SUSTAINABLE REFINING

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Petron’s sustainability efforts start from the moment it plans and contracts for delivery of crude and products/components to the refinery, where crude oil is processed into a full range of petroleum fuels, gasoline, jet fuel, kerosene, diesel and industrial fuel and petrochemical feedstock.

• Safety Programs• Safety Facilities• Behavioral Based Safety (BBS)

Program• Integration of contractors to Petron

Safety Performance• Employee and Contractor Safety

Management Program• Accreditation of Contractor Safety

Practitioners and Officers

• Permits and Reporting Requirements• Integrated Management Systems

(IMS) Certification• Installation of Environmental

Protection Facilities• Use of low sulfur fuel for our

furnaces and boilers• Installation of double lined/high

density Polyethylin (HDPE) on C6H6 tanks and close loop sampling

• Investment on Refinery Master Plan (RMP-2) and Refinery Solid Fuel-Fired Boilers (RSFFB) will generate economic activities and create jobs/employment

• Health, Safety, & Environment (HSE) and BBS Orientation for Visitors and Contractors

• Contractors and Employees Driver Accreditation

• Emergency Response Teams• Mutual Aids Agreement• Firefighting Trainings

• Measuring, Managing, and Minimizing our environment foot print

• Greenhouse gas (GHG) Accounting• Project CODy• Project SolHAZE• Odor Management• Waste Segregation Performance

Index (WSPI) for PBR and its Contractors

• Preference for qualified local residents for employment/job vacancies

• Engagement of local contractors for maintenance expansion projects and environmental programs

• Compliance with Department of Labor and Employment-Bureau of Working Conditions (DOLE-BWC) laws and regulations

• Community Medical and Health Programs

• Community Information, Education and Communication Campaign

• Livelihood Programs

• Compliance with environmental laws• Compliance with products’

environmental standards• Compliance with Marine Terminal

Safety

• Local sourcing of supplies and materials by contractors

• Contractors engaged to use Petron products

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SUSTAINABLE DISTRIBUTION, DEPOT & TERMINAL OPERATIONS

From the refinery, Petron transports its products mainly by sea (PRIMARY DISTRIBUTION) to 32 depots and terminals strategically located all over the country. It also has in–house marine vessel vetting procedures to ensure quality and safety in handling its products from refinery to depot. The nationwide network of depots and terminals delivers the products via tank trucks (SECONDARY DISTRIBUTION) direct to Petron service stations all over the country. Third party tank trucks used in delivering these products from depots to customers follow strict standards in tank truck supplier accreditation and environmental training.

• Accredited Safety Practitioners by Department of Labor & Employment (DOLE)

• Compliance with the DOLE annual reporting requirements

• Establishment of the Occupational Health and Safety (OSH) - Corporate

• Environmental Management Briefing• Pollution Control Officers (PCO)

Training and Accreditation• Membership to Pollution Control

Association of the Philippines (PCAPI) Regional Organization, attendance to PICAPI Convention and Forum

• Multi-Partite Monitoring Teams (MMT), per Environmental Compliance Certificate (BOC) or Project

• Information and Education Campaign such as Oil Spill Awareness to MMT members

• ISO (International Organization for Standardization) Certification Audits

• Government and Regulatory Audits, Functional Audits/Facility Inspection

• Liaising Activities with the Barangay, relevant government agencies and local NGOs

• Investment in oil spill equipment• Contribution to National and Local

Oil Spill Contingency Plans

• Employment of local residents and contractors

• Local sourcing of materials and supplies

Social Responsibility (CSR) of DOLE or the Kapatiran Work Improvement in Small Enterprise - Training and Advisory Visit (WISE_TAV)

• Emergency Response Teams• Implementation of Anti-Child Labor

requirements

• Membership to Port Facility Security Advisory Council

• Mutual Aid Agreements on emergencies with Industry Players

• Technical Visits to Customers and Industrial Accounts

• Conduct of Safe Tank Truck Delivery Procedure Briefing and Delivery Route Assessment Safety in Driving Seminars

• Established Fleet Management• Established Haulers Association• Product Recovery Systems• Conduct of Environmental Site

Assessments and Installation of Monitoring Wells

• Regular Inspections• Oil Spill Response Limited (OSRL)

and Waterborne Industry Oil Spill Equipment (WISE) Membership

• Energy Conservation Program• Solid Waste and Hazardous

Waste Management Systems Implementation

• Tank Truck (T/T) Fleet Global Positioning System (GPS) Monitoring

• Tank Truck (T/T) Fleet Route Optimization

• Strict implementation of Drug and Alcohol Policy per location

• Fire Control Training• Investigation/Analysis of incidents• Service Excellence

• Nationwide participation in the National Greening Program and the Linis Estero Program

• Regular celebration of Earth Month, Environment Month, World Water Day, International Coastal Cleanup Day

• Tank Truck Modernization Program• Double Hull Vessels• Marine Vessel Fleet Modernization• Expansion of Depot Network• Assuring Depot’s Presence and

Tenure• Compliance with International Ship

and Port Facility Security (ISPS) Code for our berthing/pier facilities

• Compliance with International Safety Guide for Oil Tankers and Terminals (ISGOTT) requirements

• Marine Vetting• Regulatory Compliance- MARINA

(local body), IMO (International Maritime Organization), in-house standards

• Marine Vessel Global Positioning System (GPS) Monitoring

• Marine Vessel Route Optimization

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SUSTAINABLE DEALERSHIPIt is at these service stations where Petron retails the fuels to motorists and public transport businesses alike. Each station is managed by a dealer who has been extensively screened and trained by Petron to give the utmost care in handling Petron fuels and the best possible service to delight the consumers.

• Mobile Training Van• Lakbay Alalay Motorist Assistance

Program• Service Station Restroom

Rehabilitation• Service Stations as Disaster Relief

and Donations Drop-Off Centers

• Pollution Control Officers (PCO) Training and Accreditation

• Implementation and Monitoring of Environment Management Plan (as show in the chart)

• GreenS/S Award• Improvement of Service Station

Facilities• Participation in National Greening

Program/Tree Planting• Compliance with environmental laws

and regulations

• Employment of locals• Micro Filling Stations (MPS) for small

entrepreneurs• Volume Incentive Program

• Petron Dealers Association (PETDA) Fellowship and Awards Night

• Year-round campaigns/promotions/incentive programs

• Travel Incentive Tours for service station dealers

• Sports Festivals

• Quality Improvement Program• Synergy Projects with San Miguel

Corporation• Sales Promotions

• Holiday Glitters Christmas Campaign• Festival Promo• Outreach Programs

Environment Management Plan for Service Stations

ProperStorageandtransport/treatmentofhazardouswastethroughDepartmentof Environment and Natural Resources

(DENR)accreditedfirms

Proper Maintenance of GenSets, GenSet

Emission Testing

SegregationofWaste:“Nabubulok,” “Hindi Nabubulok”

Hazardous Waste

Wastewater Treatment, Compliance to Water

QualityEffluentStandards

Securing of Environmental ComplianceCertificate(ECC)and

Compliance to its Conditions

GHG Accounting and Reduction Programs

Regular Submission of Self-Monitoring Reports and Compliance

MonitoringReport(SMR/CMR)SecureDischargePermit,PermittoOperate,HazwasteGenerator’sID

Designation/Accreditationof Pollution Control Officers(PCO)

Clean Air Act

Solid Waste Management

Act

Clean Water Act

Climate Change

PD1586/EIS

HazWaste Act

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Greening the Supply ChainPetron’s commitment to its vision and sustainability efforts starts from the moment it plans and contracts for delivery of crude and products/components to the Refinery. It only contracts safe and reliable crude and product carriers that meet strict international marine environmental and safety standards. Further to this, it only deals with accredited companies that share similar values and standards as Petron in relation to marine safety and environmental protection. Petron coordinates closely with its sources to ensure that the right quality and quantity crude and products are loaded at source and delivered at the Refinery at minimal loss and without quality degradation.

Every measure is taken to prevent oil spills and accidents from happening, particularly upon the arrival and discharge of the vessels’ contents at the Refinery. Petron is a member of the Oil Spill Response Limited–Singapore (OSRL), and complies with marine safety standards such as the International Safety Guide for Tankers and Terminals, which provides the best practices in the safe operation of oil tankers and terminals including changes in ship design, technology, and legislation; and the International Ship and Port Facility Security (ISPS), a comprehensive set of measures to enhance the security of ships and port facilities through risk management and assessment. All depots and terminals with port facilities are also accredited by the

ISPS. Petron is also a member of the Waterborne Industry Oil Spill Equipment and the Pollution Control Association of the Philippines Regional Organization (PICAPI). The company regularly participates in the PICAPI Convention and Forum and contributes to the National and Local Oil Spill Contingency Plans of the OSRL.

At the Refinery, the crude oil is processed into a full range of petroleum fuels, namely, liquefied petroleum gas (Gasul and Fiesta LPG), gasoline (Blaze 100R, XCS, Xtra, and Pinoy Gas), jet fuel, kerosene, diesel (Turbo Diesel and Diesel Max), and industrial fuel; and petrochemical feedstock, particularly, benzene, toluene, mixed xylene, and propylene.

Petron has a fuel additives blending facility at the Subic Freeport, which does toll blending for a world-class additives manufacturer to supply requirements of well-known and established international oil companies. The facility strategically enables Petron to formulate unique additives at Pandacan for premium and regular fuels, specially adapted to the most rigorous local and international driving conditions. The additives are delivered in drums via container loads in trucks to the Pandacan laboratory for proper mixing and eventual blending into fuels. The pre-mixed additives are also sent out in drums via trucks and marine vessels, from Pandacan to the various depots for blending into fuels.

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extensively screened and trained by Petron to give the utmost care in handling Petron fuels and the best possible service in retailing fuels to the consumer.

This network also directly supplies by tank truck the fuel oil, gasoline, diesel, and LPG requirements of various industrial customers. Meanwhile, Petron supplies jet fuel to its various airport installations domestic and international airlines. The LPG depot and operations sites deliver Gasul and Fiesta brand LPG in cylinders via truck to an extensive network of LPG dealers who take care of selling to households and other industrial consumers.

In as much as Petron uses third-party tank trucks in delivering its products from depots to customers, it follows strict standards in tank truck supplier accreditation and involves suppliers themselves in safety and environmental training.

Petron also operates a lube oil blending plant at the Pandacan terminal, where it blends lubes and greases, which are delivered by truck in 1-liter and 4-liter plastic containers to the service stations and sales centers for retailing to motorists. Petron also delivers bulk lubes and greases specially formulated for the OEM requirements of industrial accounts, via tank truck (20kl), and in isotainers (20kl), bulktainers (2.5kl), drums (200 li) and pails (18 li) via truck trailers or container vans.

Petron has partnered with major fast food chains in its service stations, and synergized with its parent company in setting up San Mig Food Ave and Bank of Commerce facilities

and Zamboanga. Petron’s network includes airport installations in Davao, Iloilo, Laoag, and NAIA which are supplied with jet fuel by tank truck from nearby depots. In addition to these, Petron has LPG storage and filling operations in Pasig, Legaspi City, and San Fernando, Pampanga to address the specific needs of the LPG business.

Considering the critical requirement of Petron for marine vessels, Petron has in-house marine vessel vetting procedures to ensure that only good quality and safe vessels are utilized for hauling its products from Refinery to depot.

The nationwide network of depots and terminals delivers via tank trucks such fuels as LPG, gasoline, diesel, and kerosene direct to as many as 1,900 Petron service stations all over the country. It is at these stations where Petron retails the fuels to motorists and public transport businesses alike. Each station is managed by a dealer who has been

From the Refinery, Petron transports its products mainly by sea to 32 depots and terminals strategically located all over the country. It delivers products by barge across Manila Bay to its current premiere terminal in Pandacan, which supplies the whole of Metro Manila. In line with its commitment to the city of Manila to scale down operations at the terminal, a significant portion of current storage is expected to be transferred to a strategic alternate site in the near future. The Limay terminal meanwhile, located just beside the Refinery, is supplied via pipeline from the Refinery. The balance of the products from the Refinery are delivered mainly by marine vessels to the various other depots and terminals all over the country, covering Luzon, via Aparri, Batangas, Navotas, Palawan, Pasacao, Poro, and Rosario; Visayas, via Amlan, Bacolod, Iloilo, Isabel, Mactan, Mandaue, Ormoc, Roxas, Tacloban and Tagbilaran; and Mindanao, via Davao, Bawing, Iligan, Jimenez, Nasipit, Tagoloan,

LPG products being readied for distribution to Petron retail outlets.

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among others to give customers a total solution, one-stop full-service experience for their needs. It increasingly depends on a Point Of Sale system to monitor sales and inventory, and thereby allow it to strategically refill in a timely manner its fuel and product inventory via tank trucks and appropriate vehicles for non-fuel products.

Each step of the supply chain is carefully monitored by Petron and controlled to the extent possible, in

“We believe that maintaining market leadership and ensuring long-term dominance in this highly complex and dynamic industry demand a sustainable supply chain structure – there is no other way! The market is continually changing, and gravitating towards companies that are able to integrate profitability with social and environmental care, in doing business. As the Supply Chain Management Committee Chairperson, I ensure that we are able to manage our operations safely, and that all Divisions are aligned in meeting customer needs, at the least possible cost, fit-for-purpose and with utmost care for the environment and the society.

The challenges faced by the supply chain, by the sheer nature of the business, are daunting and have far-reaching and deep impacts. Petron has a full complement of committed and technically competent people who are well-trained not only to respond to, but to anticipate these challenges. The company invests in technologies to enhance efficiencies in the supply chain, and implements high standards, policies, best practices and long-term plans on sustainability. We continuously integrate and improve our ways in managing our complex supply chain, towards winning more customers and partners who trust us and share our values in promoting essential economic growth in a safe, socially responsible and environment-friendly manner.

As we progress in our sustainability efforts, we continue to invest in our network, provide our customers value for money with clean fuels and superior products along with excellent service,

influence all the stakeholders in our supply chain to cooperate and work with us in greening our supply chain, and continue to engage our people to volunteer in CSR and environment care activities. After all, we intend to remain as the country’s reputable top oil company for a long, long time.”

Rowena O. CortezPetron VP for Supply & Operations

order to keep its costs down and retain leadership position in the highly competitive oil business. A Supply Chain Management Committee oversees the synergy, avoiding the silo approach for optimization, and conducts the weekly meetings with representatives from the pertinent divisions. The Committee addresses the challenge of further integration of the entire supply chain to ensure high quality products and services are consistently delivered safely, on time, and at reasonable cost to the end user.

Given this process flow, Petron’s business reaches beyond the economic centers of the country to its most remote areas. Bringing energy to these far-flung places, along with our development initiatives, we foster the potential for a more inclusive growth. For instance, economic opportunities start to arise where there is a Petron service station because our presence supports the government’s move to set up farm-to-market roads and other public infrastructure that

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general public. All Petron facilities undergo HSE facility inspections and compliance audits. ISO Management Internal Audits and functional audits are also conducted for Petron’s facilities. Petron’s standards for health and safety are extended to our customers, contractors, and service providers, who are made to undergo safety and process audits, and project concept inspections. A total of 40 audits and inspections were conducted in all of Petron’s locations, including those of customers and service providers.

Compliance with the DOLE-BWC laws and regulations and Marine Terminal Safety and membership in Mutual Aid Agreements are also crucial factors in sustainability refining.

Petron Bataan Refinery is always in the forefront of environmental management beyond mere environmental compliance. We undertake specific programs to optimize Refinery operations and ensure a healthier environment

facilitate productivity. By tapping into the local business network, whether in terms of providing us with services or supplies, we build capacity at the grassroots level and create more partner businesses and contractors that help strengthen our business as we widen our scope.

Understanding our central role in countrywide development and nation building, Petron commits to the efficient delivery of our products all over the archipelago. Throughout, we seek to ensure compliance with existing laws, rules, and regulations on energy, environment, internal revenue, and customs. We also continuously modernize our systems so that compliance and adherence to laws and standards become second nature to us.

Sustainable Refining

Petron’s focus on safety is critical to our performance, and we have tried to cascade these values and standards throughout our operations. We require our contractors to align themselves with our health, safety, and environment policies.

Our Contractor Safety Management (CSM) Program provides our contractors and their sub-contractors with guidelines on the minimum health and safety requirements. Contractors must comply with these requirements prior to commencement and during any actual work activities within Petron’s facilities and premises. This program is Petron’s commitment to ensuring that contractors work safely at all times, which is aligned with contractor’s obligations under the Occupational Safety and Health Standard of the Philippines (OSHS).

The CSM program protects Petron’s employees, resources, and properties, as well as those of our contractors. We make sure to integrate our contractors in the Petron Safety Performance program, accredit safety practitioners and officers among them, and conduct orientations on behavior-based safety. We see this program as assisting contractors in complying with government regulations and in adopting standard operating procedures. It is also our way of sharing our values with our stakeholders, and actively engaging our stakeholders in business activities. Additionally, the CSM motivates our contractors to continuously improve, through regular performance monitoring. Monitoring and evaluation of a contractor’s performance are critical factors in selecting partners for future contracts.

Inspections and functional audits are conducted throughout our business. This is to ensure that plants adhere to Petron’s standards on health and safety of employees, customers, suppliers, contractors, and the

The Refinery is a major provider of local employment in the province of Bataan, and its expansion program RMP-2 is expected to create over 10,000 more jobs.

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for the communities surrounding the Refinery. These include: IMS certification; installation of environmental protection facilities; use of low-sulfur fuel gas for our furnaces and boilers; installation of double-lined/HDPE on benzene tanks and close-loop sampling; odor management; and a waste segregation performance index (WSPI) for the Refinery and all contractors.

In terms of the economic impact on our supply chain, we use local contractors for maintenance, expansion projects, and environmental programs; and work with contractors who source their materials locally. With the Refinery’s expansion project, the Refinery Master Plan 2, job openings at the Refinery prioritize qualified locals from the province of Bataan. The Refinery currently employs 395 Bataeños accounting for 62% of the Refinery’s total work force of 632 personnel. We also conduct community medical health programs and livelihood projects.

All these commitments and endeavors as we green the supply chain will help us reach our goal, which is “To be the Pacesetter Refinery in the Asia Pacific and The Most Admired Industrial Complex in the Philippines.”

Sustainable Distribution, Depot and Terminal Operations

Ensuring that our products get to their final destination—and ultimately, to our customers—safely, and with minimal impact on the environment is a top priority for Petron. The major environmental impacts in transportation are oil spills—both

in-land and coastal—and carbon emissions. Marine vessels are the major arteries carrying our products from the Refinery to the depots and terminals at the primary distribution stage. Petron’s Marine Department has a strict vetting process that demonstrates our company’s strong commitment to maritime safety and environmental protection.

Despite being an archipelago, maritime disasters figure frequently in the news. Accidents continued to happen even if ships and terminal operators were all certificated to have complied with relevant industry rules and regulations. The 2007 creation of a dedicated team for marine vessel vetting became an imperative for Petron after the Guimaras incident, when a sub-contracted hauler caused an oil spill in 2006, a substandard vessel that met the requirements of the Flag Administration, Port State and Classification Society. Petron knew it couldn’t place its commitment to the environment and the community entirely in the hands of others.

Petron’s vetting policy asserts that no vessel “shall be engaged by any of Petron business units unless it has been vetted by the Marine Department and written approval for its use was obtained.” It works with a third-party inspection and vetting company accredited with some of the leading names in the oil, chemical, and gas industry as well as in international trading and shipping.

Petron’s Marine Department has five primary functions: vessel inspection, vessel vetting, accident investigation, marine terminal inspection, and International Safety Management/Tanker Management Self Assessment

audits. It does all these to meet its objectives of safeguarding Petron from exposure to unnecessary risk; supporting the safety, quality, security and environmental policies of the company; determining the standard of vessels and marine terminals using a technical risk assessment free of any commercial influence or consideration, and applying such assessment to all vessels and marine terminals in a uniform and equitable manner.

Vessel inspection and vessel vetting are at the heart of the department’s reason for being. Inspection goes above and beyond the vessel’s general information (including certification and documentation), appearance, and structural condition, covering safety management, pollution prevention, crew management, navigation and mooring, and ship-to-ship supplement among others. Inspection is not vetting, which is just as rigorous but covers more criteria. It has detailed guidelines, checklists and questionnaires to assist in applying a uniform interpretation of technical criteria and is covered by numerous international conventions, and regional, industry and local standards and regulations.

Our sense of responsibility pushes us to implement in our vetting requirements, particularly for crossbay vessels plying the Pasig River, some anti-water pollution measures that are normally required by the MARINA. This is the installation of slop tank and segregated ballast tank. Slop tank is where oily bilge water and dirty water produced during change of cargo and tank cleaning are collected for disposal to shore facilities. In the past, vessels usually used their cargo

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purpose, trade route and/or cargo. For example, a brand new top of the line vessel may be rejected if it does not match the terminal’s specifications, which can lead to accidents and damages.

Thus, complementing this process is the marine terminal inspection, where the department conducts periodic safety inspection of all Petron marine terminals and direct account customers. Aiming to monitor proper compliance with acceptable industry standards, the inspection process also seeks to provide accurate and comprehensive information of terminals to ensure compatibility of ships and terminals, safety of operations and the protection of environment. Seventeen of our terminals with pier facilities comply with the International Ship and Port Facility Standard.

The company’s Marine Department is tasked with ensuring that more than just being seaworthy, marine vessels utilized by Petron live up to the safety, quality, security and environmental policies of the company.

oil tanks as ballast tanks. Before they are to load at the Refinery, they have to dump the oily water mixture (oil residue plus the sea water used as ballast water) into the sea to prepare their cargo tanks for loading. With Petron’s introduction of segregated ballast, ballast water is not contaminated with oil and cargo tanks are exclusively used for cargo oil. As a result, no oily water mixture is discharged into the marine environment.

Vessel vetting process

Ultimately, vetting is the process by which Petron is able to assess the vessel’s quality and suitability for a given task. The process takes into consideration physical inspection and documentary audit of a particular vessel for the sole purpose of qualifying the tonnage for a specific

Mandaue Terminal

Vetting is the best way to match operational requirements of the voyage and to properly manage all identified risks, which include but is not limited to the following: undue delays and costs of failing regulations; the rising insurance costs; casualties that carry severe commercial, human, and environmental consequences, and tarnished company reputation. In 2012, with the acquisition of the vetting software eINSPECT System, Petron expects to increase efficiency and record management by at least 60%.

Part of the task of the Marine Department is to conduct investigations on every marine incident or accident to determine root cause/s and identify appropriate corrective actions to prevent recurrence. It also conducts annual

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audits of all vessel owners and operators to ensure that policies and procedures pertaining to vessel operations were in accordance with the ISM Code.

In terms of fleet modernization and in compliance with the Maritime Industry Authority’s Circular No. MC2010-01 which mandates double-hull specifications in domestic vehicles with a gross register tonnage of 150 and above, Petron has 20 double-hulled coastal vessels and 29 double-hulled cross bays, improving safety standards and ensuring the protection of the marine environment.

In terms of our black tankers, all contracted vessels have complied with the same guideline since 2008. For white contracted vessels, the conversion program and retrofitting works started as early as 2010, in tandem with a vessel replacement program which mandated all incoming vessels to have double-hull configuration. To date, all white tankers are now compliant to the double-hull circular. The average age of tankers is 7 years, with 50% of the fleet at 5 years old or less from date built. With its commitment to a safe and environmentally friendly ship-shore interface, the Marine Department has inspected, since 2007, a total of 109 coastwise vessels, 65 foreign vessels, 29 marine terminals, and 14 ship operators. A total of 1,054 vessels were also subjected to dry vetting. It has also since declared 48 marine vessels not fit for service, or 5.22% of the total number inspected.

We also invested in the adoption of the Global Positioning System (GPS) Tracking System and Closed

The vessel vetting process is complemented by regular safety inspections of all Petron marine terminals and direct account customers.

Circuit Television (CCTV) Cameras to monitor the location of our vessels and to improve security respectively. All inter-island tankers and 80% of crossbay barges were installed with the GPS tracking technology, while 50% of the crossbays had their CCTV systems activated.

Ship-shore safety training program

To further engage its marine haulers, Petron conducts quarterly coordination meetings to discuss marine-related matters such as safety and environmental issues, accident/incident statistics, investigation findings and corrective/preventive actions, training programs, new statutory requirements of the government, among others. It coordinated with the American Bureau of Shipping in conducting the incident investigation seminar. Ship-shore safety seminars, hosted

by the Marine Department and Supply and Operations, were also conducted in Luzon, Visayas, and Mindanao, an endeavor that has resulted in enhanced cooperation and understanding between ship and shore personnel during ship-shore interface and cargo operations.

Petron is also a member of the Philippine Institute of Petroleum that acts as industry oversight group for concerns in the areas of product quality standards, transport and handling practices, and compliance with relevant government regulations. It also seeks to create a venue for the sharing, preservation and refinement of best practices in the field of health, safety, environment, and quality, supplementing existing regulations with the creation and establishment of the Tanker Vessel and Marine Terminal Quality Assurance Standards.

Sustainable transport for Petron means operational efficiency to ensure safety and the optimized utilization of our resources, environmental-friendly operations, and a commitment to healthy people and working environment. We commit to these, despite the fact that these are neither regulatory requirements nor mandated by law, because we understand Petron’s crucial role in fueling domestic industry and daily lives nationwide. Many of programs discussed below are initiated by Petron, and we hope to contribute to their legislation for a more widespread adoption of these practices.

One of Petron’s major continuing goals is to improve tank truck safety, product security, and delivery

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reliability. We have ongoing tank truck modernization and optimization programs in support of this goal and a total of 36 brand-new trucks and 128 accelerated second-hand tank truck replacements have been aligned to this program since 2009.

We enhanced tank truck standards and specifications and standardized preventive maintenance program for trucks and appurtenances such as hoses and pumps, and equipped those dedicated to black deliveries with an oil spill kit. These trucks were also subjected to regular comprehensive inspections. In Pandacan, Petron deployed brand new trucks and have already exceeded the target population. In terms of second-hand trucks, we set a lower service-life of five years maximum to ensure a more efficient, safer, and more reliable fleet.

In relation to T/T monitoring, we also installed GPS tracking devices to monitor on a real time basis the location, route taken and speed of our trucks. This also renders police assistance services in case of emergencies. In the near future, we will strengthen this nationwide tracking program with trip management features, an automated tank truck scheduler, and automated stock replenishment program to improve the

order fulfillment process, streamline delivery operations, and save on transportation cost. Parallel runs are now ongoing to test the program.

Aside from fleet improvements, Petron also works to upgrade the skills of its personnel. Last year, our drivers participated in defensive driving seminars, training on safe tank truck operations and inspections, and incident/accident investigation technique such as responding to oil spills. Programs have been designed to assess the physical, mental, and professional capacities of our drivers. To ensure that we meet our customer’s needs in terms of product transport and delivery, we conducted a service excellence program among our haulers and drivers to motivate them to continue providing world-class service.

Tank truck inspection training

Our driver’s physical and mental health program covers annual physical examination, random drug testing, and neuropsychiatric tests. Because majority of road accidents stem from fatigue, we strictly regulated our drivers’ hours on the road and provided them with clean and decent quarters at our depots and terminals where they could rest. We have a drivers’

Regular discussions and training on marine-related issues and concerns further enhance the capabilities of both Petron personnel and those in its supply chain.

Tank truck inspections help prevent the occurrence of incidents on the road, while regular training for drivers aid in their continual improvement.

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handbook and guide published in the vernacular and standard toolbox meetings to promote their continuous improvement. We make sure to monitor the effectiveness of these programs through regular audits and inspections.

We also embarked on several initiatives to improve our product delivery system, including a product delivery job hazard analysis. We are now in the initial stages of developing a Haulers Management System, which will document the established hauling operating policies, procedures, and initiatives to ensure that haulers can comply with the tasks required to achieve our objectives.

We make sure to continuously indoctrinate all parties involved in the correct tank truck receiving procedures. Thus, we also completed the audio-video materials that would provide our dealers, haulers, depots and most especially the drivers, standard reference materials on proper product loading and delivery operations.

Because of the increasing frequency of inter-island deliveries in the last several years, our road transport group proposed to standardize the handling of additional marine insurance to properly reflect the true cost of product delivery. The same will be done for toll fees. Discussions on how to implement the program are still ongoing with our marine serviced department. Long-term programs include bottom loading and vapor recovery system to protect air quality, and to improve reliability of supply through its inventory-driven delivery system.

Petron continues to modernize its service stations to better attend to the needs of motorists.

Sustainable Dealership

Customers nationwide know Petron through the service station in its community. Last year, Petron invested in various service station improvements. These improvements were undertaken to ensure that Petron’s presence in these communities contribute to the well being of residents and protect their health and safety while cascading the triple bottom-line agenda to its business partners.

To prevent corrosion in our underground tank (UGTs), which can lead to oil spills and the contamination of soil and groundwater, we replaced old steel UGTs with double-walled fiber-glass tanks and, as additional measure, installed a 1.5 mm-thick high-density polyethylene lining to serve as protective basin. In line with this is the upgrade of existing suction lines and vent lines connecting the UGT to the dispensers to hard plastic. Possible leaks are also guarded against through regular monitoring of

observation wells and another well of brine solution in our double-walled tanks. Should the unloading of our product into the UGT cause a spill, the upgrade of our fill sump from concrete to hard plastic allows us to create a return system back into the tank. Our dispensers and pumps are also equipped with such technologies as shear valve, breakaway coupling, and automatic locks in our nozzles to contain any possible spills that might arise from accidents around the pump islands.

In addition, we constructed oil spill containment canals in front of our service stations so that should an oil spill happen, run-offs into the road that might endanger motorists and cause traffic would be prevented. These canals lead to an oil and water separator, which is part of our waste management program in the service stations. Other waste management initiatives included the installation of a sewage treatment plant in larger stations that have, as locators, dining and service establishments that generate solid waste and wastewater

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because of their operations. We continued to protect the air quality in the community by upgrading from gooseneck valve to pressure vacuum vents that open only when there is pressure, curtailing the amount of fugitive emissions. Throughout our stations are safety signs to engage the customer in fire prevention.

As a component in the Environment Management Plan for Service Station Dealers, we continued our innovative Pollution Control Officers Training course. The training course is a program that Petron conducts to ensure that Petron’s dealers are informed and knowledgeable about environmental laws and regulations implemented by the Department of Environment and Natural Resources Environmental Management Bureau. The course is accredited by the DENR Central Office, and satisfies EMB’s 40-hour environment training requirement prior to accreditation as a pollution control officer. Since the program began in 2010, there have been 14 batches and a total of 668 Petron Service Station dealers, personnel, and contractors trained under our DENR–EMB accredited Basic Pollution Control program.

One of the major improvements in 2011 was the outright accreditation of participants as PCOs right after completing the training program. Service stations no longer experienced a delay in accreditation, and instead felt the immediate benefit of having a certified PCO. The PCO is tasked with ensuring that the station complies with all EMB’s laws and regulations. The automatic accreditation scheme was

Environmental Management at Petron Service Stations

Last year, Petron celebrated a milestone when three of its service stations in Davao received the globally recognized Environmental Management System (EMS) Certification in a record time of six months.

The pioneering batch of dealers qualified to undergo the process of EMS certification was chosen for their awareness of and compliance with environmental regulations. Our CTESG Area Engineers, and officers from the Retail Network Engineering and Maintenance, the Environment groups and Area Sales Executives assisted the dealers in the preparation for certification. While many still think that environmental protection is an “optional” program, something that is nice as an add-on, Petron sees it as integral to the business. By working closely with our dealers, we share with them our belief that environmental management is not only about stewardship and environmental protection. It is a system that will help improve business operations as whole. A fully implemented EMS enhances efficiencies, resulting in better service and greater customer satisfaction. At the same time, we contribute to a greener planet by reducing risks to the environment—one station at a time.

Many people perceive the oil industry as polluters, the environmental bad guys. With Petron cascading environmental responsibility to its service stations through EMS

implemented for the training batches in Leyte and Tuguegarao. Ninety five or 32.6% of the total number of participants this year have benefited from this scheme.

Training is only part of the story, however. To gauge the effectiveness of the training program, Petron conducts a compliance survey during the training, to get an idea of the baseline level of compliance with environmental regulations. Post training, Petron conducts site inspections to monitor whether there are any actual improvements in the service station’s environmental compliance. In every batch, at least 10% of the attendees were inspected, and results compared with the initial survey, in order to determine whether the PCOs were in fact implementing what they had learned in training.

Through their strict observance of our Environmental Management Plan, three Petron service stations were certified last year with the globally recognized Environmental Management System. Two Petron mobile training vans travel around the Philippines to provide our service station attendants with the on-site training required. We also continued our GreeneSS program, which rewarded Petron service stations that strive to protect the environment throughout their operations. Compliance with environmental laws and regulations and promotion of health and safety are at the heart of our dealers’ operations. We have an aggressive incentive program for dealers who excel in their sustainability performance.

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2011 Sustainability Report

Certification, we are intent on proving that with the right leadership, the Philippine oil industry has a green and sustainable future.

Mapping the Future of our Supply Chain

Our journey to greening the supply chain continues. The Logistics Master Plan (LMP) serves as our roadmap for a consolidated supply chain.

The LMP integrates the Primary Distribution, Depot Network, and the Secondary Distribution Master Plans. The primary distribution master plan is geared towards supporting the depot network master plan, continuing the fleet modernization and optimization, and fully complying with local and international regulations. The Depot Network Master Plan aims to support our Sales Expansion. With the aggressive construction of service stations all over the country, new depots shall serve as rally points for growth areas. This will not only effectively serve our customers but will also benefit our environment as our tank trucks will be more optimized. Aside from building new depots, we will be developing our existing depots to be more attuned with the times. This also aims to secure depot tenure just like securing lot ownership and right of way. Lastly, the Secondary Distribution Master Plan aims to support the Sales Programs, which include the Base Volume, new businesses and markets and the Micro Filling stations (MFS/ Bulilit

Stations). Other drivers include the improvement in the delivery model such as instituting the Inventory Driven Delivery System to cover our S/S network which is also a way of optimizing the delivery routes taken by our T/Ts, safety and compliance to standards, lowering costs and improving supply reliability.

The Supply Chain Management Plan will directly link the performance of our suppliers and contractors to the business goals of Petron. The Plan will also be part of our Supply Chain Roadmap to progress supply chain engagement from an internal management tool into a culture so that Petron is able to expand its sphere of influence when it comes to sustainability, while maintaining market leadership. In concrete terms, we will define and codify the parameters of our Supply Chain engagement following a third-party assessment of the sustainability capabilities of our contractors and suppliers. We strive to embed sustainability practice into their operations and speak a

common language by reflecting the triple bottom-line indicators in the performance card of our dealers beginning 2012, and in the vetting mechanisms that our various divisions use on business partners to rate and assess their overall performance. This will communicate clearly the message that in Petron, profitability must be built upon the foundation of caring for both the environment and the community.

In the long run, we believe that all our proactive efforts protect our partners’ social license to operate, protect the health and safety of various stakeholders, reduce the cost of turnover by improving workforce productivity and retaining high performers, and becoming the dealer of choice in their areas. In short, Petron hopes always to boost the economic gains of our partners because they work with us and participate in upholding our standards. Because of this beneficial relationship, we promote ownership of sustainability among our network of business partners nationwide.

The tank truck modernization program is among the many components of Petron’s Logistics

Master Plan.

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