1. SAFETY / ENVIRONMEMT MANAGEMENT And IMPROVEMENT of PETROCHEMICAL PLANTS 2005.10.14

2. 1. Introduction of Company 2. Introduction of SK safety and environment system 3. Improvement of SK petrochemical plant Contents

3. Introduction of Company

4. Introduction of SK Corporation ▶ Established: October 13, 1962 ▶ No. of Employees : 4,931(October, 2004) ▶ Organization : Headquarter,Seoul / Ulsan CLX /Daeduck research center /11 Logistics Centers ▶ Sales : 13.22 Trillion KRW in 2003 World Top 10 Refinery (Fortune, 2003)

5. History of SK Corporation 62~70 Years Founded as first oil refining company in Korea, played a key role in the economic development of Korea 80~90 Years Built foundation to become General Energy & Chemical Company 2000 Years Globalized Innovative Marketing Company  1962 Korea Oil Corp. established  1964 No. 1 atmospheric distillation unit start up  1968 No. 2 atmospheric distillation unit start up  1970 Aromatic plant start up  1972 No.3 atmospheric distillation unit start up  1973 Naphtha cracking center start up  1980 Private Business (SK Group)  1985 New aromatic complex start up  1989 New Ethylene Plant start up  1990 No. 1 Plastic Plant start up  1991 No. 4 atmospheric distillation & Oil Chemical unit start up  1996 No. 5 atmospheric distillation, No.2 middle distillation unit start up  2000 OK Cashbag.com Opened. Sales of Anti-epileptic Technology  2001 Knowledge Management Great Prize Award  2002 No. 1 Grade in the world for 3 years in Plastic Plant Process safety Index  2003 China entry of Technology service Business

6. Introduction of SK Ulsan Complex ▶ Plant Area: 8.26 Million ㎡ ▶ No. of Employees: 2,850 ▶ No. of Plant / Unit : 5 Plants / 150 Unit ▶ Storage Tank For Hazardous Materials : 570 Spot ( 328 Ten Thousand ㎘ ) ▶ Pressurized Gas Storage Tank : 45 Spot (~ 80 Thousand ㎘ ) ▶ Wastewater Treatment Capability : 4 Waste Water Treatment Plant (~55 Thousand Ton/ Day) ▶ Air/Water Automatic Monitoring System: 30 Spot(Air 20 Spot, Water 6 Spot) ▶ Plant Area: 8.26 Million ㎡ ▶ No. of Employees: 2,850 ▶ No. of Plant / Unit : 5 Plants / 150 Unit ▶ Storage Tank For Hazardous Materials : 570 Spot ( 328 Ten Thousand ㎘ ) ▶ Pressurized Gas Storage Tank : 45 Spot (~ 80 Thousand ㎘ ) ▶ Wastewater Treatment Capability : 4 Waste Water Treatment Plant (~55 Thousand Ton/ Day) ▶ Air/Water Automatic Monitoring System: 30 Spot(Air 20 Spot, Water 6 Spot)

7. Organization of SK Ulsan Complex Ulsan Complex Refinery Plant HOU Plant FCC Plant Petrochemical Plant Polymer Plant Utility Plant Storage & Distribution Production Management / Laboratory Technical Supporting Div. Technology Service Biz. Div. Maintenance Electric & Instrument Inspection Project & Engineering Engineering & Technical Service Corporate Engineering & Maintenance Div. Production Division Production Supporting Div. Health, Safety and Environment Division

8. Introduction of SK safety and and environment system

9. Company Vision SKVISIONSKVISION SocialMission EconomicalMission SK VISION The Highest Valued Company in Korea * Most Successful Value Innovation Company * Continuous Customer Values Creating Company HSEMission Value Maximization for the Shareholders, investors and employees Company Growth in line with society Safety : Zero Accident workplace through advanced HSE Management system Health : Value Creation by the healthful employees at the optimal work environment Environment : Continual environmental Improvement through advanced HSE Management system

10. Mission & Goal Complex Safety / Environment Mission  Internal customer : No Anxiety about accident and disease  External Customer : Recognizing Safe and Eco-Friendly Company  Employee Incident “Zero”  Contractor Incident “Zero”  Employee Anxiety “Zero”  “No 1” Company for Public Goal

11. SK SHE Management System HISTORY  Compliance Stage: 1962 ~ 1990 1962 Korea Petroleum Corporation founded 1972 Began Operation of a biological treatment facility for the first time in Korea 1990 Received Award of Honor for safe operation from the US National Safety Council  Control Stage: 1991 ~ 1995 1991 Began study of environmental impact throughout the Ulsan CLX 1993 Declared the Safety Environment Policy 1993 Completed all-purpose environment facilities 1993 Received ISO 9001 certification for the entire products and process in 7 areas  Management Stage: 1995.12 ~ 1996 Received ISO 14001 certification 2000 Received the Grand Prize for Environmental Management from Maeil Business Newspaper 2001 Received the Best Safety and Health Management Company certification from Mail Business Daily 2002 Established the HSE Management Master Plan 2003Integrated SHE management system 2004 Advanced SHE Management Initiative

12. Plan Implement Adjust Measure ♣ Leadership ♣ Mindset & Behavior Information / Communication Risk Assessment & Management Capability Procedures Performance Management Evaluation / Improvement Community Relationship Legal Compliance SK Safety · Environment Management

13. Environment Improvement Environment Master Plan (2002 ~ 2006) Purpose  To meet new reinforced environment regulation  To achieve comfortable operation environment of CLX Investment Cost for improvement Study Procedure Extract problems And Generate ideas Develop ideas ImprovementImprovement Evaluation Diagnosis for Plant Opinions of Plant Experience New Regulation ~ 2003 200420052006Total Petrochemical4.42.84.62.214.0 Total CLX12.212.741.528.995.3 [Unit : Million $, US ]

14.  ‘To be’ of SK Corporation  Zero human, process and environment accident, and removal of employee anxiety over HSE to promote proactive working condition  100% Plant Availability  Establishment of HSE management partnership with contractors  Local community perceives CLX as safe and eco-friendly company As is To be Safety / Environment Management System Plan Implement Measure Adjust Achievement of ‘To be’ through continuous improvement of Safety /Environment Performance with continuous improvement  Incident rate “Zero”  Contractor Incident rate “Zero”  Member anxiety “Zero”  Awareness of The public “No. 1”  The level of HSE Management is high and workers’ perception is consistent  HSE Master plan is already established and executed  The level of plant availability is maintained high through continuous effort on accident prevention  Contractors support HSE Management  Local community perceive favorably SK Safety · Environment Management Safety / Environment Management

15. Improvement of SK petrochemical plant

16. stable Moderate Very Stable World Best Level Diagnosis and Improve (TOP) SK KM System Improvement of Petrochemical Plant Unit Stability Unit Severity HighModerateMild 1990 ~ 1999 High Capacity Improved stability ~ 1990 General Operation 2000 ~ High Severity High Stability Expansion Period SAVE Program T/A Interval Increase - PGC Fouling Prevention - C4 Acetylene Converter Stabilization Period Quality Control Periodical T/A (1 ~ 2 yrs) Trouble Control / Education  Change for Operation Concept

17. SAVE (Systematic Approach for Valuable Energy) (1999) Energy Saving & stable operation Through Idea Implementation Energy Saving & stable operation Through Idea Implementation  To save utility cost dramatically through various analysis (about 20 analysis methods) and generate ideas Activities ImprovementIdeaImprovementIdea Objectives ValuableEnergy Steam & Water Electric Fuel * System Analysis * Loss Analysis * Trouble Analysis Activities  To achieve dramatic performance improvement in the shortest period

18. TOP (Total Operational Performance) (2000) World Best Competitiveness by 2002 World Best Competitiveness by 2002 Unscheduled S/D Time Reduction  T/A Interval Prolongation QUALITYQUALITY COSTCOST ReliabilityReliability High Quality Product Increase Waste Reduction Raw/Subsidiary Materials Reduction Energy use Reduction Productivity Improvement  To achieve dramatic performance improvement in the shortest period Activities Improvement Idea Improvement Idea Objectives  To build a system for continuous performance improvement Activities

19. Up to early 90’ T/A by every two years Major Problems - Fouling of compressor and coolers - Efficiency degradation of major towers - Equipment failure Current (’98 ~ ) T/A by every four years Minimize the degradation of major equipment. Apply on stream cleaning method Early ’90 Future T/A Interval Prolongation TFT B/M of developed plants Diagnosis of unit Extract bottleneck point Solve the problem considering safety and environment Turn Around Interval Increase Activities for Stable Operation

20. PGC Fouling Prevention (1996 ~ ) Months Major Activities for T/A Interval Prolongation  Cyclopentadiene dimers/polymers formed by Diels-Alder reactions  Polymers formed by free radical reactions  Condensation/deposition of heavy hydrocarbons in the gas Inorganic deposits  Carbon powder or cokes carryover from quench towers CARBON- MIXED POLYMERS Compressor Casing Polymer Compressor Interstage Cooler Polymer  Fouling and polymerization at PGC system

21. * Lower energy consumption * Increased turn-around interval (4.5 years)  PGC Efficiency Trend After Application Major Activities for T/A Interval Prolongation ( Efficiency, %) ( Month) BeforeAfter Excellent Performance  Higher Solvency  Remain as Liquid  No Olefins / No Sulfur  Higher boiling temperature New Wash Oil by SK  New Wash Oil Apply at PGC Dissolve all type of deposit formed on the compressor. After Application

22. Problems Scheme for new system Major Activities for T/A Interval Prolongation  Short turn-around interval of Butadiene Extraction Unit  Low efficiency of BEU at EOR (End of run) Debutanizer C4 Storage Tank B.D Process C4 Acetylene Converter C4 Acetylene Converter (1998 ~ )  Pre-treatment of fouling materials  Lower cleaning frequency of fouling equipment Performance  Prolongation turn-around interval (2 years  4 years)  Prolongation of fouling towers cleaning interval  Keep the maximum capacity of BEU

23. Knowledge Management System (2000 ~ ) All activities are achieved and stored and shared at SK’s KM system. Activities Operation Data Operation Data Trouble History Trouble History Safety Standard Education Materials Education Materials Near Miss, TPM, etc Near Miss, TPM, etc SK KM System Improvement History Benchmarking Materials  Improved Operation  Operation Data  Experience

24. Performance of Olefin Plant Performance for Reliability (based on Olefin Plant) 700 200 100 0 ’73 ’96’03 ’78 ’89 500 600 800 #1 EU (190) #2 EU (650) #1 EU Revamp #2 EU NEP S/U #2 EU Revamp Process efficiency Improvement 100 150 550 670 840 100 98 96 94 92 97.2 98.0 94.9 94.1 92.9 * Annualized T/A period is included in Reliability Index. (RI = Actual production / Max. C2 Production Capacity x 100) T/A Interval Prolongation #1 EU NCC S/U (RI) Capacity (MTA C2-)

25. Thank you !!