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

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

Realization of Customer Satisfaction

S-OIL concentrates its capabilities on enhancing consumer benefits and satisfaction with products of premium quality and reasonable prices. The Company is proactive in communicating with customers to identify their needs and reflecting them in its business activities. The Company also pursues shared growth with service stations (S/Ss) and LPG filling stations (F/Ss), its key customers and main customer contact channels, through helping them enhance competitiveness and solidifying cooperative relations.

Reasonable Product Pricing

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

Improvement of Consumer Convenience

Amid unfavorable sales conditions, such as stagnant demand for fuel products, increasing market uncertainties, and intensifying competition among suppliers, S-OIL strives to enhance customer convenience and boost its domestic market share on many fronts. For example, efforts focus on improving customer experience with the Company's service and products and securing a reliable source of demand by expanding sales network with S/Ss, F/Ss, and direct sales offices. Despite the downward trend in the number of S/Ss across the country, the Company made a continuous effort to secure a stable sales network, thereby minimize inconvenience for customers. Furthermore, the Company carries out differentiated programs and engages in creative brand marketing activities to boost sales, while actively exploring new business opportunities. As a result of such efforts, the Company captured 22.6% of domestic market share for retail light oil products in 2018, which is a new record high for the Company.

Timely and Accurate Handling of Customer Complaints

In a bid to strengthen customer communication, S-OIL has established an integrated Voice of Customer (VOC) system, through which the Company handle and analyze all customer feedback received via various channels including customer center, company website, ARS and SNS, in an integrated and systematic manner. The timeframe for VOC handling is set by VOC type and reflected in KPI to allow for swift handling. Also, the Company performs satisfaction surveys on VOC handling and feed the result back to the VOC handling procedure for continuous improvement of the system. The handling status is notified to customers via calls, SMS, and e-mails. The Company also runs the VOC Awareness Program, an incentive system to recognize customers who raised constructive VOCs and employees who handled VOCs in an efficient manner. In a preemptive effort to resolve customer complaints, the Company has in place the Hidden VOC program to discover factors that may possibly cause customer discontentment by visiting S/Ss, F/Ss and suppliers and address the issues. In addition, the Company interacts with a prosumer group called GOODOIL Friends to collect valuable opinions and incorporate them in its two-way communication with customers, while operating an SNS-based one-on-one communication channel. The Company taps into the big data collected in the integrated VOC system to identify patterns in customer complaints, while offering S-OIL Notification Service to promote two-way communication with customers utilizing messaging platform KakaoTalk.

Competitiveness Enhancement of S/Ss and F/Ss

S-OIL is committed to supporting S/Ss and F/Ss, the Company's key customers and main customer contact channels, to enhance their competitiveness through various on-site programs and proactive communication. This effort has earned the Company first place in S/Ss category of the 2018 Korea Net Promoter Score and the 2018 Korean Service Quality Index selected by the Korea Management Association Consulting, and the 2018 National Service Awards selected by the Institute for Industrial Policy Studies.
GOODOIL Etiquette & Clean Up Campaign
S-OIL launched the GOODOIL Etiquette & Clean Up campaign in 2016 to address service attitude and restroom hygiene that were identified as issues from consumer awareness surveys and make customer experience more pleasant. Also the Smile Together campaign where customer and service staff greet each other with a smile has been received very well by customers as it lays out a vision that every little act of kindness helps build a brighter society.
Operation of Site Management System
In order to improve service quality at S/Ss and F/Ss to meet rising customer expectations, S-OIL is operating YES Team for on-site training. YES Team consists of experts equipped with certificates and knowledge in customer satisfaction, labor relations, and other areas related to operations of S/Ss and F/Ss. The Company has also intensified supporting activities such as the reinforcement of training on responding to customer complaints to minimize customer inconvenience.
VOCs from S/Ss and F/Ss
S-OIL has in place a separate VOC system to listen to S/Ss and F/Ss and know their pain points, while conducting interviews on site to find out negative experiences that S/Ss and F/Ss had but did not file with the Company through the Hidden VOC program. In 2018, the Company analyzed the 154 complaints received through the VOC channels as well as hidden VOCs identified through the site interviews, and conducted various activities to address concerns, including ARS system improvement and Clean Up campaign expansion.
Academy for Management Capability Enhancement
S-OIL provides a wide range of well-thought-out supporting programs, such as on- and off-line courses, consulting by in-house consultants, and the GOODOIL Family Magazine to help S/Ss and F/Ss strengthen management capabilities. Training for S/S owners and onsite training are offered by District Biz HQs and sales offices respectively. In addition, GOODOIL Family Magazine delivers up-to-date information on management, relevant law and regulations, policies, and the Company's major marketing activities and support programs.
Revenue Diversification through Developing Non-Oil Businesses
In view of dwindling profitability caused by intensifying price competition, S-OIL has developed competitive non-oil businesses which S/Ss and F/Ss can adopt to diversify their revenue portfolio. The Company has introduced non-store and small-budget non-oil business items such as car supplies sales, brokerage business, and bottled water sales for S/Ss and F/Ss. And the Company has developed quality PB products such as urea solution and ethanol washer fluid at competitive prices. A car wash franchise service was launched as well that has the strongest relevance to the sales in order to help increase their profit and competitiveness with a premium and standardized car wash service. The Company is expanding its alliance with GreenCar, a car sharing provider.
Awards for High Performing S/Ss and F/Ss
In a bid to build and strengthen long-term cooperative ties with S/Ss and F/Ss that are core customers and essential partners of domestic sales network, S-OIL selects stations that achieved remarkable performance in terms of service, facility management, sales volume, and profitability, and awards S-OIL Champions Club every year. The award promotes competition in good faith and sharing of good practices among S/Ss and F/Ss, thereby contributing to the overall improvement in management capabilities.
Support for Promotional Events
S-OIL launches various promotions and supports purchase of bottled water, wet tissue, and other promotional goods according to the yearly promotion plan that considers seasonal factors and feedback from S/Ss and F/Ss. The Company implements differentiated promotions for different regions and seasons, which are well received by S/Ss and F/Ss,as part of the effort to build competitiveness.

Domestic Marketing for Lube Business

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

Domestic Marketing for Petrochemical Business

S-OIL has been making continuous efforts to reinforce chemical business for long-term sustainable growth by enhancing its competitiveness with strengthening its status in domestic chemical market. Although aromatics market is expect to be more volatile and competitive after significant capacity expansions in China, the Company is consolidating its market presence throughout long-term partnership with most of end-users in Korea. Strategically, the Company has been gradually expanding its para-xylene domestic market share by supplying to all PTA manufacturers in Korea by securing stable demand in Ulsan through pipeline and by supplying to other customers outside Ulsan by SWAP. In addition, for benzene, the Company continues to expand customer base in Korea with intensifying long-term relationship for stable and profitable sales. For olefin monomer business, it is crucial to secure logistic facilities such as pipelines for timely and stable supply due to logistic restrictions as gas product. For this reason, the Company has preemptively established pipeline networks to all major end-users in Ulsan Complex and made a bridgehead for stable and timely sales to olefin downstream manufacturers. For ethylene, first-ever produced product, the Company thoroughly prepared logistics and built strong partnership with end-users prior to initial production, enabling the Company to commence pipeline supply to domestic customers immediately after RUC start-up. Regarding propylene, the Company has been reinforcing the partnership with domestic customers and playing an important role to balance propylene supply and demand balance within Ulsan Complex throughout various SWAP activities. The Company's reliable supply of olefin monomers in domestic market contributes not only to consolidate the Company's presence in the chemical industry but also to strengthen the competitiveness of related downstream businesses in olefin value chain with triggering downstream investments.

Product Quality Assurance

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

Enhancement of R&D Capabilities

Instead of feeling complacent about the technology it has already secured, S-OIL continues investing in R&D activities aimed at improving product quality and advancing production facilities and works with prestigious colleges and research institutes. In pursuit of sustainable growth, the Company's Technical Service & Development Center (TS&D Center) and the R&D Team at Onsan Refinery carry out many R&D projects such as high value-added production technology based on by-products from petrochemical products, BTX conversion technology, solar-to-hydrogen conversion technology, high-efficiency eco-friendly fuel oil development, and more.
New Product Development
S-OIL holds domestic patents on long-life gasoline engine oil and long-life diesel engine oil of improved fuel efficiency that were developed jointly with the Hyundai-Kia R&D Center. The Company continues to engage in joint R&D projects, developing engine oil as well as transmission oil. The Company also develops various types of industrial oils to meet varying consumer needs.
Technology Support through Pilot Plants
Having succeeded in operating a high pressure pilot plant, which produces clean lube base oil, and another bunker-C desulfurization pilot plant, S-OIL possesses the most advanced research facilities and experience in refining process. Efficient operation of the pilot plants enables the Company to continue technical support for optimum catalyst selection and improvement of production yields and quality. Ongoing joint research projects with external research organizations help the Company sharpen its R&D capabilities. The Company's sophisticated facilities contribute to improving production processes and catalyst assessment. As a result, the Company has raised profitability and also minimized impact on the environment and consumer safety by manufacturing the entire products as light oil or ultra-low sulfur products.
Introduction of Latest Analysis Equipment and Skill
S-OIL has introduced the latest analysis equipment and skill to ensure stable quality management and customer trust. Reliability of lab. testing is secured by regularly calibrating analysis equipment through certified third-party institutes as well as in-house verification programs. The Company also offers training programs to improve its analysis ability, thereby securing quality testing capabilities and contributing to production efficiency. In 2018, the Company took its quality management effort to next level by introducing the latest analysis tools and techniques for petrochemicals, including propylene oxide and polypropylene.

Production of High-quality Eco-friendly Products

S-OIL is recognized for its gasoline and diesel with the highest grade in the Environmental Quality Evaluations. The Company's kerosene also obtained the Eco-Labeling Certification in 1994 for the first time among Korean refiners, and has maintained the certification ever since.
Introduction of New Processes
Going beyond passive response to environmental regulations, S-OIL is proactively introducing new processes as well as revamping and upgrading them to develop and supply more efficient eco-friendly products with premium quality. For example, the diesel dewaxing process was introduced to innovate the stability of diesel performance even at low temperature in winter. Moreover, the Company upgraded its lube base oil production process, which dramatically reduced emission of a hazardous chemical substance Poly Aromatic Hydrocarbon and allowed the Company to supply more eco-friendly and safer lube base oil to the market. The additional introduction of alkylation and HS-FCC process allowed even better quality of gasoline as well.
Prevention of Market Distribution of Inferior Products
S-OIL's real-time quality monitoring system checks in advance for any factor that may negatively affect product quality throughout the entire production process, from introduction of raw materials to market distribution step. By utilizing the system, the Company ensures only those products that satisfy quality standards are supplied to customers. Furthermore, regular communication is held between the production and sales organizations to produce products that meet customer requirements. Also, the Company periodically participates in inter-laboratory crosscheck program organized by domestic and overseas authorities, including ASTM and K-Petro, to enhance testing reliability.

Enhancement of Quality Management in Market Distribution Process

S-OIL always pays full attention to systematic product quality management in the entire market distribution process, as well as in the production process, with the aim of preventing pollution or quality degradation of products at S/Ss and F/Ss and ensuring customers' rights to purchase products with specified quality and quantity. As a result, the Company's diesel was ranked first in the diesel category of the 2018 Korea Brand Recommendation index by Korea Management Association Consulting.
Strict Inspection on Product Quality of S/Ss and F/Ss
As part of its effort to produce and supply quality products, S-OIL is working to strengthen quality assurance activities to preclude contamination or quality degradation of products in the market distribution process and ensure customers' rights to purchase products with specified quality and quantity. The Company takes a systematic approach to quality inspection on S/Ss and F/Ss as well as prevention activities. Diverse possible means are tried to ensure efficient quality control such as injecting specific markers, running onsite handy analyzers, abnormal symptom monitoring system, itinerant training ion quality assurance by quality managers, and checking dealer information. The Company runs the Product Quality Tracking System which integrates product distribution and quality information encompassing Onsan Refinery, S/Ss, and customers to trace back distribution routes. In addition, the Company puts efforts to provide customers with the best quality products and apply strictest penalties including de-branding to S/Ss and F/Ss found to sell fake oil.
Trustworthy Service Station
S-OIL operates Trustworthy S/S program where the Company guarantees products sold at service stations according to quality and quantity specifications to allow customers to easily purchase high-quality products. At least six quality inspections a year and periodic quantity specification inspection are a prerequisite to maintaining the qualification as Trustworthy S/S. The Company also puts up signs to let customers know that they are purchasing from a Trustworthy S/S, and promptly provides information on the quality of the products they purchase using S-OIL notification service on KakaoTalk.

Marketing Communication

S-OIL has overcome its inherent limitations as a late comer in the refining industry and grown to a trusted corporation that is contributing to the development of the national economy and society. This was possible due to the diverse and creative marketing and communication activities that were undertaken to deliver best quality products as well as active interaction with customers. Acknowledged for such efforts, the Company received the grand award in the brand management category at the 2018 Management Grand Awards for two consecutive years, and ranked 43rd on the list of the Best Korea Brands 2018 selected by Interbrand Korea, which highlighted the Company's strong brand value.

Brand Marketing as a Medium for Customer Communication

Advertising Campaign
In 2018, S-OIL ran an advertising campaign under the theme "Start Up with Good Oil," sending positive energy and cheers to all men and women, especially working moms trying to strive a work & life balance and retiring men seeking new challenges. The advertisement resonated with customers and created a positive image that oil is not just the fuel that we fill our cars but also serves other meanings and purposes in social contexts. The advertisement recorded more than 20 million SNS views, resulting in the top of mind awareness of 55.9%, which is an unprecedentedly high record among Korean refiners.
Differentiated GOODOIL Character Marketing
S-OIL has been promoting the GOODOIL character as a symbol of good oil for diverse marketing activities at S/Ss and F/Ss, events and promotions as well as advertising campaigns in order to get in closer touch with customers and more closely relate to them. The three-dimensional animated film of GOODOIL Family characters the Company produced in 2018 caught on, adding to the intimacy with consumers, and led to even closer communication with them via SNS channels. Considering customers' opinions and suggestions, the Company launched GOODOIL characters and opened more character shops. Other activities included opening GOODOIL park golf course, and installing GOODOIL Family dream village at COEX, Seoul, thereby offering customers more chances to meet GOODOIL characters and learn more about good oil.
Differentiated Sports & Cultural Marketing
S-OIL's support for diverse sports and cultural events boosts its brand's dynamic, friendly yet prestigious image. The Company has been hosting the KLPGA S-OIL Championship since 2007 and sponsoring the S-OIL Championship Pro-Am to offer premium service and exclusive values to customers. Starting 2017, the Company engaged in creative and comprehensive sport marketing activities using GOODIL Family characters, including outdoor advertising and promotions at Sajik Baseball Park in Busan, home to the Lotte Giants professional baseball team. To strengthen ties with customers and provide them with greater cultural benefits, the Company also organizes events such as Culture Date and Cinema Date. In particular, the Company invites Bonus Card customers and partner dealers to special cultural events giving them a good chance to enjoy high-quality cultural performances.
Systematic Promotion
S-OIL carries out various promotional activities to provide more practical benefits to customers who visit its S/Ss and F/Ss and increase their satisfaction. As part of this effort, in 2018, the Company held the GOODOIL Family sweepstake at S/Ss and F/Ss across the country, through which customers received diverse free gifts such as GOODOIL characters, daily goods, and vehicle supplies. The Company also opened a mobile point shopping mall to help its Bonus Card members easily use their bonus points, issued vouchers, and offer free giveaways for those purchasing with accumulated points, thereby enhancing customer experience in general.

Creation of a Friendly, Socially Responsible Company Image

S-OIL strives to build an image as a friendly company that fulfills social responsibility and interacts with various stakeholders, based on creative and unique corporate image advertisements. Not only is the Company running public interest campaigns on the front page of major daily newspapers, it is also delivering useful information to various stakeholders in a timely manner to promote broader interaction. In 2018, customers gave positive feedback on the programs the Company launched, including a safety quiz campaign in which GOODOIL characters promoted everyday safety in a fun and easy-to-understand manner, and 1-minute health campaign to share easy ways to promote health and wellness for everyday life. The Company also created innovative printed advertisements to introduce the RUC/ODC project, a major undertaking of the Company to build a balanced portfolio across fuel, lube and petrochemicals divisions, as well as the ones that illustrate the activities of For Heroes, the flagship of its CSR program. Apart from conventional methods of advertising, the Company has erected a huge panel against the external walls of the Head Office which conveys written messages of hope and consolation and strengthens cultural as well as emotional bonds with the local community.

Fair Competition in Market / Protection of Customers' Personal Information

S-OIL's effort to play by the rules for fair competition and protect customer interest is upheld by the core corporate value of integrity and top management's strong commitment to compliance management. The Company also preemptively responds to the increasingly stringent the Personal Information Protection Act and the Act on Promotion of Information and Communications Network, and implements the systematic information protection policy for its critical information and personal information of all stakeholders including customers. In recognition of its privacy protection efforts, the Company became the first Korean refiner to obtain a certification on the Information Security Management System (ISMS) and the Personal Information Management System (PIMS) from the government in 2015.

Fair Competition in Market

Fair Trade Training
S-OIL's commitment to reinforcing compliance management is championed by top management's leadership, especially in relation to fair trade laws. To ensure that compliance management is adhered to by all employees, the Company published a compliance manual and must-follow guidelines "Dos & Don'ts" for sales activities. The Company also holds a fair trade training session by inviting an external lecturer every year to raise employees' awareness on compliance with relevant laws. Further, the Company holds training sessions tailored to the needs of sales force on site, helping staff at District Biz HQs and sales offices to better understand and abide by fair trade practices.
Self-assessment on Fair Trade through Compliance System
S-OIL carries out regular and ad-hoc self-assessments on its compliance system to check for any violation of fair trade laws in business operations. In addition, the Company actively assists employees' compliance with fair trade laws by providing real-time legal updates on the latest legislation and revisions on relevant laws and regulations, conducting training sessions on major legal requirements, and regularly monitoring its fair trade law compliance.
Use of Written Contracts Based on Fair Trade
When entering into a contract with a business partner, S-OIL utilizes a standardized written contract that reflects the recommendations from the Fair Trade Commission. Moreover, the Company has reflected mandatory terms and conditions of trade in its written contract in full compliance with the Fair Agency Transactions Act, which came into effect in 2016.

ISMS-based Critical Corporate Information Protection

S-OIL's information protection is comprised of managerial, technical, and physical areas. ISMS is utilized enterprise-wide to ensure systematic information protection and risk management activities.
Managerial Area
At S-OIL, the Information Security Committee chaired by the Chief Security Officer reviews the Company's major information security policies and action plans, tracks progress, and pushes forward efforts to raise information security awareness. To that end, the information security training is provided to all employees twice a year, and online training programs started from 2017 also serves the goal of enhancing the employees'awareness on information security. A simulated phishing drill is carried out more than four times a year to make sure employees know how to respond to malicious e-mails. In order to stay ahead of evolving hacking technologies, the Company also makes continued efforts to sharpen its counter cyber-attack capabilities by acquiring latest security technologies and closely cooperating with information security companies.
Technical Area
All IT systems at S-OIL are safely operated as per the internal security standards and addressed for security weaknesses through periodic hacking simulations and security patch updates. In addition, the centralized storage, analysis, and monitoring of IT system logs allow the Company to be more proactive in preventing likely and predictable attacks. The Company is continuously enhancing its capability to respond to brute force attacks. For efficient response to Advanced Persistent Threat (APT) and unknown malware, in particular, the Company has introduced APT attack prevention device and a security solution that detects abnormal activities on user computers, respectively. In parallel, the Company implemented a solution that blocks web-based file modification and malicious files to raise its website security posture.
Physical Area
S-OIL's major IT systems are located in a data center equipped with one of Korea's best security solutions, safeguarding the IT assets from physical intrusions from outside.

PIMS-based Systematic Personal Information Protection

S-OIL uses PIMS to safeguard personal information in a systematic way.
Minimum Retention of Customers' Personal Information
In full compliance with the Personal Information Protection Act and to minimize personal information leakage risk, S-OIL deletes sensitive personal information, such as resident registration number, entirely from the Company's customer database. In addition, IT Security Team is accountable for making continuous improvement to the work process in a way that minimizes handling of personal information and monitoring how personal information is accessed, stored, and altered in real time. Furthermore, in cases where personal information is shared to an outsourcing partner for the purpose of operating the bonus card system, the Company uses a solution that sets the expiry date for the third-party use of such information and deletes it immediately upon expiry, thereby keeping the risk of personal information leakage involving an outsourcing company to a minimum.
Encryption of Personal Information and Access Control
At S-OIL, customer information is safely managed. The Company stores personal information with encryption, implements control access through the personal information access control system, and systematically monitors access history accordingly. The Company effectively limits personal data access on an as-needed basis by allowing access rights only to IT system managers and certain teams requiring personal data access. Furthermore, access can only be made through the Virtual Desktop Infrastructure system that separates Internet and business networks or the Server Based Computing system that blocks Internet connectivity, minimizing the potential risk of customer information leakage. Additionally, system access authorization is exclusively granted with two-factor authentication requiring both password and One Time Password (OTP).
Personal Information Protection Training
S-OIL provides all employees as well as those from contractors who handle customer personal information with periodic privacy protection training at least twice a year as well as other online training programs.

Overseas Marketing

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

Overseas Marketing for Fuel Business

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

Overseas Marketing for Lube Business

S-OIL is achieving high operating income through stable sales of the entire production stock of lube base oil by employing marketing strategies tailored to each market. The Company is also actively utilizing its lube base oil production capacity, which ranks 2nd place in the world based on a single location. In 2018, years of efforts to boost profitability paid with the Company signing long-term business agreements with some state-owned companies in China and India, which are among the largest lube base oil markets in Asia. The Company also diversified sales markets depending on product types to secure stable sales channels. The Lube R&D Center located inside TS&D Center is in operation to reinforce the Company's core capability in the lube business and the Company strives to keep customer loyalty based on stronger and stable product supply capacity as well as thorough quality control, in tandem with the increasing demand for premium lube base oil products. For lubricant business, S-OIL has cemented a solid position in the market on top of positive response from home and abroad for S-OIL SEVEN, which is a high-end lubricant brand. Keeping up the momentum, the Company expanded the lubricant logistics hubs for more efficient inventory management and reinforced local marketing activities, participating in overseas exhibitions and holding dealer conferences. As a result, the Company successfully made inroads into four new overseas markets, and signed deals with six new agencies in existing markets in 2018, expanding its export to over 50 countries including strategic markets like China.

Overseas Marketing for Petrochemical Business

S-OIL's marketing activities vary from market to market as they are tailored to the different characteristics of different petrochemical products. As for para-xylene, although an excess of supply is expected with China's recent capacity increase, the Company is working to secure both stable and profitable sales outlet by expanding business with existing loyal customers while developing new customers in China. Meanwhile for benzene, the Company has been nurturing long-term partnerships with customers in the US, where steady import is anticipated, while diversifying regional export portfolio to prepare for the growth of benzene self-sufficiency in China. In addition, the RUC/ODC project in 2018 enabled the production of propylene oxide and polypropylene to the domestic and overseas markets based on premarketing and its strategic alliance with Saudi Aramco Products Trading Company. As illustrated above, the Company is actively consolidating its position across overseas markets by preemptively responding to the rapidly evolving petrochemical market environment and is committed to staying at the frontier as a market leader.