WE INVEST TO IMPROVE, ALWAYS
2017 Sustainability Report
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“In everything we do and every time we plan an investment or develop our production system, we are guided by our strong propensity for continuous improvement and the conviction that only by challenging ourselves can we continue to innovate, resulting in a benefit for the environment and the people.”
Alessandro Gilotti RAM President Contents
LETTER FROM THE PRESIDENT 4
1. RAM AND SUSTAINABILITY
1.1 Reporting standards and criteria 8 1.2 Approach to sustainability 9 1.3 Highlights 2017 18 2. RAM: A STRATEGIC 2 SYSTEM, A LONG-TERM APPROACH
2.1 About us 22 2.2 Shareholders, management, community 24 2.3 Integration with the community and environmental investments: a commitment that renews itself 26 2.4 Our development path 28 2.5 People and employment 30 2.6 Training 34 2.7 Staff selection 36 2.8 Innovation becomes substantial: production cycle and products 38 2.9 The Port, a strategic asset 46
3. THE ENVIRONMENT, A PRIORITY WITHOUT COMPROMISES
3.1 RAM, health and community 52 3.2 Environmental monitoring and control 57 3.3 The most important environmental projects 58 3.4 Air 60 3.5 Greenhouse gases 61 3.6 Water 62 3.7 Energy 64 3.8 Waste 67 4. SAFETY, 1 OUR GUIDING LIGHT 5
4.1 Our goal is always “zero accidents” 70 4.2 Initiatives for safety 74 4.3 Maintenance 77
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5. RELATIONSHIPS WITH THE COMMUNITY: 3 SUPPORT FOR PROJECT DEVELOPMENT
5.1 Industry and community 82 5.2 Education, training, and community 85 5.3 Labour relations 87 5.4 Transparency 87
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6. DISTRIBUTION 7. APPENDIX OF THE ECONOMIC 7.1 Management systems ADDED VALUE and certification 100 7.2 Committees and sub-committees 101 6.1 Staff 92 7.3 Primary sustainability indicators 102 6.2 Financiers 92 GRI contents table 104 6.3 Institutions 93 Letter of assurance 108 6.4 Community 94 6.5 We distribute value to local businesses 96 0 Xxxxxxxxxxxxxxxxxxxxxxxxx
LETTER FROM THE PRESIDENT
Over the years we have shown that we are able to seize economic, industrial, and growth opportunities. This is possible because we have and do set common goals, many of which relate to environmental sustainability.
For seven years now, compiling the yearly As proof of the constant attention to these themes, Sustainability Report is our chance to stop for a in 2017 we were invited by the Ministry of Economic moment and examine all the decisions we have Development, which considers us to be a strategic taken and that we know have an impact on the asset for the Country, to share our experience and company and shareholders, our workers, the entire daily work to further decrease the environmental community, Sicily, and especially the province of impact of our activities. We are pleased that we are Messina, which we are an integral part of. considered a “best practice” but are aware that in order to have noteworthy results we must have the In everything we do and every time we plan an courage to make large investments. Considering investment or develop our production system, we only environmental investments, for us this means are guided by our strong propensity for continuous approximately Euro 110 million only in the last improvement and conviction that only by three years. We continue to invest despite the challenging ourselves can we continue to innovate, uncertain consumption trends. In fact, in 2017 we resulting in a benefit for the environment and the saw a decrease in the use of petroleum products people. in Italy, which is explained through the decrease in transport fuel sales despite the increase in vehicle 2017 was an important year for us because we registrations. celebrated 20 years of joint venture between ENI and Q8, one of the few truly positive and lasting Our investments allow us to make innovations, even examples of equal cooperation between two large in a world that is considered to be “traditional” like and potentially competing companies. the world of refineries.
4 | 2017 Sustainability Report We have been applying the Industry 4.0 and the environmental impact, and concrete initiatives Digital Transformation concepts for years now. supporting local and social projects are our way of Technologically advanced sensors, intelligent showing that we are here and are aware that we ventilation systems, and transport software are are a value for the Milazzo and Valle del Mela area. already a reality at RAM. For us, being part of the community also means We would like our facility to continue to be safer, promoting the energy culture. We open the doors cleaner, and more efficient for our workers and we of the plant to schools and universities, organizing back that up with concrete deeds. One of the many guided tours and constructive meetings to give projects created is the “Integrated Port Handling” everyone the possibility to get to know us better. system. Our port of Milazzo, which is strategic for Over 600 students visited our facility in 2017. transporting our products and for the development of the entire community, is the first port in Italy to In this Report, I see all of our profuse commitment have computerized its port operations. We helped to sustainability, which guides us in all of the make this possible. decisions we make at the company and is the strategic key for the present and future of the The link to our location is not just related to our refinery. geographic position. More than 97% of the over 600 people who work for us come from the surrounding Alessandro Gilotti area and a large part of the thousand contractor RAM President workers who are present in the refinery each day come from Milazzo and the province of Messina. They were born here, work here, and have decided to build their future and raise their children here. For us, protecting the community also means protecting the refinery and its workers, therefore, investments in technological innovation to reduce
5 6 | 2017 Sustainability Report 1 RAM AND SUSTAINABILITY
1.1 Reporting standards and criteria 8 1.2 Approach to sustainability 9 1.2.1 The Integrated Management System, Model 231, and the Code of Ethics 10 1.2.2 Always working to improve 12 1.2.3 The materiality matrix 16 1.3 Highlights 2017 18
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1.1 REPORTING STANDARDS AND CRITERIA
For us, the Sustainability Report is an important Termica Milazzo Srl, the company acquired by communication tool we use to inform our RAM in 2016, of which it is the sole shareholder stakeholders (see RAM stakeholders, page with management and coordination activities, 14) about the company’s economic, social, and is excluded from the report. As of November 1, environmental performance. Servizi Milazzo Srl, a company founded by RAM in 2014 to manage the HMU2 plant, was incorporated We have now reached the seventh edition, and, like in Raffineria di Milazzo Scpa following the every year, the Report shows the concrete actions “merger for incorporation”. Therefore, the 2017 that we have taken to protect the health and safety Sustainability Report presents the data with the of our employees and the population. We have variations due to this corporate operation. also highlighted the actions we took to protect the environment and for the development of the entire In preparing this report, which was also ecosystem, which were also made possible through subject to an independent external audit by the ongoing relationships with local participants. PricewaterhouseCoopers, we adopted the G4 integrated sustainability reporting guidelines with In the Sustainability Report we record and recount indicators for the Oil & Gas industry issued by the the actions that confirm our desire to be an Global Reporting Initiative (GRI) with a “core” level integrated, stable, transparent, and sustainable of adherence. GRI is the independent international presence in the community. association whose purpose is to: • Create, promote, and distribute guidelines for To guide us in formalizing this process with a voluntary reporting of economic, environmental, view towards continuous improvement, we have and social performance; the Best Available Techniques (BAT), which are • Equalize social and financial reporting in international standards that RAM continuously terms of rigor, comparability, accuracy, clarity, seeks to be in line with, even before they become timeliness, and reliability. legal requirements. The Sustainability Report is subject to the As in the previous editions, the reporting scope approval of the Board of Directors and, therefore, of the document is the activity performed by the is presented in the Stakeholder Meeting along Milazzo Refinery during 2017. with the Fiscal Year and Consolidated Financial Statements.
8 | 2017 Sustainability Report 1.2 APPROACH TO SUSTAINABILITY
We have always been committed to producing We implement short, medium, and long-term high quality fuels using the most up to date and company projects and concrete actions, invest innovative technology, with the contribution of in training to enhance our human resources, motivated and professional human resources, and adopt transparent and objective selection and while respecting the environment and health processes for choosing our suppliers. We also and safety. build and cultivate continuous relationships with the local area and population, knowing that they Sustainability and protection of the environment, provide the stimuli and requirements that we must community, and public health are an important respond to and take care of. part of our daily work. So, our good intentions are transformed into actions.
9 1 RAM and sustainability
1.2.1 THE INTEGRATED MANAGEMENT SYSTEM, MODEL 231, AND THE CODE OF ETHICS
We have collected and formalized all of the Internally, we have dedicated teams of people general requirements in terms of Health - Safety - who, on a daily basis, study and implement the Environment - Energy and Quality in an Integrated best possible technological solutions (BAT, Management System (IMS), which is shared with all Best Advanced Technologies) and improve the company departments. environmental and production performance of our The standards and practices we use follow the facility. This is the spirit with which we operate, current laws and standards set forth in the applying the principle of continuous improvement respective certifications. We work to surpass to all areas of RAM with the goal being to protect the legal limits and increasingly improve our the environment, the area in which we operate, and performance in terms of environmental impact. the people with whom and for whom we work.
THE RAM INTEGRATED MANAGEMENT SYSTEM
ENVIRONMENT IMS ENERGY IMS SAFETY IMS FOR DANGERS QUALITY IMS AND HEALTH IMS OF SIGNIFICANT ACCIDENTS
Manages the Supervises all Intends to prevent Is developed in Includes direct and indirect activities and any harmful event order to prevent production, environmental operations against direct significant accidents handling, and aspects deriving performed and indirect workers connected storage from refining that have or could that operate inside to certain hazardous of propylene. activities, product have an impact the Refinery. and to limit their handling, and energy on the energy consequences for production. performance of the human health and Refinery. the environment.
Related Related Related Related Related certification: certification: certification: certification: certification: UNI EN ISO UNI CEI EN ISO OHSAS 18001 UNI 10617 UNI EN ISO 14001:2004 50001:2011 9001:2008
10 | 2017 Sustainability Report In 2017, periodic checks were performed to Our Model 231 includes the Code of Ethics that maintain the validity of the certifications, including represents the synthesis of the principles and ISO 14001. We are working on adapting to the new values held by the Milazzo Refinery and traces the standards, Environment 14001:2015 and Quality fundamental goals and conduct standards that 9001: 20151. Our Chemical Laboratory for analysing each employee and partner must adhere to when raw materials, fuels, internal consumption, and carrying out their work or when interacting with sea discharge is UN EN ISO 9001:2005 certified. third parties. Also, the Laboratory is accredited with reference The general principles on which the Code of Ethics to specific analyses (Emission Trading Process is based are respect for the law, transparency, and sea discharge control), UNI CEI EN ISO/IEC honesty, loyalty, correctness, confidentiality, 17025:2005. good faith, and respect for the environment. It All certifications are the result of lengthy work also clearly and explicitly defines the ethical and in the field to improve the facility in terms of social responsibilities of the management and processes, management, and technology. employees of the Milazzo Refinery to the various stakeholders. As specified in Italian Legislative Decree An independent Supervisory Board monitors the 231/2001, we have implemented an Organization, effectiveness of the Code of Ethics and Model 231. Management, and Control Model called “Model In this regard, during June, July, and November 231”. This decree introduced the administrative 2017, the Supervisory Activities per “Programme responsibility of companies that may be held 231” for the year in progress were carried out, responsible for crimes committed by employees particularly in reference to the company processes in the interests of the company, which is then related to Maintenance, Contracts/Payments subject to sanctions. The company’s responsibility Management, and Investments. may, however, be excluded if it has adopted and effectively implemented adequate organization, management, and control models to prevent them.
SUPERVISORY BOARD The independent organization that monitors and audits the Organization, Management, and Control Model 231.
1) More details are provided in the appendix, in the Management and Certification Systems (page 100) and Committees and Subcommittees (page 101) paragraphs. In particular, they guarantee consistent management of the activities described above.
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1.2.2 ALWAYS WORKING TO IMPROVE
As RAM, we promote the improvement of our For us, the Improvement Plan is a real Action Plan, performance and so we have decided to align our that accurately ratifies the timeline of the goals to be sustainability model with the top international achieved regarding continuous improvement of the standards. Integrated Management System and the constant The investment policy that we have defined and reduction in inefficiencies through planning that we are implementing year after year takes targeted interventions. The Plan is updated every into consideration various areas identified by a quarter with the involvement of all Departments, specific improvement programme designed for which identify the actions and investments needed our company. The Improvement Plan for Health - to achieve the preset goals. Safety - Environment - Energy and Quality, named PROSAQ is part of our Integrated Management System (see Par. II Integrated Management System, Model 231 and the Code of Ethics, page 10).
12 | 2017 Sustainability Report SUMMARY OF PROSAQ
Areas Goals
Reduce the risk of accidents and anomalies for the health Health and safety of the operators.
Improve the efficiency and effectiveness of managing the water Water resource treatment plant under normal and emergency conditions
Atmosphere Reduce atmospheric emissions
Reduce the risk of major accidents. Improve efficiency and the Major accidents availability of the facilities for managing emergency and the fire resistance of the equipment and structures during an emergency
Raw materials and products Improve the quality of the products and their environmental impact
Energy efficiency Reduce/optimize consumption
Soil and subsoil Prevent the risk of soil subsoil contamination
Management System for Safety - Health - Environment - Energy Improve the implementation of the Integrated Management System and Quality
Maintain a high level of control with regards the presence detection Security system
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MATERIALITY ANALYSIS Our Sustainability Report is based on a materiality needs that are significant for the company and its analysis whose purpose is to map and prioritize stakeholders (in other terms, interest holders). sustainability themes, expectations, and real
RAM STAKEHOLDERS
Environmentalist Institutions Trade Unions Associations Press
Area Schools and Civil Society Universities Employees Suppliers
This analysis allowed us to identify the aspects that Semi-structured interviews were held with local are considered “material” and that, in other words, stakeholders and there were conversations with reflect the significant impacts for the organization the citizens of Valle del Mela or with privileged from an economic, environmental, and social individuals regarding the objective of the research point of view and that substantially influence (physicians, environmentalists, politicians, the stakeholders’ perceptions, evaluations, and tradesmen, researchers, entrepreneurs, and RAM decisions. workers).
For the analysis of the Sustainability Report 2017, The data collected was then compared and we voluntarily adhered to a study performed integrated with the results of the six focus groups by the University of Messina. This study was conducted inside the Milazzo Refinery with workers conducted between April 2017 and February and employees of the company with different roles 2018 and was a socio-anthropological research and residents in Valle del Mela. The social context performed by consulting “external” stakeholders, was also explored through a constant online and the citizens of Valle del Mela, and “internal” paper Media Monitoring operation by the local stakeholders, the workers and employees. press of television news and local group activities on the primary social networks. The method used referred to the proper tools of qualitative research, conducted as close as possible to human experience and the concrete dimension of the phenomena under study.
14 | 2017 Sustainability Report Analysis of the previous Sustainability Reports • RAM’s role inside of a broader production system (2014; 2016) shows a continuity of the requests of with related development and investment plants local parties, which could be summarized in four implemented by the company takes on a central interconnected macro-areas: value with respect to the theme of Work and the source of employment; • Questions regarding the Environment and the Health of the population - emerged in relation to • Transparency in relationships with local sensory perception with the visibility of the torch institutions guarantees RAM’s relationships with flame, smoke, and diffusion of odours. Attention the local area. However, there is a need for more toward the best operating technologies in the rapid and effective communication with the local plants is seen as tools for reducing emissions people. and safeguarding health; In general terms, awareness of environmental • The Safety of the plants was mentioned in the topics and public health has increased. report on the External Emergency Plan in case of accidents but also regarding safety in the workplace for employees;
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1.2.3 THE MATERIALITY MATRIX
In the graph below, those themes considered to be We are committed to listening to the people, of high priority, or in other words the “material” which also includes our workers and our satellite topics for both external and internal stakeholders workers, on themes of health and safety and (i.e., employees and the RAM organization in we continue to invest, as was already done in general) are shown in the upper right. the previous years, in continuously training our employees and the employees of companies that The interests of the internal and external work with us on the plants. stakeholders and the company are increasingly aligned. The Milazzo Refinery works hard each day As we can also see in the graph, the most to improve its performance in terms of emissions. important topic is “the health of the population”. We do it by planning short and medium-long term Besides this topic, the other important ones for investments to create projects that bring benefits external stakeholders are emissions and quick in terms of environmental and social protection. communications. On the other hand, internal stakeholders are more concerned with safety in the workplace and investments for the development of the company.
Health of the population
Emissions Quick communications Odours Development and investments Torch flame Workplace safety Transparency Better with local technologies institutions External
Importance stakeholders the for emergency plan
Hiring
Management of cultural heritage
Importance for the Company
16 | 2017 Sustainability Report Relevant themes Paragraph
Environment • Emissions Air (page 60) • Torch flame • Odours
Health RAM, health and community • Health of the population (page 52)
Safety • External emergency plan Safety, our guiding light • Workplace safety (page 68) • Best technologies
Work Distribution of the economic • Development and investments added value (page 88) • Hiring
Community • Relationships between the Refinery and management of the local cultural heritage Relationships with the local • Transparency with local institutions community: support for project development Communication (page 80) • More rapid communication with the community
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1.3 HIGHLIGHTS 2017
70.7 MILLION EUROS of investments, 50% of which was on specific projects for improving environmental performance.
18 | 2017 Sustainability Report 79.6 MILLION EUROS 181 MILLION EUROS of total investment for implementing the supplier turnover. the SRU3 sulphur recovery plant 82% goes to Sicilian suppliers. with a subsequent reduction of the On the other hand, 26 million environmental impact in terms of SO2. is the turnover of Milazzo suppliers.
21% 1,025 PEOPLE of the Italian requirement on average, of third-party companies of diesel fuel covered by our (associated), work daily at RAM. production.
90% OF FINISHED PRODUCTS 26% are shipped by sea with 665 ships of the Italian requirement of petrol to major Italian ports: Naples, Livorno, covered by our production. and Venice.
11 MILLION METRIC TONNES 630 EMPLOYEES of product processed. We have 99% of which have permanent produced more and reduced contracts. 97% of these are from emissions. the province of Messina and 53% directly from Milazzo.
-35% of emissions of sulphur oxides (SO ) HOURS OF TRAINING 2 33 in relation to the tonnes processed. on average for each employee, 69% of which regards Health, Safety, and the Environment. -24% of emissions of nitrogen oxides (NOX) in relation to the tonnes processed. 500 FAMILY MEMBERS of employees have participated in the ”Open Factory” initiative. 800 MILLION EUROS of VAT generated for importing crude oil and semi-processed products from countries outside the EU.
19 20 | 2017 Sustainability Report 2 RAM: A STRATEGIC PL ANT, A LONG-TERM APPROACH
2.1 About us 22 2.2 Shareholders, management, community 24 2.3 Integration with the community and environmental investments: a commitment that renews itself 26 2.4 Our development path 28 2.5 People and employment 30 2.6 Training 34 2.6.1 Interventions in 2017 35 2.7 Staff selection 36 2.7.1 25 years at RAM: a surprise for those celebrating 37 2.8 Innovation becomes substantial: production cycle and products 38 2.9 The Port, a strategic asset 46
21 2 RAM: a strategic plant, a long-term approach
2.1 ABOUT US
The Milazzo Refinery operates within the Italian and As indicated by the Ministry of Economic international refinery system for the production of Development, we are a strategic national asset fuels (to generate energy and for motors) and raw and essential for ensuring the security of energy materials. procurement in the country.
Our finished products satisfy a significant part of Our Refinery is considered fundamental for the national fuel demand: about 21% of diesel fuel safeguarding the Italian refining industry thanks to and 26% of petrol. its ability to ensure products created according to With a balanced processing capacity of greater the highest environmental standards. The National than 10 million metric tonnes per year, RAM is Energy Strategy, while considering a future de- one of the most advanced refineries in Europe carbonization of the country, in fact foresees that in terms of both production capacity and constant the process is monitored and governed in order to emissions monitoring and reduction. We are able to continue to ensure the country’s energy security. receive and process a wide range of raw materials, to produce in compliance with the strictest quality specifications, and to manage complex logistics with 90% of our products shipped by sea.
22 | 2017 Sustainability Report WHY RAM AS Reaching and maintaining quality levels equal to the highest benchmarks in the industry is supported by AN ACRONYM? the combination of the high professionalism of our It comes from the 630 people - to which is added an average of over English, Refinery 1,000 people in third-party companies - and the use of advanced technology thanks to investments of approximately Euro 580 million in the last 6 years.
Our shareholders are Eni S.p.A. and Kuwait Petroleum Italia S.p.A. (known with the trademark Q8), each owning 50% of the shares. The shareholders allow RAM a processing fee for the refining of their crude oil equal to the sum of all costs. Therefore, the company income statement closes at zero on a regular basis, respecting the nature of the joint-stock consortium company (S.C.p.A. in Italian).
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2.2 SHAREHOLDERS, MANAGEMENT, COMMUNITY
» THE RAM MANAGEMENT 20 YEARS TOGETHER The General Manager, along with In 2017 the joint venture that management, has the responsibility of governs the company celebrated proposing investment projects to the 20 years, demonstrating a solid shareholders aimed at improving the connection over time and with a company in the long term. long-term projection.
24 | 2017 Sustainability Report Eni S.p.A. and Kuwait Petroleum Italia S.p.A. The BoD appoints the Chairman and Vice Chairman, created a joint venture to manage the Refinery and along with two Delegated Directors, one for each signed Shareholders’ Agreements. shareholder, with equal powers.
The Shareholders’ Agreements between the two In addition, the Board of Directors appoints the call for RAM to be: General Manager who runs the Company with the • Competitive in the long term; collaboration of the 12 Department Managers (see • An international excellence in the area of health, the Organizational Chart). safety, and the environment; • Flexible to be able to process various types of There is also a Board of Statutory Auditors with crude oil. three Statutory Auditors and two Alternate Auditors, charged with the audit activities. The company Board of Directors (BoD) is made up of eight members, 4 appointed by Eni and 4 appointed by Kuwait Petroleum Italia.
ORGANIZATIONAL CHART
GENERAL MANAGER Pietro Maugeri
HR & EXTERNAL ADMINISTRATION INFORMATION PLANNING PROCUREMENT RELATIONS & FINANCE SYSTEMS & ECONOMIC Luca Antonino Alberto Francesca Scaglione Giulio Franceschini Minutoli D’Amico Minotti
TECHNICAL MANAGER Paolo Chiantella
STRATEGIC PLANNING Raffaele D'Angelo
SAFETY & NEW PROJECTS MAINTENANCE & OPERATIONS TECHNOLOGY ENVIRONMENT GROUP ENGINEERING Antonio Francesco Roberto Fortunato Flavio Ricciardi Buccarelli Fulci Sabatini Laganà
In force since 1 May 2018
25 2 RAM: a strategic plant, a long-term approach
2.3 INTEGRATION WITH THE COMMUNITY AND ENVIRONMENTAL INVESTMENTS: A COMMITMENT THAT RENEWS ITSELF
The Refinery, with an area of 212 hectares in the The following is a list of the major environmental municipalities of Milazzo and San Filippo del Mela, projects for 2017: is a major presence in the area of which it has become an integral part. Thanks to an advanced industrial model based NEW RECOVERY UNIT on the continuous improvement of the industrial SRU3 SULFUR technologies and the measures adopted to see page 41 safeguard the health and safety of the people and STEAM RECOVERY SYSTEMS preserve the surrounding environment, RAM also TO CONTAIN EMISSIONS confirms its role as a promoter of the development FROM SHIPS see page 49 of the community. We invested over Euro 1 billion in the past 15 years. PROJECT “ZERO” FUEL OIL see page 56 Since 2011, at least Euro 70 million per year were NEW TECHNOLOGY FOR ODOUR invested in the facility with a peak of 120 million in REDUCTION see page 59 2015, the year in which various innovative projects were launched. Despite the complex situation in WITH THE NEW SCRUBBER the petroleum market, between the decrease in COLUMN IMPROVING consumption and new forms of energy, in 2017 RAM FUEL QUALITY see page 61 invested a total of Euro 70.7 million in projects and improvements. This amount is destined to grow INCREASING TOPPING3 KILNS AND in the coming years to restart a trend that was VACUUM PERFORMANCE IS GOOD FOR temporarily interrupted, also due to the absence THE ENVIRONMENT see page 65 of cyclic interventions in 2017 like the “Main A PROGRAMME FOR EFFICIENCY OF turnarounds” or the big programmed maintenance TANKS see page 77 shutdowns of the plants (the last ones were in 2015 and 2016).
Investments exclusively for environmental impact were always over Euro 30 million per year in the last three years and were Euro 35.5 million in 2017, corresponding to almost half of the total RAM investments.
26 | 2017 Sustainability Report INVESTMENTS TREND 1997-2017 (in millions of Euros)
1997 49.3 1998 46.5 1999 44.1 2000 76.4 2001 51.0 2002 35.5 2003 28.3 2004 67.9 2005 34.6 2006 34.5 2007 35.1 2008 56.1 2009 59.1 2010 60.6 2011 69.6 2012 102 2013 92.1 2014 104 2015 121.7 2016 88.9 2017 70.7
27 2 RAM: a strategic plant, a long-term approach
2.4 OUR DEVELOPMENT PATH
2000
1987 The company becomes a The company consortium is transformed company as “Raffineria Mediterranea 1995 S.p.A” 1961 Raffineria di Milazzo S.p.A. The Refinery is founded begins operations
OUR OBJECTIVE: CONTINUOUS IMPROVEMENT
1994 1957 Raffineria Mediterranea Mediterranea Raffineria was S.p.A. merges founded with Agip Petroli S.p.A. 1982 1996 Agip Petroli purchases Joint venture with the shares after Kuwait Petroleum closure Italia: purchase of due to the 50% of the company petroleum crisis shares
28 | 2017 Sustainability Report 2004
The registered office is moved from Rome 2016 to Milazzo Purchase of “Termica Milazzo”
2017
Merger for incorporation of “Servizi 2003 Milazzo Srl” in Raffineria di Eni replaces Milazzo S.C.p.A Agip Petroli in the joint venture 2014 following the merger Purchase of a company branch of the HMU2 plant manager creating a new company, “Servizi Milazzo Srl”
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2.5 PEOPLE AND EMPLOYMENT
Our activity requires highly qualified people who are In a region like Sicily, which has a long-term skilled but especially passionate and willing to work unemployment rate of 14.2% (the Italian average is in a team. 6.7%) 2, in 2017 we hired 20 people, 17 for Servizi Given our size and the fact that most of our employees Milazzo Srl following the merger for incorporation, come from Milazzo and the rest from Valle del Mela which was completed while maintaining the same (77%) or, anyway, from the province of Messina (97%), employment levels. During the year there were 3 our main role is the creation of economic and social resignations. value for the area, which is translated into a constant commitment to safeguard employment levels (as we At the plant, we also began 8 apprenticeships, with have shown in the case of the purchase of Termica the forecast being to hire them when the training Milazzo in 2016). is completed.
2 Sources: Banca d’Italia - Sicily’s economy - June 2017
30 | 2017 Sustainability Report 630 Total staff in service OUR QUALIFIED STAFF Our employees have diplomas or degrees, mostly in technical or technical/scientific areas. We are always looking for qualified and talented staff to work with us, to reinforce our vision for the future. They must be proactive with a desire to learn and must have a link with Sicily.
RAM STAFF
6 28 1 12 66 301 248 1 Managers Coordinators White collars Blu collars Apprentices
RAM staff seconded to ENI and Q8 staff ENI and Q8 seconded to RAM
35 8 10 Total Women
31 2 RAM: a strategic plant, a long-term approach
44 Average age of RAM
» CONTINUOUS PRODUCTION CYCLE The production cycle in our Refinery runs 24 hours per day, 365 days per year, therefore about two-thirds of our employees (62%) work eight- hour shifts while the remaining thirds work daytime hours (38%).
32 | 2017 Sustainability Report GEOGRAPHIC ORIGIN OF EMPLOYEES
1.5% 1.5% Other Sicily Outside of Sicily 20% Other prov. Messina
53% Milazzo
24% Valle del Mela*
* Municipalities in Valle del Mela: Barcellona, Merì, San Filippo del Mela, Pace del Mela, Santa Lucia, Gualtieri, San Per Niceto, Condrò.
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2.6 TRAINING
We are a company that believes strongly and To reach these goals, each year we prepare a invests in innovation. However, in order to be training plan based on the needs communicated innovative, we need not only highly specialized from all managers, taking into consideration staff, but also responsible individuals. This is why mandatory training, training on system updates, along with technical training, which is mandatory and individual growth paths, which allow continuous in a company like ours, we also offer training on revision and improvement of professionalism and people management and conduct. staff skills.
For us, training means providing all of our employees with the skills and tools needed to take advantage of the technologies used as the Refinery and to comply with the standards regarding Health, Safety, and the Environment along with all applied Management Systems.
34 | 2017 Sustainability Report 2.6.1 INTERVENTIONS IN 2017
The training interventions in 2017 were mostly the Production staff interested in operation aimed at satisfying legal requirements. They, management and the Maintenance staff. included training on the risk of significant accidents as dictated by Italian Legislative There was also managerial training during the Decree 105/2015, basic training, and updates on year with two projects carried out in collaboration safety from Italian Legislative Decree 81/2008, with the ISTUD Foundation: “Managing People”, and, in collaboration with the Italian Red Cross, intended for Management and covering evaluation specialized first-aid courses for training all meetings, and “From Intuition to Execution”, emergency team members. intended for about 70 category 2 clerical staff members and new university graduates inserted The primary training interventions of a technical/ in the company development plan (the last specialized nature were related to the creation editions will take place in 2018). and startup of the new SRU3 sulphur recovery plant (page 41). In particular, this involved
STAFF DEVELOPMENT
Description Hours
Young population Training for new employees 1,216
Adapt skills in line with the changes Managerial ability in business and strengthen 2,773 Enhancement skills managerial skills core business and requalification Development of pathways Requalification 2,434 to new roles and professional
Training on the safety culture, emergency management, and use of Safety 14,245 all fire extinguishing systems
Total hours 20,668
In percentage terms, 47% of the training hours was for workers, 43% for clerical staff, 8% for middle managers, and 2% for managers.
TRAINING HOURS (average hours per employee)
2015 2016 2017 For us, training is also a dynamic part of our dialogue with the community. Our activity with the education world is very intense and includes the organization of school visits and the promotion of apprenticeships and university scholarships (see 25 28 33 par. Education, training, and community, page 85).
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2.7 STAFF SELECTION
A company like ours, that performs a strategic The selection path includes the following phases: and complex activity, requires not only technical knowledge but also relationship skills and I. Analysis of CVs received. team spirit, which only emerge after in-depth Candidates can send their CV via the website evaluations. www.raffineriadimilazzo.it, on the page “Work with us”; To achieve this in relation to the organizational II. The candidate psychological-aptitude needs that emerge gradually, we have a structured assessment collects in-depth information on selection process. their profile as well as their expectations and motivations; III. Our staff holds a technical meeting with the suitable applicants, with a final choice being made from among the best candidates.
Our business, which is part of the Italian and international refining system for the manufacturing of fuels primarily requires engineering graduates (particularly chemical and mechanical) and those with technical diplomas in the industrial sector.
36 | 2017 Sustainability Report 2.7.1 25 YEARS AT RAM: A SURPRISE FOR THOSE CELEBRATING
This year there were many employees, 52, that Bearing this in mind for the 25-year anniversary have reached the milestone of 25 years of work at party, we decided to put together something fun RAM. and entertaining for them, their families, and the Besides being numerous, the group of 52 other employees at the ceremony. In fact, the employees is very close-knit and cohesive because celebrants were involved in the preparation of they shared not only their work but also are close small choral groups and one large one. The level friends who share social occasions. of participation, involvement, and fun experienced by the celebrating employees at this true surprise party demonstrated how much our people are able to join in and be a team. The work and commitments that we carry forward together on a daily basis are based on technical skills and, especially, on attention to health and 25 safety, but it is during social moments like these YEARS that our sense of belonging becomes even more tangible.
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2.8 INNOVATION BECOMES SUBSTANTIAL: PRODUCTION CYCLE AND PRODUCTS
Our production cycle has the complexity needed Manufacturing takes place in a series of stages. In to create products such as fuels for aeronautics, the first step, the lighter hydrocarbons, which are transport, and domestic heating by transforming lower in specific density, are separated from the crude oil from all over the world (see paragraph heavy ones, which are then chemically “broken” “Crude oil origin”, page 45). and recombined through advanced technologies, creating other products. All of our main products - LPG, naphtha, petrol, Jet Fuel, and diesel - and secondary products With our technology, we are able to transform - sulphur and fuel oil - are produced according approximately 90% of the crude oil into products to legal specifications, with increasingly strict required by the market, like petrol and diesel, parameters from the environmental point of view, obtaining a heavy product, such as fuel oil from the which pose growing economic and sustainability remaining 10%. challenges.
38 | 2017 Sustainability Report OUR PRODUCTS: PRIMARY USES
LPG Primarily for domestic, industrial, and agricultural use, is employed as a fuel for motors, for heating, and the production of heat.
Petrol Gasoline Commonly used as a fuel for internal combustion engines. Proplene Primarily used in the production of polymers and plastics as well as other chemical compounds.
Jet Fuel Used as an aeronautic fuel for reaction engines.
Diesel Used to fuel diesel engines. Specific diesel for ships is part of the same family. Fuel oil Used as a fuel for thermo-electric plants.
Sulphur Marketed in both the liquid and solid form, it is used in many industrial processes and in agriculture as fertilizer.
39 2 RAM: a strategic plant, a long-term approach
The degree of innovation that we have achieved In 2017, the new SRU3 sulphur plant with the allows us to refine a wide range of crude oils, OGA2 and SWS3 auxiliaries was added to the including those with the most complex processes, production cycle (see the box on the following page providing a significant economic advantage. “New SRU3 Sulphur Recovery unit”). These new plants have improved the treatment system for sulphur compounds with a reduction in this type of
emissions (SO2).
SAFETY PERFORMANCE - CREATION OF NEW SRU3-OGA2-SWS3 PLANTS Between March 2015 and September 2017, This complex project required concentration, an average of 80 workers per day from teamwork, and maximum compliance with the suppliers were involved in the creation of standards protecting health and safety, as well the new SRU3-OGA2-SWS3 plants. as the environment. To ensure this high quality of work, we have promoted training and awareness As part of the internal safety management initiatives, advocating a culture of safety to go system, 21 workers were awarded for along with the work involved in the project. good conduct. From the production point of view, 2017 was a record year in terms of the total volume of Thanks to the careful and constant finished products shipped, which equalled 10.1 commitment of all parties involved, the metric tonnes. We did this while maintaining high work ended with us achieving our goal of environmental standards, which are reflected in “zero accidents”. a reduction in emissions (see paragraph Air on page 60).
40 | 2017 Sustainability Report NEW SRU3 SULPHUR RECOVERY UNIT The new SRU3 Sulphur Recovery Unit, with the related Amine Regeneration and Sour Water Stripping auxiliary units (Amine Regeneration 2 - OGA2 and Sour Water Stripper 3 - SWS3 respectively), was started up in September 2017. Created in complete alignment with the industry BAT, the new plants enhanced the treatment system for process currents rich in Sulphur compounds in the pre-existing Sulphur Recovery 1 and 2 units (SRU1 and SRU2) and related auxiliaries (Amine Regeneration 1 - OGA1 and Sour Water Stripper 1 and 2 - SWS1 and SWS2). The new SRU3, OGA2, and SWS3 units increase the flexibility and continuity of the treatment systems, allowing both the current management of the existing units and their “Down” period, which is understood as the plant downtime for scheduled Maintenance in full compliance with the requirements in the current authorization (Decree VIA DVA DEC-2011- 0000255 of 16 May 2011). This Decree guarantees an overall _99% yield from Sulphur recovery plants. These plants fall within the framework of the changes aimed at maintaining high standards of flexibility and environmental protection.
41 2 RAM: a strategic plant, a long-term approach
There was an 18% increase in production compared Of the product that is shipped over land, 61% was to 2016, which was due, in particular, to greater shipped using tanker trucks (95% delivered in production of diesel. 90% of the products were Sicily) with the remaining 39%, represented by fuel shipped by sea and the rest over land. oil, being shipped through oil pipes to the nearby thermoelectric plant in San Filippo del Mela.
INDUSTRY 4.0 AND RAM “Industry 4.0” refers to a technologically advanced production model that is based on connecting the machines to the network, the analysis and use of data as a tool for creating value, and the man-machine interaction for more flexible and efficient management of the production cycle. In short, it is a digitalization process of the manufacturing sector that, by renewing the value chain, changes the work method as well as the very nature of the organizations. The Italian Ministry for Economic Development has prepared a National Industrial Plan 4.0 to promote increasingly “digitalized” industrial models. RAM falls fully under this plan and applies its own Industry 4.0 standards, creating projects that are highly technological and in compliance with the standards. Their operation is controlled by computerized systems or managed through sensors and digital drives. In particular, these projects include: the SRU3 Sulphur Recovery Unit with the related OGA2 and SWS03 auxiliary units (“New SRU3 Sulphur Recovery Unit” on page 41), the adjustment of Topping3 (see box “Increasing the performance of the Topping3 kilns and Vacuum is good for the environment” on page 65), and the new loading platform for the diesel and jetA1 (aeronautics fuel) tanker trucks.
42 | 2017 Sustainability Report SIMPLIFIED FLOW CHART Petrol production cycle
Primary distillation plan
Diesel production cycle Topping
More information and a description of the individual plants are available at www.raffineriadimilazzo.it “The Plant”, section, which also provides an interactive map that describes the various processing phases.
43 2 RAM: a strategic plant, a long-term approach
PRIMARY DESTINATION PORTS FOR RAM PRODUCTS
11% Port Marghera 13% 13% 11% 76% Livorno Non-EU EU Italy 24% Naples
RAW MATERIALS USED (data in millions of metric tonnes)
2015 2016 2017
Crude oil 8.7 8.7 10.6
Semi-processed products 0.8 0.5 0.3
Other products needed for the refining process 0.2 0.1 0.1
TOTAL 9.7 9.4 11.0
44 | 2017 Sustainability Report ORIGIN OF THE CRUDE OIL
Canada Norway Azerbaijan Russia 0,2% USA 3% 28% 18% 2% Italy 4%
Iran Mexico Algeria 14% 2% 4% Kuwait Egypt Turkmenistan 10% Libya0,4% Iraq 2% 8% 4%
45 2 RAM: a strategic plant, a long-term approach
2.9 THE PORT, A STRATEGIC ASSET
Considering that 90% of RAM products are Thanks to the fees paid by the ships entering the transported by sea, port logistics play a key role in Refinery, the Messina Port Authority collects the life of the company as does the Port of Milazzo more than Euro 12 million per year. We pay and the Messina-Milazzo Port Authority. approximately Euro 388 thousand per year in state fees. Plus, in 2017 alone, the VAT revenue due for There were 665 ships that were moored to the the import via sea of crude oil and semi-processed Refinery piers, generating merchandise traffic products from countries outside the European of about 20 million metric tonnes of crude Union was Euro 801 million. oil, refined products, and liquefied gases, an increase compared to 2016 due to the increase The Port is therefore a strategic asset for our in processes. In 2016, our volumes represented business, but it is also thanks to RAM that it 73% of the total amount handled in the ports becomes an added value for the city, local business, of Messina, Milazzo, and Lipari, which are and all those who carry out connected production those pertaining to the Messina-Milazzo Port activities (see the graph below “Activities generated Authority. This year, considering the increase in by logistics”). the amounts processed, it is plausible that the percentage is growing.
46 | 2017 Sustainability Report Milazzo Helmsmen Milazzo Boatmen Escape route Fire Extinguisher Tugboats Maritime information service Maritime agency
ACTIVITIES GENERATED BY NAVAL LOGISTICS
Car rental service Waste disposal Hotels Chemical Other suppliers Certification of merchandise services and services Customs agent
We contributed to improvements and innovations near the seaport and the RAM piers. in the management of the activities at the Port of The Port of Milazzo was, therefore, the first in Milazzo by introducing the innovative software for Italy to have computerized the management of “Integrated Port Handling”. port operations with tangible benefits in terms of This supports the Messina Port Authority in the quick operations and the safety of the plants, ships, rationalization and integration of the flow of people, and environment. information needed to carry out the port activities
47 2 RAM: a strategic plant, a long-term approach
DIGITAL TRANSFORMATION, OUR POINT OF VIEW For us, technology is an opportunity that The second area where Digital Transformation allows us to improve the way we manage and principles and advantages are applied is safety control information. This is why the path we with the introduction of the SafeWork application chose to take in 2017, which we will continue for managing work permits and gas certificates to follow in the upcoming years, is the inside the facility. To measure the data related to integration between different measurement the gas measurement in particular, workers are systems, with the purpose being to optimize equipped with explosion-proof smartphones with how we manage production and internal an APP installed that allows them to run the test, resources at the Refinery. enter the data, digitally sign the gas certificate and send it to the server to be printed. The first Digital Transformation project that we would like to mention is related The third application area is related to supplier to logistics, with the “Integrated Port relations with the introduction of a new portal Handling” software aimed at rationalizing and (see box “The new online portal for suppliers”, integration the information flow in managing page 95) that allows continuous and completely the port activities for ships that perform digitalized communication with associated loading and loading at the Milazzo piers. companies. In this manner, whoever works with This project was also related to the public us always knows their administrative position service piers and created benefits in terms of (documents to be updated and necessary organization even for the transport companies permits), the procedures in progress, and the that manage traffic to and from the Eolie performance of projects. Islands, a source of work for the area thanks to their tourism.
48 | 2017 Sustainability Report Handling via sea of incoming petroleum products (mainly crude oil) and outgoing ones (primarily THE MESSINA PORT AUTHORITY petrol and diesel) takes place through the - Messina and Milazzo Port System - Has maritime terminal made up of 2 piers. jurisdiction over the two RAM piers.
» PIER 1 » LOADING 470 m long and 30 m wide LPG, petrol, diesel, jet fuel. 2 mooring points Docking of ships with a gross capacity of up to 104,000 metric tonnes.
» PIER 2 » LOADING » UNLOADING 650 m long and 30 m wide Propylene, LPG, petrol, Crude oil, semi- diesel, jet fuel, fuel oil. processed products. 6 mooring points Docking of ships with a gross capacity of 240,000 metric tonnes and maximum ship dimensions used for intercontinental transport.
STEAM RECOVERY SYSTEMS TO CONTAIN EMISSIONS FROM SHIPS During loading at the piers, the tanks on the ships are connected to the VRU1 and VRU2 plants. These abbreviations indicate the hydrocarbon steam recovery units for refineries and warehouses. Thanks to these plants, which recover the light components from the ships that could otherwise be dispersed during loading, atmospheric emissions are significantly reduced, as required by current laws. In order to enhance, improve environmental performance in terms of diffuse emissions, and increase the flexibility and continuity of the existing systems, we have the creation of the VRU3. Unfortunately, the prolonging of the authorization process associated with the comprehensive review of the AIA has not yet allowed us to install it.
49 50 | 2017 Sustainability Report 3 THE ENVIRONMENT, A PRIORITY WITHOUT COMPROMISES
3.1 RAM, health and community 52 3.1.1 Legal limits 54 3.1.2 Investments for the environment 55 3.2 Environmental monitoring and control 57 3.3 The most important environmental projects 58 3.3.1 Monitoring odours 58 3.4 Air 60 3.5 Greenhouse gases 61 3.6 Water 62 3.7 Energy 64 3.7.1 The thermo-electric plant 66 3.8 Waste 67
51 3 The environment, a priority without compromises
3.1 RAM, HEALTH AND COMMUNITY
The presence of a petroleum facility like ours issues or deviates from what is detected in other attracts particular concerns from the local urban, industrial, and non-industrial areas in Italy community to questions connected to the impact or Europe. This conclusion is also substantially on human health. reflected in a similar investigation carried out by We share these apprehensions and that is the the World Health Organization Regional Office for primary reason for our many investments in the Europe research and development of the best technologies that increasingly reduce the plant’s impact on the It is important that epidemiological studies are environment and the community. updated and current. In fact, dated studies would The topic of emissions and the protection of health take into consideration environmental conditions is a delicate topic that we face, as is fitting, with and sanitary events that are not reflected in scientific precision. The SENTIERI study provides the present circumstances. The “time” factor us with a more accurate comprehensive view of the must be carefully considered when interpreting health status of the population of Milazzo through epidemiological data, given that many chronic data collection and analysis methods. illnesses that can be linked to environmental Based on this study (see box “The SENTIERI factors are manifested clinically many years and study”, page 53), there are no indications that the decades after the beginning of exposure to harmful health profile of the population living in the Valle chemical agents. del Mela area presents any particularly critical
52 | 2017 Sustainability Report Nor can prevention activities be based on At the same time, in accordance with the health epidemiological studies of old data as they offer data from the SENTIERI and WHO studies, we a snapshot of historic circumstances that have can see that in recent years, monitoring of the air nothing to do with recent environmental conditions quality in the Milazzo area showed no particular evaluated with a view towards possible mitigation critical issues4. To demonstrate that, all we need to measures. do is compare the Milazzo data with the air quality parameters in the major Italian cities collected in a recent Legambiente Report (2018).
THE SENTIERI STUDY The most reliable and up-to-date study on the health of the population in the Milazzo was conducted as part of the SENTIERI national project. This is a national epidemiological study of the area and settlements exposed to risk from pollution, coordinated by the Italian Institute of Health with the participation of many Italian universities and scientific institutions and qualified researchers. This investigation, updated to 2014, took into consideration 63 causes of death/illness in the Valle del Mela area. The study used an identical metric to analyze the epidemiological profile of Milazzo and other Italian areas that are home to industrial sites such as Taranto, Venezia Porto Marghera, and Porto Torres. The data from the study show no significant critical health issues in the Milazzo area. As reported on page 108 of the SENTIERI study: “The general mortality observed in men is lower than the expected values, and does not differ for women.” “In both genders, the total incidence of tumours, excluding skin tumours, does not differ from the expected values.” “In both genders, the number of hospital stays for all causes does not different from expected values.” From the SENTIERI results we can deduce that there is an absence of excess mortality due to neoplastic diseases concerning the digestive system (stomach, colon-rectum) and the respiratory system (trachea, bronchi, lungs), as well as the absence of excess mortality due to non-neoplastic diseases in adults. Similarly, the SENTIERI results lead to the exclusion of excess mortality due to types of neoplastic diseases (e.g., bladder tumours or tumours of the lymphohematopoietic system) which are sometimes connected to chemical agents related to petroleum refining processes, such as benzine or polycyclic aromatic hydrocarbons. Therefore, the most recent epidemiological data contrast with the view of some that there would be significant critical health issues in the Valle del Mela area.
4) Sources: SENTIERI study (SENTIERI is an acronym of Studio Epidemiologico Nazionale dei Territori e degli Insediamenti Esposti al Rischio da Inquinamento or National Epidemiologic Study of the Territories and Settlements Exposed to Risk of Pollution), 2014; Review of studies “Human Health in Areas with Industrial Contamination” - World Health Organization Regional Office for Europe, 2014.
53 3 The environment, a priority without compromises
3.1.1
LEGAL LIMITS THE MEDICAL PROTOCOL FOR PROTECTING HEALTH For some, pollution must be considered harmful RAM continuously protects the health of even when emissions and the concentrations of its employees in relation to professional pollutants are maintained below legal limits. risks and the work environment, That compliance with legal limits is not, in itself, following a strict medical protocol an absolute guarantee that can exclude negative defined by the Company Physician. Our impacts on public health and is obvious and Medical Protocol calls for all workers applicable to any situation, production facility, to have periodic physical examinations, or lifestyle that consists of a certain level of specific checkups, and blood tests to theoretical risk. This is the reason why, in the field verify their suitability for the role. of toxicological risks, the limits of exposure to pollutants are set with extremely prudent criteria In 2017, a total of 589 workers (383 and set at doses that are tens or hundreds of shift-workers and 206 day-workers) times below the values that produce undesired were subject to a physical examination effects in the more vulnerable members of the in application of the Medical Protocol exposed population. and Italian Legislative Decree 81/2008. Since no study appears to have been conducted, it is The results of the physical examinations also not clear to what extent the drastic reduction in showed the absence of illnesses linked emissions would reduce the burden of atmospheric to the work activities performed by the pollutants at the local level. No risk and impact individuals. analyses were carried out either to determine if and how much any drastic reductions would affect Our facility has a first aid station with the quality of the air and the state of health of the specialized medical staff to ensure population. The reference to the "precautionary service 12 hours per day on-site and principle" made by some is absolutely acceptable. availability during the remaining hours If applied within the context of health prevention of the day and on holidays. policies, this principle requires prior identification and quantification of specific risk factors. This step is essential to ensure that the planned mitigation measures are effectively aimed at countering greater risks, rather than marginal or non-existent risks, thus avoiding the risk of unreasonable interventions that often involve high economic and social costs.
54 | 2017 Sustainability Report 3.1.2 INVESTMENTS FOR THE ENVIRONMENT
Attention for environmental performance is in In 2017, the environmental results continued to be our DNA as it is an integral part of the agreement decidedly positive, continuing RAM’s trend even signed with our shareholders at the time the joint with, or perhaps despite, the major increase in venture was created. processing that was recorded during the last fiscal Our point of reference is the Integrated year. Environmental Authorization (IEA) issued by In 2017, investments in projects aimed at the Ministry of the Environment that establishes, innovation and improvement of our environmental among other things, the maximum emission performance were approximately Euro 61.3 million, limits of the Refinery. Essentially, the IEA 7% more than in 2016. Of these investments, Euro established what RAM can and cannot do from the 35 million were related to specific projects for environmental point of view. environmental protection, an amount greater than what was spent in 2016 but also equal to almost 50% of the overall RAM investments in 2017.
55 3 The environment, a priority without compromises
AMOUNT FOR IMPROVEMENT INTERVENTIONS REGARDING THE ENVIRONMENT (amount in millions of Euros)
2015 2016 2017 The current expenses for the sectors (air, water, waste), which amounted to Euro 22.3 million, must be added to the investments for environmental improvement interventions. 45.3 32.3 35 mln mln mln
IEA The Integrated Environmental Authorization issued by the Ministry of the Environment is the provision that authorizes the operation and conditions of an installation, guaranteeing compliance with the requirements set forth in the current regulations.
PROJECT “ZERO” FUEL OIL We are evaluating the opportunity to Increasing its production will further improve our production cycle and our increase the reliability of internal environmental performance, adopting a self-production. new and advanced production cycle for the conversion of liquid fuel. This will allow a significant reduction in emissions in places where fuel oil is The goal of the project is the zero the used and eco-compatible energy self- production of fuel oil, or the heavy residue production. The project is developed of the crude oil. Fuel oil will be treated to with the assumption of a progressive be transformed into clean gas (hydrogen). reduction in the consumption of fuel oil Hydrogen is widely used in the refinery in the global market. processing cycle.
56 | 2017 Sustainability Report 3.2 ENVIRONMENTAL MONITORING AND CONTROL
Besides being regulated by the Integrated The review is initiated when the authorization Environmental Authorization (IEA), our activity is expires (a period of 12 years if in possession of inspired by and adopts the BAT. certifications, as is the case for us) or, as in the current case, following publication of new BAT. The IEA and the BAT are two system that operate together. In fact, obtaining Authorization is only On the date this document was printed, the IEA possible with identification and adoption of the review had not yet been completed. Best Available Technology. We are, also, subject to periodic controls by ARPA The standards regarding the IEA calls for Messina, the public agency that takes care of the overall and integrated evaluation of the prevention and environmental protection. During environment impact of the plant, which impacts 2017, ARPA performed several inspections at our the adaptation of the plant itself regarding the Refinery related to: defined standards, with the subsequent necessary • IEA conformity; investments. This is a balance with a delicate • Functionality of flue emission monitoring aspect for the life of a plant because all projects systems; that impact the environment, even positively, are • Functionality of systems for treating discharge subject to Authorization. substances (wastewater) and sea discharges; • Assessment of interstitial gas sampling in the While drafting the 2017 Sustainability Report, the context of the implementation of the Soil Gas IEA review by the Ministry of the Environment Monitoring Protocol; is also under way. The review was initiated for • Sampling the groundwater; RAM, as for other Italian refineries, following the • Air quality monitoring system. publication in October 2014 of the “Conclusions” that make up the compendium of updated Overall, ARPA performed 15 inspections, including technologies that apply to refinery plants and the ordinary check of implementation of the processes. As part of this review, RAM proposed Integrated Environment Authorization, which certain technological improvements in applying was performed jointly by ARPA and ISPRA during the “BAT Conclusions” such as, for example, August 2017 and which found no nonconformities. the new VRU3 steam recovery system, whose implementation has been stopped, however, due to a prolongation of the investigation path.
57 3 The environment, a priority without compromises
3.3 THE MOST IMPORTANT ENVIRONMENTAL PROJECTS
The investments we implement are mainly intended and legislative go-ahead from the Ministry. One of for the development of projects whose scope is the these was the project to cover the water treatment improvement of performance in the facility in plant tanks (in the paragraph Integration with the terms of emissions. community and environmental investments: a In particular, certain projects were initiated which commitment that renews itself, page 26, there is a will have a positive impact on the environment list of the most important environmental projects and that were waiting quite a while for regulatory in 2017 presented in this report).
3.3.1 MONITORING ODOURS
We implement continuous monitoring of the the control organizations, we have begun an odours produced by the Refinery, which includes experimental network of electronic noses for the identification of potential sources, definition odour monitoring. For the development of the and implementation of a periodic audit programme project, we collaborated with a Dutch company that by selected and trained staff, and activation of created projects in some port and industrial areas mitigation measures. We would like to be even such as Rotterdam and Amsterdam. more active in this area. That is why, along with
58 | 2017 Sustainability Report NEW TECHNOLOGY FOR ODOUR REDUCTION As part of the programmed investments of the Milazzo Refinery, a project for covering the API tanks at the water treatment plants (TAP and TAX) was initiated. The API tanks are special devices for the treatment of oily water, including discharge water from refineries, also called API separators. The name comes from the American Petroleum Institute, that first defined the standard design characteristics. The oil separates from the water by gravity, using the difference in specific weight of the two fluids. VOC are volatile organic compounds that originate from the evaporation of hydrocarbons during processing. The goal of the tank cover project is to reduce diffuse emissions of the related VOC. The project, which was developed and authorized in 2017, is currently in the implementation phase and is expected to be completed during 2018. It is aligned with the BAT that apply to treatment plants for discharge water from refineries and is aimed at improving environmental performance.
59 3 The environment, a priority without compromises
3.4 COMPARISON OF EMISSIONS DATA FOR PRIMARY COMPOUNDS AIR (data in metric tonnes) IEA limit = 2,547
We implement strict and continuous monitoring of 1,673 1,659 atmospheric emissions for the primary parameters 1,467
such as nitrogen oxide (NOX), sulphur oxide (SO2), carbon monoxide (CO), and dust (PM). We also NOx regularly monitor the emissions of volatile organic 2015 2016 2017 compounds (VOC) coming from the plants, storage, and product loading systems (the emissions increased in absolute numbers but, compared to IEA limit = 9,623 the they are decreasing).
Our point of reference is represented by the limits set by the Integrated Environmental Authority (IEA) 3,065 2,862 2,330 both on the concentrations of compounds emitted as well as the total annual quantity emitted in terms SO 2 2015 2016 2017 of mass flow (limited to NOX, SO2, PM, and CO).
The mass flows recorded during the year show a constant improvement in almost all indicators, IEA limit = 251 with values that are significantly lower than the limits set by the IEA, which are, for us, the return on investment we were striving for and that we expected. 77 37 35 PM 2015 2016 2017
RATIO OF EMISSIONS TO QUANTITY PROCESSED (grams/tonnes) IEA limit = 1,259
2016 2017 682 512 567
CO 2015 2016 2017 NOx 176 133 -24%
IEA limit = Not set
1,138 1,090 1,085 SO2 326 212 -35%
COV 2015 2016 2017
IEA limit in force on December 2017 60 | 2017 Sustainability Report RAM values 3.5 GREENHOUSE GASES
We follow the European “Emissions Trading” The intensity of the direct emission of greenhouse system to monitor greenhouse gas emissions. This gases related to production in 2017 is equal to 0.186 is a greenhouse gas emissions trading scheme kg of CO2 e per tonne processed. In this case, the (GHG) in the European Union, aimed at promoting data increased compared to the previous year for the reduction of these emissions according to the two reasons: the inclusion of data. The volume of criteria and guidelines in the Kyoto Protocol, which greenhouse gas emitted by the Refinery expressed will have a global impact. in metric tonnes of CO2 equivalent is subject to certification by specialized external organizations.
THE NEW SCRUBBER COLUMN IMPROVES FUEL QUALITY At the Refinery, we mainly use self-produced gas to meet our energy needs. The installation of a new scrubber column is planned. This column will work on all of the gas self-produced by RAM. The gas will be “scrubbed” of Sulphur oxides (SO2) and transformed to assimilate it with natural gas, creating a further reduction in environmental impact.
The intensity of the direct emission of greenhouse Servizi Milazzo Srl HMU2 plant, not included in the gases related to production in 2017 is equal to previous Sustainability Report, and the subsequent
0.186 kg of CO2 e per tonne processed. In this case, and significant increase in production registered in the data increased compared to the previous year 2017. for two reasons: the inclusion of data from the
CO2 direct emissions (millions of metric tonnes) 2015 2016 2017
1.86 1.83 mln mln 2.03 mln
61 3 The environment, a priority without compromises
3.6 WATER
Water, an important material for our production In 2017 we benefited from the positive effects of process, is used at the Refinery to cool the plants, revamping the water treatment plant (TAP), an supply the fire extinguishing system, and to investment made in 2016, thanks to which today produced demineralized water to be used for the we recycle and reuse a large quantity of water, production of steam. The latter is also used as equal to 2,628,698 cubic metres, which is 8% more an energy vector for the production of electricity compared to the previous year, in relation to the or to heat the process fluids and for renewing the greater amount of crude oil processed. equipment before maintenance is performed.
Systematic controls performed on the groundwater are performed using the tight network of piezometers in the Refinery with THE TAP sampling also performed in the presence of ARPA, the auditing body. Besides the quality of the The Water Treatment Plant groundwater, which is raw material for us, we are is made up of a pretreatment also concerned with optimizing consumption and section, a chemical-physical maximizing water recovery within the production treatment, and a biological cycle. treatment to refine the quality of the purified water. We have always maintained a balance in The revamping optimized the procurement of sources, which include: purification capacity of the • A network of wells created to provide water for plant, allowing greater water industrial use at the plants; re-use. • A second network of wells whose primary purpose is to create a water barrier to protect the groundwater, recovery quality water for the production cycle; • Withdrawal from the sea (only in the event of an emergency for fire extinguishing purposes); The discharge water, along with rainwater and • Withdrawal of demineralized water and steam washing water, are purified by a biological system, from Termica Milazzo. which uses natural biofauna (bacteria) which feed on the substances to be purified. Another source of water procurement is the municipal aqueduct used only and exclusively for hygiene-sanitary use.
62 | 2017 Sustainability Report QUANTITIES OF WATER PROCURED (in m3)
13% 13% 13%
2015 2016 2017 8,386,411 50% 8,234,248 46% 8,920,898 49% TOTAL WATER TOTAL WATER TOTAL WATER WITHDRAWN WITHDRAWN WITHDRAWN 31% 35% 31%
7% 7% 7%
WELL WATER OTHER INPUT WATER BARRIER WATER WATER PURCHASED FROM TERMICA MILAZZO (WATER AND STEAM)
Water released into the sea was equal to 5,486,755 chemically, of the organic and inorganic compounds cubic metres. The amount of oxygen needed for present in a sample of water is indicated by two the complete oxidation, both biochemically and parameters (BOD and COD).
SEA DISCHARGE ANALYSIS (concentration of primary reference parameters in mg/l)
IEA limit = 40 IEA limit = 160 IEA limit = 80 IEA limit = 5
100.35
48.29 42.28 17.50 19.41 13.86 15.61 15.72 15.56 0.13 0.03 0.05 BOD COD SST Hydrocarbons 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
IEA limit Italian Legislative Decree 152/06 Reference parameters (mg/l)
From the data shown in the table, we can demonstrate how the values are clearly lower than the limits set in the legislation.
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3.7 ENERGY
The Refinery consumes a consistent quantity of It is only possible to save energy if we implement energy and is a so-called energy-intensive plant. a systematic approach that provides for However, we have set a goal to reach increasingly constant verifications of consumption trends greater energy efficiency. and identification of areas where intervention is needed. In recent years resources have been channelled to modernize the plants and optimize the energy consumption that make up 30% of the total operating costs of refining. MORE ENERGY AUTONOMY WITH THE TURBOEXPANDER Our energy autonomy was consolidated in an eco- compatible manner in 2016 with the implementation of the Turboexpander, which produces electricity using the gas generated by the production process. With the contribution of our thermo-electric plant and the support of the Turboexpander, in 2017 we reached a good level of autonomy, equal to 47% of the average electricity requirement.
In 2017, purchased energy increased, however, due In return, the energy produced by Termica Milazzo, to the increase in processing, yet remained below which manages a natural gas electrical power the levels reached in 2015, the year before the station, went to support the energy availability for Turboexpander was implemented. the entire Region of Sicily. The energy transferred to the National Electrical Network in 2017 was Our Energy Management System is based on UNI 969,060,000 KWh, about 6% of the regional EN ISO 50001 certification. This standard specifies requirement. the requirements to create, initialize, maintain, and improve an energy management system, with the goal being to implement a systematic approach and improve energy performance.
64 | 2017 Sustainability Report INCREASING TOPPING3 KILNS AND VACUUM PERFORMANCE IS GOOD FOR THE ENVIRONMENT We adapted the Topping3 kilns and Vacuum to the BAT. In particular, overall energy efficiency was increased, and the use of fuel oil was reduced and even completely eliminated for the Topping3. In the modern kilns, ventilators and a system for recovering the heat contained in combustion gases and burners at low emission of nitrogen oxides (NOX) were installed.
ENERGY CONSUMPTION AT THE REFINERY
23.6% Energy purchased from outside
76.4% Energy produced by RAM (including the amount of renewable energy produced by the photovoltaic system)
We consumed almost 30 million GigaJoules The work to be done for energy self-sufficiency (GJ) of energy, 22.8 million (or 76.4%) of which requires further, very complex projects that we we produced ourselves (see the details about have in the pipeline, but we can state that we are the energy sources in the paragraph: Primary on the right path. sustainability indicators, page 103).
65 3 The environment, a priority without compromises
3.7.1 THE THERMO-ELECTRIC PLANT
The Termica Milazzo thermo-electric plant, 100% turbine through the expansion of the hot gases controlled by Ram and authorized to operate at created by the combustion of natural gas. In the a power of 365 MWt, produces electricity and second cycle, mechanical energy is obtained from technological steam conferred to the National a turbine supplied by the steam produced by the Electricity Grid and the Refinery itself. heat recovery boiler, which uses the gases coming from the turbogas unit as a heat source. Since it is a combined cycle cogeneration plant, supplied by natural gas, it allows high-yield The combined cycle and cogeneration allows a electricity production. The steam used to produce greater use of energy from the fuel and therefore electricity is also used for the technological a greater overall energy return compared to processes in the plant and for heating. traditional thermo-electric systems.
The combined cycle transforms the thermal An important aspect from the environmental point energy of the natural gas into mechanical energy of view is the presence of a desalinator, which using two cascading thermal cycles. In the first allows the production of industrial water using cycle, mechanical energy is obtained from the gas seawater.
66 | 2017 Sustainability Report 3.8 WASTE
The various activities that make up daily life at The waste produced from the Refinery’s activities the Refinery - process phases, maintenance, and is disposed of in the most suitable sites based operation of auxiliary services - produce various on the type of material and in relation to what is types of waste, from purification sludge resulting established in the Waste Tracking Control System from the treatment of wastewater to residues (SISTRI). As for all of our activities, we have drawn from cleaning the tanks, waste produced from up the necessary procedures and tested the maintenance operations on the systems, or from efficiency of the interventions, which provide for excavation work to create new plants. monitoring and checks. In the particular case of waste, we collaborate with outside organizations whose task is to verify conformity with the standards and their correct application.
Waste produced Recovered Intended (metric tonnes) or recycled for the landfill Total quantity Hazardous Waste not (metric tonnes) (metric tonnes) waste produced waste hazardous waste produced produced
2017 20,062 13,174 6,887 11,240 8,822
2016 26,322 12,564 13,758 15,071 11,251
2015 56,231 12,752 43,479 38,899 17,332
The data collected in 2017 confirm the decrease in the amount of waste produced by RAM, especially SISTRI is a computer system that non-hazardous waste. checks the traceability of waste implemented by the Ministry We pay particular attention to recycling, as is of the Environment to allow becoming even more common for domestic waste, computerization of the entire supply adopting practices that allow increases in the chain of special waste on the national amount of waste recovered. level. The System is finalized at simplifying the procedures and The recovery primarily involves materials from obligations connected with waste excavation, catalysers, and used oils. In 2017, the management. SISTRI is managed amount of waste recovered was 56%. by the Carabinieri Unit for the Protection of the Environment.
67 68 | 2017 Sustainability Report 4 SAFETY, OUR GUIDING LIGHT
4.1 Our goal is always “zero accidents” 70 4.1.1 Investments for safety 71 4.1.2 Training for managing emergencies 72 4.2 Initiatives for safety 74 4.2.1 Safe roads campaign 75 4.2.2 The torch, an effective safety system 76 4.3 Maintenance 77 4.3.1 Maintenance, Environment, and Safety 78
69 4 Safety, our guiding light
4.1 OUR GOAL IS ALWAYS “ZERO ACCIDENTS”
After 6 years without accidents, there was a fire The episode, that the Regional Technical detected inside the Refinery in mid-December Committee of the National Corps of Firefighters 2017, which was promptly extinguished by the excluded from classification as a significant Internal Emergency Team. This incident involved incident, led us to further reflections on safety, three people, two being employees of associated stimulating the company, employees, and owners companies who were injured and required medical of associated companies to renew their personal treatment. and professional commitment to achieving the goal of “zero accidents”, as we did for the previous 6 years.
SAFETY PACT The first major and concrete act was having everyone, including RAM and employers of associated companies, sign a Safety Pact at the beginning of 2018. We also initiated audits on work permits for associated companies that work inside the facility. And last but not least, we perform audits regarding compliance with safety standards, which impact the performance index of associated companies, and will increase supervision and checks in the field.
We are certain that the “zero accidents” goal is We want to continue to be a leader in the safety possible, as proven by our past record without field and that requires cohesion and team spirit. accidents, because we are committed to analysing Improvement is the result of collective effort risks and we adopt adequate prevention measures, that must also involve the associated companies but also because we keep our employees involved, operating at the Refinery as alongside of us they requirement maximum attention to be paid to perform work with a high risk of accidents (such safety aspects and strictly following the rules. as instrumental, mechanical, construction, and electrical work). Our goal is to minimize human error and implement mutual control mechanisms between the staff working at the Refinery. If we all know and TOOLS FOR SAFETY apply the safety rules, our colleagues will apply them as well, for our own safety and for the safety • SGS of others and the facilities. • Continuous training • Awareness campaigns • Safety pact
70 | 2017 Sustainability Report 4.1.1 INVESTMENTS FOR SAFETY
After years of intense investments for safety we year, was concentrated on maintaining those levels. have reached the high standards that we wish to To these investments we must add the current apply to our Refinery. Our investment during 2017 safety expenses of Euro 8.1 million. of Euro 6.1 million, a decrease from the previous
AMOUNT FOR IMPROVEMENT INTERVENTIONS REGARDING SAFETY (amount in millions of Euros) 2015 2016 2017
16.8 17.1 6.1 mln mln mln
INVESTMENTS IN SAFETY FOR ALL PROCESS SYSTEMS To work concretely on continuous improvement in safety and minimizing risks, we perform a HAZOP (HAZard and OPerability) Review every five years for all process systems. The HAZOP analysis is conducted in compliance with international standards and is performed by an external organization that identifies improvement and evolutionary interventions, classifying them based on the analysis of the causes, consequences, protections, and associated level of risk. RAM responds to this by planning the implementation of the identified interventions in order to improve safety and operability. It costs approximately Euro 100 thousand per year to perform these studies and the implementation of the interventions requires investments of Euro 650 thousand per year.
71 4 Safety, our guiding light
4.1.2 TRAINING FOR EMERGENCY MANAGEMENT
Preparation and reactiveness are essential in In the event of an emergency, the Emergency Team managing emergencies in a facility like ours and, made up of the Internal Firefighting Team and the therefore, adequate training is necessary. For this plant operating staff is set up under the coordination reason, all of our staff are subject to a periodic of the Shift Consignee (the highest internal shift theoretical and practical training plan with fire manager in the facility). The Emergency Team extinguishing exercises. performs weekly exercises, simulating the events Besides performing joint exercises with the in the Department Emergency Plans. National Corps of Firefighters, we also have an Starting in 2016, we further reinforced our Internal Firefighting Team with a Team Captain and equipment with a new firehouse outside the specifically trained staff. perimeter of the Refinery - and also with the purchase of an innovative piece of firefighting equipment.
THE EXTERNAL EMERGENCY PLAN (EEP) The External Emergency Plan (EEP) is a plan that organizes the available resources in the area to reduce or mitigate the effects of an industrial incident on the areas outside the perimeter of a plant with possible risk, sharing the procedures with other local public and private administrations. The Plan also establishes the emergency messages to run on the alarm systems so the population can take appropriate action. The External Emergency plan is drafted, issued, and activated under the aegis of the Prefecture of Messina. RAM participated in the work group coordinated by the Prefecture of Messina to update the Plan.
72 | 2017 Sustainability Report In 2017, the update investigation of the Safety safety measures adopted by the Refinery for the Report, which occurs every five years, ended prevention and limitation of the consequences of on a positive note. Based on this, the Regional significant accidents. The Safety Report for the Technical Committee (RTC) began the process to New SULPHUR SRU3- SWS3-OGA2 (see page 41) examine it, performing the necessary inspections was also approved in 2017. (with the investigation group spending 10 days at the Refinery) to understand and verify the
PREVENTION OF RISKS OF SIGNIFICANT ACCIDENTS RAM is subject to the obligations set forth in Italian Legislative Decree 105/2015, which specifically covers risks of significant accidents and calls for, among other things: • An in-depth risk analysis and preparation of the Safety Report; • Implementation of an Internal Emergency Plan (IEP); • Implementation of the company policy for the prevention of significant accidents through the development of the Safety Management System (SMS) in compliance with current standards. At the company we implement a constant awareness campaign on this topic and several years ago we introduced a system for reporting “Near Accidents”. Here our staff can signal any “near misses”, or events that occurred in which only luck or human skill prevented a real accident. “Near Accidents” are analyzed or discussed with the goal being to improve staff training and implement and/or change procedures and/or systems.
73 4 Safety, our guiding light
4.2 INITIATIVES FOR SAFETY
To promote greater sensitivity to safety themes, Safety is also a topic that goes hand-in-hand with even with employees of associated companies that training. Specific courses are also held for newly work at the facility, a few years ago we introduced hired workers of associated companies before the ”Safety meter”. This is a mechanism similar they enter the facility and for special occasions. to a driver’s licence that deducts points for In 2017 we offered initiatives related to the “safe nonconformities, with heavier penalties for more roads” concept. serious infractions. If no points remain, the worker is denied access to the Refinery. However, points can be recovered with training initiatives or can be added to the licence with proactive conduct aimed at improving safety standards in the plant.
74 | 2017 Sustainability Report 4.2.1 SAFE ROADS CAMPAIGN
We have installed an advanced technological For this reason, in 2017 we developed an awareness control system on our internal road system. The campaign on safe driving in the facility. software monitors the situation, providing real time updates on traffic conditions. The campaign focused on various themes, from driving rules, to permits and signs, to proper However, we are convinced that technology serves conduct in the event of an emergency. humans and not vice versa and we must all know and follow the traffic rules inside the Refinery.
75 4 Safety, our guiding light
4.2.2 THE TORCH, AN EFFECTIVE SAFETY SYSTEM
The Refinery torch is a safety system used to In exceptional cases recorded by us, there may be effectively manage possible gas excesses that surpluses in gas production that are sent to the could occur during operation of the plants. It is torch. This occurred in 2016 during the General made up of a pilot flame that is always lit for safety Maintenance Shutdown (Main Turnaround = MTA), reasons. which caused various “ignitions” and “shutdowns”. During these phases, for obvious safety reasons, more gas was sent to the torch. In 2017, the values were subsequently reduced.
GAS FLARED IN THE TORCH (metric tonnes)
2015 2016 2017
8,966 17,270 8,133
76 | 2017 Sustainability Report 4.3 MAINTENANCE
Maintenance of the Refinery systems ensures In 2017, Euro 42 million were spent on maintenance reliability, functionality, and efficiency, with activities. subsequent optimization of production. We measure the reliability of the operation of the Maintenance is mainly divided into: plants using various indicators that compare the • Condition-based (or predictive) maintenance - hours of unavailability of the various plants (taking defines a limit value for the machinery involved, into account the causes that made the unavailable) at which maintenance is performed in order to and the expected hours of operation. preserve the reliability of the machinery over In 2017, excellent performance was recorded, time and to ensure energy saving performance; which confirms the good maintenance and • Programmed (or preventive) maintenance operation practices adopted. We can consider the - is performed at preset times, which can be Reliability Factor to be one of the more significant calibrated thanks to information acquired indicators. This is the relationship between the during predictive maintenance. It is commonly effective running time of the plants and the time in performed during “Downtime”, when there is a which it is available for operation. temporary suspension of plant activity; Last year this index reached a value of 98.8 out of • Corrective maintenance - is performed 100, a value that should be considered excellent for following a failure. this type of plant.
A PROGRAMME FOR TANK EFFICIENCY The Milazzo Refinery has a large group of tanks at atmospheric pressure for storing petroleum products. The tank inspection activities are planned and performed according to the highest international standards (API and EEMUA). These activities are aimed at periodically checking the structural integrity of the individual tanks and checking the advancement of degradation of the primary components in order to minimize the risk of leakage. The Milazzo Refinery manages a BAT restructuring and alignment programme for the tanks. RAM’s annual investment is approximately Euro 15 million and calls for the installation of a minimum of two double bottoms per year, in line with the requirements set forth by the Integrated Environmental Authorization (IEA).
77 4 Safety, our guiding light
4.3.1 MAINTENANCE, ENVIRONMENT, AND SAFETY
Maintenance policies also have an impact on the In 2017 we also created a series of interventions surrounding environment. to improve energy efficiency that also have a We apply various methods to perform the positive impact on safety. The primary projects Maintenance necessary at the Refinery. This in this area were concentrated on increasing the includes the LDAR (Leak Detection and Repair) energy efficiency of the machinery and improve method, which allows us to evaluate microleaks the efficiency of electric motors. For each project, of volatile organic compounds in the work investments, improvements, and replacements environment and implement the necessary actions were made, as explained later. to reduce them. IMPROVEMENT IN THE PUMP SEALS Each year, special devices are used to check of 240 We continued with the policy of adopting double thousand points throughout the Refinery where seals through the replacement of the seals on 12 there is a potential leakage of hydrocarbons into process pumps in various Refinery systems. These the atmosphere that cannot be detected visibly. If a were mainly light hydrocarbon and hot pumps, so leak is identified, we eliminate it using mechanical potentially flammable. We applied a double casing means. compared to the previous single one, thus adding another barrier between the fluid pumped and the outside environment. This new type of seal also ensures greater control. Besides counting on an extra barrier, it also has adequate instrumentation for detecting problems on the two barriers so it is possible to intervene promptly. This is a project in progress that will continue in the coming years.
78 | 2017 Sustainability Report INCREASE IN THE ENERGY EFFICIENCY IMPROVEMENT IN THE EFFICIENCY OF THE MACHINES OF THE ELECTRIC MOTORS Maintenance was involved in various projects The project calls for the progressive replacement working to improve the energy efficiency of the of the old motors with new ones having greater machinery. The primary ones were: energy efficiency than those in service for several • The installation of a specific system called years having lower performance. Hydrocom on various alternative compressors in different plants. This component is able to regulate the operation of the compressors at their optimum level, making them more uniform and less subject to spurts, thus ensuring significant energy savings and better reliability; • The replacement of the air coolant equipment with new models. This involves fans able to optimize the air flow, thus obtaining major energy savings as well as increased cooling capacity.
79 80 | 2017 Sustainability Report 5 RELATIONSHIPS WITH THE LOCAL COMMUNITY: SUPPORT FOR PROJECT DEVELOPMENT
5.1 Industry and community 82 5.2 Education, training, and community 85 5.2.1 Culture and society 86 5.2.2 Youth, sports and community 86 5.3 Labour relations 87 5.4 Transparency 87
81 5 Relationships with the local community: support for project development
5.1 INDUSTRY AND COMMUNITY
Providing support to social and cultural This is a path involving over 20 thousand students development of the local community in the and 400 high schools throughout Italy each year, Milazzo and Valle del Mela area is the basis of our promoting communication between the various Corporate Social Responsibility policy. In fact, we areas and learning through laboratory activities. are convinced that we can contribute to improve The “Students Lab” paths intend to train youth to the well-being of individuals. That is why we place have an entrepreneurial spirit and stimulate the our resources at the disposal of the community and development of transversal skills. are available to listen to their needs and provide help when necessary. In the invention created by this group of young We grow together with our community and feel people, a special clothesline called “Raindome”, it is our duty to be a resource for the population, we saw the same desire to innovate found in our even an economic one. For this reason we support activities. projects that benefit local resources and stimulate personal planning, in particular for youth so they can open up new horizons.
With this spirit we supported the IV B project at the Liceo Scientifico (High School) from Milazzo, RAINDOME which was awarded the national “Students Lab” competition. This is a clothesline equipped with a special sensor that can detect rain and implement a waterproof panel, thus keeping clothing dry even in case of sudden downpours.
82 | 2017 Sustainability Report One of the things we pay special attention to and that » CHARITY CONCERT we do willingly is to help the weaker members of ATLAS DAY was one of the more significant society, especially collections for basic necessities initiatives we supported in 2017 in the donated to parishes. charity concert For holidays and national celebrations (e.g., social field. It was a Easter, Christmas, International Women’s Day), we organized at the Teatro Trifiletti by the participate in the initiatives of various organizations Italian Down Syndrome Association including ADMO, AISM, and ENEA, relaunching Milazzo-Messina in collaboration with their communications campaigns on a local level ATLAS, a non-profit group in the area that and purchasing their products, sold as a form of organizes awareness events regarding self-financing (e.g. dove cakes, Christmas cakes, social inclusion and diversity. Easter eggs, plants). During the evening, some musical groups Year after year, during the Christmas period in from the area performed. The entire particular, we have been renewing our support for income went to the association, which welfare actions in favour of the local community then used it to finance its activities and by the Red Cross of Milazzo purchasing their daily initiatives aimed at families and to develop planners and calendars. social, scholastic, and work integration projects for people with Down Syndrome. And finally, we support the Italian Down Syndrome Association - Milazzo-Messina section. In one of the initiatives we supported and organized together we got to know Michele, a boy with Down Syndrome, who now works at our company canteen with a fixed-term contract.
83 5 Relationships with the local community: support for project development
RAM: THE FACTORY IS OPEN During 2017 we opened the doors to the Opening the doors to the factory and all our facility to the families of our employees families transformed our ordinary work to show them the plants, explain their into something extraordinary for a day and operation, and share the value and many joyfully welcomed the initiative, further importance of the refinery for us and for reinforcing their sense of belonging with the Valle del Mela. Our colleagues proudly company. 127 families participated with over and enthusiastically showed their wives, 500 in attendance, including 176 children, who husbands, children, and parents their work made the event even more happy, joyous, and stations, and, with the support of images fun. of the Refinery, told them about the world Four editions were planned at first and another of energy and fuels in every aspect, from six were added to meet the strong demand. production to storing, to sea shipping. The memory of these events will remain Various colleagues donated their time vivid beyond our own memory and that of the to accompany children and families to participants through the 2018 RAM calendar, discover all of the parts of the facility, which includes some of the photographs taken highlighting the great value given to during the visits. protecting health and the environment.
84 | 2017 Sustainability Report 5.2 EDUCATION, TRAINING AND COMMUNITY
In 2017 collaboration with schools and universities All of our actions are driven by the idea that the was consolidated with the visit of 605 students at potential for growth in the area is closely related RAM. These students came from 14 middles and to the development of its people, especially upper middle schools in the provinces of Messina, youth, in terms of knowledge and skills. In that Palermo, and Reggio Calabria. sense, we try to play an educational and cultural enhancement role with schools and universities, RAM aroused the interest not only of technical offering students education tools and direct schools (nautical, industrial, professional) and experiences at our facility, in the hope that we information system schools (commercial) but also can feed their curiosity and increase their cultural of high schools such as “Seguenza” in Messina, knowledge. whose students showed a desire to learn about an organized and complex company like ours. In order to provide a contribution of innovation to the educational world, we also donated an interactive multimedia blackboard (LIM) to the Istituto Comprensivo San Filippo del Mela, which includes a primary school and pre-school. The LIM is an integration tool with classroom teaching because it combines the strength of visualization and typical presentation of a traditional blackboard with digital and multimedia opportunities.
AGREEMENT WITH THE UNIVERSITY OF MESSINA Other projects we supported for educating youth: In 2017 we signed a three-year agreement • The twelfth edition of “Orient@giovani”, an with the Università degli Studi di Messina initiative promoted by the Milazzo Istituto to finance a Scholarship for a PhD in Tecnico Tecnologico “Ettore Majorana” to help Engineering and Materials Chemistry students in their final year of middle school with (23rd cycle). The Scholarship was then the important choice of their subsequent study assigned to a student who had performed path; • The BEST (Board of European Students of his apprenticeship at RAM. There were Technology) at the University of Messina, with 10 apprenticeships, 9 of which were for which we renewed our collaboration for another students from the University of Messina, Summer Course in 2017 aimed at students from Faculty of Engineering, Chemistry and all European Universities. Informatics, and one for students of the University of Catania, Faculty of Computer Engineering.
85 5 Relationships with the local community: support for project development
5.2.1 CULTURE AND SOCIETY
We are proud to have contributed to numerous During the Christmas period, we supported the cultural and entertainment initiatives that Milazzo Council in organizing concerts, shows, constitute moments of social interaction and events, and fun for kids as well as activities to positive gathering for the area. involve less able members of the community such as the elderly and disabled. One of the main One of these was the summer season organized by developments during Christmas 2017 was the Milazzo and San Filippo del Mela with shows and installation of an ice skating rink for a month. It events that took place in various city locations. was open to everyone and was enjoyed by many There were also many open air activities that we families from Milazzo and the area. helped organize, such as the fifth edition of the All of the activities we support periodically are to choral musical festival, ”InCanto Mediterraneo”, promote the Milazzo and Valle del Mela area and with choirs from European and other countries create entertainment, enjoyment, and fun. We and the “Castroreale Milazzo Jazz”, one of the few contribute to all of this because we are closely Sicilian festivals dedicated to this type of music. tied to the area and we pay attention to it and We also contributed to the “Notte Rosa” at Milazzo its population with real, simple actions that are Castle. The goal of the event is to spread knowledge available everyone and do not exclude anyone. about violence.
We also helped the Proloco Milae, along with the participation of the Municipal Administration, in organizing the “Tono Summer Fest 2017": an event based on fitness, tournaments, beach sports, play activities, and musical shows with the goal being to create an opportunity for the youth in the area to come together and have fun.
5.2.2 YOUTH, SPORTS, AND COMMUNITY
We support youth sports since we feel it is a valid We also contributed to organizing specific sports tool to promote individual growth and cultivate initiatives, especially during the summer. These team spirit, which is fundamental in world of work. include the Svinco Summer Village, which hosted For this reason, we support local amateur sports the Summer Basket 2.0 tournament. Along with associations that have many people registered basketball matches involving children aged 5 to and are rooted in the area, contributing to certain 12 and other older teams, the event also included expenses such as travel. music and recreational activities for younger children.
86 | 2017 Sustainability Report 5.3 LABOUR RELATIONS
2017 confirmed the company’s tradition that pays In 2017, RAM and the Unions not only discussed particular attention to proper and transparent the general aspects such as the annual investment labour relations for the development of the Refinery plan but also discussed strategic organizational and an effective involvement of the people in the themes for the future of the Company. This was company’s choices and policies. followed by the signing of an agreement that Labour relations play a particularly significant role changed the organizational structure of the in the daily management of the primary aspects Plant area, creating the structural conditions for of life at RAM through organized management of possible future developments. This is an important worker representation. At RAM there is a Unitary piece that is added to the mélange of the Refinery’s Union Representative Body and, within that, the sustainable development. Workers’ Representatives for Health, Safety, and the Environment), as well as the FILCTEM- CGIL, FEMCA- CISL, and UILTEC-UIL trade union Secretaries.
5.4 TRANSPARENCY
A large part of our communication policy is carried unique visitors, mostly people from the area who out in initiatives that involve the local area. are interested in following the updates we share periodically. Our website allows us to provide constant visibility of our activities, especially the News Besides other things, on our portal it is also section. This is a direct communication channel possible to consult the 2017 Sustainability Report that is increasingly appreciated and continuously as well as previous ones. enhanced. In fact, in 2017 there were 35 thousand
87 88 | 2017 Sustainability Report 6 DISTRIBUTION OF THE ECONOMIC ADDED VALUE
6.1 Staff 92 6.2 Financiers 92 6.3 Institutions 93 6.4 Community 94
6.4.1 Our suppliers, a partner for sustainability 94 6.5 We distribute value to local businesses 96
89 6 Distribuzione del valore economico aggiunto
In 2017 we generated and distributed a certain Remember that, due to its consortium nature, amount of economic added value to our RAM balances its financial statements, not stakeholders in the area: the staff, institutions, registering profits or losses. It provides a service funders, and local community. to the shareholders, ensuring crude oil refining and receiving compensation equal to the costs The economic added value is a wealth produced by sustained, including the taxes paid. our company over the course of the year taken into consideration and is the result of the differences In 2017, the total economic value generated between the revenue and intermediate costs of was Euro 125 million, essentially the same as production, including ancillary and exception the previous year. If we remove the amount kept components. at the company (amortization equal to Euro 65.9 million), the most signification amount of value was distributed to the staff.
90 | 2017 Sustainability Report DETERMINATION OF ADDED VALUE ACCORDING TO GBS GUIDELINES (Data in thousands of Euros)
Formation of the Added Value 2015 2016 2017
Revenues from sales and services 601,992 561,392 522,988
Other revenue and income 8,799 10,364 26,173
Capitalized costs 1,604 2,127 1,882
Value of production 612,395 573,882 551,044
Purchases of materials and external services (496,456) (446,538) (416,860)
Other operating costs (4,484) (4,339) (8,697)
Intermediate production costs (500,941) (450,877) (425,556)
Gross global added value 111,454 123,005 125,488
ECONOMIC VALUE DISTRIBUTION (in thousands of Euros) G4-EC1 INDICATOR
Breakdown of Added Value 2015 2016 2017
Staff remuneration 47,307 48,079 48,902
Remuneration to financiers 7,434 7,026 6,462
Remuneration to institutions 4,449 7,938 3,971
Community remuneration 142 168 167
Net global added value 59,332 63,211 59,502
Amortizations 52,122 59,794 65,986
Gross global added value 111,454 123,005 125,488
91 6 Distribution of the economic added value
6.1 STAFF
In 2017, we distributed Euro 48.9 million, about 39% “Staff remuneration” includes pay, social of the total economic value, to the staff, at the same security costs, provisions for the ESI fund, levels as 2016. and added services for the staff. Second level collective bargaining periodically determines the These are resources that are transformed into remuneration for the staff based on the goals spending power for the benefit of the community, reached and the current standards, and is in line given that a large majority of our workers are from with RAM’s strategic objectives of valuing people. the Milazzo area and Valle del Mela in general.
6.2 FINANCIERS
The share of added value distributed as expenses to funders equals Euro 6.4 million. This item represents the figure paid for the expenses on shareholder financing and bank financing.
92 | 2017 Sustainability Report 6.3 INSTITUTIONS
An amount of approximately Euro 4.0 million was The primary items contributing to the formation of paid to institutions. This amount includes direct added value distributed to institutions are: and indirect taxes, contributions, and membership Regional tax, IMU property tax, waste disposal tax, fees. The reduction in this item is due to lower TASI public services provided to property owners, Corporate income tax compared to 2016, when and Corporate income tax, to which are added there were taxes on high maintenance costs, “Contributions and membership fees”, understood which the standard provides for recoverability in as being the contribution for experimental fuel subsequent years. stations intended for “Innovhub - Experimental stations for industry” as set forth in the ministry decree dated 10 March 2015 issued by the Ministry of Economic Development.
PAYMENTS TO INSTITUTIONS (in Euros)
2016 2017
Fiscal year income taxes 4,413,356 348,339
- Corporate income tax 3,847,647 -
- Regional tax 746,737 348,339
Other taxes 3,057,444 3,050,367
- IMU/Tasi property taxes 1,934,476 1,969,477
- Tax on SO2/NOx emissions 232,325 217,158
- other 890,643 863,732
Contributions and membership fees 467,547 571,996
TOTAL 7,938,346 3,970,701
93 6 Distribution of the economic added value
6.4 COMMUNITY
The economic added value intended for the the local population in various areas and is aimed community amounts to approximately Euro 167 at charitable and youth sports organizations, social thousand, in line with the previous year. works, and contributions for schools and to finance PhDs (see chapter Relationships with the local This item primarily refers to contributions that community, support for planning, page 80). support the development of activities to involve
6.4.1 OUR SUPPLIERS, A PARTNER FOR SUSTAINABILITY
Our system of suppliers is a significant partner in spreading our sustainability policies.
PRESENCE OF SUPPLIER STAFF AT RAM 1,025 (daily average):
Suppliers are expected to share and apply the Our questionnaires allow us to investigate aspects high standards in human health and safety and that are significant to sustainability and reputation environmental protection that we have defined. (such as impacts on safety, training, and protecting human rights, plus environmental performance). For this role that our suppliers performed, we have defined a company qualification system » OUR SUPPLIERS with an application through the portal (see box “The new online portal for suppliers, page 95) that There were 1219 qualified suppliers guarantees adequate technical and economic/ in the 2017 suppliers list, 392 of which financial capacity but also their contribution to our were critical and 827 non-critical. continuous improvement approach. In 2017, there were 89 new critical suppliers qualified and 100 non-critical for a total of 189 new suppliers qualified 921 orders were issued to the 368 qualified suppliers, 252 of which were for services and 669 for materials.
94 | 2017 Sustainability Report THIRD-PARTY COMPANY QUALIFICATION PATH
Application through the portal by filling out a standard questionnaire regarding general information about the company and its activities, certain administrative Step 1 documents, and possible references. The results of the questionnaire, along with Qualification proposal the company information, documentation, and certifications the company possesses, allow a qualification rating to be assigned for each supplier on the portal.
Step 2 Prequalification If the data related to the company being proposed is evaluated positively, the and qualification of prequalification path is initiated with administrative verification. companies for non- critical activities
This is a more in-depth verification in which further information is collected Step 3 (organizational structure and information systems; human resources, including the Qualification of geographic origin of the staff; health, safety, and and the environment; human rights; companies for critical and training), with special attention being paid to sustainability aspects. During this activities step, an inspection may be performed by an internal qualification team.
Having positively passed all steps of the verification process, the company is entered Suitability into the list of suppliers. In this final phase, RAM declares its availability for a possible collaboration.
THE NEW ONLINE PORTAL FOR SUPPLIERS RAM published a new portal for suppliers with numerous advantages regarding communication. In fact, this tool allows prompt and simple interaction with the Refinery, eliminating the use of paper, when possible. The following can be done through the portal: • Manage the information needed for the qualification process; • Manage requests for external staff and vehicles from third-party companies to enter to Refinery; • Manage requests for document regarding the contract and construction sites; • View the documents made available by the Refinery. Following verification of the information by the various company departments, the supplier will receive an update on the status of the process.
95 6 Distribution of the economic added value
6.5 WE DISTRIBUTE VALUE TO LOCAL BUSINESSES
Our suppliers invoiced Euro 181 million just to the the province of Messina alone. On the other hand, Milazzo Refinery. Of these, Euro 80.7 million are Euro 26 million is the turnover (with RAM) of the related to companies in southern Italy. companies located in Milazzo. This data allows Going into even more detail, 82% of the Euro 80.7 us to state that we can be considered a source of million is the turnover for Sicilian suppliers. Of wealth and work for the community. this percentage, 64% is related to suppliers in
96 | 2017 Sustainability Report DISTRIBUTION OF EXPENSES (turnover in millions of Euros)
NORTHERN ITALY 2015 2016 2017
TOTAL ABROAD 122.5 104.4 54.9 2015 2016 2017
23.4 41.1 20.5 CENTRAL ITALY 2015 2016 2017
TOTAL ITALY 13.7 21 24.9 2015 2016 2017
266.6 262.2 160.5
SOUTHERN ITALY
2015 2016 2017 SICILY
of 66.5 131.3 136.8 80.7 which 82%
TURNOVER FOR THE PROVINCES OF SICILY (in millions of Euros)
Messina of Milazzo 42.3 which 26
Trapani Palermo 0.09 3.3
Enna 1.7 Catania 1.8 Agrigento -
TOTAL SICILY Caltanisetta 0.6 Siracusa 15.7 66.5 Ragusa 0.7
97 98 | 2017 Sustainability Report 7 APPENDIX
7.1 Management systems and certification 100 7.2 Committees and sub-committees 101 7.3 Primary sustainability indicators 102 GRI contents table 104 Letter of assurance 108
99 7 Appendix
7.1 MANAGEMENT SYSTEMS AND CERTIFICATION
ENVIRONMENT UNI EN ISO 14001:2004 Field of application: refinement of crude oil and semi-processed products received via ship, storage and movement of products by ship, tanker trucks, and pipelines, production of electricity and steam for internal use through polycombustible boilers, service plants (industrial wastewater treatment, preliminary waste storage). Certificate by DNV.
QUALITY UNI EN ISO 9001:2008 Field of application: production, storage, and movement of polypropylene, the stream with the highest added value of those produced. The requirements are periodically checked by an internal audit system. Certified by Bureau Veritas. Field of application: analysis laboratory for raw materials, fuels for internal consumption, and sea discharge. Certified by Bureau Veritas.
CHEMICAL LABORATORY UNI CEI EN ISO/IEC 17025:2005 Field of application: The accreditation confirms the technical competency of the laboratory in reference to specific analyses. Accredited by Accredia.
HEALTH AND SAFETY IN THE WORKPLACE OHSAS 18001 Field of application: refinement of crude oil and semi-processed products received by sea, storage and movement of products by ship, tanker trucks, and pipelines, production of electricity and steam for internal use through polycombustible boilers, service plants (industrial wastewater treatment, preliminary waste storage). Certificate from the DNV.
SAFETY UNI 10617 Field of application: prevention and control of accidents developed in compliance with the requirements set forth in the new applicable regulations (Italian Legislative Decree 105/2015).
ENERGY UNI CEI EN ISO 50001:2011 Field of application: management of energy in the process of refinement of crude oil and semi-processed products sold via sea, tanker trucks, and pipelines, production of electricity and steam for internal use through polycombustible boilers, service plants (industrial wastewater treatment). Certificate by DNV.
100 | 2017 Sustainability Report 7.2 COMMITTEES AND SUB-COMMITTEES
A support of the Integrated Management System, Committees and Subcommittees was formed with particular skills in specific topics in order to ensure consistent and proper management of the activities.
CCSSA - CENTRAL COMMITTEE FOR SAFETY, HEALTH, ENVIRONMENT, AND ENERGY This committee determines the corporate policies, strategies for continuous improvement, and performance goals of the Integrated Management System. The Committee has the following members; Managing Directors, General Manager, Technical Manager, and Manager of the Safety, Protection, and Prevention Department.
CSSA - COMMITTEE FOR SAFETY, HEALTH, ENVIRONMENT, AND ENERGY / 1ST LEVEL LINE COMMITTEE This committee defined, creates, monitors, and coordinates the development plans to achieve the goals and performance indicators. It is made up of the General Manager, Technical Director, and all Department Managers.
2ND LEVEL (OR DEPARTMENT) AND 3RD LEVEL (OR UNIT) LINE COMMITTEES These committees perform a fundamental role for improving internal communication regarding HSE - Health, Safety, and Environment, defined by the CSSA (1st level Committee). Those responsible transfer the information to their employees and then communicate the information received in return to the managers. The 2nd level, or Department, Committees are made up of the Department Manager and the direct employees, up to the Unit Managers. The 3rd level, or Unit, Committees are made up of the Unit Manager and the direct employees.
SAE SUBCOMMITTEE This committee analyses and verifies reports of accidents, adverse events, and economic loss.
SPAD SUBCOMMITTEE This committee coordinates the IMS activities of external companies and contractors.
SMMI SUBCOMMITTEE This committee analyses and verifies the activities to improve and modify the plants and processes.
SVSC COORDINATION This takes care of logistics management and monitoring of field visits.
101 7 Appendix
7.3 PRIMARY SUSTAINABILITY INDICATORS
Indicator Unit of measurement 2015 2016 2017
Raw materials Crude oil 8.74 8.72 10.58 Semi-processed products Million tons 0.79 0.54 0.27 Other products used for the process of refining 0.17 0.1 0.11 Finished products LPG 0.1 0.1 0.1 Propylene 0.1 0.1 0.1 Naphtha 1.3 1.3 1.6 Petrol 1.7 1.7 1.9 Tons Jet Fuel 0.2 0.3 0.3 Diesel 4.5 4.1 5.1 Fuel oils 0.9 0.8 0.9 Sulphur 0.1 0.1 0.1 Transports Total volume of product distributed 8.9 8.4 10.1 - of which by sea Million tons 7.7 7.5 9.1 - of which by land 1.3 0.9 1.0 Employment Employees in service 611 624 630 - residents in the Province of Messina 593 603 611 Employees on the payroll 604 615 628 Employees with a fixed-term contract 6 8 3 Number - women during the 3 years 2 2 2 Employees with a permanent contract 598 607 625 - women during the 3 years 33 33 33 Employees subject to a performance evaluation 144 165 168 Training 15,488 17,611 20,668 Hours Average hours of training per employee 25 28 33 Spending on training Euros 221 189 193 Union relations Percentage of employees covered by collective % 100 100 100 agreement contracts Hours of worker strikes Number 0 553 0 Economic value and Investments Value of production 612,395 573,882 551,044 Intermediate production costs (500,941) (450,877) (425,556) Economic value generated / distributed 111,464 123,005 125,488 - Distributed to the personnel 47,307 48,079 48,902 Thousands of euros - Fees to financiers 7,434 7,026 6,462 - To institutions 4,449 7,938 3,971 - To the community 142 168 167 To the company (Amortisation) 52,122 59,794 65,986 Total investments Millions of euros 122 89 71
102 | 2017 Sustainability Report Indicator Unit of measurement 2015 2016 2017
Suppliers Total turnover 291.0 303.3 181.1 - Overseas 23.4 41.1 20.5 - Italy 267.6 262.2 160.6 - North 122.5 104.4 55.0 Millions of euros - Central 13.7 21.0 25.0 - South 131.3 136.8 80.7 of which in the Province of Messina 63.7 62.5 42.3 of which in Milazzo 39.8 38.5 26.0 Safety
(number of accidents Frequency index of employee and contractor accidents every million hours 0.24 0.24 1.43 worked) (number of calendar days lost per year for Index of gravity of employee and contractor accidents 0.95 0.72 2.64 every thousand hours worked) Accidents involving RAM personnel 0 0 1 Number Accidents involving external companies 1 1 4 Environment Air
Nox 1,673 1,659 1,467
So2 2,862 3,065 2,330 Volatile Organic Compounds (VOC) Tons 1,090 1,086 1,138 PM 77 37 35 CO 512 567 682 Total direct emissions of greenhouse gases Million tons 1.86 1.83 2.03 Energy efficiency Energy acquired from outside 7,527,279 6,366,943 7,047,116 - natural gas or methane 3,793,320 3,039,959 3,478,796 - electricity 1,545,420 1,321,354 1,565,418 - thermal energy (steam) 2,188,539 2,005,630 2,002,902 Energy produced by RAM 20,938,094 21,217,986 22,828,788 - Fuel gas 14,064,734 13,706,343 15,791,060 GigaJoules - Fuel oil 2,055,565 1,434,257 1,174,367 - LPG 336,041 448,670 264,604 - Coke 4,481,754 5,628,716 5,598,757 Renewable energy produced by RAM 4,727 4,378 5,115 - solar energy 4,727 4,378 5,115 Overall energy consumption 28,470,100 27,589,307 29,881,019 % elec self-produced/total elec consumed % 43 51 47 Water Total amount of water drawn Cubic metres 8,386,411 8,234,248 8,920,898 Water from wells 50.3 46 49 Water from other sources (municipality, bilge etc...) 6.6 6.7 7 % MISE water 30.6 34.6 31 Water and steam acquired from Termica Milazzo 12.5 12.7 13 Recycled/reused water Cubic metres 1,670,000 2,437,769 2,628,698 Refuse Quantity of refuse produced 56,231 26,322 20,062 - of which is hazardous 12,752 12,564 13,174 - of which is not hazardous Tons 43,479 13,758 6,887 Total amount of refuse recovered or recycled 38,899 15,071 11,240 Refuse produced destined for disposal 17,332 11,251 8,822
103 7 Appendix
GRI CONTENTS TABLE
GENERAL STANDARD DISCLOSURES Reference paragraph / notes
Statement from the most senior decision-maker of the organization G4-1 (such as CEO, chair, or equivalent senior position) about the relevance of Letter from the President; Strategy and analyses sustainability to the organization and the organization’s strategy G4-2 Description of key impacts, risks and opportunities Letter from the President; About us
G4-3 Name of the organization Cover
Innovation becomes substantial: production G4-4 Primary brands, products, and services cycle and products RAM’s headquarters is in Milazzo G4-5 Location of the organization’s headquarters www.raffineriadimilazzo.it Number of countries where the organization operates, and names of G4-6 countries where either the organization has significant operations or that Innovation becomes substantial: production are specifically relevant to the sustainability topics covered in the report cycle and products
G4-7 Nature of ownership and legal form About us
RAM: a strategic plant, a long-term G4-8 Markets served approach; Innovation becomes substantial; production cycle and products About us; Innovation becomes substantial: production cycle and products; Distribution G4-9 Scale of the organization of economic added value; Primary Identified material aspects and sustainability indicators boundaries People and employment; Primary G4-10 Breakdown of employees by contract, region and gender sustainability indicators
G4-11 Percentage of total employees covered by collective bargaining agreements Primary sustainability indicators
Innovation becomes substantial: production G4-12 Describe the organization’s supply chain cycle and products; Our suppliers, a partner for sustainability
G4-13 Significant changes during the reporting period Reporting standards and criteria
Approach to sustainability: the Integrated G4-14 Explanation of how the precautionary approach or principle is addressed by the Management System, Model 231, and the organization Code of Ethics List externally developed economic, environmental and social charters, G4-15 principles, or other initiatives to which the organization subscribes or which The Integrated Management System, Model it endorses 231, and the Code of Ethics Labour relations; Confindustria Messina, G4-16 Memberships of associations Unione Petrolifera, Confindustria Energia Companies included in the consolidated financial statements and an indication G4-17 of the companies not included in the report Reporting standards and criteria Reporting standards and criteria; Materiality G4-18 Process for defining report boundaries and content analysis
G4-19 Material aspects identified Materiality analysis; Materiality matrix Materiality and perimeter G4-20 Boundary for the report for each material aspect (within the organization) Reporting standards and criteria; Materiality of the report analysis; Materiality matrix
G4-21 Boundary for the report for each material aspect (outside the organization) Reporting standards and criteria
G4-22 Explanation of the effect of any restatements of calculations None
G4-23 Explanation of significant changes from previous reporting periods None
G4-24 List of stakeholder groups engaged by the organization Materiality analysis
Materiality analysis: Materiality matrix; G4-25 Basis for identification and selection of stakeholders with whom to engage Relationships with the local community; Involvement support for planning of the stakeholders Approach to stakeholder engagement, including frequency of engagement by Materiality analysis; Relationships with the G4-26 type and by stakeholder group local community; support for planning Key topics and concerns that have been raised through stakeholder G4-27 engagement, and how the organization has responded to those key topics and The materiality matrix concerns, including through reference to what is stated in the report Reporting standards and criteria; The 2016 G4-28 Reporting period Sustainability Report was published on 16 May 2017 Reporting standards and criteria; The 2016 G4-29 Date of most recent previous report Sustainability Report was published on 16 May 2017
G4-30 Reporting cycle Yearly Profile of the Report the information is available on the website G4-31 Contact point for questions regarding the report or its contents www.raffineriadimilazzo.it The ‘in accordance’ option the organization has chosen; GRI Content Index; G4-32 reference to the External Assurance Reporting standards and criteria
G4-33 External Assurance of the report Letter of assurance
104 | 2017 Sustainability Report Shareholders, management, community; The G4-34 Governance structure of the organization Integrated Management System, Model 231, and the Code of Ethics; About Us Governance Processes for evaluating the highest governance body’s own performance on G4-44 sustainability issues Letter from the President;
G4-48 Body that approves the Sustainability Report Reporting standards and criteria
The Integrated Management System, Model G4-56 Corporate mission and values, codes of conduct and principles 231, and the Code of Ethics The Integrated Management System, Model 231, and the Code of Ethics; The guidelines G4-57 Mechanisms for for seeking advice about unethical or unlawful behavior that the Refinery applies are included in Model Ethics and Integrity 231 of organization, management, and control The Integrated Management System, Model 231, and the Code of Ethics; They are set forth G4-58 Mechanisms for reporting concerns about unethical or unlawful behavior in RAM “Model 231” available on the website www.raffineriadimilazzo.it
SPECIFIC STANDARD DISCLOSURES
Category: Economic
G4 - DMA Reporting standards and criteria
Economic performance indicators G4-EC 1 Direct economic value generated and distributed Distribution of the economic added value
G4-EC 4 Financial assistance received from government Distribution of the economic added value
Approach to sustainability: the Integrated G4 - DMA Management System, Model 231, and the Code of Ethics Procurement practices Approach to sustainability: the Integrated Proportion of spending on local suppliers at significant locations Management System, Model 231, and the G4-EC 9 of operation Code of Ethics; Our suppliers, a partner for sustainability
Category: Environmental Approach to sustainability; Innovation G4 - DMA becomes substantial: production cycle and products; Raw materials Innovation becomes substantial: production G4-EN 1 Materials used by weight and volume cycle and products; Primary sustainability indicators Reporting standards and criteria; Energy; G4 - DMA Primary sustainability indicators
G4-EN 3 Energy consumption within the organization Primary sustainability indicators
G4-EN 5 Energy intensity Primary sustainability indicators Energy OG2 Energy produced from renewable sources by origin Primary sustainability indicators
OG3 Energy savings due to conservation and improvements in terms of efficiency Energy
G4-EN 6 Reduction in energy consumption Energy
G4 - DMA Reporting standards and criteria; Water
G4-EN 8 Total water withdrawn by source Water Water G4-EN 9 Withdrawal sources significantly impacted by water withdrawals Water
G4-EN 10 Percentage and total volume of water recycled and re-used Water, Primary sustainability indicators
Integration with the community and G4 - DMA environmental investments: a commitment that renews itself
G4-EN 15 Direct greenhouse gas emissions Greenhouse gases
Emissions G4-EN 18 Greenhouse gas (GHG) emissions intensity Greenhouse gases
G4-EN 19 Reduction of greenhouse gas emissions Greenhouse gases
G4-EN 21 NO, SO, and other significant emissions Air
105 7 Appendix
Reporting standards and criteria; Primary G4 - DMA sustainability indicators; Waste
G4-EN 22 Total water discharges by quality and destination Water; Primary sustainability indicators
Waste G4-EN 23 Total weight of waste by type and disposal method Waste; Primary sustainability indicators
G4-EN 24 Total number and volume of significant spills Our goal is always: zero accidents
OG6 Volume of hydrocarbons flared and vented The torch, an effective safety system
Innovation becomes substantial; Production cycle and products; Integration with the G4 - DMA community and environmental investments: a commitment that renews itself Integration with the community and Products and services G4-EN 27 Extent of impact mitigation of environmental impacts of products and services environmental investments: a commitment that renews itself The amount of benzine, sulphur, and lead OG8 Content of benzine, lead, and sulphur in fuels in the fuels we produce fall fully withing the standards set forth by the current regulations Integration with the community and G4 - DMA environmental investments: a commitment Conformity that renews itself Monetary value of the significant fines and total number of non-monetary G4-EN 29 sanctions due to failure to comply with the environmental laws and regulations None
G4 - DMA Investments for the environment General expenses Integration with the community and environmental investments: a commitment G4-EN 31 Total environmental protection expenditures and investments by type that renews itself; Investments for the environment Our suppliers, a partner for sustainability; all Evaluation of the environmental G4-EN32 Percentage of new suppliers evaluated based on environmental criteria companies selected for critical activities are performance of the suppliers evaluated based on environmental criteria
Category: Social
G4 - DMA Reporting standards and criteria Occupation Total number of new hires and turnover by age group, gender, and geographic G4 - LA1 area People and employment Reporting standards and criteria; Labour G4 - DMA relations Percentage of total workers represented in the company-worker formal Labour relations; The Integrated Management G4-LA 5 committees for health and safety that allow control and communication of System, Model 231, and the Code of Ethics; programmes for health and safety in the workplace Committees and subcommittees
Health and safety in the Type of injury and rates of injury, occupational diseases, lost days, and Safety, our guiding light; Primary workplace G4-LA 6 absenteeism, and total number of work-related fatalities, by region and by gender sustainability indicators
G4-LA 7 Workers with high incidence or high risk of diseases related to their occupation RAM, health and community
Protection of public health as a company G4-LA 8 Health and safety topics included in formal agreements with trade unions priority; Labour relations
G4 - DMA People and employment
Average hours of training per employee per year, by gender, and by employee G4-LA 9 category People and employment Training and instruction Programs for skills management and lifelong learning that support the G4-LA 10 continued employability of employees and assist them in managing career People and employment; Primary endings sustainability indicators Percentage of employees who receive regular reports on their results and their G4-LA 11 career development, by gender and by employee category Primary sustainability indicators
G4 - DMA Our suppliers, a partner for sustainability Evaluation of the social performance of the suppliers G4-LA 14 Percentage of new suppliers that were screened using labor practices criteria Our suppliers, a partner for sustainability Significant actual and potential negative impacts for labor practices in the Our suppliers, a partner for sustainability; Our G4-LA 15 supply chain and actions taken goal is always: zero accidents The Integrated Management System, Model 231, and the Code of Ethics. RAM G4 - DMA “Model 231” available on the website Non-discrimination www.raffineriadimilazzo.it
G4-HR3 Total number of incidents of discrimination and corrective actions taken None
G4 - DMA The Integrated Management System, Model Evaluation of suppliers 231, and the Code of Ethics on human rights G4-HR10 Percentage of new suppliers that were screened using human rights criteria Our suppliers, a partner for sustainability
106 | 2017 Sustainability Report Reporting standards and criteria; G4 - DMA Relationships with the local community: support for planning Local communities Integration with the community and G4-SO1 Percentage of operations with implemented local community engagement, environmental investments: a commitment impact assessments, and development programs that renews itself; Investments for safety The Integrated Management System, Model G4 - DMA 231, and the Code of Ethics Anti-corruption The Integrated Management System, Model G4-S05 Confirmed incidents of corruption and actions taken 231, and the Code of Ethics The Integrated Management System, Model G4 - DMA 231, and the Code of Ethics Political contributions The Integrated Management System, Model G4-SO6 Total value of political contributions, by country and recipient/beneficiary 231, and the Code of Ethics: our Model 231 does not call for contributions to politicians The Integrated Management System, Model G4 - DMA 231, and the Code of Ethics Antitrust Total number of legal actions for anti-competitive behavior, anti-trust, and G4-SO7 monopoly practices and their outcomes None The Integrated Management System, Model 231, and the Code of Ethics. RAM G4 - DMA “Model 231” available on the website Conformity www.raffineriadimilazzo.it Monetary value of the significant fines and total number of non-monetary G4-SO8 sanctions due to failure to comply with the laws and regulations None
G4 - DMA Our suppliers, a partner for sustainability
Supplier assessment Percentage of new suppliers evaluated based on criteria regarding their impact on social activities G4-SO9 on society Our suppliers, a partner for sustainability
OG13 Number of process safety events, by business activity Our goal is always: zero accidents
107 INDEPENDENT AUDITORS’ LIMITED ASSURANCE REPORT ON THE SUSTAINABILITY REPORT
To the Board of Directors of Raffineria di Milazzo SCpA
We have carried out a limited assurance engagement on the Sustainability Report (hereinafter the “Report”) of Raffineria di Milazzo SCpA (hereinafter the “Company”) for the year ended 31 December 2017.
Directors’ responsibility for the Sustainability Report
The Directors are responsible for preparing the Sustainability Report in compliance with the G4 Sustainability Reporting Guidelines defined in 2013 by the GRI - Global Reporting Initiative, as indicated in the paragraph “Reporting standards and criteria” of the Report, and for that part of internal control that they consider necessary to prepare Sustainability Report that is free from material misstatement, whether due to fraud, unintentional behaviours or events. The Directors are also responsible for defining the sustainability performance targets of Raffineria di Milazzo SCpA, for reporting the sustainability results, as well as for identifying the stakeholders and the significant aspects to be reported.
Auditor’s responsibility
We are responsible for the preparation of this report on the basis of the work performed. We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) – Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000), issued by the IAASB (International Auditing and Assurance Standards Board) for limited assurance engagements. The standard requires that we comply with applicable ethical requirements, including professional independence, and that we plan and perform our work to obtain limited assurance that the Report is free from material misstatement. The procedures consisted in interviews, primarily of company personnel responsible for the preparation of the information presented in the Report, analysis of documents, recalculations and other verification procedures in order to obtain evidence deemed appropriate.
Our company applies the International Standard on Quality Control 1 (ISQC (Italy) 1) and, therefore, maintains an overall quality control system that includes directives and procedures on the compliance with the ethical principles, with the professional principles and with the applicable laws and regulations.
108 | 2017 Sustainability Report The procedures we performed consisted in verifying compliance of the Report with the principles for defining the content and the quality of a sustainability report set out in the “G4 Sustainability Reporting Guidelines”, and are summarised as follows: • comparing the financial information reported in chapter “Distribution of the economic added value” of the Report with the information included in the Company’s financial statements as of 31 December 2017 on which we issued our audit opinion, in accordance with article 14 of Legislative Decree no. 39 of 27 January 2010, on 12 April 2018; • analysing, through inquiries, the governance system and the process for managing the sustainability issues relating to the Company’s strategy and operations; • analysing the process aimed at defining the significant reporting areas to be disclosed in the Report, with regard to the methods for their identification, in terms of priority for the various stakeholders, as well as the internal validation of the process findings; • analysing the processes underlying the generation, recording and management of quantitative data included in the Report. In detail, we carried out: - meetings and interviews with the management of Raffineria di Milazzo SCpA to achieve a general understanding of the information, accounting and reporting systems in use to prepare the Report, as well as of the internal control processes and procedures supporting the collection, aggregation, processing and submission of the information to the function responsible for the Report preparation; - a sample-based analysis of the documents supporting the preparation of the Report, in order to obtain evidence of the reliability of processes in place and of the internal control system underlying the treatment of the information relating to the objectives disclosed in the Report; • analysing the internal consistency of the qualitative information described in the Report and its compliance with the guidelines identified in the preceding paragraph “Directors’ responsibility for the Sustainability Report”; • obtaining a representation letter, signed by the legal representative of Raffineria di Milazzo SCpA, on the compliance of the Report with the guidelines identified in the paragraph “Directors’ responsibility for the Sustainability Report”, as well as the reliability and completeness of the disclosed information.
Our limited assurance work was less in scope than a reasonable assurance engagement performed in accordance with ISAE 3000 (reasonable assurance engagement) and, consequently, it does not provide us with a sufficient level of assurance necessary to become aware of all significant facts and circumstances that might be identified in a reasonable assurance engagement.
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109 Conclusion
Based on the work performed, nothing has come to our attention that causes us to believe that the Sustainability Report of Raffineria di Milazzo SCpA as of 31 December 2017 has not been prepared, in all material respects, in compliance with the “G4 Sustainability Reporting Guidelines” defined in 2013 by the GRI - Global Reporting Initiative as disclosed in the paragraph “Reporting standards and criteria” of the Report.
Palermo, 23 April 2018
PricewaterhouseCoopers SpA
Signed by
Marco D’Alia (Partner)
This report has been translated from the original, which was issued in Italian, solely for the convenience of international readers.
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110 | 2017 Sustainability Report 111 RAFFINERIA DI MILAZZO S.C.p.A
Joint-stock Consortium Company Registered office in Milazzo (ME), 98057 Contrada Mangiavacca
Share capital €171,143,000.00, fully paid VAT, Tax ID, and Messina Business Registry No. 04966251003 Messina REA no. 171213
Post Office box no. 178 Fax: 090 9232200 Phone: 090 9232 1
We would like to thank everyone who was involved in creating this report.
Graphic project Cabiria BrandUniverse
All rights reserved. No part of this book may be reproduced or distributed by any means without the written permission of Raffineria di Milazzo S.C.p.A. raffineriadimilazzo.it