Annual and Sustainability Report 2017

RUNNING A SAFE,
We have global standards, processes, and tools to
manage safety, the environment, and community
EFFICIENT, RESPONSIBLE, involvement. We aim to continuously improve the way we
operate to prevent incidents and identify, avoid where
AND PROFITABLE possible, and minimise adverse environmental and social
BUSINESS impacts across our projects and facilities. We also
report on our performance in our Annual and
Sustainability Report.

37
FUEL THE PHILIPPINES, MAKE THE FUTURE

FINANCIAL 2. Operational Planning. Strategic plans with one-

year and three-year targets are operationalised by the

PERFORMANCE
businesses. After securing approval from the Board of
Directors, capital is allocated to support these plans.

3. Reporting. Businesses report if their financial and

operational targets have been met, and which areas

W
e conduct our business responsibly to need improvement.
attain sustainable profitability and deliver
value to our stakeholders. To contribute to 4. Appraisal. The Board of Directors and upper
a sustainable energy future, it is critical that we also management appraise the overall performance of the
manage our financial performance. businesses of Pilipinas Shell.

Pilipinas Shell is expected to maximise value, maintain It is the Board’s responsibility to foster the long-
cash flow, manage costs, and generate strong returns for term success of Pilipinas Shell. Board-level quarterly
shareholders. All these contribute to the longevity of the operational updates and reviews are done to evaluate
business, and help us fulfil our mandate. (103-1) the effectiveness of our strategy against set targets
and key metrics for financial performance. Upper
Business Performance Management (BPM) is our management also holds monthly meetings to discuss
principal tool to monitor, manage, and meet the our financial and operational performance. Monthly
Company’s business goals. Below are the four steps of finance forums and regular business meetings are also
our BPM: (103-2) conducted to serve as our primary controls for evaluating
performance at the business and function level. (103-3)
1. Strategic Planning. Management develops a
strategic and medium-term plan that is: In 2017, Pilipinas Shell generated a direct economic
a. Credible. Specific interventions are laid out to value amounting to Php 171.41 billion, of which Php
deliver the plan; 2.67 billion and Php 2.66 billion were distributed to
b. Competitive. Ambitious goals are set to achieve employees and shareholders, respectively, and Php 400
competitive returns within the planning period; and million invested in community development.
c. Affordable. The plan is achievable with the
resources available.

2017 ECONOMIC VALUE GENERATED AND DISTRIBUTED (in Php billion) (201-1)

7.71 LEGEND
10.66
4.50%
Economic Value Retained
6.22% 2.66 Government (taxes, duties, levies)
12.45
1.55%
7.26% Payments to Suppliers
4.07 Crude and Finished Products Suppliers
2.37%
0.72 Service Providers
3.55% 6.09 0.42% Equipment, Property and Other Suppliers
171.41
2.67
1.56%
Employees
0.04 Communities
0.02%
76.09% Providers of Capital
Shareholders
Creditors
130.43

38
 Annual and Sustainability Report 2017

OPERATIONAL Our Retail business ranked 6th in profitability and 9th

in sales volume versus other Shell Retail businesses

EXCELLENCE globally in 2017.

“We sell more per station than any other company in

the marketplace,” observed Cesar A. Buenaventura,

B
eyond cost management, we also measure our independent director and former Chief Executive
operational performance. We track our “No More Officer of Pilipinas Shell.
Big Stuff” Health, Safety, Security, and Environment
(HSSE) targets of zero fatality and zero significant At less than half the retail network footprint of our
recordable events. We also track what we call the closest rival, we compete in terms of operational
“Four Halves,” namely: Process Safety, Personal Safety, efficiency, quality products, and customer service.
Transport Safety, and Environmental Impacts.
A legacy that spans generations
The way we conduct our business is equally important
as the quality of our products and services. We train Pilipinas Shell’s 1,000th retail station, located along
our people to continuously look for improvement Greenfield Parkway, Eton Road in Sta. Rosa, Laguna,
opportunities within our operational processes. Through opened in May 2017. Dubbed the “Makati of the
programmes like the Excellence Every Day VP Award, we South,” Sta. Rosa has become a bustling business,
recognise personnel for the outstanding performance of residential, and commercial district.
their duties.
“We are very excited to contribute to the growth of
The 2017 Shell People Survey (SPS) showed respondents this area,” said Jenny Tan, owner and operator of
giving Pilipinas Shell 78% for operational excellence Shell Eton Road.
(compared to Shell’s overall score of 72% and the top
quartile benchmark of 77%) and an average score of Tan’s grandfather was also a Shell distributor, while
86% for being a “responsible business” (against 81% for Tan’s father operated their family’s first Shell retail
Shell, and 85% for the top quartile benchmark). station. She entered the business in 1996 and now
manages 11 Shell retail stations—the largest cluster
surrounding the South Luzon Expressway (SLEX). Her
FUELLING LEGACY AND INNOVATION success is one example of Pilipinas Shell’s enduring
relationships with retailers that span generations.

Redefining the retail station concept

Pilipinas Shell gives motorists a truly satisfying

stopover experience. Apart from refuelling and
maintenance and repair services, our customers can
also find Shell Select, quick-service restaurants, ATMs,
deluxe comfort rooms, and Pilipinas Shell’s latest café
concept offering, deli2go, in Shell stations.

deli2go at Shell Magallanes “We understand that the needs of our customers
are evolving,” said Anthony Lawrence Yam, Vice
Retail remains the largest growing segment of the President - Retail of Pilipinas Shell. “Our food at
business, and contributes a significant portion of our deli2go does not compromise on the taste and quality
total sales. that Filipinos deserve.”

39
FUEL THE PHILIPPINES, MAKE THE FUTURE

SAFETY DAY
AT SHELL: 2017 marks the 11th year that Pilipinas Shell
observed Shell Safety Day.

Working together
for everyone’s
safety

Safety Day, an annual event held by Shell worldwide, Goal Zero Day at Shell Aviation
engages Shell employees and contractors to improve their
safety performance. SAV Philippines also held Goal Zero Day on October 11,
2017. The event taught personal, process, and transport
In the Philippines, Safety Day has been observed for safety to airport users.
11 years, most recently on May 10, 2017 with renewed
focus on three Safety Leadership themes: Care, Risk The occasion marked two milestones of SAV’s Into-Plane
Normalisation, and Dilemmas. Operations: 7,002 days of no harm, and 3,715 days of
no leaks. As of December 2017, the record has gone up
Some retail stations took the opportunity to tie up with to 7,093 days of no harm, and 3,806 days of no leaks
organisations that would lend their expertise on safety — bringing SAV closer to a Double Platinum Award for
and security. The Shell station in Kapalong, Davao del Safety to add to their platinum and gold trophies since
Norte, for one, partnered with the Kapalong Municipal 1998.
Police Station to conduct an information campaign on
crime prevention and illegal drugs. Through the years, Shell Aviation in particular has been
very focused on teaching safety protocols in the airport.
Meanwhile, Shell Aviation (SAV) Philippines combined fun
and games with a formal lecture and sharing sessions. “Since [we have celebrated Safety Day and Goal Zero
Participants included station managers, ground crew, and Day], we have had no troubles. We are the priority
suppliers who are regular ramp users. “We invited not in positioning under the aircraft, because now they
only our [airline] customers, but also all the airport users,” understand our concern about safety,” said Pastrana.
said Boyet Pastrana, Airport Operations Manager.

40
 Annual and Sustainability Report 2017

ASSET INTEGRITY
AND PROCESS
SAFETY

A
t Pilipinas Shell, we conduct our operations
responsibly and abide by stringent policies on
asset integrity and process safety at all levels. We have various asset integrity management
Our leaders fully understand the process safety risks and procedures that are implemented based on
require controls to educate and engage their employees Shell’s Global Manufacturing Standards and Best
in delivering the right outcomes. (103-1) Practices. It is embedded in the 22 Requirements
of the Proces Safety section of the HSSE&SP
We follow the Health, Safety, Security, Environment, Control Framework. (103-2)
and Social Performance (HSSE&SP) Control Framework
regarding asset management and safety processes. Examples of these safeguards include:
We make sure our assets are fit for use and work to
preserve their integrity through regular maintenance 1. Design and Engineering Manuals (DEM)
and inspections. We follow procedures that should 2. Design and Engineering Practices
reduce chances of a technical breakdown or a safety 3. Process Safety Basic Requirements
incident, such as a leak, fire, or explosion. Our vigilance 4. Manufacturing Site Requirements Manual
minimises the risk of harm to our people, and enables 5. Pressure Equipment Integrity Management
the Company to be a good neighbour in the communities Standard
where we operate. (103-2)

Pilipinas Shell adheres to permit to work guidelines.

41
FUEL THE PHILIPPINES, MAKE THE FUTURE

ASSET INTEGRITY PRINCIPLES 4. Integrity Leadership

Asset integrity refers to the way we manage our facilities This describes the accountability of business leaders
throughout their complete life cycle with the goal of never to ensure our assets are safe through all phases of
unintentionally releasing hazardous material. We follow four their life cycle.
asset integrity principles: Design Integrity, Technical Integrity,
Operating Integrity, and Integrity Leadership. Championed by our President and Chief Executive
Officer, safety is mandated as everybody’s
1. Design Integrity responsibility. Business and function heads, and
HSSE managers, work together to ensure everyone
This requires design engineers to assess the Process understands and adheres to the HSSE&SP Control
Safety risks of proposed facilities, and design and build Framework. The Asset Manager assigns the roles
assets to specific engineering standards: and responsibilities for the operation of the asset, in
compliance with the control framework. (103-2)
DEM1 defines the Process Safety requirements in
technical standards for design and construction that have At the refinery, various managers are accountable
a direct relationship to the control of process hazards on the requirements of Asset Integrity and Process
with risk assessment. DEM2 focuses on preventing the Safety Management (AI-PSM), as specified in the
re-occurrence of known major process safety incidents by control framework. This includes setting expectations,
addressing the main causes and key barriers. prioritising, and assigning resources. (103-1)

2. Technical Integrity

This involves maintaining hardware through proactive

testing, inspection, maintenance and repair following
the Shell Global Reliability and Integrity maintenance
plan. It’s critical that inspection, monitoring, preventive
maintenance and equipment repairs preserve the design
integrity of the asset throughout its operating life.

3. Operating Integrity

This means operating all our facilities within the

prescribed operating envelope from startup to shutdown.
We define and comply with operating procedures,
especially critical processes such as permit to work
systems, use of safeguarding systems, and change
management.

In managing operational risks, we operate our

facilities using a Front Line Barrier Management (FLBM)
programme to prevent the occurrence of undesirable
incidents or limit the consequences in the event of such
incidents.

42
 Annual and Sustainability Report 2017

MANAGING PROCESS SAFETY For aviation equipment maintenance and operational

safety, Pilipinas Shell follows the Shell Aviation
All our physical assets are well-designed, properly Maintenance Manual (SAMM), Shell Aviation Quality
maintained, and safely operated. We implement a System (SAQS), and Shell Airports Operations Manual
process safety management system to achieve our (SAOM). (103-2)
Goal Zero ambition of “no harm, no leaks” across all
operations At the refinery, we have an everyday zero incident
target on Tier 1 and Tier 2 Loss of Primary Containment
Our supply and distribution arm adheres to an Asset (LOPC) following the American Petroleum Institute (API)
Management Policy that helps prevent process safety guide to reporting process safety. Certain mechanisms
incidents. (103-2) are implemented: permit to work; focused inspection
programme for LOPC surveillance; process isolation
For maritime safety, we follow the Shell Maritime Safety using Lock-out Tag-out (LOTO) system; levelling up
Requirements for Design, Engineering, Construction and maintenance by doing mechanical handover to
Operations. (103-2) operations; and heightening operational discipline
using a structured competency assessment for frontline.
Similarly, road transport has its own checks and We also use an electronic system that monitors our
safeguards. Vehicles used by field-based staff (e.g. employees’ exposure to work-related hazards at any
Retail Territory Managers, Account Managers, etc.) given time. (103-2)
must be rated at least four stars in the Global New Car
Assessment Programme (NCAP), as vetted by our Global BEHAVIOUR-BASED SAFETY PROCESS
Road Safety Technical Expert. NCAP-4 rating indicates
overall good performance in crash protection, with Visitors at Shell House must undergo a safety briefing
additional crash avoidance technology. Meanwhile, before being allowed past the reception lobby. Similar
our contracted lorries follow the Shell Global Vehicle safety protocols apply in fuel terminals and other
Standards, and are checked via the Road Transport shell office facilities. Prior to any activity, participants
Pillars audits to ensure that all safety requirements are are oriented on the safety rules and the location of
met. (103-2) emergency exits.

We foster a culture of safety and abide

by the Shell Golden Rules, prominently
displayed at various sites to remind us
to:

1. Comply with the law, standards,

and procedures;
2. Intervene in unsafe or non-compliant
actions; and
3. Respect our neighbours.

Compliance to the Golden Rules

extends to our contractors, as the
Goal Zero ambition is embedded in
Pilipinas Shell employees regularly discuss our contracts, and articulated in the
insights related to HSSE.
Contractor HSSE Manual.

43
FUEL THE PHILIPPINES, MAKE THE FUTURE

12 LIFE-SAVING RULES

We follow the 12 Life-Saving Rules, which set out clear-

cut “dos and don’ts” that cover activities with the highest
potential safety risk. The rules help us ensure safety of
operations and protection of our people. (103-2)

We conduct Toolbox Talks with contractors and third-party

operators in the terminals to discuss tasks, operational issues,
Work with a valid work Conduct gas tests
and safety considerations. Those who are not yet acquainted permit when required. when required.
with the 12 Life-Saving Rules are oriented. Experienced
employees are asked to share their HSSE insights. (103-2)

We also follow a Stop Work Policy, wherein a Shell employee

or contractor is obliged to immediately suspend work when
they discover an unsafe condition or act, such as personnel
lacking personal protective equipment. Work resumes only
after the unsafe condition has been rectified. (103-2)
Verify isolation before Obtain authorisation
work begins and use the before entering a
specified life protecting confined space.
equipment.

Obtain authorisation Protect yourself against Do not walk under a Do not smoke outside
before overriding or a fall when working at suspended load. of designated smoking
disabling safety critical height. areas.
equipment.

No alcohol or drugs While driving, do not exceed Wear your seat belt. Follow prescribed
while working or driving. speed limits. Also, refrain from Journey Management
texting or calling on your mobile Plan.
phone; instead, place your mobile
on “Do Not Disturb” mode. If you
use the phone as a navigational
tool, activate voice guidance as a
precaution.

44
 Annual and Sustainability Report 2017

INCIDENT RESPONSE AND REPORTING We have the necessary resources and competencies
to deal with spills, leaks, fires and explosions. Our
Incidents are reported and investigated following emergency response plans are routinely tested and
internally established standards and regulatory improved after simulation exercises. We conduct drills
requirements. Pilipinas Shell utilises a unified information to make sure that our employees and contractors can
and communications technology (ICT) system called respond rapidly to an incident.
Fountain Incident Management (FIM) to report, review,
and follow up on investigation results. It allows employees EVALUATION
and contractors to report incidents, potential incidents,
near misses, investigations, and action items, on a web- Control Framework Audits and Integrated Assurance
based database. The combined data pool in the FIM Plans (IAP) check the effectiveness of our management
system allows for in-depth trend analysis and reports. By approach. The IAP involves a three-tier Line of Defence
using one sharing tool, all Shell companies and third-party (LOD):
contractors can learn and work together more efficiently to
prevent safety incidents. (103-3) LOD 1: Internal self-assurance and checklist;
LOD 2: Peer review, which involves global and regional
Number of process safety events, teams of subject matter experts that conduct evaluations
by business activity (OG13) across businesses; and
LOD 3: An independent review conducted by
Due to our immediate response, the two cases each of representatives from the Global HSSE&SP Assurance
Tier 1 and Tier 2 process safety incidents did not result in team. (103-3)
any fire or injury, nor affect the continuous supply of fuel
products to the market: HSSE KPIs are regularly monitored to re-evaluate
business plans in the short- (3-6 months) and long-term
(one year). Management reviews, regular reports, and
PROCESS SAFETY NARRATIVE PER field walks help us identify and manage potential safety
EVENTS (PSE)1 API RP 754 risks, and prevent their recurrence.

Hydrocarbon oil leak coming We also conduct an annual Assessment of Risks and
from a portion of a pipeline
Responses at Worksites of Shell (ARROWS), which is led
Tier 12
Hydrocarbon leak coming
by the Country Coordinating Team (CCT). This assures
from a flange excellence in risk control management, prevention
of HSSE-related incidents, and emergency response
Hydrocarbon LOPC from the capabilities. (103-3)
removal of a blind flange
Tier 23
Our monthly technical forum aids in the investigation of
LOSC4 from a cold stream incidents and serves as a venue to discuss HSSE insights
from a cooler
and improvements. (103-3)

1
A Process Safety Event (PSE) is an unplanned or uncontrolled release
Altogether, these evaluation mechanisms and business
of any material, including non-toxic and non-flammable materials (e.g. audits provide valuable input and enable us to meet
steam, hot condensate, nitrogen, compressed CO2 or compressed air).
2
A Tier 1 Process Safety Event (T-1 PSE) is a loss of primary containment our management commitments and to operate in a safe
(LOPC) meeting a threshold as defined by API RP 754.
3
A Tier 2 Process Safety Event (T-2 PSE) is a LOPC with lesser volume of
manner. (103-3)
release than a Tier 1.
4
Loss of Secondary Containment

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FUEL THE PHILIPPINES, MAKE THE FUTURE

55 YEARS
OF SAFE AVIATION

Refuelling an aircraft is a complex process. At age 52, shared by Chevron and Petron since 1962. SAV
Nehemias B. Salaver, Shell Aviation (SAV) Philippines escalated its advocacy when a contractor was involved
operator, makes it look easy. He goes through a precise in an incident at JOCASP in 1998.
sequence of steps — positioning the fuel tanker; making
the necessary grounded connections between aircraft “One of our goals is to bring HSSE to the highest level
tank and hydrant; checking the gauge, opening valves, of consciousness. The dilemma for us, in a joint venture
and activating fuel delivery — all within 15 minutes. environment, is that we do not have sole responsibility.
Then he calmly reverses his steps and moves on to the So we try to share our knowledge and influence,” said
next aircraft, navigating through the airport traffic. Melchor “Jun” Abina, Jr., SAV Country Operations
Manager.
Salaver joined SAV in 1987 as a contractor for
maintenance, fresh off his scholarship under the Sanayan SAV is active in the Operations Committee and the HSSE
sa Kakahayang Industrial (SKIL) programme of the Working Group at NAIA, and tries to intercede where
Pilipinas Shell Foundation, Inc. “If you don’t study all the there are unsafe conditions. When NAIA equipment
functions, you’ll limit what you can do. I learned, so I proved insufficient to detect lightning strikes in 2014, for
don’t get nervous, even when the auditor asks questions,” example, SAV furnished the Manila International Airport
he said, in Filipino. Authority (MIAA) with portable lightning detectors.
“MIAA was able to establish a protocol. Eventually, they
A premium on safety purchased their own equipment. Now, whenever there
are lightning strikes within a 5-kilometre radius, MIAA
SAV is audited annually, solidifying its reputation of issues a warning to stop operations,” Abina said.
being a responsible business. The heart of its operations
is situated in the Joint Oil Companies Aviation Fuel
Storage Plant (JOCASP) within NAIA. These are premises

46
 Annual and Sustainability Report 2017

SAV is also represented in the global Joint Inspection Abina, 22; Salaver, 31; and Pastrana, 32. All operators
Group (JIG), which develops standards to govern the are required to complete their Aviation Centre of
operation of shared fuel storage and handling facilities Excellence (ACE) Training, which is renewed every three
worldwide. Pilipinas Shell’s latest contribution has been years. They are trained in safe and effective operations,
to determine better controls to test aviation equipment including use of modern equipment, marketing support,
and lower the risk of fuel-related incidents. Internally, supply security, and customer care. All three supervisors
the Company is already introducing a more efficient also undergo shifts in roles—from administration and
water separator. “You’re keeping your equipment and purchasing, to vehicle maintenance, to safety.
processes safe, and at the same time you’re keeping the
passengers in the airlines safe,” said Abina. “Our group has initiative. There’s always someone
asking for another’s help to learn a new expertise,”
Bigger footprint, better impacts said Manalo, in Filipino. “But the core is safety, and
delivering the goods that we need to deliver. We excel
For its 55th year, SAV expanded its refuelling network at that.”
to include Mactan-Cebu International Airport (CEB), the
second busiest terminal in the country. With this latest
entry, Pilipinas Shell now supplies jet fuel at three of the
key international airports in the country, including Manila
(MNL) and Clark, Pampanga (CRK).
Ninoy Aquino International Airport (NAIA) has
one of the busiest runways in the world:
“Customers prefer Shell, they see how we work,” said
SAV Manila Airport Operations Manager Boyet Pastrana,
whose focus is safety. They’ve recorded 7,093 days of 108,995
zero harm since 1998—that’s 1,893,944 safety man- international passenger flights logged in 20171
hours for the past 20 years—and 3,806 days of zero
leaks since 2007. SAV Manila was one of only three
finalists for the Shell Diamond Award on Safety. This
2017, the business has been awarded another win by On average, Shell Aviation (SAV) Manila serves:
the Safety Organization of the Philippines (SOPI), and
is slated for a Double Platinum Award from Shell Global
HSSE.
36
international flights

Since 1998, the only “spots” in their record are from a

seatbelt issue in 2013, and a moving vehicle issue in 25,000 litres
2015. “We’re actually proud that we chose to report
of Jet A-1 fuel per short-haul flight
that isolated case of not wearing a seatbelt,” said
Patrick Manalo, a supervisor whose focal is vehicular
maintenance. “Regardless of the consequence, you own 100,000 litres
your mistake, and you don’t compromise on the safety of per long-haul flight
your co-workers.”

There are 14 members in the SAV Manila team: a 1

Figures from the Manila International Airport Authority
country manager, a site manager, three supervisors, and
nine into-plane operators. Many of them are long-time
employees: Manalo is clocking 18 years;

47
FUEL THE PHILIPPINES, MAKE THE FUTURE

PERSONAL EMPLOYEE HEALTH SERVICES

SAFETY, HEALTH TRC1 FREE

MAN-HOURS
YEARS TRC
FREE

AND WELLNESS Pilipinas Shell

Manufacturing
6,906,064

193,376
0.05

0.05

Supply and
6,037,368 1.58
Distribution

F
or Pilipinas Shell, there are two general approaches
Retail 13,484,158 7.45
to the management of personal health and safety:
Lubricants 3,486,318 5.14
risk-based task management and promotion of
wellness among our people. (103-2) Aviation 1,893,943 8

Specialities 3,605,906 8
Apart from the 12 Life-Saving Rules that our workers
abide by, the Shell Health Manual specifies our approach Real Estate 1,646,682 4.93

and policy: we prohibit alcohol and drug use; practice Lubricants Supply
293,175 2.60
Chain
fatigue risk management; and evaluate fitness to work
of employees. If an employee is found to have a health 1
Total Recordable Cases
condition that renders him or her temporarily unable to
perform his or her usual activities at work, line managers
would determine appropriate job activities while the In 2017, Pilipinas Shell implemented a new scheme
employee recovers. (103-2) for the healthcare benefits of employees. Health and
Human Relations collaborated to develop a programme
Our service providers include Occupational Health utilising a combination of third-party administration and
Nurses (OHNs) and Occupational Health Advisers premium-based health care to provide medical benefits
(OHAs) who are guided by Health Manuals from the and coverage for Pilipinas Shell employees. This strategy
HSSE&SP Framework. (103-1) We conduct Health Risk enabled the Company to provide health care benefits to
Assessments (HRA) for each of our work sites, and for employees and dependents in a cost-effective manner.
every activity conducted therein. Through this HRA, we (103-2)
are able to identify, assess, and manageany potential
risks to health of employees and contractors – whether We have a Blood Supply Programme in partnership with
chemical, biological, or physical hazards. Our OHNs tertiary hospitals. This makes it possible for employees
make necessary changes and recommend adjustments to and their immediate dependents in emergency situations
mitigate risks. (103-2) to have immediate access to blood at no cost. We also
conduct quarterly bloodletting activities, wherein blood is
If there are health-related incidents, the OHA and OHNs donated by our employees. Our Live Donors Programme
report on reasons for the incident and control measures also has volunteers that will donate blood at a moment’s
breached or ineffective procedures. They are responsible notice. (103-2)
for updating and elevating the issues to the HSSE focal
on-site, who will then make further recommendations to Pilipinas Shell prioritises human performance and
the business for implementation. HSSE tracks recordable care, where Resilience, Shell Be Well, and HIV/AIDS
cases and lost time injury due to incidents. awareness and prevention are at the forefront. (103-2)

We learn from our experience: post-incident evaluation

prompts engineering to further improve our facilities—
and avoid recurrence. (103-3)

48
 Annual and Sustainability Report 2017

Employees benefit from

the annual physical exam,
where they are also given
the opportunity to engage
in a Wellness Talk with a
healthcare professional.
Having articulated their
health and wellness
goals, employees will be
encouraged to commit
to their goals through
the Be Well Scorecard
and participate in
Shell’s health promotion
activities. The scorecard
An employee receives a Wellness
Talk from a healthcare professional serves as a personal
at the Wellness Hub.
tracker and reminder for
employees to monitor
their progress and help
SHELL BE WELL PROGRAMME them achieve their goals.

Under the supervision of the Health Promotion Manager, Through the Breathe Well Programme, employees who
the Shell Be Well programme promotes a healthy wish to quit smoking could participate in the Weaning
lifestyle and reinforces wellness and productivity among from Smoking Journey where support from the Wellness
employees. It includes five aspects of wellness: (1) Eat Hubs are felt. There is a wide array of smoking cessation
Well, to recommend healthy food options; (2) Move initiatives offered, which include detoxification sessions,
More, to promote regular physical activity; (3) Breathe focused group discussions, and individual counselling.
Well, which includes a smoking cessation support
campaign; (4) Sleep Well, to address fatigue; (5) Pilipinas Shell also conducts other health promotion
and Think Well, which empowers employees to build activities throughout the year. Activities are scheduled
resilience. Pilipinas Shell also has a programme to help every month according to identified themes. For example,
employees manage stress positively. February focuses on the heart, March is for the first
quarterly blood donation activity, and July is Nutrition
WELLNESS HUBS Month.

To further strengthen our approach to wellness, we Overall, employees that participated in the wellness
transformed our clinics into Wellness Hubs in 2017, programmes showed marked improvements in lifestyle-
which now offer a more holistic and wide range of health related indices, such as reduced cholesterol levels and
services, such as skincare, optical, dental, and mental Body Mass Index (BMI) rates. Boosting employee health
health services to our employees. There are currently has also benefited the business: between 2015 to 2017,
three Wellness Hubs located at Shell House in Valero, we achieved a 5% savings in our HMO costs attributed
Makati; the Tabangao Refinery in Batangas; and Cebu. to the Be Well programme.
(103-2)

49
FUEL THE PHILIPPINES, MAKE THE FUTURE

HIV/AIDS AWARENESS AND PREVENTION For 2017, 56 teams, composed of seven members
each, competed in the Global Challenge. This is
Pilipinas Shell recognises that the issue of HIV/AIDS the seventh year that Pilipinas Shell has enjoined
has an effect on our people and the overall business employees to “move more” by taking a “virtual walk”
environment. In response, it seeks to create a supportive around the world. The teams have a daily target of
work environment and promote non-discrimination for 10,000 steps, which is documented via an activity
employees living with HIV/AIDS, whether they are tracker. Since the challenges are done in teams,
employees, contractors, customers or suppliers. our employees feel supported while enjoying some
friendly competition.
Our nurses and doctors in the Wellness Hub are certified
counsellors for HIV/AIDS, and employees (and their Pilipinas Shell even went beyond the 100-day
dependents) may voluntarily avail of HIV/AIDS-related challenge, extending our programme participation to
services, such as counselling, testing, and management. six months to allow for a more holistic approach. It
Pilipinas Shell’s efforts are intended to raise awareness, also extended a fun activity to motivate teams.
as well as reduce fear or stigma in relation to HIV/AIDS.
“I am more determined this year to join at least one
of the health programmes, like the Global Challenge.
With these programmes, I can see that if there are
WELLNESS CHAMPIONS: people who are willing to invest time and effort into
PILIPINAS SHELL EMPLOYEES living a healthy lifestyle, then so can I,” said Czarina
COMPETE IN GLOBAL CHALLENGE Cabatay-Arabe, Sourcing Specialist, Contracting
and Procurement.

Pilipinas Shell ranked third in the Virgin Pulse Global

Challenge, formerly known as the Global Corporate
Challenge (GCC), a 100-day challenge posed to
companies worldwide to promote a culture of health
and wellness in and out of the workplace. With the
ranking, Pilipinas Shell bested more than 53,000
teams from up to 3,000 companies worldwide.

50
 Annual and Sustainability Report 2017

SUPPLIER pre-qualification by gathering data and making

assessments that are aligned to Shell’s requirements. For

ASSESSMENT
high-risk contracts, HSSE checks are included to help us
understand how suppliers manage these aspects and to
ensure that they comply with Shell’s principles. Suppliers’
pre-qualification results are valid for three years, after

O
ur suppliers are our partners and they make it which, they must undergo the process again to ensure
possible for us to deliver new projects and run that they are still compliant with requirements.
our operations efficiently.
Pilipinas Shell also has internal controls to ensure that
Our Contracting and Procurement team is responsible we comply with the regulatory frameworks that govern
for nearly all of our purchases and contracts. The team contracting and subcontracting agreements, as mandated
works with our business managers to assess and evaluate by the Department of Labour and Employment (DOLE).
potential suppliers. Anti-bribery and corruption (ABC) due diligence
obligations are incorporated into high-value contract
Supplier pre-qualification ensures that our contractors assessments to avoid significant risks related to supplier
and service providers comply with the Shell Supplier transactions. On a yearly basis, we conduct workshops
Principles and are able to effectively deliver our on ABC and HSSE compliance for suppliers to help them
requirements. (103-1) meet the SQS requirements. (103-2)

The Shell Supplier Principles outlines four principles that We also conduct regular business performance reviews
are important to us and the commitments that we expect with suppliers. This enables us to monitor their adherence
from our suppliers: to contract agreements and to help avoid recordable
incidents related to HSSE, bribery, and corruption. With
1. Business integrity, respect to supplier concerns and feedback, we conduct
2. HSSE, internal monitoring to ensure proper management and
3. Labour conditions and human rights, and response. (103-3)
4. Social Performance.

In accordance with our Shell

General Business Principles and our
Code of Conduct, we seek to work
only with contractors and suppliers
who contribute to sustainable
development, and we purchase
products and services that support
our approach to sustainability.

Pilipinas Shell manages supplier

assessment through the global
Shell Supplier Qualification System
Pilipinas Shell addresses
(SQS), which was introduced supplier concerns and feedback.
in January 2012. It provides a
streamlined process to supplier

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FUEL THE PHILIPPINES, MAKE THE FUTURE

IMPACT ON THE as the Tabangao Refinery is certified ISO 14001 for

environmental management. The Tabangao Refinery

ENVIRONMENT
Leadership Team leads the implementation and
monitoring of the Control Framework with support from
Health, Safety, Security and Environment (HSSE), and
External Relations (ER) teams.

P
ilipinas Shell works to provide energy in a MANAGING ENVIRONMENTAL FOOTPRINTS
responsible manner. (103-1) Running a safe and
responsible business means that we understand A key element of managing our environmental impact
the impact we can have on the environment and the and maintaining our Environmental Compliance
communities we share it with – before, during, and at the Certificate is the effective monitoring of our consumption
end of our operations. We carry out detailed assessments metrics.
of potential environmental, social, and health impacts
when we plan new projects. These help us to manage The HSSE Core Team and Safety Steering Committee
and reduce our impact on the environment and on monitor our performance through key performance
communities throughout the lifetime of the project, from indicators, as reflected in the HSSE dashboard, as well
initial planning to final decommissioning. as regular audits and updates.

Standards that cover our environmental performance Since 2016, we have also been monitoring our
include: managing emissions of greenhouse gases, using performance at Pilipinas Shell through the
energy more efficiently, flaring and burning off less Sustainability Scorecard published in our Annual and
gas during oil production, preventing spills and leaks Sustainability Report. (103-3)
of hazardous materials, reducing fresh water use, and
conserving biodiversity. ENERGY AND WATER CONSUMPTION

ENVIRONMENTAL COMPLIANCE The Tabangao Refinery generates its own electricity,

using cleaner-burning natural gas from the Malampaya
Our efforts include full compliance with regulatory Deepwater Gas-to-Power project and, in case the
requirements, stringent environmental impact assessment, Malampaya platform is on maintenance or on emergency
and meaningful community relations. Our environmental shutdown, back-up Euro IV (PH) diesel (i.e. low sulphur
performance is tied to our social performance. Both fuel) is being used momentarily (maximum 45 days every
are managed to maintain our licence to operate. two years, based on the past year’s agreement).
Effective management of any activity that could impact
the environment means that we avoid a Notice of Our excess power is sold to internal consumers. In 2017,
Violation and complaints from the community. Avoiding the Department of Energy (DOE) endorsed Pilipinas
any damage to the environment, and preventing any Shell’s plan to sell electricity to external consumers via
misunderstanding or cause for complaint, means we the Wholesale Electricity Spot Market.
preserve our reputation and mitigate any risk of
business loss.

Guided by the Environment Manual of the Shell

HSSE&SP Control Framework, all our operations
and facilities follow a strict compliance protocol, risk
management frameworks, and assurance processes for
impact monitoring. Accordingly, a major facility such

52
 Annual and Sustainability Report 2017

Energy Consumption (302-1) Energy Reduction (302-4)

2016 2017 15,379.9 GJ

2017
(Natural gas +
ENERGY CONSUMPTION1 2016
Electricity)

7,310,587.8 GJ
6,575,982.6 GJ

734,605.2 GJ

OWN ENERGY GENERATED (Natural Gas)

Reduction in energy consumption in 2017 is primarily

attributed to the planned turnaround where the refinery
7,300,163.2 GJ
was on shutdown for two months. Hence, overall energy
6,555,287.2 GJ consumption is low compared to the previous year. Other
energy reduction tactics are still being developed and
should be fully implemented by 2021-2023.

ELECTRICITY IMPORTED2

Water Withdrawal by Source (303-1)

24,565.0 GJ Volume of water

Water Sources
withdrawn (Mm3)
37,044.1 GJ

Surface water
11.0
(non-fresh water)

ELECTRICITY EXPORTED3

Groundwater1 2.0

14,140.5 GJ TOTAL 13.0

16,348.7 GJ
1
Groundwater consumption is metered by Utilities Technology.

The Tabangao Refinery uses fresh water sourced from

deep wells, and surface water from Batangas Bay. The
1
Refers to total energy used, which includes own energy generated,
imported electricity and exported electricity refinery does not use any water from municipal water
2
Refers to energy purchased from the national grid sources.
3
Electricity is sold to the Bitumen Import Facility (BIF), the Tabangao
Depot, and some are returned to the National Grid Corporation of the
Philippines if there is excess power supply.

53
FUEL THE PHILIPPINES, MAKE THE FUTURE

Water Sources Significantly Affected by Direct and indirect GHG emissions

Withdrawal of Water (303-2) (305-1, 305-2)

2016 2017

20.1 Mm /yr 3 Scope (tCO2e)

Groundwater1 Direct GHG

emissions
345,448.7

322,851.3
1
Figure is taken from the Tabangao Refinery Water Management Plan

Indirect GHG
2,083.1
emissions
This is the average annual water balance for the 3,120.4
combined Malitam-Tabangao catchment expressed in
annual volumetric flow. Pilipinas Shell is aware that its
* The Tabangao Refinery’s Greenhouse Gas (GHG) Accounting
source of water is important to local communities and and Management System has been assured by Lloyd’s Register
indigenous peoples in the surrounding area. Quality Assurance (LRQA), a global provider of management
system certification, validation, verification, and training on
international standards.
EMISSIONS

Pilipinas Shell endeavours to reduce our own greenhouse We follow the maximum annual limits as prescribed by
gas (GHG) emissions particularly in our manufacturing the Control Framework for Sulphur Oxides (SOx) and
operations over the long term. We maintain a CO2 Nitrogen Oxides (NOx).
Business Plan which includes: an inventory of GHG
emissions based on the reporting requirements in the Part of our strategy to reduce sulphur as a by-product at
current Performance Monitoring and Reporting (PMR) the Tabangao Refinery is to capture some of the waste
Specification; a forecast with a 10-year projection; and material for eventual sale to third parties engaged in the
targets and performance monitoring in support of the production of batteries, soap, and fertiliser, and other
Company’s GHG and energy management objectives. specialty products.

This year, the 6.54% decrease in Direct GHG emissions

(Scope 1) is due to the non-production of energy during NOx, SOx, and other significant emissions
the two-month refinery turnaround. Only one gas turbine (305-7)
was used to run utilities, since there was no demand from
the process units. To ensure reliability, back-up electricity
2016 (tonnes) 2017 (tonnes)
to run off-plots, offices, and oil movements, including
jetties, was sourced from the national grid. Indirect GHG
NOx 1,077.7 1,433.2
emissions (Scope 2) emission increased by 49.80% in
2017 due to the increase in purchased electricity. SOx 3,635.3 3,100.6

Other reductions in emissions can also be attributed to Volatile

the manufacturing turnaround. organic
1,038.8 680.1
compounds
(VOC)

54
 Annual and Sustainability Report 2017

Shell’s policy under the Control Framework is to reduce EFFLUENTS AND WASTE
any routine flaring or venting of associated gas at our
operations to a level as low as technically and financially The Tabangao Refinery has an existing Environmental
feasible. We also aim to minimise operational flaring Monitoring Plan (EMP), which stipulates the site’s
required for safety reasons, such as during the start-up of environmental monitoring strategy and commitments.
a new facility. The refinery is fully compliant to the EMP. This
compliance is being observed by the Department of
As an active member of the World Bank-sponsored Environment and Natural Resources - Environmental
Global Gas Flaring Reduction (GGFR) partnership and Management Bureau (DENR-EMB) via the STAR-TREC
a signatory of “Zero Routine Flaring by 2030” initiative, Multi-Partite Monitoring Team.
Shell seeks to reduce flaring by working collaboratively
to find alternative uses for gas that would otherwise The Tabangao Refinery follows DENR Administrative
be flared. Order No. 2016-08 - Water Quality Guidelines and
General Effluent Standards. For 2017, the total oil
Volume of flared and vented hydrocarbon discharged to surface water amounts to 18.9 tonnes. The
(OG6) refinery takes proactive measures to manage incidents
that might impact water quality.

4,039.9 tonnes
Refinery wastes on the other hand, are treated by DENR-
and Shell-accredited treatment facilities. These facilities

0.16% volume flared for gas are audited to make sure that they fully comply with both
local and international standards.
production in relation to total
volume produced

Note: All volatile hydrocarbons are flared and not vented

to atmosphere. Information provided is metric tonnes of flared
gas/metric tonnes of volume of products produced.

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FUEL THE PHILIPPINES, MAKE THE FUTURE

Waste by type and disposal method

(306-2)

We practise waste segregation and recycling.

AMOUNT
TYPE METHOD REMARKS
(tonnes)

Waste oil from tank maintenance is recovered and sold to an accredited

Recovery,
Hazardous Waste 4,387.0 third party, to be used by a cement plant. Other hazardous waste are
treatment
collected and treated by a facility accredited by the DENR-EMB.

Landfill 93.1 Industrial non-hazardous waste is disposed via landfill.

Non-hazardous
Waste Scrap materials and scrap metals are sold to a trusted scrap buyer,
Recycling 491.4
and recycled.

Domestic waste is collected by the Materials Recovery Facility, which

Landfill, separates recyclables from biodegradable waste. The biodegradable
Domestic Waste 100.0
recycling materials are reprocessed as compost by a government-owned disposal
facility; the residuals are disposed in a government-owned landfill.

SPILLS (306-3) Based on a third-party report, the spills were effectively

controlled and contained, which prevented the occurence
As already discussed, Shell has clear requirements and of any environmental impact. In the event of spills, we
procedures in place to prevent operational spills. At the follow procedures itemised in Shell’s Spill Preparedness
Tabangao Refinery, we execute the Goal Zero Renewal and Response Manual. We investigate the causes of
Strategy. We aim for zero incidents of environmental spills and agree with the relevant authorities on what
non-compliance, including zero spills to land or needs to be done. If necessary, we conduct clean-
water bodies, and zero incidents of loss of primary up and/or remediation. Pilipinas Shell has ongoing
containment. (103-2) remediation activities at our decommissioned terminal
in Pandacan, Manila. (See feature article, “A Graceful
Pilipinas Shell’s Tabangao Refinery documented three Exit…” on page 58)
spills in 2017:

NATURE OF SPILL VOLUME (MT)

May 26, 2017

1.71
Fuel oil spill to land

August 6, 2017
14.81
Crude oil spill to surface water (Batangas Bay)

August 15, 2017

0.69
Kerosene spill to land

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 Annual and Sustainability Report 2017

OUR DECOMMISSIONING APPROACH Prior to remediation, we conduct an Environmental

Site Assessment using the site’s current zoning criteria.
Impacts on the local environment and the community The results of this assessment, comparable to our Shell
(more on this on page 76) are of particular concern Screening Level for both soil and groundwater, are
during the decommissioning of a project, defined as the then used to determine whether or not a remediation is
process of terminating the operations of a facility. needed in a decommissioned site.

Since 2015, Pilipinas Shell has decommissioned two Different zoning criteria would mean different
terminal facilities: Sucat-Buli Terminal, which ceased remediation requirements. The Sucat-Buli Terminal closure
operations and dismantled its facilities in 2016, was due to operational redundancy; there was no zoning
and Pandacan Terminal, which ceased operations change. Pandacan Terminal, on the other hand, was
in 2015. We assessed both sites and determined decommissioned because local government changed the
that soil condititions in Sucat Buli met Industrial Zone site’s zoning criteria from industrial to commercial zone.
requirements, whereas due to rezoning, Pandacan had
to undergo soil remediation. (OG11) “We aim to improve the condition of the site to make it
suitable for a particular use,” Baquiran said.
The decommissioning plan is activated once the
Company decides to move out from a certain site. Our In terms of soil remediation, excavating the soil and
approach to decommissioning is dependent on factors removing it for treatment using physical or chemical
such as the types of structures, their age and location, methods is both time-consuming and costly. The process
and technical challenges. The plan also includes is made much more efficient because of Pilipinas Shell’s
consultations with relevant stakeholders. detailed records. Our focus on “no spills, no leaks”
means acute awareness of where to excavate and test for
Upon decommissioning, the site’s existing government contamination.
permits, including its Environmental Compliance
Certificate, will also be terminated. Pilipinas Shell’s Soil and Groundwater Focus Delivery
Group initiates soil and groundwater remediation not
REMEDIATION AND ITS EFFECTS only for decommissioned sites, but also for commissioned
fuel terminals, supply points, and retail stations.
Among the decommissioning activities, remediation, in
particular, is implemented to remove potential hazards Through our remediation efforts, we mitigate potential
and restore the surroundings in line with our own hazards not just to our assets and equipment, but also to
stringent standards on health and safety. our neighbouring communities and the environment.

“In the Philippines, there are no concrete laws yet in

terms of remediation. However, multinational companies,
such as Shell, are very strict and already have some
guidance in terms of remediation,” said Jay Baquiran,
Senior Programme Manager of Pilipinas Shell’s Soil and
Groundwater Focus Delivery Group.

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FUEL THE PHILIPPINES, MAKE THE FUTURE

A GRACEFUL EXIT:
Decommissioning
and Remediation of
Pandacan Terminal

With the reclassification of Pandacan from an Industrial soil to facilitate better water and oxygen absorption. An
II to a Commercial I zone, fuel terminals and depots on-site mobile laboratory tests the soil to ensure that it
therein had to shut down and relocate by January 2016. does not pose any health hazards. Done properly, soil
Operations ceased on June 30, 2015 and the terminal aeration has the potential to revitalise the site so it would
was completely demolished on November 23, 2015. be fit for gardening and agricultural purposes.
(OG11)
For achieving 100,000 man-hours free of lost time
Although not required by the ruling, we also initiated injury (LTI), the team received a Health, Security, Safety,
a soil remediation project so the old site would fit its Environment, and Social Performance (HSSE&SP) Award
new classification. “The land has to be suitable for on November 10, 2017. As of March 31, 2018, we
commercial use when the lot owner decides to sell it achieved 295 days of Goal Zero and 157,916 LTI-free
or develop it,” reasoned Jay Baquiran, Pilipinas Shell’s man-hours.
Senior Programme Manager for Soil and Groundwater
Focus Delivery Group, which performs the soil and Turnover of the site to its lot owner is targeted by
groundwater assessment and remediation for the December 2018.
downstream business.

The Pandacan Remediation Project Team is currently

employing soil aeration in Pandacan. This involves
removing potentially contaminated and impacted soil
from the top layer, and then aerating or puncturing this

58