-OIL SEVEN". In 2020, in the face of shrinking global demand due to COVID-19, S-OIL continued its efforts to secure sales outlets and was able to maintain stable supply to more than 60 countries, including its strategic markets such as China, Vietnam and Russia. Noticeably, S-OIL established local partnerships in India and Indonesia to lay the foundation for local production and sales of finished lubricants, and successfully secured supply opportunities to local vehicle manufacturers.

S-OIL diversifies its marketing activities to be optimized for each market through systematic market research and core customer development, considering the varying production processes and market characteristics for different petrochemical products. As for para-xylene, although incremental supply is expected with China's recent massive capacity additions, S-OIL is working hard to secure both stable and profitable sales outlets by expanding business with key customers while developing new customers in overseas market. For benzene, S-OIL has been nurturing long-term partnership with end-users in the US and regional market, where steady demand is anticipated, while diversifying regional export portfolio in preparation for increasing benzene self-sufficiency in China. For propylene oxide and polypropylene exports, S-OIL successfully entered major markets such as China and Southeast Asia in cooperation with Saudi Aramco whose vast sales channels amplified its market reach in the key markets. S-OIL is also expanding direct exports to overseas factories of Korean companies. As illustrated above, S-OIL is broadening its customer base and strengthening its market position in the fast paced petrochemical market through making preemptive investment, securing a stable logistics base, and intensifying marketing efforts.