CRR CEPSA 2009 web

Togetheralong the way

2009

CorporateResponsibility Report

Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .02

Message from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .03

Key economic, social and environmental indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .04

Contents

01CEPSA............................... 06

02Energy Supply............................... 16

03Generating Value............................... 24

04Employees............................... 32

05Customers............................... 48

Appendix: 2009 corporate responsibility initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114

Appendix: Inventory of greenhouse gas emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122

Appendix: Associations of which CEPSA is a member . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123

Appendix: Glossary (terms in the report accompanied by this symbol are defined here) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126

06Suppliers................................60

07Part of the Community................................66

08Commitment toTechnology................................76

09EnvironmentalManagement...............................84

10Greenhouse Gases..............................102

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Corporate Responsibility Report 2009 | Message from the Chairman

Message from the Chairman

At CEPSA we are aware thatcommitment to sustainabledevelopment is a present andfuture need, to be met every daythrough the endeavours ofcompanies and theirprofessionals. Striving for profitability in amanner which is respectful anddemanding when it comes to thesurrounding environment is also acrucial part of business today.CEPSA continues to work toachieve transparent, opencommunication, expressing oursocial commitment with fullsincerity.

Faced with the current economicclimate, 2009 was a year in whichCEPSA had to implement the mostefficient formulae to ensure thatthe organisation performed atoptimum levels, with investmentsstill being made within theplanned deadlines. The goals wereto make sure that we couldcontinue operating in a strong,stable and forward-thinkingmanner.

Over the coming decades we willneed to contribute to thedevelopment of a new energymodel, guaranteeing rather thancompromising the prosperity offuture generations. This challengewill require innovative adaptation,not only in the traditional andalternative energy sectors, butalso on the part of the world’sgovernments. Public-privatecollaboration will be a cornerstone

for this process, defining all-encompassing and effectivepolicies geared towards increasingefficiency, encouraging thedevelopment of new alternativeenergies and improving theeffectiveness of traditionalmethods for extractinghydrocarbons and their refinedproducts.

Today, more than ever, theimportance of corporateresponsibility is clear, contributingto sustainable development basedon a long-lasting relationship withstakeholders. It is therefore crucialthat we are capable of integratingmechanisms to meet current andfuture needs, a move which willincrease the value of CEPSA infinancial, social and environmentalterms.

We also understand that weoperate in a sector subject togrowing demands which go beyondmere legal compliance. We areaware of current focus on issuessuch as nature conservation,human rights and jobs.

It is through our commitments,actions and behaviour thatCompañía Española de Petróleos,S.A. shares these concerns,contributing to the rational use ofresources, establishing standardsof ethical conduct andencouraging economic growthwhich is compatible with thesurrounding environment.

We would not have been able tomeet the corporate responsibilitytargets set forth in this documentwithout the effort and dedication ofour professionals. Our motto of“nothing is possible unlesseveryone is involved”, engraved onthe medal we present each year toour long-serving professionals, iseven more important in thecurrent economic climate.

We are proud to present you ourcorporate responsibility report,and hope that you will read it as areflection of our firm ethicalcommitment to society as a whole.

Santiago Bergareche BusquetChairman

Corporate Responsibility Report 2009 | Message from the CEO

Message from the CEO

CEPSA, like every other companyoperating in the energy sector, hadto deal with the impact of theglobal financial crisis in 2009.Demand and margins werereduced significantly for all theCompany’s activities. This crisis,which was partly compounded byhigh energy prices, has made iteven more crucial to combineeconomic development withalternative energy solutions. Themove to this new model will taketime and, during the transitionperiod, companies within thesector will have to assure aconstant supply of energy throughfossil fuels. To do so we will needto continue with our work inlocating new gas fields, as well asresearching and developing newtechnologies to offer products withincreasingly demandingspecifications.

Despite the difficulties of thecurrent economic climate, in 2009CEPSA made significantinvestment in projects which arenot just profitable, but alsonecessary if we want to remain acompetitive company andconsolidate our commitment tomeeting energy demand in asustainable manner in the longterm. Following three years ofconstruction, we have completedour project to enlarge the middledistillate capacity of the “LaRábida” refinery, which willincrease annual middle distillateproduction by 2.5 million tonnes.

We have continued with the workwe began in prior years to bringdown operating costs for all ourareas of activity. We are alsoreducing energy costs, due to theirimportance in our productionprocesses and also because oftheir impact on climate change.Thanks to our efforts in this area,our CO2 emissions were reducedby 320,000 tonnes in 2005-2009.

At CEPSA production centresminimising the environmentalimpact of our operations is apriority, and our environmentalinvestment and expendituretotalled approximately 120 millionEuros in 2009.

Safety remains a coremanagement focus for CEPSA,and is crucial for the Company’sprogress. Yet again the measureswe have implemented in this areahave led to an improvement in thelost-time accident rate for ownand contracted personnel, fallingfrom 4.65 to 3.59 for every millionhours worked.

As a member of the community, atCEPSA we are aware thatintegration into the areas in whichwe operate is vital. We havetherefore continued to consolidatedialogue with our stakeholders, aswell as supporting social projectsin the various locations in whichwe are present.

Our professionals are our mostvaluable resource, and we arecommitted to providing jobstability, motivating our personneland encouraging a humanresource management modelwhich aims to develop thepersonal and professionalcapacities of the CEPSA team.

I have the pleasure of presentingthis 2009 Corporate SocialResponsibility Report, whichreflects many of CEPSA’scommitments and achievementsthroughout 2009.

I would also like to take theopportunity to thank each andevery CEPSA professional forsharing these commitments withus, as well as for their contributionto achieving our results for theyear.

Dominique de RiberollesCEO

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KEY ECONOMIC, SOCIAL AND ENVIRONMENTAL INDICATORS

ECONOMIC 2009 2008 2007Financial and operating

Crude oil production from working interest (BOPD) 116,891 121,866 115,955

Crude oil sales (BOPD) 31,696 21,931 19,820

Processed crude (BOPD) 408,623 437,487 432,494

Product sales1 (millions of tons) 28.5 29.0 30.1

Sales revenues2 (millions of Euros) 16,084 22,831 18,888

Adjusted net operating income3 1,058 1,493 1,383

Adjusted operating income3 468 880 917

Adjusted net income attributable to shareholders of the parent company3 270 524 638

Operating cash flow (millions of Euros) 1,075 867 925

Capital and exploration expenditures (millions of Euros) 951 1,579 635

Created value (millions of Euros)

Taxes paid4 2,578.4 2,679.8 2,736.7

Generated economic value 18,640.3 25,353.6 21,483.0

Distributed economic value 17,975.5 24,468.9 20,677.0

Retained economic value5 664.8 884.7 806.0

Cash dividend agreed in the CEPSA Group6 229.1 284.4 350.9

Adjusted net income attributable to shareholders of the parent company per share3 1.01 1.96 2.38

Cash dividend agreed in each year per share (Euros) 0.80 1.00 1.25

Profits for personnel7 530.9 554.7 500.2

Government grants8 10.7 0.6 22.7

Throughout the report you will find this symbol, which indicates that the term is defined in the glossary.

1 Excluding crude oil sales.

2 Excluding excise taxes on oil & gas.

3 Excluding gains or losses on inventory price fluctuations and other non-recurring income.

4 Includes special hydrocarbon tax, other taxes and corporate income tax.

5 Retained economic value, difference between generated and distributed economic value.

6 Shareholders of the parent company and minority shareholders of subsidiaries.

7 Includes wages and salaries, contributions and provisions for pensions, social security and training expenses.

8 Includes grants from the European Union, autonomous regional governments, the Spanish government and other.

4

5

SOCIAL 2009 2008 2007Employees9

Number of staff 11,703 11,815 11,398

New staff 1,060 1,490 1,204

Staff departures 1,024 1,047 1,173

Staff turnover10 437 554 517

Average training hours per employee 462,839 600,753 473,038

Occupational health and safety

Number of lost-time occupational accidents11 89 112 112

Lost-time accident frequency rate (own personnel)12 4.11 5.27 5.40

Lost-time accident frequency rate (own personnel and contractors)12 3.59 4.65 4.89

Common illness absenteeism (%)13 3.43 3.60 3.66

Absenteeism (%) 5.30 5.46 4.82

Health and safety training hours for own personnel14 93,311 125,483 102,366

Local communities

Investment in business responsibility initiatives (millions of Euros) 3 4.2 3.2

ENVIRONMENTAL 2009 2008 2007Environmental investment and expense (millions of Euros)

Investment 41.11 38.44 39.63

Expense 78.87 68.70 59.01

Emissions by business area

Refining (t of CO2 equivalent / t of crude oil treated) 0.147 0.147 0.147

Petrochemicals (t of CO2 equivalent / t of product obtained) 0.178 0.202 0.223

Exploration and Production (t of CO2 equivalent / t of net oil) 0.074 0.062 0.044

Cogeneration (t of CO2 equivalent / total Mwh exploited) 0.262 0.256 0.239

Combined Cycle Power Plant(t of CO2 equivalent/Mwh net electricity produced) 0.410 0.404 0.392CO2 emissions (kilotonnes) 5,704 6,144 5,999Environmental training hours14 4,711 3,163 6,601

9 New staff, staff departures and staff turnover do not include CEDIPSA (100% CEPSA); this company is engaged in the operation and installation of service stations and itsactivity is seasonal.

10 Includes staff that leave the organisation due to disability, resignation, death, retirement or dismissal.

11 Accidents resulting in temporary unfitness for work, permanent disability or death.

12 Number of lost-time accidents per million hours worked.

13 Number of working hours lost per theoretical annual working day.

14 Training hours per employee are calculated on the basis of employees registered in the CEPSA “HR ACCESS” database (87.75% of total personnel, comprising the Spanish subsidiaries).

Corporate Responsibility Report 2009 |

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01CEPSA • Company profile...........................................................................................08

• Our understanding of corporate responsibility...........................................09

• Corporate Governance Model......................................................................09

• Risk management........................................................................................10

• CEPSA’s position on public policies.............................................................12

Corporate Responsibility Report 2009 | 01 CEPSA

To be a growing company that generates wealth and is committed to:creating value and safeguarding shareholders’ interests; offering qualityservices and goods to our customers; meeting the needs of ourprofessionals; establishing a framework of trust and collaboration withour suppliers; the wellbeing of society and, more specifically, thecommunities in which we operate; all with the maximum respect andminimum impact for the environment.

Our commitment

7

Compañía Española de Petróleos,S.A. (CEPSA) is an industrial groupoperating at every stage of the oilvalue chain; from oil and gasexploration and production to themarketing of oil derivatives.

Its Petrochemicals division, which ishighly integrated with the Refiningdivision, manufactures and marketsraw materials for products withadded value used by a large varietyof industries. The Company alsoengages in other activities in itsfield, such as oil and gas explorationand production, natural gas andelectricity.

CEPSA is one of Spain’s topcompanies and, through a gradualinternationalisation of its activities,also operates in Algeria, Brazil,Canada, Colombia, Egypt, Panama,Peru and Portugal, marketing itsproducts worldwide.

Activities:

• Crude oil and natural gasexploration and production.

• Refining, distribution and sales ofoil derivatives.

• Manufacture and sale ofpetrochemical products.

• Gas and electricity generation,purchases and sales. Participationin the construction and operationof the MEDGAZ underwater gaspipeline.

Its Petrochemicalsdivision, which is highlyintegrated with theRefining division,manufactures andmarkets raw materialsfor products with addedvalue used by a largevariety of industries

01CEPSA

COMPANY PROFILE

8

CEPSA believes that corporatesocial responsibility is aboutachieving operational excellence inbusiness management, improving inareas in which it has experience,responding to challenges that arise,and adapting to public requirementsand expectations. Its conduct isbased on the Mission Statement,Corporate Outlook and FoundingPrinciples.

• Mission Statement: “We are acompetitive energy andpetrochemicals companycommitted to society, theenvironment and customersatisfaction”.

• Corporate Outlook: “We areresponsible in our management ofresources and in all initiativesgeared towards our stakeholders”.

• Our Founding Principles arebased on Respect for humanrights, Transparency inmanagement and Quality andSafety in the activities we carryout, enabling us to comply withour Mission Statement and fulfil our Corporate Outlook.

OUR UNDERSTANDING OF CORPORATE SOCIAL RESPONSIBILITY

CEPSA’s Corporate Governancepolicies and procedures providesupport and set lines of action toensure that the organisation as awhole achieves the overall goals ofthe Company and that the interestsof its shareholders are protected.They are therefore focused on thefollowing objectives:

• creating value;

• customer satisfaction;

• improvement in environmental

performance, ethical conduct,energy efficiency, and safety.

In the Corporate Governance model,CEPSA’s shareholders constitute thehighest governing bodyrepresentative of the Company’sshare capital. The shareholdersmeet once a year to discuss andadopt agreements on issues ofstrategic interest for the Company.

Their agreements enter into force onthe date of their approval and aremandatory for all.

CEPSA also has a board of directorswhose mission is to determine theCompany’s strategic directions andeconomic objectives, and ensurethat the Company responds to theconcerns and needs of the society inwhich it operates. CEPSA’s board ofdirectors held 10 meetings in 2009.

Mission Statement, Corporate Outlook and Founding Principles

CORPORATE GOVERNANCE MODEL15

15 Further information in Legal Documentation and the CEPSA 2009 Corporate Governance Report at www.cepsa.com.

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http://www.cepsa.com

CEPSA has a system in place formanaging risks arising fromunforeseen circumstances which isstructured through its functionalorganisation and developed annuallyas part of the Group’s process forpreparing and reviewing its strategy.This system encompasses andevaluates the impacts of the risksidentified by the businesses andfunctional units of the Group,establishing certain measures andguidelines.

These guidelines update a systembased on the existence andapplication of a regulatoryframework, comprising basicprocedures and manuals which canbe freely consulted by all Companypersonnel. Audit plans are carriedout to oversee the correctimplementation of this framework,including compliance by thepersonnel designated to this project.

Contingency plans

With a view to protecting itsemployees and providing for thecontinuity of the Company’s activitiesfollowing impacts from possibleexternal events, the CEPSA Group isworking to standardise itscontingency plans.

The objective of these plans is tominimise the impact of anycontingency on the Company’semployees, businesses andcustomers, and where applicable, toensure the continuity of itsoperations.

47.07%

4.10%48.83%

IPIC

Market

TOTAL

CEPSA shareholder structureat 31 December 2009(%)

Members of CEPSA’s board of directors 2009 2008 2007

% Per age groupBetween 30-50 years old 38.46 31.58 21.05 Over 50 years old 61.54 68.42 78.95

% Women 7.69 5.30 5.30

RISK MANAGEMENT

01CEPSA

10

Commercial risk management

The diversity of the commercial transactions carried out by the Company requires efficient monitoring ofpayments from customers to keep the default rate as low as possible. CEPSA has implemented a Regulationthat establishes the principles of the commercial credit policy, based on a customer credit rating methodology.

For its effective application, the Company has implemented a Financial Supply Chain Management (FSCM)tool designed to manage commercial risk, into which it uploads internal data (accounting ledgers, paymenthabits, etc.) and external information (commercial and financial data, solvency assessments by credit ratingagencies) on its customers.

Each order is processed based on the credit limit allocated. If the customer increases their volume of riskwith the business area above the level initially determined, or if there has been a delay in payments, a systemis activated to suspend supply, enabling each situation to be reviewed on an individual basis. The financial andcommercial areas are thereby equipped with a tool that allows them to evaluate the risk of non-paymentassociated with each customer.

Crisis communication management

The Company has established acrisis communication systemwhich details the differentcourses of action to be followeddepending on the seriousnessand repercussions of a specificcontingency. The system also

designates the personnel fromeach area responsible forcarrying out these actions toenable them to report on thesituation in a fast, accurate andtransparent manner. Trainingsessions are held periodically to

rehearse the practical applicationof the system. Over 120 personnelparticipated in the most recenttraining session, which was heldin 2009.

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In December 2008, the EuropeanParliament approved the energypackage, “An energy policy forEurope”, specifying the targets to beachieved by 2020: improving energyefficiency, reducing the demand forprimary energy by 20%; ensuringthat 20% of total primary energyconsumed derives from renewable

sources; and decreasing GHGemissions by 20% compared with1990 levels.

Although the documents consideredas a whole include the objectives andproposals of the refining industry ateuropean level, through EUROPIAand more specifically through itsparticipation in the ENPAG (Energy

Policy Action Group), CEPSA hascollaborated actively with theEuropean Commission and theEuropean Parliament to ensure thatthe final provisions, to be approvedduring the course of 2010 andsubsequent years, include all thesector positions that have yet to bedefined.

In 2009, CEPSA continued toparticipate and collaborate in bothnational and european forums,congresses and sector-relatedassociations16, taking part inmeetings to discuss and agree oncommon sector positions on mattersaffecting the Company.

In 2009, CEPSA focused its initiativeson the following issues:

• Energy policy in Europe.

• REACH (Registration, Evaluation,Authorisation and Restriction ofChemical substances).17

• Fuel Quality Directive.

• Management of used oils.

• Biofuels.

• Integrated Pollution Preventionand Control: IPCC Directive.

• Greenhouse gas management.18

CEPSA’S POSITION ON PUBLIC POLICIES

Energy policy in Europe

16 ENERCLUB, World Energy Council, AOP, FEIQUE, ACOGEN, ASELUBE, EUROPIA, CONCAWE, CEFIC and OME, among others.

17 Information on REACH is included in the chapter on Customers.

18 Information on greenhouse gas management is included in the chapter on “Greenhouse gases”.

01CEPSA

12

On 5 June 2009 the Fuel QualityDirective (FQD) was officiallypublished, establishing the technicalspecifications for transport fuels, amatter of considerable relevance toCEPSA, with a view to reducing GHGemissions and thereby limiting theirimpact on human health and theenvironment.

The approved directive is the resultof an agreement between theEuropean Commission, theEuropean Council and the EuropeanParliament, and follows theproposed review of directive98/70/EC, also known as the “FuelDirective”, launched by theCommission on 31 January 2007, andof Directive 1999/32/EC with respectto the specifications for fuel used byinland waterway vessels.

The FQD includes most of theproposals put forward by EUROPIA.However, there are still certainpoints of concern to the sector thatare currently being studied by expertcommittees appointed by theEuropean Commission.

Fuel Quality Directive

The used oils management systemSIGAUS was created following theentry into force of Royal Decree 679of 2 June 2006 regulating themanagement of used industrial oils.CEPSA is a founder and member ofthe board of SIGAUS.

The objective of the SIGAUS systemis to guarantee and finance thecollection and treatment of selectedused oils generated by theconsumption of industrial oils in theSpanish market.

Pursuant to the aforementionedRoyal Decree, the Company hasadhered to the Prevention Planmanaged by SIGAUS. This requiresthat manufacturers of industrial oilpresent a plan including measuresaimed at generating lower volumesof waste to reduce the environmentalimpact of their activities.

Used oils

13


The use of bio-components in fuelsis intended to reduce dependency onoil and decrease GHG emissions.CEPSA has made its commitment tothis issue clear through its closecollaboration with AOP.

Order 2877/2008 issued by theSpanish Ministry of Industry,Tourism and Commerce required theincorporation of 3.4% (calorieequivalent) of bio-components infuels in 2009. CEPSA has exceededthis requirement by almost 10%,reaching a proportion of

approximately 3.7% by incorporating75,000 tonnes of bioethanolequivalent (ETBE) in its gasolinesand 219,000 tonnes of biodiesel in itsdiesel oils. The bio-componentsused meet European standards ofquality and were largely purchasedfrom domestic producers.

Biofuels

01CEPSA

14

This directive regulates industrialemissions throughout the EuropeanUnion. It is also known as directive96/61/EC (IPPC), and was revised atthe end of 2007, leading to directiveproposal COM (2007) 844 onindustrial emissions.

The purpose of this directive is tolimit and reduce the air, water andland pollution of any industrial,agricultural and livestock farmingactivities presenting a high potentialfor pollution. Compliance with thislegislation requires analysis of theaforementioned activities for the

procurement of the IntegratedEnvironmental Authorisations (IEA).This process is carried out under anintegrated system for the preventionand control of pollution, whichfundamentally consists of using thebest available techniques, preventingall pollution, using energy efficientlyand preventing accidents andlimiting their consequences, all witha view to attaining high standards ofhealth and environmental protection.

The Company supports the currentIPPC directive and its threerefineries, three petrochemicalplants, ASESA (50% CEPSA) andNueva Generadora del Sur, all havethe IEA. However, through itsparticipation in EUROPIA atEuropean level, and AOP at domesticlevel, CEPSA works to bring theattention of Madrid and Brussels todifferent issues of concern to thesector, including a thoroughassessment of the economic impactof the directive prior to its approval.

Integrated Pollution Prevention and Control: IPPC directive

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02Energy Supply

• 2009 milestones / 2010 challenges ..............................................................17

• International situation..................................................................................18

• Challenges facing the sector: CEPSA’s initiatives.......................................19

• Case study: Operation of the crude oil stabilisation plant (Colombia) ................................................22

Corporate Responsibility Report 2009 | 02 Energy Supply

2009 milestones

• Completion of projects to increasemiddle distillate production capacityat the “Gibraltar-San Roque” and “LaRábida” refineries.

• Achieved target of incorporating 3.4%(calorie equivalent) of biocomponentsin fuel, reaching around 3.7%.19

• Test sequence for bringing theMEDGAZ gas pipeline into operation.

2010 challenges

• Start-up the Middle DistillateProduction Capacity ExpansionProject at the “La Rábida” refinery.

• Achieve the target of incorporating5.83% (calorie equivalent) ofbiocomponents in fuel.

• Bring the MEDGAZ gas pipeline intooperation.

Energy availability is essential for the functioning of moderneconomies, economic growth and prosperity. As an energycompany, CEPSA plays an important public role: supplyingsociety with energy. The stability of that supply is one of itsprimary responsibilities.

19 Information on this milestone can be found in “CEPSA’s position on public policies” in chapter one, CEPSA.

Our commitment

17

International energy demandMillions of TOE (Tonnes of Oil Equivalent)

2009 has been a year ofinternational crisis that affected allmarkets. The energy sector hasbeen no exception, although thesituation has allowed importantconclusions to be reached on itsfuture.

Better quality of life and thesubsequent demographic boomhave unveiled the underlyinglimitations of our natural resourcesin dealing with energy demands.Countries and governments havealso been forced to consider theenvironmental cost of a societybased on inefficient management ofenergy resources.

The social impact of these advances,at the service of mankind, has led tomajor changes in the economicsystem.

Although gas and oil continue toplay a vital role in the current energymodel, the expected high prices offossil fuels in the future will havestructural consequences for thismodel. High prices drive the searchfor new technologies that willimprove energy efficiency, signallingthe market in how to optimiseconsumption.

Measures to slow down climatechange have had two major effectson the energy model. The first ofthese has been greater efficiencyinitiatives to curb emissionsthroughout the production chain andthe use of energy products, whilethe second impact has been thedevelopment of alternatives to fossilfuels such as biofuels, renewablefuels, etc.

Both these circumstances arereducing the structural demand foroil-based products, especially withindeveloped countries.

However, according to theInternational Energy Agency (IEA),even if new saving, efficiency andsubstitution measures are put intoeffect, in the best-case scenario,fossil fuels (coal, oil and gas) willstill represent 68% of total energyconsumption in 2030, compared with80% at present.

INTERNATIONAL SITUATION

02Energy Supply

Source: 2009 World Energy Outlook

18

1980 1990 2000 2010 2020 2030

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

Other renewables

Biomass and waste

Hydropower

Nuclear

Natural gas

Crude oil

Coal

WEO-2008 forecast

The energy sector is experiencingtroubled times. In addition to thevolatility of crude oil prices, there isalso the issue of the technicalcomplexity of exploiting newdeposits and the reduced demand inthe most highly developed countries,particularly within Europe. This hasled to disparities between supplyand demand, addressed by cuts inproduction by OPEC throughout2009.

The IEA forecasts that, in a best-case environmental scenario whereCO2 equivalent (greenhouse gases)in the atmosphere does not exceed450 ppm, energy requirements in2030 will have increased by 20% inrelation to the current level. If thisprediction proves wrong, theincrease could be almost 40%.

Furthermore, the replacement offossil fuels in the medium term (20-30 years) is restricted bytechnological and not only economicfactors. The challenge for the sectorand CEPSA is, therefore, clear.

CEPSA’s response has been toadapt its installations, improve itsprocesses and optimise operations,

while launching new projects toensure that product supply meetsmarket demand. Proof of this is theCompany’s investment to increasecapacity at the “La Rábida” refineryand at some of the units of the“Gibraltar-San Roque” refinery,which will help combat the shortageof middle distillates (diesel oil andkerosene) in the Spanish market.

CHALLENGES FACING THE SECTOR: CEPSA’S INITIATIVES

Source: National Energy Commission/IEA, 2009

The investment made toincrease capacity at the“La Rábida” refinery andat some units of the“Gibraltar-San Roque”refinery will help combatthe shortage of middledistillates (diesel oil andkerosene) in the Spanishmarket

2004 20052006

International oil supply and demand(Millions of barrels per day)

Supply

Demand

200920082007

88

86

84

82

80

78

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In June 2009, CEPSA Colombia passed the audit for ISO 9001 certification, becoming the first CEPSAexploration and production project to receive this award. The audit consisted of analysing seismicacquisition processes and verifying that high standards of quality are upheld throughout the differentstages, from planning to analysis of the data obtained.

The supply market has seen a dramatic increase in heavy crude oil price differentials (for both sweet andsour crude oil), due to the new flows generated by Asian demand, greater conversion capacity of therefineries to treat these kinds of crude oils and production cuts agreed by OPEC, which particularlyaffected crude oils with high sulphur content.

In the past year crude oil supply has also been hit by the economic crisis. Consumption has shifted,falling significantly in developed countries whilst growing in the emerging countries of Asia, with a globalreadjustment to refining and conversion capacity. This situation has led to a drop of almost 8% in thevolume of crude oil purchases made by CEPSA refineries compared to 2008. However, thanks to theconversion capacity of our refineries, the number of different types of crude oil supplied has risen to 36,including eight new kinds of oil which had not been previously processed.

In terms of the acquisition of products and taking into account that import and export levels have beensimilar to other years, diesel purchases have fallen considerably as a result of the sharp drop inconsumption in Spain during the economic crisis. Marine fuel sales, in contrast, have risen, due to theslight growth in this activity in the regions where CEPSA operates.

The supply market in 2009

02Energy Supply

20

CEPSA’s initiatives in 2009

Secure supply requirements CEPSA’s initiatives Performance in 200920:

main projects

Availability of sufficientcrude oil to carry out activity.

• Own production and acquisition of crude oil and products.

• Crude oil produced: 116,891 barrels/day(working interest).

• 20.3 million tonnes of crude oil (148 millionbarrels) acquired and unloaded at therefineries.

• 6.6 million tonnes of oil and petrochemicalproducts acquired (diesel, fuel andkerosene).

An efficient distributionnetwork to ensure thatcustomers receive productsin the right place at the righttime.

• Expansion and optimisation of the salesnetwork.

• Technological improvements to the networkand products (product traceability).

• 1,762 service stations.• Launch of CEPSA STAR EUROTRAFIC card.• Marketing of CEPSA Agromax Diesel and

Gasóleo Calefacción CEPSA Rendimiento(CEPSA Diesel Performance Heating).

• Fuels for marine use: expansion ininternational ports.

• Lubricants, greases and paraffins:international expansion, 65 countries, 16 more than in 2008.

• Asphalts: 17% increase in sales in Portugal.• Incorporation of microchips at the CEPSA

bottled-gas depot.• LOGISPLAN project.21

Other activities thatcontribute to the supplyprocess.

• Development of new supply networks.• Contribution to maintaining strategic

domestic reserves.• Incorporation of biocomponents into fuels.

• MEDGAZ: construction progress. 90%completed.• Safety stock22: 50 days of stock.• 300,000 tonnes of biocomponents.

The resources required forthe manufacturingprocesses to transform rawmaterials into productswhich are useful forconsumers.

• Maximum efficiency in refinery installations.• Distillation of crude oil to obtain derivatives.

• 20.6 million tonnes of crude oil distilled atthe refineries.

• 20.3 million tonnes of products produced atthe refineries.

• Project to increase production of middledistillates at the “La Rábida” refinery(Huelva).

• Commencement of activities for the newvacuum unit and hydrogen plant at the“Gibraltar-San Roque” refinery (Cadiz).

• Projects to increase capacity and improveenergy efficiency at the distillation units atthe “Tenerife” refinery (Tenerife).

20 Further information on the Company’s performance can be found in the 2009 CEPSA Annual Report at www.cepsa.com.

21 Information on this project can be found in the Customers chapter.

22 In accordance with Spanish legislation, each operator has the obligation to maintain reserves of crude oil and oil-based products equivalent to at least 90 days of sales. The Spanish Corporation ofStrategic Reserves of Oil-based Products (CORES) is responsible for managing the strategic reserves of oil-based products and monitoring minimum reserves of hydrocarbons (oil-based productsnatural gas).

21



CASE STUDY

CEPSA carries out exploration and production activity in Los Llanos, Colombia, where its operations include theCaracara block. Different seismic campaigns have been performed at this block and various exploratory wells23

have been drilled, which have confirmed the existence of different fields around which CEPSA has beenconstructing the necessary oil treatment installations.

The volume of water associated with the production of crude oil is high in the Los Llanos region. The block atCaracara is producing at a rate of 20,000 barrels of oil per day and four barrels of water for every barrel of crudeoil. CEPSA, therefore, has a plant for the physicochemical process of separating and treating the crude oil andwater, to ensure that the necessary specifications are met for exporting the oil and using the water.

The treatment process begins when crude oil from the wells is transferred to the tanks –Gun Barrels – where itis treated with steam and chemical products, enabling much of the water to be separated. The separated oil isthen sent to storage tanks where any remaining water is removed. Once the required specifications have beenmet, the product is transported in fuel tankers or via pipeline to a pumping station to be exported.

The separated water flows through various tanks and treatment tanks, where different separators allow theresidual oil to be recovered. The water is then pumped to a cooling pool, before being transferred to a treatmentpool where reagents are added to remove any solid residue, which is sent to a drying bed or the bioremediationarea. The remaining water is sent to an adjustment and parameter control pool where it is treated to complywith the end values established by Colombian legislation.

Once the treated water reaches the specifications required under the environmental licence awarded to Caracara,there are different alternatives for the end use of this water (injected into the subsoil, sprayed onto the land anddischarged into water currents). The Company currently reinjects 80% of the water into the subsoil and spraysthe remaining 20%, acting at all times in accordance with prevailing legislation and respecting the environment.At present, CEPSA is implementing a project to expand its production facilities with the aim of adapting its surfaceinstallations, enabling it to treat a higher volume of fluids and reinject 100% of the water from the productionprocess.

Operation of the crude oil stabilisation plant at Caracara (Colombia)

02Energy Supply

23 The drilling of various exploratory wells serves to confirm the existence of an oil or gas deposit so that the necessary extraction installations can then be built.

22

23


24

•2009 milestones / 2010 challenges ..............................................................25

•Creating value...............................................................................................26

•Case study: Generating value in Andalusia ..................................................31

03Generating Value

Corporate Responsibility Report 2009 | 03 Generating Value

2009 milestones

• Investments of 951 million Euros. • Accumulated investment of 1,000 million Euros for theconstruction of the Middle Distillate Production CapacityExpansion Project at the “La Rábida” refinery (Huelva).

2010 challenges

• Maximise retained value in a complex environment. • Maintain size and profitability.

To contribute to socio-economic growth, especially in the areas inwhich the Company is present, by developing projects and newactivities which generate employment, create value forshareholders, extend the range of products and services availableto customers and increase production activity for its supply chain.

Our commitment

25

Obtaining sustained profits is one ofCEPSA’s objectives24, which formspart of another, wider goal tomaximise value in the long term.This is quantified using indicators ofeconomic value generated,distributed and retained.

In 2009 the economic valuegenerated25 totalled 18,640 millionEuros, down 26.5% compared with2008. This reduction is primarily dueto the decrease of over 30% in theaverage price of crude oil and crudeoil derivatives.

The economic value distributed26 byCEPSA to suppliers, employees,shareholders and public institutionswas 17,975 million Euros, down26.5% compared with the prior year,attributable to the same factors thatreduced the economic valuegenerated.

The economic value retained,measured as economic valuegenerated less economic valuedistributed, was 664.8 million Euros,down 25% compared with 2008. Thisvalue was obtained in a difficultyear, marked by a significant drop indemand for oil, gas and oil products,

a steady rise in the price of crudeoil, a decline in economic activityand historically low refiningmargins.

The major fall in demand for oilproducts in 2009, due to thedownturn in industrial productionand, therefore, in transportation (themain use of oil derivatives) has alsohad a negative impact.

The listed price of Company shareshas fallen significantly in 2009, froman average value of 69.30 in 2008 to26.78 in 2009. Consequently, thePrice Earning Ratio (PER),calculated as the ratio between theaverage listed price and the netprofit per share, is in line with theaverage PER of the Spanish stockmarket and the oil and energysector.

CREATING VALUE

03Generating Value

24 More economic and financial information on the CEPSA Group can be found in the 2009 Annual Report at www.cepsa.com.

25 Generated Economic Value is obtained by adding operating revenue, finance income, share in profit of associate companies and gains on asset sales.

26 Prepared on the basis of the adjusted results. The adjusted results do not include the equity effect of changes in the price of inventories and other non-recurring items, and therefore allows a clearappreciation of the cornerstones of the business independently of the increases or decreases in the value of inventories that are required at both legal (minimum safety stock levels) and operating levels.

26


Generated Economic Value25

(Millions of Euros) 2009 2008 2007

Revenues27 18,364.9 25,115.5 21,230.3Other operating income 176.6 192.1 135.3Finance income 30.1 3.7 28.1Profit share from associates 35.6 37.5 51.4Gains on the sale of assets 33.1 4.8 37.9

Total 18,640.3 25,353.6 21,483.0

Retained Economic Value(Millions of Euros) 2009 2008 2007

Generated economic value 18,640.3 25,353.6 21,483.0Distributed economic value 17,975.5 24,468.9 20,677.0Retained economic value = difference between the economic value generated and distributed 664.8 884.7 806.0

CEPSA shares (Number of bearer shares: 267,574,941 at Euro 1 par value each) 2009 2008 2007

Quotations (Euros per share)Average 26.78 69.30 68.07Year-end (31.12) 21.77 67.60 71.00

Dividends agreed (Millions of Euros)Parent company shareholders 214.1 267.6 334.5Minority subsidiary shareholders 15.0 16.8 16.4Total dividends (Millions of Euros) 229.1 284.4 350.9Dividend agreed per share (Euros) 0.80 1.0 1.25Pay-out (%)29 79 51 52

Distributed Economic Value(Millions of Euros) 2009 2008 2007

Economic relations with suppliers28 14,637.1 20,950.0 17,089.2Employee salaries and other compensation 530.9 554.7 500.2Payments to shareholders 229.1 284.4 350.9Total taxes paid by CEPSA 2,578.4 2,679.8 2,736.7

Total 17,975.5 24,468.9 20,677.0

27 This figure includes the special tax on hydrocarbons.

28 These figures relate to investments in business responsibility activities in communities where CEPSA operates. For further information see the section on “Projects of public interest” in the chapterentitled “Part of the community”.

29 Measured with respect to net adjusted profit. Not including the gains or losses generated by changes in the price of inventories and other non-recurring results.

27


During 2009, CEPSA earmarked over530 million Euros for salaries,pension contributions and paymentsand other employee benefits.

The Company also paid taxes of over2,500 million Euros in 2009. Thisamount is largely due to the excisetaxes on oil and gas.

With respect to CEPSA’s economicrelations with suppliers, the value

generated in 2009 totalled 14,637million Euros, 30% less than in 2008.This is primarily due to the reductionin average price for supplies ofcrude oil and related products.

03Generating Value

Employee salaries and other remuneration(Millions of Euros) 2009 2008 2007

Wages and salaries and pension contributions and payments 421.2 438.1 395.6Other employee benefits 109.7 116.6 104.6

Total 530.9 554.7 500.2

Total taxes paid by CEPSA(Millions of Euros) 2009 2008 2007

Special tax on hydrocarbons 2,281.3 2,285.2 2,345.6Local taxes 59.3 43.6 37.8Income tax 237.8 351.0 353.3

Total 2,578.4 2,679.8 2,736.7

28

Economic relations with suppliers in respect of expenses included in the income statement(Millions of Euros) 2009 2008 2007

Supplies 12,876.0 18,858.0 15,263.0Transport and freight 318.6 491.1 459.9Projects, supplies and external services 1,285.5 1,421.0 1,273.3Environmental costs 19.0 16.0 11.0Other operating expenses 126.0 130.9 72.0Financial costs of remunerated debt30 12.0 33.0 10.0

Total 14,637.1 20,950.0 17,089.2

Deductions and government grants (Millions of Euros) 2009 2008 2007

Income tax deductions and credits 17.3 16.6 16.3Capital grants 10.7 0.6 22.7Operating grants 3.2 1.9 2.5

Capital grants received (Millions of Euros) 2009 2008 2007

European Union - 0.13 -Autonomous Communities 4.5 0.50 0.84Spanish central government and others 6.2 - 21.90

Total 10.7 0.63 22.74

Government loans (Millions of Euros) 2009 2008 2007

Loans extended at subsidised interest rates (average annual volume) 16.3 21.9 25.4

30 Net cost accrued in the period in respect of interest rates on bank and other financing.

29


Despite the adverse economicclimate, the investments made in2009 generated value of 951 millionEuros with suppliers.

This figure is similar to that of 2008,not taking into account theinvestment for the acquisition of

hydrocarbon exploration andproduction rights for the Caracarablock (Colombia).

Economic relations with suppliers in respect of investments (Millions of Euros) 2009 2008 2007

Exploration and production 214 742 98 Refining and distribution 594 680 413 Petrochemicals 34 27 65 Technology, gas and cogeneration 101 125 55 Corporation 8 5 4

Total 951 1,579 635

Net sales(Millions of Euros) 2009 2008 2007

Products Services Products Services Products Servicesrendered rendered rendered

Domestic market 13,711.1 142.1 19,451.8 146.5 16,274.3 151.6Rest of EU 2,246.0 5.3 2,773.5 4.9 2,641.3 7.5Rest of the world 2,051.3 209.1 2,484.9 253.8 1,929.7 225.9

Total 18,008.4 356.5 24,710.2 405.2 20,845.3 385.0

03Generating Value

30

CASE STUDY

CEPSA first commenced its activities in Andalusia over 40 years ago, with the start-up of the “Gibraltar-SanRoque” refinery. Since then, the Company has maintained close ties with this Autonomous Community,contributing to its economic development and the prosperity of its inhabitants through direct and indirectemployment, the acquisition of goods and services from local suppliers, and taxes paid to the regional authorities.The Company’s operations in the area encompass service stations, liquefied gas packaging and storage, theproduction of asphalts and lubricants, cogeneration, chemical plants and refineries.

CEPSA is the industrial leader of Andalusia, heading the company ranking with a turnover of 12,160 million Euros,measured as the average value of its product sales. Its industrial plants provide direct employment to 3,895people and indirect employment to another 4,000 through its two refineries (“Gibraltar-San Roque” and “LaRábida”), three chemical plants (Puente Mayorga, Guadarranque and Palos de la Frontera), five cogenerationplants and 50% of the combined cycle Nueva Generadora del Sur (NGS). Additionally, with purchases of goodsand services from local suppliers representing an amount of Euros 118 million in 2009, CEPSA generates furtherwealth within the community.

The Company has invested approximately 1,400 million Euros in Andalusia to construct and extend units that willincrease the production of middle distillates and alleviate dependence on external resources, in addition toimproving the energy efficiency of its plants.

One of the most significant investments undertaken by CEPSA was carried out in Palos de la Frontera, Huelva,constituting the Middle Distillate Production Capacity Expansion Project of the “La Rábida” refinery, which willplace the refinery among the most efficient industrial plants in Europe.

This project required an investment of 1,000 million Euros, generating considerable employment and wealth.During the three years of its duration, the headcount for this project was 140 professionals, with an average of1,427 additional casual workers employed by CEPSA on a daily basis bringing this figure up to 3,000 during peakperiods, such as August 2009. The project required the support of over 200 contractors, of which 50% wereAndalusian companies or companies with a consolidated presence in the region. These are significant figuresconsidering the current economic climate.

In Huelva, CEPSA represents 2.7% and 10.2% of local and industrial employment, respectively, and 38.2% of thejobs provided by the industries included in the Association of Basic Chemical Industries of Huelva (AIQB).

Between 2009 and 2013, CEPSA will invest 500 million Euros to optimise resources in the “Gibraltar-San Roque”refinery located in the Campo de Gibraltar region. These investments will include two new cogeneration plantsand new vacuum and hydrogen units, which will enable the conversion of heavy gas into automotive diesel oils.

In the Campo de Gibraltar region, CEPSA represents 0.40% of local employment, 3.56% of industrial employmentand 15.30% of all the industries included in the Association of Large Industries of Campo de Gibraltar (AGI).

In addition to suppliers and employees, part of the value generated by CEPSA in Andalusia as a result of theaforementioned activities is distributed to public institutions. The Company has directly paid local or regionaltaxes in Andalusia amounting to 41 million Euros. Furthermore, pursuant to certain financing agreements, aportion of the taxes paid to the central government are re-allocated to Andalusia.

In a difficult period for both the Andalusian economy and that of Spain as a whole, the investments undertakenby CEPSA not only serve to enhance energy efficiency in the region but also to help consolidate its businesses.

Generating value in Andalusia

31


04Employees

2009 milestones

• 2009 milestones / 2010 challenges..............................................................32

• Human capital..............................................................................................36

• Equality programmes .................................................................................38

• Attracting and retaining talent ....................................................................39

• Industrial relations.......................................................................................41

• Training ........................................................................................................42

• Case study: On the other side of the table ..................................................43

• Occupational health and safety...................................................................44

• Case study: Programmed maintenance stoppage at the “Tenerife” refinery.............................................................47

Human resources• Implementation the

Human Resources SkillsManagement Model at thetechnical headquartersand corporate units.

• “On the other side of thetable” campaign forattracting talent.

• Progress in the action planfor the TrainingProgramme leading onfrom the internal auditcarried out in 2008.

• Equality programmes:equalities diagnosis.

• Completion of the firstphase of the DevelopmentPlan for Manufacturingarea Managers.

• Start of thestandardisation of CEPSAGroup contingency plans31.

• Creation of the CEPSAEnergy Chair at the HigherTechnical School ofEngineers of SevilleUniversity.

31 Information on this milestone can be found in the Risk Management section of chapter one, CEPSA.

32

CEPSA aims to be an employer of choice for professionals in thesector, because of its culture, based on innovation, excellence andcommitment to the development and safety of its employees.

Corporate Responsibility Report 2009 | 04 Employees

Our commitment

• Completeimplementation of theHuman Resources SkillsManagement Model inthe areas of Sales,Supplies, Planning,Control and Distribution,Exploration andProduction and NaturalGas.

• Develop the CEPSAGroup’s equalopportunities policy.

• Deal with newchallenges arising fromthe human resourcesskills managementmodel: a) design of acorporate developmentprogramme, whichincludes a pro-activemobility policy; b)integration of model-based training solutionsinto training anddevelopment plans; c)design of successionprogrammes.

• Continue using theintranet as a humanresources managementtool and analyse it froman employee perspective.

• Implement the secondphase of thedevelopment plan formanufacturingmanagers: reinforcingteam managementcapacity and leadership.

• Achieve maximumemployment stabilitythrough the adoption ofdevelopment, flexibilityand mobility measures.

2010 challenges

Human resources

33

04Employees

34

• Achievement of the goalto reduce lost-timeaccident rate for own andcontracted personnel tobelow 4.65, reaching 3.59per million hoursworked.

•Standardisation oftechnical criteria to beapplied in risk analysiswhen managing changesin installations.

• Progress in theinvestigation of industrialaccidents, with greaterdisclosure of lessonslearned.

• Action taken to extendthe culture of “Zerotolerance for unsafecircumstances”throughout all CEPSAorganisations.

2009 milestones

Safety

• Keep the lost-timeaccident rate for own andcontracted personnelbelow 4.0 per millionhours worked.

•Launch the “Visibleleadership in safety”campaign: intensify thecommitment of CEPSAmanagement to ensuringsafety.

• Perform audits tomonitor theimprovement initiativesafter accidents at two ofthe industrial plants.

• Standardise technicalcriteria to be applied inrisk analysis whenmanaging changes ininstallations through thetraining of CEPSA’stechnical personnel.

2010 challenges

Safety

35


04Employees

The company’s human resourcespolicies aim to reinforce human andintellectual capital and offer anattractive working environment, astimulating professional career anda safe and healthy workplace inorder to attract and retainprofessionals.

Factors such as employee loyalty,satisfaction and commitment arekey intangible assets for the growthand development of the company,and are also beneficial when itcomes to forging trust-basedrelations with employees, affordingdistinctive advantages.

CEPSA is committed to respect forhuman rights and basic principlessuch as dignity, the abolition offorced and child labour and thesuppression of discrimination basedon gender, race, creed, religion andorigin.

In 2009, CEPSA had a staff of 11,703professionals, 0.9% less than theprevious year due to the drop inactivity, which has been particularlyevident in the service stationsnetwork. CEPSA’s commitmentwithin the current economic climatehas been to offer greateremployment stability. Consequently,initiatives have been implemented tooptimise the Company’s structure,especially in the petrochemical areawhere activities have been groupedinto the single entity, CEPSAQuímica S.A., and to promoteinternal mobility within the Group.

This decrease in human capital hasbeen partially offset by the growth inactivity within the exploration andproduction areas in Columbia, Peruand Egypt. Of the appointments in2009, 84% were new employees, andof those leaving the company, in42% of cases the contracts hadexpired and 18% left due to voluntaryretirement.

In relation to the profile of CEPSAemployees, the average age is 41.4and the average length of service is12.4 years. Of the total headcount,13% work in foreign subsidiaries. Ananalysis of employees by area is as

follows: 78.3% work in the refiningand distribution area, 12.4% in thepetrochemical area, 4.1% in theexploration and production areasand 5.2% belong to corporation,technology, the research centre andgeneral services. The proportion offemale employees has remained inline with the previous year. Lastly,91% of the workforce has apermanent contract, 7% more thanin 2007, which demonstrates thecommitment of CEPSA to providingits workers with stable jobs.

HUMAN CAPITAL

36

Breakdown by professional category and gender(Number of employees) 2009 2008 2007

Female Male Female Male Female Male

Management and department heads 77 560 73 581 68 601Expert technicians 324 1,226 310 1,226 306 1,252Technicians 444 1,398 435 1,368 368 1,252Specialists 2,694 4,499 2,747 4,631 2,543 4,283Assistants 316 165 305 139 403 322

Total 3,855 7,848 3,870 7,945 3,688 7,710

% of total personnel 33 67 33 67 32 68

Breakdown by country(Number of employees) 2009 2008 2007

Spain 10,192 10,413 10,349Portugal 756 757 522Latin America 464 364 262Canada 207 211 215North Africa 56 39 29Europe 28 31 21

Total 11,703 11,815 11,398

32 Personnel at 31 December 2009, except for CEDIPSA (100% CEPSA); this company is engaged in the operation and installation of service stations and its activity is seasonal. Therefore, the averageheadcount for 2009 is presented. 310 of the 11,703 employees in 2009; 308 of the 11,815 employees in 2008 and 315 of the 11,398 employees in 2007 work for companies of which CEPSA owns morethan 50% but less than 100%. 4,338 of the 11,703 employees in 2009 work for subsidiaries (CEDIPSA, SERVICAR AND PROPEL) engaged in the operation of service stations.

33 Recruitment and departures do not include CEDIPSA (100% CEPSA); this company is engaged in the operation and installation of service stations and its activity is seasonal.

34 Includes employees who leave the organisation due to disability, resignation, death, retirement or dismissal, excluding CEDIPSA, which is engaged in the operation and installation of servicestations and the activity of which is seasonal.

Number of employees32

(% international)

Number of incorporations33, departures33 and turnover34

(Number of employees)

200920082007

9%11,398

12%

11,815

13%

11,703

200920082007

517

1,1731,204

554

1,047

1,490

437

1,0241,060

Turnover

Departures

Incorporations

37


With the aim of effectively extendingthe principle of equal opportunitiesfor women and men to all areas ofhuman resources management, in2008 a committee was formed byCompany management and tradeunions to design an equalityprogramme.

As a preliminary step, in 2009 theCompany prepared a diagnosticreport on the equality situation inthe work centres that fall underCEPSA’s collective bargainingagreement, covering around 3,000employees. This report has beensubmitted for review to the workers’representatives. The conclusionsdrawn from the report have enabledthe Company to identify areas forimprovement and prepare a set ofrecommendations for preparingfuture equality programmes to beimplemented at CEPSA.

EQUALITY PROGRAMMES

Education and training are thetwo basic pillars for tacklingthe many challenges facingsociety in the 21st century.

CEPSA is, therefore, firmlycommitted to the belief thatuniversities are essentialcentres for generatingknowledge and transferringthis knowledge to society as awhole, and has set up variousCEPSA chairs in Spain.

In October 2009, was createdthe CEPSA Chair at the HigherTechnical School of Engineersof Seville University, the thirdChair that the Company hasestablished in Andalusia.

The aim of the Chair is topromote teaching activitiesand interdisciplinary researchinto the latest trends inproduction processes and theuse of fuel and petroleumproducts.

This fulfils one of the maintasks of the Chairs, which is toact as a link between theacademic world and thespecialised employmentmarket.

CEPSA strengthens itscommitment touniversities

04Employees

38Program of grants for postgraduate students at the FrenchInstitute of Petroleum in Paris

The degree of specialisationrequired in the sector means thatcompetition is fierce with regard toattracting and retaining talent. TheGroup therefore requires arecruitment strategy that makesCEPSA an attractive company inwhich to make a professional career.

As part of its strategy to establishlinks with future professionals,CEPSA is involved in differentinitiatives which includeparticipating in the most importantemployment forums and fairs withinits sector, such as those organisedby the Higher Technical School ofEngineers of Seville University, theCarlos III University of Madrid andthe 2nd Employment Forum of LosBarrios in Cadiz.

The Company also collaborates on aregular basis with Universia, anemployment portal aimed atuniversity students throughoutSpain. Furthermore, as in previousyears, CEPSA awarded 13 grants forpostgraduate studies at the FrenchInstitute of Petroleum in Paris andthe Institute of Petroleum at Heriot-Watt University in Edinburgh, withthe Company undertaking to recruitgraduates after they have finishedtheir studies.

The Company’s workers are itsgreatest asset. Their motivation andinvolvement and identifying theirneeds and concerns are thereforeessential to earn their commitmentand loyalty. To this end, CEPSA hasimplemented human capitalmanagement tools, designed

equality programmes and reinforcedits communication channels, as wellas providing its employees withsocial benefits that go beyond thoseestablished by law, such as pensionplans, help with schooling or grantsfor employees and their children.

Also, as a way of recognising thededication and efforts of its workers,the Company organises annualevents at its centres in Spain,Portugal and foreign petrochemicalsubsidiaries to acknowledge theaccomplishments and work of itsemployees.

ATTRACTING AND RETAINING TALENT

Internal communication is an excellent tool forproviding in-depth information on the Company’sactivities and position and for reinforcing employeeloyalty and a corporate culture. The complex natureof companies requires creating appropriatechannels to ensure a constant exchange ofinformation at all levels. It was with this aim that,in March 2009, the “Gibraltar-San Roque” refinerylaunched the programme “Breakfasts with theManager”. This initiative, organised once a month,is intended to be

an opportunity for direct dialogue between staffand the centre manager. Around eight people,nominated at random and representing bothgenders and a broad range of ages, specialistareas, company areas and departments, participatein these meetings. Managers provide informationon factory targets and new projects and addressany concerns the employees may have. Nine ofthese meetings, attended by a total of 78 employees, were held in 2009.

Breakfasts with the Manager

In recognition of their dedication and hardwork, the Company organises annualevents and rewards for its professionals

39


04Employees

One of the keys to retaining talent ispromoting professionaldevelopment. In 2009 CEPSA hascontinued to work on two projects toencourage personal andprofessional development:

• The Human Resources SkillsManagement Model: TheCompany introduced this model in2008, with the aim of managementand development of employees onthe basis of their personal andprofessional skills. The model hasbeen applied more rigorouslythroughout 2009 to identifyemployees’ strengths and areasfor improvement. Implementation

is in three phases: providingemployees with information andtraining on the model, assessmentof employees’ personal andprofessional skills, and analysis ofthe results to detect training needsand to design developmentprogrammes. 700 people took partin the project in 2009, which will becompleted in 2010 with theparticipation of a total of 1,600people.

• The manufacturing managementdevelopment plan35: Aimed atpermanently improving themanagement and leadership skillsof the Company’s manufacturingmanagement team on the basis oftraining itineraries adapted toeach level of responsibility. A totalof 7,000 training hours wereattended by more than 360managers from the threerefineries and three petrochemicalplants run by the Company inSpain. This programme receivedthe third prize in the annualawards held by the CEPSA Groupin recognition of the improvementactivities suggested by itsemployees.

Professional development

35 Further information can be found in the case study in the “Employees” chapter of the 2008 Corporate Responsibility Report.

40

The Company considers thatevaluation systems providemanagers with objective informationon the merits of individualemployees and the level ofachievement of area targets.

They also make human resourcespolicies more dynamic, by offeringopportunities for growth andpersonal development whilstmotivating employees and rewardingthem for their efforts and loyalty.

CEPSA’s professional performance evaluation systems

Dialogue and trust are thecornerstones of CEPSA’s labourrelations. The Company’s policy inthis respect adheres to theFundamental Principles of theInternational Labour Organisation,made evident by trade unionrepresentation in CEPSA and zerowork hours lost to labour disputes.

97% of personnel are represented bya plural and democratic electedbody, in accordance with theprevailing legislation for eachcountry, and 42% of the workforcecomes under collective bargainingagreements, which are negotiateddirectly by employee-electedrepresentatives. The remainingemployees come under agreementsbeyond the Company’s jurisdiction,where representations aredetermined indirectly, albeit withunion participation.

In 2009, collective labouragreements for 2009-2010 weresigned for CEPSA Química Palos andagreements for 2008-2012 for CEPSAQuímica Montreal and CEPSAAviación. A total of 519 workerscome under these agreements.

LABOR RELATIONS

Employees who receiveperformance evaluation(%)

60.12 60.49 60.75

200920082007

41


Personnel under collective labour agreements

2009 2008 2007Breakdown by business units Total % Total % Total %

Refining, Distribution and Marketing 8,819 78 8,984 78 8,672 77Petrochemicals 1,365 12 1,443 12 1,494 13Exploration and Production 206 2 203 2 170 2Corporation, Technology, Research Centre and General Services 921 8 907 8 923 8

Total 11,311 11,537 11,259

Breakdown by union representation

2009 2008 2007Employees % Employees % Employees %

Union representation 9,981 85 10,220 87 10,239 90No union representation 1,722 15 1,595 13 1,159 10

Total 11,703 11,815 11,398

In an ever-changing environmentlike the present, where work areasevolve quickly, keeping employeesup-to-date has to be a continuousprocess.

In 2009, training was given on suchareas as teamwork, innovation,financial issues, etc., totalling morethan 460,000 hours and averaging 45hours per person. This figure isdown 23% on the previous year, as in2008 training was given to 148people who had joined the Companyfollowing the extension of the “LaRábida” refinery. Similarly, trainingin safety issues has been reduced,as the new personnel trainingprogramme was largely directed atoccupational health and safety. Thisapart, the average number oftraining hours remained in line with2007.

The increase in environmentaltraining hours is due to thereclassification of certain trainingactivities from the safety area to theenvironmental area, together with anew training initiative implementedat the “Tenerife” refinery.

Throughout 2009, the Companycontinued the global review of itstraining strategy, to establish a newmodel bringing training into line

with the Company’s objectives andstrategy and adapted to the needsidentified through the HumanResources Skills ManagementModel.

TRAINING

36 Training hours per employee are calculated on the basis of employees registered in the CEPSA “HR ACCESS” database (87.75% of total personnel, comprising the Spanish subsidiaries).

04Employees

42

Training hours36

Environment

Safety

Total

6,601

102,366

3,163

125,483

4,711

93,311

473,038

600,753

462,839

200920082007

CASE STUDY

Based on the conviction that a company’s main asset is its human capital, the primary objective of the recruitmentand selection unit is to attract and select the best candidates for jobs in the Company.

The complexity of the employment market, social changes and the different values demanded by new generationsof professionals have led the Company to put special emphasis on its modernity, as a company that creates qualityemployment. As the internet is at present the most widely used platform for exchanging and finding information,the contact tool of choice has become a website or specific virtual space.

The website www.alotroladodelamesa.com has, therefore, been launched, providing an innovative and differentway of communicating with those seeking work. On this website, CEPSA becomes the candidate, giving potentialemployees the chance to interview the Company virtually and obtain information on all its areas of activity and jobvacancies.

The Company is embodied on the website by a personal guide who takes users interactively through the differentcontent so that they can view CEPSA’s “curriculum vitae” (history, business areas, corporate culture and plans forthe future) and recruitment policy.

In addition to this information, www.alotroladodelamesa.com includes a corporate video, contributions fromCEPSA employees who share their experiences of the Company, and a form for contacting the Recruitment andSelection unit directly.

An important element of the website is thepossibility for candidates to submit theircurriculum vitae online and keep their detailsupdated through a system of passwords.

As part of the promotion of this new image,an online campaign was launched toadvertise the website on the mainemployment portals, which together with theCompany’s participation at the biggest jobsfairs and forums and the presentations givenat different universities, helped to bring waymore visitors to the website than expected.The consequent rise in the number of CVssubmitted enlarged the Company’s database(13,552 new CVs and 2,152 updates to CVsduring 2009) and the Company image wasrated positively by candidates.

“On the other side of the table” campaign

43


http://www.alotroladodelamesa.com

http://www.alotroladodelamesa.com

CEPSA considers it essential toimplement a health and safety in theworkplace policy that preventswork-related risks and adheres tothe Occupational Health and SafetyAct. Preventing accidents is apriority for CEPSA and the companyhas established procedures, trainingprogrammes and monitoringsystems (OHSAS 18001) to this end,on which it has continued to workhard throughout 2009.

Employees participate in theCompany’s health and safetyinitiatives through health and safetyrepresentatives. A company mayalso have a health and safetycommittee, depending on thenumber of employees and theiractivities. This is a joint body forregular and periodical consultationson the Company’s health and safetyinitiatives.

At the plants which have anoutsourced health and safetyservice, various measures weretaken to improve the coordination ofthe service in 2009, such asstandardising the medical protocolsapplied to each position and using acomputer system to organisemedical check-ups more efficiently.

CEPSA is committed to co-operatingwith service companies in theapplication of provisions for safety,hygiene and health, providing a co-ordination system involvingoccupational health and safety visitsand the exchange of experiences.

With the aim of standardising thelevels of (technological) riskacceptable in different activities andapplying them to risk analysis atnew and existing facilities, CEPSAhas developed Risk AcceptanceCriteria guidelines based on globalpractices in the oil, chemical andgas sector and prevailing legislation.In relation to these guidelines, thefollowing initiatives have beencarried out:

OCCUPATIONAL HEALTH AND SAFETY37

37 The information for the safety area does not include data for international sales offices or CEPSA Panama, ECANSA and AMARCO, as no registry system is available.

CEPSA has developedRisk Acceptance

Criteria guidelinesbased on global

practices in the oil,chemical and gas

sector and prevailinglegislation

04Employees

44

• Standardise technical criteria tobe applied in risk analysis whenchanges or modifications aremade. The procedure hasconsisted of integrating RiskAcceptance Criteria into thechange management guidelinesand analysis of operational risk. In2010, the Company will perform astudy of the processes carried outat the work centres andsubsidiaries to evaluate thetechnical quality of theseprocesses and establishstandardised methodology.

• Integrate the application of RiskAcceptance Criteria in the analysisof technological risk whenoverseeing changes to the centresaffected by major accidentlegislation.

• Apply additional security levelsand measures (layers ofprotection) to the risk studies ofthe new projects and existinginstallations.

In addition, in 2009 the periodicreview of the industrial facilities atthe “Tenerife” refinery wasperformed by the safety engineers.The programme enables the designand operating standards of the unitsto be updated, and the installationsare evaluated to check whether theyare in line with the best standardsand practices of the sector.

Emergency drills were also carriedout at all plants with subsequentanalysis of the action teams andidentification of potentialimprovement initiatives. These drillsinvolved the medical and fire-fighting teams as well as servicesuppliers—subcontractors,transport companies, etc.—whowere also required to participate sothat they could be made aware ofthe procedures to be followed inemergency situations, thus avoidingthe unnecessary involvement of theemergency teams in protectingthem. Emergencies can, therefore,be brought under control morequickly, affecting as few people aspossible. These drills have beenaudited by third parties at some ofthe plants, thereby obtainingobjective information on emergencyprocedures at the installations.

45

1. The “Tenerife” and “Gibraltar-San Roque” refineriesreceived a distinction from the AutonomousCommission for Safety and Hygiene in the Workplace(COASHIQ) in recognition of the results achieved inpreventing accidents in the workplace in 2008.

2. The Autonomous Commission for Safety andHygiene in the Workplace (COASHIQ) granted anaward to the “La Rábida” refinery for achievingzero lost-time accidents involving own personnelduring 2008.

2009 acknowledgements


On the other hand, three monthlyindicators have also beenestablished to monitor more closelythe improvements made followingaccidents and incidents, operationalrisk analyses and audits performedat the plants. As this issue is veryimportant to the Company, theCEPSA audit department has begunto monitor the extent to whichcorrective measures arising fromaccident investigations have beenimplemented.

A fundamental part of theCompany’s occupational health andsafety activities is the training andinformation provided to itsemployees. The “Zero tolerance ofunsafe situations” campaign is oneway of encouraging compliance with

established guidelines to avoid andrectify unsafe activities that couldresult in injuries to personnel. In2009, this campaign was launched inthe different manufacturing areaswithin Spain and with thesubcontracted service companies.

The goal of the “Disclosure oflessons learned” project is to studythe mistakes committed in industrialaccidents and incidents with a viewto preventing potential incidents atCEPSA facilities. The safety areakeeps a systematic record of allaccidents and potentially seriousincidents that have occurred at theplants for analysis.

This record is shared with all theCompany’s safety units, which thenevaluate the risk of a specificincident also occurring at theirplants and the measures thatshould be adopted to prevent such asituation from arising. Wherenecessary, the appropriatemeasures are then established.

Following the implementation of allthese measures, the lost-timeaccident rate for own and contractedpersonnel in 2009 was kept belowthe target of 4.65, totalling 3.59 permillion hours worked. However, theCompany deeply regrets the death atthe start of 2009 of a worker from asubcontracted service company atone of its plants.

Accident rates/absenteeism38

for own personnel39

2009 2008 2007

Lost-time occupational accidents40 89 112 112Accident frequency rate41 4.11 5.27 5.40Accident severity rate42 0.11 0.10 0.10Common illness absenteeism43 (%) 3.43 3.60 3.66Absenteeism (%) 5.30 5.46 4.82

04Employees

46

CASE STUDY

From 28 February to 21 March 2009 the “Tenerife” refinery carried out a programmed maintenance stoppage which, dueto the scope of the work performed, was the most important and complex of all the stoppages carried out over thepast ten years, involving investment of over Euros 18 million.

During the three-week stoppage period, preventative maintenance work was performed at the plant (periodic reviewand inspection of equipment to prevent, identify and rectify possible flaws) along with corrective maintenance work(carried out once a problem has been identified). Important improvement techniques designed to optimise processesand reduce the environmental impact of the plant were also implemented.

The stoppage was manned by 65 CEPSA employees and more than 1,000 workers from 37 different subcontractors,organised into 24-hour shifts. Many different high-risk tasks were involved in the stoppage and, on many occasions,these were performed simultaneously in a limited space, which required correct planning from all involved.

Owing to the broad scope of the work carried out, in the two months prior to the stoppage the refinery’s occupationalhealth and safety service analysed the most important tasks to identify possible risks and establish preventativemeasures.

53 health and safety technicians from the subcontractors and 6 outside experts led by the refinery’s own health andsafety experts were responsible for ensuring that two main objectives were met: prevention of occupational accidentsand health and safety risks.

The efforts of all those involved in the stoppage, coordinated through a programme of cascading meetings and constantexchange of information, during around 305,000 hours of work, have had positive results, i.e. zero lost-time accidents,only two incidents with light injuries and satisfactory coordination of preventative activities.

Programmed maintenance stoppage at the “Tenerife” refinery

38 Absenteeism data for companies with head offices in Spain.

39 Includes those companies in which CEPSA holds an interest of over 50%. Exploration and Production data are included for those fields in which CEPSA operates in Columbia and Algeria. Information on the fields in which CEPSA operates can be found in the Annual Report available at ww.cepsa.com.

40 Accidents resulting in temporary unfitness for work, permanent disability or death.

41 Number of lost-time accidents per million hours worked.

42 Number of calendar days lost due to accidents per thousand hours worked.

43 Number of working hours lost per theoretical annual working day.

200920082007

Lost-time accident frequency rate41

5.27

3.59

5.40

4.11

Own personnel

Own and contracted personnel

4.89 4.65

Accident frequency rate (own personnel)

Refining

Petrochemical

COASHIQ200920082007

8.47

4.99

4.51

7.69

6.83

3.99

2.36

4.32

1.82

47


05Customers

2009 milestones

• 2009 milestones / 2010 challenges .............................................................48

• Commitment to quality and customer satisfaction ....................................52

• Product stewardship....................................................................................53

• CEPSA and REACH in 2009..........................................................................53

• Improvement activities by market ..............................................................54

• Commercial communications and data protection.....................................57

• Information security ....................................................................................58

• Case study: Introduction of a microchip in butane gas canisters .............................................................59

REACH Service stations Fuels (gasoline, diesel and fuel oils)

48

• Optimisation of CEPSA’sparticipation in theSubstance InformationExchange Forum (SIEF).

• Commencement of theimplementation ofRegulation 1272/2008 onthe classification,labelling and packagingof substances andmixtures, based on theGlobally HarmonisedSystem (GHS)established by the UnitedNations.

• Creation of theCLINOVA 8 innovationproject in the fuels area,with progressiveincorporation into all thelinks of the value chain(employees, customersand suppliers).

• LOGISPLAN Project.

• Implementation ofenvironmental healthand safety certificationsin all CEPSA’s fuelsuppliers.

CEPSA undertakes to offer its customers quality products andservices, satisfying their requirements through fast, safe andefficient supply.

Corporate Responsibility Report 2009 | 05 Customers

Our commitment

• Register all the substancesmanufactured and/or sold by theCompany.

• Collaborate with the customers ofCEPSA Química in implementationof its new product stewardshipprogrammes.

• Implement the UNE-EN ISO 27001standard, pursuant to the SpanishData Protection Act, in all thetransport companies CEPSA workswith in Spain and Portugal.

2010 challenges

REACH Product stewardship Fuels (gasoline, diesel oils and fuel oils)

49

05Customers

50

44 DETISA, a fully-owned CEPSA subsidiary, is engaged in the cogeneration and sale of electricity to industrial consumers.

Aviation fuel Electricity

2009 milestones

Liquefied petroleum gases: butane and propane

Lubricants

• Installation of mobile dataterminals in the vehicles thatsupply fuel to aircraft atFuerteventura airport.

• Fitting of microchips into 300,000new butane gas canisters and600,000 used.

• Consolidation of CEPSALubricantes’ ComprehensiveCustomer Service Department.

• Certification by the SpanishNational Energy Commission thatthe energy supplied by DETISA44 isproduced at highly efficientcogeneration plants.

• Implement a CustomerRelationship Management (CRM)tool to ensure effectivecommunication with endcustomers of propane and butanethrough the Company’s website,telephone services and textmessages.

• Consolidate the innovationsintroduced with respect toprocesses, products and peoplewith a view to improving theperformance of the lubricants soldby CEPSA, motivating theCompany’s employees and buildingon relationships with customers.

• Further the development of theenergy advisory activity in the areaof cogeneration.

2010 challenges

Liquefied petroleum gases: butane and propane

Lubricants Natural gas

51


05Customers

Ensuring the high quality of itsproducts and services is a keypriority for CEPSA in itscommitment to customers. Thisaspect encompasses all theactivities surrounding a sale, such

as attending customer queries bytelephone and managing orders andcomplaints, factors that have adirect impact on the customer’sperception of the quality of theservice provided.

The customer satisfaction rating for2009 is 99.89%, in line with the99.88% achieved in the two prioryears.

.

COMMITMENT TO QUALITY AND CUSTOMER SATISFACTION

CEPSA guarantees the quality of the products and crude oils it purchases for processing at its refineries andpetrochemical plants by engaging an independent inspection company to verify, at the ports of loading andunloading, that the crude oils and, in particular, the products purchased meet the specifications required.

In the case of the products sold from CEPSA’s plants – diesel oil, petrol, kerosene, etc. - the Company hasestablished a protocol whereby daily samples are taken from the storage tanks and subsequently analysed in alaboratory to monitor their quality and specifications.

Finally, prior to loading the product onto the tanker, the Company provides the ship’s captain with a safety datasheet detailing the characteristics of the product and the precautions to be taken when handling and/ortransporting it in the event of an accident.

Guaranteeing the quality of crude oils and acquired products

52

Product stewardship at CEPSA is based on a number ofdirectives aimed at promoting the safe and responsibleuse of products. This philosophy encompasses health,safety, environmental, socioeconomic and technicalissues to guarantee product quality to customers.

During 2009, the Company participated in severalprogrammes aimed at improving the profile of itsproducts, including a project to reduce the impact on airquality of the VOC emissions from its products and ananalysis of the life cycle of Polyethylene terephthalate(PET) with a view to implementing eco-design features,where possible, in its products.

PRODUCT STEWARDSHIP

On 1st June 2007, the EuropeanUnion approved the REACH(Registration, Evaluation andAuthorisation of Chemicals)regulatory framework, a unique andcomprehensive system forregulating, registering, evaluatingand authorising chemicalsubstances and their free circulationwithin the European market.

This Regulation requires companiesto register any substancesmanufactured, imported or sold inquantities of over one tonne, toevaluate the associated risks anddetermine their possible impact onpeople’s health and theenvironment.

Prior to the established deadline of30 November 2010, companies arerequired, working collaborativelythrough the Substance InformationExchange Forum (SIEF), to compilea list identifying the properties,toxicology, acceptable uses, etc. ofthe substances manufactured and toagree the classification and labellingof those requiring registration.Throughout 2009, in addition tocarrying out its internal preparationsto register these substances, CEPSAhas participated actively in variousconsortia to determine the productsor groups of products to beregistered.

CEPSA Química has made a greateffort by publishing the uses andapplications of its chemical productson the Company’s website for thepurposes of providing thisinformation to its customers45.Information on the uses andapplications of CEPSA’s otherproducts is available on theCONCAWE website.

With a view to implementing, in 2010,the European standard forharmonising the classification,labelling and packaging ofsubstances and mixtures (EuropeanRegulation 1272/2008), in 2009CEPSA has focused primarily onclassifying the substances acquired,processed and sold by the Companyand evaluating their impact in itssafety data sheets.

CEPSA AND REACH IN 2009

45 http://www.cepsa.com/cepsa/Que_ofrecemos/Productos_quimicos/REACH/

53


http://www.cepsa.com/cepsa/Que_ofrecemos/Productos_quimicos/REACH/

05Customers

IMPROVEMENT ACTIVITIES BY MARKET

54

Service stations

• Adaptation of customer loyaltyprogrammes: After acquiringthe TOTAL service stations inPortugal, and with a view tooffering the same services andbenefits to all customers in theIberian Peninsula, CEPSA hasadapted and introduced the“Porque Tu vuelves”, TRANSClub, STAR and STAR Flotascustomer loyalty cards inPortugal.

• A firm commitment toinnovation: At the end of 2007,CEPSA Estaciones de Serviciolaunched the CLINOVAinnovation project for thegeneration, evaluation andimplementation of innovativeideas. The eight innovationgroups created in 2008 havegenerated 60 ideas during 2009,of which approximately 40%have already been introduced orare under implementation.

Fuels (gasoline, diesel and fuel oils)

• LOGISPLAN: CEPSA’s oiltankers cover a distance ofapproximately 7.5 millionkilometres per year. To optimisethe routes used, a work groupwas created to develop anadvanced route planning system,LOGISPLAN. This project hasreceived first prize in the CEPSAGroup’s annual awards forimprovements proposed by itsemployees.

Marine fuels

• A customer satisfaction surveyis carried out in this market,covering passenger and freightships and fishing boats. Theresults of the 2009 survey reflectan improvement on the alreadyhigh customer satisfaction andretention ratings obtained in2008, as well as a positiveassessment of the personalisedtreatment and product deliveryservice offered by the Company.

Aviation fuel

• Improvements in the use of thesoftware application forresponding to complaints. Thistool enables efficientmanagement of relations withdifferent operators and ofcomplaints relating to supplies,prices and flight assignments.

In 2009 the response time andnumber of requests relating tobilling have been reduced by 15%,while those relating to delays inthe supply of fuel are down 27%compared with the prior year. Theaverage response time ofoperators is down by 67%compared with the prior year.

• Installation of mobile dataterminals in the vehicles thatsupply fuel to aircraft atFuerteventura airport, enablingpermanent monitoring of theirposition and the status of criticaloperations.

Liquefied petroleum gases:butane and propane

• Start-up of a website for gasinstallation companies that willallow the mandatory annualmaintenance of the tanks thatthe Company has installed in themarket to be closely monitored(over 12,000 installations).

• Installation of a mobile dataterminal in the Company’s bulkpropane fuel tankers whichallows them to consult salesorders and the quantity ofproduct delivered and theamount remaining in the tank inreal time.

This system will enable theCompany to render emergencyservices, provide supplies to newcustomers, bill customers duringdelivery and optimise the routesused by the tankers, generatingdirect savings in fuel and reducingemissions.

Lubricants• Consolidation of the

Comprehensive CustomerService, aimed at providingcustomers with information andassistance on specific mattersrelating to the products sold byCEPSA Lubricantes, withautomatic follow-up of thestatus of the consultation orcomplaint.

• Advancement of the “Órbita”project, which includes providingtraining on the management ofused oils, health and safety andlegislation to mechanicalworkshops and smallbusinesses , to ensure thesehave a good level of legal andpractical knowledge, as part ofthe promotion of CEPSAproducts.

As the current leader in the Spanish lubricant market, CEPSA has been selling lubricants for over fifty years andis in the process of strengthening its international presence.

In addition to offering its customers a wide range of products for all types of applications, the Company alsoextends a machinery diagnosis service to its large customers through the physical-chemical analysis of thelubricant used. The customer takes a sample and sends it to CEPSA’s Research Centre, which after various trials,issues a diagnosis together with preventive recommendations for the machinery to work properly.

SIGPAT programme

55


05Customers

56

Asphalts

• Progress has been made in thedevelopment of a customer areaon the CEPSA website, wherethe Company’s customers canview their invoices, orders,overdue balances and the statusof any complaints they may havelodged. This will increase theavailability of commercialinformation in real time andfacilitate transactions betweenboth parties.

Petrochemicals

• Reduction in the response timefor complaints: Results areissued within 15 days (thereasons for the consultation andmeasures proposed). In 2010CEPSA aims to reduce thenumber of complaints receivedby all its lines of business, aswell as to increase thepercentage of responses totechnical consultations withinthe period indicated.

Natural gas

• Gradual increase in the volumeof energy advisory servicesrendered to current andpotential customers, prioritisingthe optimisation of the electricitysupplied and generated, inaddition to audits, cogenerationfeasibility studies andconsultations. In this respect,the number of initiatives rosefrom 145 in 2008 to 190 in 2009.As a result of these initiatives,improvement measures havebeen implemented for 54customers, representing annualconsumption of approximately1,200 GWh.

Electricity

• The Spanish National EnergyCommission has awardedDETISA with certification toshow that the energy suppliedcomes from a high-efficiencycogeneration plant supplied byNueva Generadora del Sur46

Combined Cycle Power Plant.This plant uses the steamgenerated to meet the heatenergy demands of the“Gibraltar-San Roque” refinery.The energy sold has a sourcethat emits lower CO2 and wastecompared with the averagevolumes for Spain.

46 Nueva Generadora del Sur is a Combined Cycle Power Plant in which CEPSA holds a 50% interest.

As part of its commitment toresponsible commercialcommunications, CEPSA is amember of several organisationswhich undertake to safeguardconsumer rights and faircompetition, such as the SpanishAdvertising Self-RegulationOrganisation (Autocontrol),“Confianza on-line”, the SpanishAssociation of Advertisers or thePortuguese Association ofAdvertisers (APAN).

In 2009, the Company collaboratedwith the Spanish Secretary of Statefor Climate Change and the SpanishAdvertising Self-RegulationOrganisation (Autocontrol) toprepare a Self-Regulation Code onthe use of environmental issueswhen advertising products andservices. CEPSA was one of the firstenergy companies to sign thisagreement. Its aims includepromoting purchases of productsand services with a lowerenvironmental impact, maintainingthe trust of consumers by avoidingmisleading environmentalarguments in advertising, andpreventing unfair practices.

Finally, CEPSA has implemented themeasures required by law to protectthe personal data of the individualswith which it operates (customers,suppliers and employees), based onthe strictest confidentiality andadoption of information securitymeasures.

COMMERCIAL COMMUNICATIONS AND DATA PROTECTION

CEPSA was one of thefirst energy companiesto sign the Self-Regulation Codeon the use ofenvironmental issueswhen advertisingproducts and services

57


In April 2009, CEPSA obtained ISO20000 quality certification formanagement of its IT systemsservices, having previously obtainedISO 27001 certification forinformation security management inNovember 2008.

The establishment of an advancedservices management system hasbrought about a significant changein culture, which has affected alllevels from management tooperations personnel.

This move has also increased theefficiency and importance of ITservices, bringing them closer andintegrating them further intobusiness processes and establishinga common language.

INFORMATION SECURITY

05Customers

58

CASE STUDY

The Company sells butane through its subsidiary CEPSA Gas Licuado, which has: 11 bottle filling and containerdistribution plants in Spain and Portugal; a market share of approximately 17%, reaching as much as 30% in someautonomous regions; over 150 distributors and close to 3,000 self-service points (service stations and other pointsof sale), as well as sales of over 15 million bottles.

In 2008, with a view to supplementing its existing range of containers, CEPSA Gas Licuado launched a new butanegas canister, with a more innovative and practical design. This new bottle includes a microchip which allows datato be transmitted by radio waves using the Radio Frequency Identification (RFID) system.

CEPSA is currently the sole supplier of butane in the Spanish market to include a microchip in its butane gascanisters, and one of the pioneers at global level in this regard. The introduction of the chip has resolved theproblems previously faced by the optical reader when deciphering the code and review and filling dates stamped onthe base of the old bottle, which due to its constant handling and position may be incorrectly identified.

This device is basically the “electronic ID” of the canister, and shows when and in which plant the gas bottle wasfilled during the year, thereby providing exhaustive safety control. In addition to the re-stamping date, it also offersinformation on the geographical traceability of the bottles, optimising the production of the bottling plant and theavailability and distribution of bottles.

In 2009, the Company acquired 300,000 new canisters with this microchip, bringing the total to 700,000. It is expectedthat these kinds of bottles will be incorporated at a rate of 200,000 per year. Additionally, a further 600,000 usedcanisters have been re-stamped and equipped with this device. The Company’s objective is to re-stamp and fit allthe Company’s butane gas bottles with a microchip (6 million used gas cylinders) within ten years.

Introduction of a microchip in butane gas canisters

59


06Suppliers • 2009 milestones / 2010 challenges .............................................................60

• Managing suppliers and contractors ..........................................................62

• Generating value for suppliers in areas where CEPSA is present................................................................64

2009 milestones

• Completion of the implementationof the Global Supplier ManagementModel.

• Revision of the corporateresponsibility parameters includedin the Supplier Evaluation andApproval System, to increase theirspecific weighting.

• Final stages in creating a supplierssection on the CEPSA website.

• Review of the General Terms andConditions for Purchasing andContracting, to include obligatorycompliance with the provisions ofthe International LabourOrganisation (ILO) and theprinciples of the United NationsGlobal Compact.

60

2010 challenges

• To perform a generalreview of the SupplierEvaluation and ApprovalProcess.

• To standardise thecontracts to be used byCentres and PurchasingUnits with the Group’sdifferent suppliers.

• To put the suppliers areaat www.cepsa.com intoservice.

• To implement the TSMS– RePro global supplierregistrationmanagement system.

Forging trust-based relations with suppliers and servicecompanies is a key focus for CEPSA to achieve its objective, whilealso helping to bring the Company closer to the communities inwhich it is present. CEPSA’s goal is to be perceived as one of thebest companies in the sector in terms of excellence of its supplyprocesses and management of its relations with these stakeholders.

Corporate Responsibility Report 2009 | 06 Suppliers

Our commitment

61


06Suppliers

A key process in the Company’sactivities is the purchase of goodsand services from suppliers andcontractors. CEPSA maintainsethical and responsible relationswith these stakeholders, combiningmanagement criteria that respectthe environment and are sociallycommitted and economicallyfeasible.

To ensure positive relations withthese stakeholders, CEPSA hasincorporated a corporate purchasingand contracting policy based on theprinciples of transparency,maximum objectivity, processefficiency and providing benefits forall the parties involved in the valuechain.

CEPSA’s supplier and contractorselection policy includes a SupplierEvaluation and Approval System,which aims to ensure the principlesof neutrality, fairness and equalopportunities, as well asguaranteeing quality, environmentalprotection and health and safety inthe workplace throughout the entirevalue chain. In 2009, the Companyreviewed the corporateresponsibility parameters

considered in its Supplier Evaluationand Approval System, updating itscriteria to include new issuesrelated to CEPSA employmentpractices and compliance withsocial, labour and ethical directives,initiatives and standards, such asthe United Nations Global Compact.

The Company has also reviewed itsGeneral Terms and Conditions forPurchasing and Contracting toensure that suppliers andcontractors act in line with theinitiatives supported by CEPSA (theUniversal Declaration of HumanRights, the provisions of theInternational Labour Organisationand the principles of the UnitedNations Global Compact) whencarrying out their activities.

.

Improving processes

CEPSA has continued to improve itsprocesses, and progress has beenmade in the implementation of aGlobal Supplier Management Model,through which CEPSA outsources itssupplier registration, classificationand document managementservices. This model will beoptimised through the currentinternal process which has beenundertaken to record and approvesuppliers using web-based tools.

Work has also continued on theimplementation of a suppliers areaon the CEPSA website, providing allthe information and documentationrequired by suppliers for theircommercial activity and interactionwith the Company during certaintransactions included in thepurchasing cycle.

MANAGING SUPPLIERS AND CONTRACTORS

62

Approximately 3,100 of CEPSA’s 3,600 active suppliers have beenapproved through this process and are still valid. Of this total, over 900have been informed of the availability of quality, environmental andhealth and safety in the workplace management systems based on,among others, the ISO 9000, ISO 14000 and OHSAS 18000 standards,as well as other specific standards and policies applicable to thecorporate responsibility field.

Supplier approval process

63


06Suppliers

The Company’s main suppliers areof crude oil and oil products. In itscommercial supplies47 CEPSA workswith prestigious and solventcommercial suppliers which arewell-established in this highlyspecialist market. The Companyalways follows the regulationsissued by international

organisations with regard toembargoes, sanctions or any othertype of applicable trade restrictions.

CEPSA always strives to benefit thecommunities in the areas where itoperates, providing localemployment opportunities andpromoting the contracting of goodsand services.

In 2009, local suppliers in theregions where CEPSA operates(excluding bank services, crude oiland products) accounted for 49.83%of the total purchases made, withthe subsequent creation of value inthese communities.

GENERATING VALUE FOR SUPPLIERS IN AREASWHERE CEPSA IS PRESENT

In countries such as Egypt, Algeria, Colombia and Peru, CEPSA remains committed to operating in a mannerthat respects the human rights of the community, its employees and its contractors. Careful attention is paidto ensuring that the company which carries out the activity, as well as its contractors, do not allow any childor forced labour or cultural, ideological or gender discrimination. They are also required to comply withprevailing employment legislation in each country, and respect contractual commitments, freedom ofassociation, working hours and all other employee rights.

Exploration and Production: Commitment to Human Rights

47 Supplies of crude oil for refineries, sale of equity crude oil production and sale and purchase of energy product imbalances from the CEPSA refining system.

64

Purchases by area48

(Thousands of Euros) 2009 2008 2007Total Local % Total Local % Total Local %

Cadiz 201,084 77,659 38.62 263,548 84,210 31.95 201,833 88,863 44.03Canary Islands 52,431 17,821 33.99 54,192 15,779 29.12 50,045 13,875 27.73Huelva 92,317 40,850 44.25 146,510 53,014 36.18 105,147 48,650 46.27Madrid 155,138 85,900 55.37 362,635 179,111 49.39 689,446 395,132 57.31Algeria49 122,379.2 73,641.8 60.17 202,524.7 95,445.3 47.13 117,198.2 57,651.2 49.19Egypt 27,895.7 20,894.2 74.90Colombia 190,035.4 95,785.1 50.40Peru 15,675.2 14,463.2 92.27

Total 856,95 427,014 49.83 1,029,410 427,559 41.53 1,163,669 604,171 51.92

48 2008 and 2007 information is not available for Egypt, Colombia and Peru.

49 Local purchases have been considered as those transactions exclusively carried out with local companies, excluding subsidiaries of international companies present in Algeria.

In 2009 local suppliers inthe regions where CEPSAoperates (excluding bankservices, crude oil andproducts) accounted for49.83% of totalpurchases made

65


07Part of theCommunity

• 2009 milestones / 2010 challenges .............................................................66

• Managing the impact on communities .......................................................68

• Contributing to projects of public interest...................................................71

• Case study: Restoration of the mortuary temple of Thutmose III ..............75

2009 milestones

• Involvement of amember of theCEPSA QuímicaBécancourneighbourhoodassociation in thejoint audit of thecompany QMI-SAIGlobal and theCanadianChemicalProducers’Association.

• Increase in thenumber of visits tothe “La Rábida”refinery and thePrimera de Paloslagoon (Huelva).

• Progress in thedevelopment of thefive-year actionplan based on theresults of thepublic perceptionsurvey performedby the “Gibraltar-San Roque”refinery in 2008.

• Fulfilment of thecommitments togenerate local jobsand respectenvironmental,social and culturaldiversity in theareas of Columbiaand Peru in whichthe Companycarries outexploration andproduction activity.

• Organisation of thefirst CEPSA “SocialValue" Awards inthe “Gibraltar-SanRoque” refinery.

66

2010 challenges

• To perform a survey onthe external perceptionof the “La Rábida”refinery (Huelva).

• To set up the Forum forSouthern Europe inCadiz.

• To sign a frameworkagreement with the LaLaguna University inTenerife.

• To create aneighbourhoodassociation for the”Tenerife” refinery.

Mutual awareness, through dialogue, and involvement incommunities projects where we operate, within a framework ofinitiatives aimed at forming quality relations based on trust,accessibility and transparency.

Corporate Responsibility Report 2009 | 07 Part of the Community

Our commitment

67


At CEPSA we know that ouroperations and activities in supportof communities need to consider theexpectations and demands of thesocieties of which we form part, andmechanisms are therefore in placefor dialogue with our mainstakeholders.

• CEPSA Química Bécancour formspart of a community consultationcommittee, which includes arepresentative from each of theindustries in the businesscomplex, including CEPSAQuímica Bécancour, and eightcommittee members whorepresent the local community.The committee met five times in2009, and CEPSA has presented

the committee with a report on theinvestments it has made in reducinggreenhouse gas emissions duringthe year. The committee membershave also visited the Company’sfacilities and gained first-handexperience of the effort it is makingto protect the environment andreduce greenhouse gas emissions.Finally, in October 2009, a joint auditwas performed on the companyQMI-SAI Global and the CanadianChemical Producers’ Association,with the participation of a memberof the CEPSA Química Bécancourcommittee.

• The CEPSA Química Montrealcommittee was formed at theinitiative of the plant itself, andcomprises representatives fromthe community, the Company andthe environmental bodies locatedwithin the area. In 2009, thiscommittee met on five occasionsand dealt with issues including theprogress made in the project torecover biogas, with its positiveimpact on reducing greenhousegas emissions; the work beingcarried out to achieve OSHAS18001 health and safetycertification in 2010; and theappointment of a committeemember to resolve any queriesfrom the community.

MANAGING THE IMPACT ON COMMUNITIES

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The results of the maintenancestoppage, which lasted 26 days,were also discussed and afavourable conclusion was reached.Finally, with the aim of bringing thelocal community closer to industrialactivity, the Company organised twovisits to the plant, which wereattended by a total of 86 peoplecomprising petrochemical studentsand other members of thecommunity.

• Comité de Fomento Industrial deCamaçari (COFIC), an associationto which DETEN Química belongsand which represents thecompanies in this city’s industrialestate, created the ConselhoComunitario Consultivo, which meton eight occasions in 2009. Duringits fifteen years of existence, this

association has forged a culture ofdialogue based on the companies’commitment to keeping the localcommunity informed on a range ofdifferent topics while gaugingpublic perception of the Camaçariindustrial area. One of the positiveconsequences of these successfulrelations has been theparticipation and contribution ofthe Conselho in the round ofnegotiations held with thecompanies and the Institute forthe Environment for renewal of theoperating licence for the Camaçariindustrial area. DETEN Químicaalso organised visits to the plantfor students, teachers,associations and institutions,receiving a total of 187 visitors.

• Global management of the “LaRábida” refinery in Palos de laFrontera (Huelva) is based on theEuropean EFQM (Excellence forQuality Management) model,which considers relations withexternal and internalstakeholders. As a result of thesurvey carried out in 2008 and inresponse to requests from thecommunity, the refinery hascontinued to promote some of theinitiatives already implemented,such as the Film Festival, basesport and the programme of visits.

Aware that the growth and prosperity of a region depend on its youngpeople, the government bodies Table régionale de l’éducation and theConférence régionale des élus of the Centre-du-Québec region havelaunched the programme La réussite éducative, j’y participe! The aim ofthis project is to reinforce the education system at all stages with a viewto reducing the school drop-out rate and, ultimately, improving the levelof education within the community. Parents, pupils, schools, governmentbodies and companies from the Centre-du-Québec region are all involved.CEPSA Química Bécancour, representing the project in this area, is awareof the importance of the initiative given the increasing demands of theemployment market and the need for companies to recruit qualified andcompetent personnel. The plant therefore establishes relations withstudents through different activities designed to bring the industry closerto the community and promote science degrees, along with the possibilityof pursuing a career in Bécancour. In 2009, the installations were visitedby 200 students, including a group of nine-year old school children, to givethem the chance to see how science is applied within companies. Theplant designed a special magazine for the students, which included apresentation about the Company, the different job positions and a numberof scientific experiments.

La réussite éducative, j´y participe !(Educational success project)

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In 2009, a total of 4,199 peoplevisited the installations, 6% morethan in the previous year, confirmingthe mutual interest of the refineryand the local community in gettingto know each other better. Alsogiven the importance of small andmedium-sized enterprises inSpain’s business world, the refineryand Huelva’s Federation ofBusinesses have signed a trainingagreement to improve thecompetitiveness of Huelva’s smalland medium-sized enterprises.

• The “Gibraltar-San Roque”neighbourhood committeecomprises four neighbourhoodassociations, a local businessrepresentative, a technician fromthe local council’s environmentaldepartment, a technician and themost senior figure from theenvironmental council, as well asrepresentatives from the“Gibraltar-San Roque” refinery. Toensure greater representation ofofficial institutions, in 2009 thecouncillor for local festivals, thecouncillor for industry and thecouncillor for the Bay all joinedthe committee.

The neighbourhood committeemet three times in 2009 to discussissues such as the presentation ofthe “Arroyo Madrevieja”biodiversity project, which will beimplemented in 2010, and theexplanation of the public warningsystem that the refinery uses indrills and in the event of realemergencies. Spokespeople forthe neighbourhood associationsalso took part in thesediscussions. In response to thesurvey on public perceptionperformed in 2008, the committeehas developed a five-year actionplan comprising 27 projects. Aspart of these projects, 2009 sawinitiatives aimed at boostingprofessional training within thecommunity through the creation ofspecific qualifications to meetCEPSA’s requirements, by meansof the CEPSA Chair andTechnological Campus. Four opendays were also held and visitswere organised for school childrenand associations resulting in atotal of 1,600 visitors to the plant.

• With the aim of raising communityawareness of the productionprocesses and environmentalprotection and safety measuresimplemented at the “Tenerife”refinery, the Company organisedschool visits which were attendedby around 900 children. Inaddition, to promote employmentin the area, the refinery and theCanary Island Employment servicehave organised a course to trainunemployed people to becomechemical plant operators,undertaking to recruit 60% of thecourse participants.

The industrial areas of Tenerife,Cadiz and Huelva have made aspecial effort to strengthen relationswith different associations,institutions and the media, to ensurebetter communications, improveawareness of their concerns andoffer more insight into the business.To this end, the Company hasorganised special meetings, topic-specific seminars and visits to itsinstallations.


70

• In Columbia, social initiatives withthe local community were steppedup as a consequence of theincrease in exploratory activitiesand new drilling processes in2009. Many of these activities havecentred on recruiting local skilledand unskilled workers to promoteemployment. The Company hasalso provided trainingprogrammes to equip recruits withthe best tools to carry out theirwork safely and with respect forthe environment.

CEPSA has been in close andconstant contact with itsstakeholders, demonstrating itsopenness to dialogue when it comesto receiving suggestions or dealingwith any concerns that may arise inrelation to projects underway. It hasalso launched alternativecommunication channels to thoseestablished by law, such as advancemeetings, informative newslettersand visits to its projects.

• In Peru the main stakeholderinitiatives have been directed atprojects that are of public interest,primarily among the communitiesdirectly affected by the seismicprojects underway in the basins ofthe River Ucayali and the RiverMarañón. In 2009, generalcorporate responsibility guidelineswere approved for the explorationand production area, to provide aframework for ensuring that theCompany acts correctly in itsrelations with its stakeholders interms of social, environmental andethical issues.

As part of the stakeholder dialogue process, the Company is committed tosupporting social, cultural, environmental51 and sporting projects incollaboration with institutions and experts in the different fields, to becomecloser to the communities in which it operates and encourage greaterintegration and understanding.

50 For a breakdown of social, cultural, environmental and sporting activities, please see the 2009 Corporate Responsibility Report at www.cepsa.com.

51 Information on environmental initiatives can be found in the biodiversity protection section of the “Environmental management” chapter.

CONTRIBUTING TO PROJECTS OF PUBLIC INTEREST50

Investment in businessresponsibility initiatives

2009 2008 2007Euros % Euros % Euros %

Social 1,070,050 36 1,239,600 30 723,330 22Cultural 996,648 33 1,434,631 34 1,050,972 33Environmental 215,712 7 251,132 6 376,890 12Sports 721,428 24 1,237,526 30 1,058,426 33

Total 3,003,838 100 4,162,889 100 3,209,618 100

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The Company’s work in the socialsphere is focused on initiativesgeared towards the most under-privileged members of society.

The CEPSA “Social Value” Awardswere held once again with the aim ofrecognising and supporting the bestsocial projects of any nature carriedout by different associations, NGOsand institutions. These awards wereheld for the first time in the Campode Gibraltar, for the fifth time inHuelva, for the third time in Madridand for the second time in Tenerifeand Portugal. A total of 233 projectswere received and sponsored by1,524 employees, with 16 of theseprojects then receiving awards fromthe juries of the respective centres.

In Canada, the Companycollaborates with differentassociations and organisations suchas the Maison des familles deMercier-Est in Montreal or Secoursaux plus démunis in Bécancour, theobjective of which is to donatefoodstuffs and other kinds ofservices to the under-privileged. InColumbia, the Company hassupported projects includingtraining programmes for businesspeople, livestock projects for youngpeople and courses onadministration, finance andmarketing, to promote and open upnew channels for marketing itsproducts. Investment projects forraising livestock were also carriedout, which help provide a structurefor livestock rearing systems andgenerate stable income within thecommunities.

In Peru, the Company has supportedthe construction of multi-usespaces where a community’s mainsocial and political activities can becarried out, the construction ofcommunal lodgings andimprovements in drinking watersystems, through the maintenanceand building of water wells. Aproject has also been implementedto provide electricity to rural areas,which will benefit around 400inhabitants, and radio equipmenthas been supplied together with thenecessary maintenance equipmentto facilitate communicationsbetween communities. With regardto health issues, medical campaignshave been launched, such asvaccinations against polio, measles,hepatitis B, etc., benefitting almost3,500 people.

.

Initiatives to improve quality of life

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CEPSA “Social Value" Awards Campaign

CEPSA is committed to promotingand preserving popular customs,culture and historical heritage, aswell as encouraging education bycollaborating in cultural,educational and scientific activities.

In addition to the programmesaimed at secondary school pupils,CEPSA has shown its commitmentto supporting the universitiesthrough its CEPSA Chairs. In 2009the CEPSA Energy Chair at theHigher Technical School ofEngineers of Seville University52 wascreated to join the existing Chairs atthe Universities of Oviedo, Madrid(Polytechnic University), Cadiz andHuelva. In Canada, the Companysupports projects to help reduceschool drop-out rates and promotetraining of young people throughprojects such as Fondationressources jeunesse in Montreal orCarrefour jeunesse emploi inBécancour. In Columbia and Peru,

CEPSA has supplied teachingmaterials to help developeducational and fun activities. InAlgeria, the Company has lent itssupport to 60 of the country’sschools in organising the fourthseries of open days to raiseawareness of energy savingmeasures.

Playing its part in the community,CEPSA supports popular customs,culture and the recovery ofhistorical heritage, establishinglinks with local communities topreserve their traditions and gainbetter knowledge of the people andtheir history. Some examples ofthese popular customs are thefestival in honour of Senhor deMatosinhos in Portugal, theCarnival in Tenerife and theProcession of the Virgen delCarmen in Ceuta. In Columbia, theCompany has supported thepresence of artisans at the

Expoartesanías fair, an event ofgreat national importance, and thePedro Flórez de la Bandola CriollaMandolin International Festival, atwhich the best player of thetraditional Creole mandolin isselected. On a cultural front, aninternational competition wasorganised in La Rábida (Huelva) toobtain ideas for building a spacethat would commemorate all theelements and places relevant tothe European Discovery ofAmerica: the Muelle de lasCarabelas, the Monastery of LaRábida, the Iberoamerican Forumand the Celestino Mutis park. Aspart of the Company’s commitmentto restoring historical heritage, ithas collaborated, in Cádiz, in therestoration of the Sacrarium ofSanta María Coronada, dating backto the 18th century, and theexcavations to restore and maintainthe Carteia site in 2006-2011.

Promotion of culture and education

52 Further information on this Chair can be found in the attracting and recruiting talent section of the “Employees” chapter.

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CEPSA supports activities aimed atencouraging sports in thecommunities in which it operates,mainly through local sports clubsand schools.

In the Campo de Gibraltar region theCompany has supported the ArcoIris Wheelchair Basketball Club,which lifts barriers to give peoplewith disabilities the chance to takepart in the sport. Free sailingcourses were given to children inHuelva and in Tenerife, and a grantis awarded for the best junior sailorof the year.

In Peru, sports equipment has beenprovided to local football andvolleyball teams and inter-community football championshipswere organised. In Columbia, 180adults and children from CEPSA andthe local community took part in afootball tournament.

Planned to coincide with theFootball World Cup to be held inAfrica in 2010, the Company isparticipating in the Play4Africaproject, which will revolve aroundfour action programmes: the “Anti-aids programme”, the “Anti-malariaprogramme”, the “Waterprogramme” and the “Right to playprogramme”, which forms the basisof the Play4Africa initiative, by givingmore than two million children theopportunity to play by providingfootball boots and balls.

Sport initiatives

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CASE STUDY

In April 2008, the Egyptian Supreme Council of Antiquities, led bythe renowned Egyptologist Zahi Hawas, granted the Fine ArtsAcademy of Santa Isabel de Hungría of Seville the concession tocarry out excavation, restoration and maintenance work at the siteof the mortuary temple of Thutmose III. CEPSA, which has beenworking in Egypt since 2004, decided to support this project,which also has the backing of the Spanish Embassy in Cairo.

Thutmose III was one of the great pharaohs of Egypt and isreferred to as the “Egyptian Napoleon” because of the greatprogress made in expanding the empire during his reign. He builthis mortuary temple in ancient Thebes on the west shore of Luxorat the outer limits of the fertile land of the Assassif region.

The archaeological restoration of the temple could take around 10years and will be divided into yearly campaigns to excavate andrestore the remains found, which will each last between a monthand a half and two months. The team of experts in charge of thework is formed by Egyptologists, archaeologists, artists,topographers, restorers and documentalists in addition to theEgyptian workers who are specialised in archaeological andrestoration work.

Consequently, work has been carried out over a period of twomonths to uncover and restore the remains of the temple, whichonce served to ensure the pharaoh eternal life. In the firstcampaign we have found 4,000 blocks that will allow the temple tobe restored. Well preserved reliefs and drawings in an excellentstate of conservation have also been found.

The ultimate goal is to set up an open-air museum where thethousands of tourists who visit the ancient land of the pharaohscan admire the temple remains, which had been curiouslyneglected by Egyptologists since the 1930s. We are thereforeenormously lucky to have the chance to explore this structure,which will also provide us with further information on ThutmoseIII.

CEPSA is playing a part in uncovering the history of this importantperiod, as well as helping the local economy by providing jobs forthe more than 100 families which live exclusively from thearchaeological mission work of foreign teams.

Myriam Seco ÁlvarezDoctor in History, director of the archaeological project.

Restoration of the tomb of Thutmose III

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08Commitment to Technology

• 2009 milestones / 2010 challenges..............................................................76

• Investment in R&D&I (Research, Development and Innovation) ...............79

• Research and development projects ...........................................................81

• Sector challenges ........................................................................................81

• Case study: Production of purified isophthalic acid ...................................83

2009 milestones

• Completion of the activities forstart-up of the vacuum unit and thehydrogen plant at the “Gibraltar-San Roque” refinery, as well as anupgrade of the technology used inthe ISOMAX unit.

• Completion of mechanicalinstallations for the project MiddleDistillate Production CapacityExpansion Project of the “LaRábida” refinery.

• Progress in the construction ofthree cogeneration plants: one atthe “Gibraltar-San Roque” refinery,another at the “La Rábida” refineryand a third at ASESA.53

53 Asphalt plant in which CEPSA holds a 50% interest.

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2010 challenges

• To implementmodifications tothe ISOMAX unitwith the aim ofincreasing theoverall conversioncapacity of the“Gibraltar-SanRoque” refinery.

• To complete theimplementation ofunits involved inthe expansion ofthe “La Rábida”refinery and moveon to theproduction stage.

• To implement aproject to increasethe transformationcapacity of thevisbreaking unit atthe “La Rábida”refinery, therebyincreasing fuel oilproduction.

• To progress in theBITUROX projectat the “La Rábida”refinery toincrease asphaltproduction.

• To implementcogeneration atASESA and thesecondcogeneration unitat the “La Rábida”refinery, and tocompleteconstruction of asimilar unit at the“Gibraltar-SanRoque” refinery.

.

R&D&I is a sustainable growth and value-generating tool forCEPSA that enables the company to optimise its productionprocesses and product quality, thereby meeting sector challengesand improving its technological capacity and reputation.

Corporate Responsibility Report 2009 | 08 Commitment to Technology

Our commitment

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Scientific research has manyapplications, including themanufacture of new materials orproducts, the design of innovativeproduction systems or processesand improvements to existingtechnologies. Innovation also allowscompanies to combine theirtechnical, financial and operatingcapacities with the minimumpossible resources, launchingimproved products, processes andservices onto the market in aclimate ever more competitive andglobalised.

R&D&I is therefore a crucial toolwithin the CEPSA growth andcompetitiveness plan, allowingproduction to be maximised with thesmallest possible impact on theenvironment and developing newfuels that reduce oil dependence.

The technology and innovationactivities carried out by theCompany support processes in theexploration and production, refining,petrochemical and commercialfields. They are also focused ondeveloping projects, processes andproducts with a positive impact onthe environment, reducing emissionand waste levels.

.

08Investment in R&D&I(Research, Development and Innovation)

Conceptual engineering:during this stage a numberof initial aspects aredefined, such as capacity,approximate location of thefuture facility, cost, return,future extensions, mainprocesses, supportservices, etc.

Basic engineering: this stage analyses theconceptual engineeringstage in more depth, andinvolves precise definitionof the facility location (plotplan), plan reviews,process diagrams,preliminary calculations,equipment purchasespecifications, etc.

Detailed engineering:the objective of this stageis to provide a detaileddesign for the facility sothat construction canbegin. The stage involvesa review of basicengineering, definitiveprocess diagrams, theremaining equipment tobe acquired, etc.

Construction,installation

and start-up.

Stages of an industrial project

78

In 2009, CEPSA earmarked 972million Euros for R&D&I activities,down 33% on the prior year due tocompletion of investment in the “LaRábida” refinery. This significantinvestment activity has mainlyfocused on the following:

1. Exploration and production area.Various exploratory activities andprogrammes have been carried outin Algeria, Egypt, Colombia, Peruand Spain, including the drilling ofproduction and injection wells,seismic campaigns and othertechnical improvements.

2. MEDGAZ gas pipeline. During 2009, 90% of this project wascompleted, with progress made onconstruction of the land stations inAlgeria and Spain. In December2009, testing began for thepipeline’s entry into service, and thefacility is expected to start up in thesecond half of 2010.

3. Petrochemicals area. The main investment in this areawas used to improve facilitiesthrough energy efficiency andsavings programmes; improvementsto and optimisation of the plants’manufacturing structures;construction of a new thermal oilfurnace; and recovery of the biogasproduced during the effluenttreatment process.

4. Refining area. In this area projects have beendeveloped to meet the risingdemand for middle distillates:

The “Gibraltar-San Roque” and “LaRábida” refineries are undertakingprojects to cover growing deficits indiesel oil (an automotive fuel whichallows CO2 emissions to be reduced)and kerosene (aviation fuel) in theSpanish market.

In 2009, the “Gibraltar-San Roque”refinery completed theimplementation of the new vacuumunit and hydrogen plant, both ofwhich were built to increase theproduction of better quality fuels.These facilities are currentlyoperating as normal. At the sametime work continued to update thetechnology used in the ISOMAX unit,to increase its capacity to convertheavy distillates into light products(mainly gasoline and diesel oil).

R&D&I investment(Millions of Euros) 2009 2008 2007

Innovation in product manufacturing, the design of process improvements and the expansion of activities 900 1,366 415Innovation activities geared towards safety and reducing environmental impacts 51 52 49Research and development 19 23 17Other (new Research Centre) 2 8 8

Total 972 1,449 489

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Atmospheric and vacuum distillation

CRUDE UNIT

TEMP. 350-390º

Pressure is somewhathigher than with theatmospheric process

CRUDE OIL

KEROSENE

LIGHT DIESEL OIL

HEAVYDIESEL OIL

ATMOSPHERICWASTE

GASES ANDNAPHTHA

ATMOSPHERICDISTILLATION

TEMP. 400-416º

Pressure of 25-70 mmHg

LIGHTVACUUM

DIESEL OIL

HEAVYVACUUM

DIESEL OIL

VACUUMWASTE

Oil distillation has been carried out since the dawn of the industrial age,and over the years. CEPSA has incorporated technological advances intoits systems, based on the processes in question, the crude oil type andcost factors.

Following the early days of atmospheric distillation, which produced alimited range of products, it was discovered that vacuum distillationcould produce intermediate products and high-quality lubricant oils.Procedures then became increasingly sophisticated, from thermal andcatalytic cracking to the high-pressure hydrocracker, with goals thatincluded perfecting the performance of the fuels obtained.

The crucial difference between atmospheric and vacuum distillationunits is the pressure involved, with the vacuum process involving lowerpressure than the atmospheric method. As CEPSA refineries strive toobtain the highest possible volume of middle distillates, heavy productsand waste are subjected to further refinery cracking processes such asISOMAX, hydrocracking or fluid catalytic cracking (FCC).

A brief history of refining

1960Hydrocracking and other processes

1940Hydrodesulphurisation

1930Catalytic cracking

1913Thermal cracking

1870Vacuum distillation

1850Atmospheric distillation

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At the “La Rábida” refinery,construction work has beencompleted on the extension project,involving a number of new unitssuch as crude, hydrocracking,hydrodesulphurisation andhydrogen. The construction of theMiddle Distillate Capacity ExpansionProject (MDCE) will lead to anannual increase of 2.5 milliontonnes for middle distillateproduction based on heavierproducts, and will guarantee thesupply of these distillates to theSpanish market, thereby reducing

dependence on imports. It should benoted that the hydrocracker unit inAndalusia uses technologypioneered by CEPSA, allowingproduction to be geared towardsautomotive diesel oil withoutexcessively increasing gasolineproduction. The new facilities willcome into service in 2010, and willmake “La Rábida” a top-levelrefining platform, increasing itsproduction and conversion capacityand improving its efficiency.

The CEPSA research centre, whichopened a new building in 2008,provides R&D&I support to theCompany’s various areas. Thecentre’s objectives includeimproving industrial processeswithin CEPSA Group facilities(increasing their output and makingthem safer and more efficient),reducing the impact of industrialactivity and controlling the quality ofthe products sold.

The most significant activities in2009 include:

• Conversion of tyres into fuel androad asphalt. The use ofautomobiles generates a numberof waste products, including usedtyres, which reach approximately300,000 tonnes every year inSpain. Although not hazardous,

when burnt they release toxicfumes, and they are notbiodegradable. Over the comingyears CEPSA is consideringincluding a product in certain fuelswhich is obtained from convertedused tyres, thereby helping toreduce the environmental impact ofthis waste. Furthermore, ProductosAsfálticos, S.A. (PROAS), a CEPSAsubsidiary, uses powder from usedtyres to manufacture a new range ofbitumen products which have beenmodified and improved with theaddition of rubber. These are usedfor road surfacing.

• Incorporation of CEPSA Químicaactivities. The research centre hasincorporated all research projectsand activities formerly carried outby CEPSA Química into its ownactivity, the most significant ofwhich include the technologydeveloped to produce morepurified isophthalic acid (PIPA)54.

Sector challenges

The CEPSA research centre isworking on a number of basic andapplied science developmentprojects, which it expects toimplement in the medium and longterm and will help the sector face itsfuture challenges.

RESEARCH AND DEVELOPMENT PROJECTS

54 For further information see the case study at the end of this chapter.

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Production of biofuels

Biofuels obtained from organicwaste are a renewable energysource that helps cut greenhousegas emissions, diversify primaryenergy consumption and reduceenergy dependence on fossil fuels.

Directive 2009/28/EC on thepromotion of the use of energy fromrenewable sources establishesminimum levels for the use ofbiofuels in transport fuels, whichwill be increased until they reach10% of the caloric content of thesemixes in 2020 (by which date 20% oftotal energy consumption will haveto come from renewable resources).To meet these objectives CEPSA isstudying the introduction ofvegetable oil into itshydrodesulphurisation units toobtain a product that is compatiblewith biodiesel. Oil hydrogenationtesting is being carried out at the“La Rábida” and “Tenerife”refineries, with the aim of producinghigh-quality diesel oil frombiological resources.

The long-term goal in this area is touse third-generation biofuels, suchas those obtained through algaecultivation. In addition to theirnatural ability to absorb CO2,produce oxygen and accumulatefats, the main advantage of theseorganisms is that they can be usedfor conversion to biodiesel.

As this project involves a number ofstages, ranging from microbiologicalcultivation of microalgae toextraction for the production ofbiodiesel, CEPSA is involved innumerous research initiatives todefine the most effective measuresin this area.

CO2 capture, fixation andrecovery

Studies are currently underway onthe capture of carbon dioxidethrough microalgae cultivation,taking advantage of this organism’scapacity to absorb CO2, even inindustrial facilities such ascogeneration plants and furnaces.CEPSA is therefore investigating thevarious kinds of CO2 emitted by itsfacilities and which, therefore, canbe absorbed through the naturalalgae process.

As part of the 7th EuropeanFramework Programme, CEPSA haspresented a project (currently at theapproval stage) which, in addition tofixing CO2, also aims to turn this gasinto more valuable products(methane, ethanol and otherpetrochemical products), which canbe subsequently used as chemicalreagents.

Production of phenol forchemical processes

Phenol is a compound used in theconstruction, chemical andpharmaceutical sectors. Extremelyexpensive raw materials arerequired to produce this compoundand, to make the process moreprofitable, the research centre isworking on a project financed by theCDTI (the Spanish Centre for theDevelopment of IndustrialTechnology) to obtain phenol directlyfrom benzene, a raw material whichis available at the refinery.

Conversion of natural gas intoaromatic compounds

CEPSA Química is currentlyexperiencing a shortfall in thearomatics it needs to producepurified terephthalic acid (PTA) andpurified isophthalic acid (PIPA),which are used to producepackaging and textile fibres. As aresult of this deficit a project hasbeen put forward for the conversionof natural gas into aromatics, andthe main resource used in thisprocess will be gas from theMEDGAZ pipeline.

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CASE STUDY

The petrochemical activity carried out by CEPSA is highly integrated with its refining activity. The business unitCEPSA Química, S.A. produces and sells over 3.5 million tonnes of petrochemical products each year.

One of the products manufactured by this company is purified isophthalic acid (PIPA), a compound used to producePET bottles and other forms of industrial plastics. Growing demand for this product and its high market price haveled the Guadarranque chemicals plant to consider increasing the production of PIPA and improving its quality.

The traditional process used to manufacture PIPA in this plant involved the use of metaxylene, a raw materialsupplied directly by the “Gibraltar-San Roque” refinery, under high temperatures and in low concentrations. Thisproduced limited PIPA and led to the formation of by-products such as CO and CO2, and an end product with anunsuitable colour.

Following numerous attempts to operate under lower temperatures and with higher metaxylene concentrations,industrial production was deemed unsuccessful due to the volatility of the isophthalic acid produced, which led toblockages in the industrial plant (formation of gels, incipient crystals, polymorphism, etc.).

The studies carried out by the CEPSA research centre identified an area where the reaction mix was oversaturated(reaching levels above solubility), and also detected that it was dependent on temperature and metaxyleneconcentration levels, meaning that the process could not continue.

A protocol was then established to define PIPA production using high metaxylene concentrations (up from 12% to20%) and under lower temperatures (approximately 195ºC). As a result, production levels increased, but the reactiontime was unchanged.

During the first pilot scheme carried out under these conditions, fixed costs were brought down by 5% comparedto the prior process, and product quality improved. Once the industrial reactor had been brought into line with theconditions selected for the pilot plant at the Company’s research centre, greater control was achieved over operatingvariables and the fixed costs saving has now reached 10%.

Production of purified isophthalic acid (PIPA)

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09EnvironmentalManagement

• Environmental management systems.................................................88

• Environmental investment ...................................................................88

• Resource consumption indicators .......................................................90

• Atmospheric emissions........................................................................92

• Water consumption and reuse .............................................................93

• Controlled discharge management .....................................................94

• Waste management..............................................................................95

• CEPSA’s position on recently enacted legislation................................97

• Case study: Replacement of furnaces at CEPSA Química Palos Plant .............................................................98

• Protection of biodiversity......................................................................99

• Case study: Biodiversity Action Plan ...................................................101

2009 milestones

• “Tenerife” refinery: start-up of thenew liquid effluent treatment plant.

• “La Rábida” refinery: study toimprove the quality of liquideffluent.

• “Gibraltar-San Roque” and“Tenerife” refineries: valuation ofthe impact of activities on airquality.

• Continuation of the project tooptimise the environmentalparameters of all CEPSA facilities.

• Definition of the strategy and actionplans regarding the EnvironmentalResponsibility Act and RoyalDecree 2090/2008.

• Suppression of the use of fuel oilas a fuel at the CEPSA QuímicaPalos de la Frontera plant.

84

Due to the nature of its activities, CEPSA assumes responsibility forthe environment in which it operates. The Company is committed toreducing its environmental impact as far as possible, implementing anumber of mechanisms to meet this objective.

Corporate Responsibility Report 2009 | 09 Environmental Management

85

Our commitment

• To launch a recycling and energy-saving campaign in Madrid andPortugal.

• To eliminate volatile organiccompounds from CEPSA QuímicaPuente Mayorga tanks and toreduce levels in the State PollutantRelease and Transfer Register (E-PRTR 2009).

• To reduce the environmental risk ofthe east dike at the “Tenerife”refinery.

• To develop biodiversity protectionand conservation action plans:identifying flora and fauna in theareas in which plants are located inSpain.

• Evaluation of environmental risksat CEPSA Química Puente Mayorgain line with the UNE 150008standard.

2010 challenges

85

09Environmental Management

86

2009 milestones

• Start-up of the new B-401N furnace(burners with low NOx emissions55)at CEPSA Química Palos de laFrontera.

• Recovery of waste from cementfacilities at CEPSA QuímicaGuadarranque.

• Review of operating methodologyand projects to minimise theorganic burden of products sent tothe wastewater treatment unit.

• Progress in the management of oldwaste from the Tarragona plantand its recovery as bitumen.

• Development of biodiversityprotection and conservation actionplans: creation of an environmentalstation in San Roque.

• Reorientation of DETEN Química’scorporate responsibility initiative:Forest Ring Project.

55 For further information on this project see the case study at the end of this chapter.

• Verify the environmental riskssurrounding CEPSA installations inPortugal.

• Carry out a study into the odoursreleased by the CEPSA QuímicaGuadarranque plant.

• Open the Arroyo Madreviejaenvironmental station in SanRoque to the public.

• Reduce the generation of organiceffluents at DETEN Químicathrough the zero effluentsprogramme.

2010 challenges

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Environmental issues have becomea key factor for businesses overrecent years, leading to numerousdebates and the enactment ofsignificant legislation in this regard.The public in general and, morevocally, ecological groups, arerequesting policies and above allaction to stop or prevent thedeterioration of our naturalresources.

CEPSA has developed mechanismsto reduce at source any possiblecauses for this deterioration which,

due to the Company’s industrialactivity, may have a negative impacton the surrounding environment.These are mainly based on theoptimisation of energy efficiency inthe Company’s processes, cuttingdown the use of raw materials andemissions.

To meet its objectives the Companyhas defined and implementedenvironmental managementsystems for its main business areasand facilities.

These systems enable CEPSA tofulfil the commitments to legalcompliance, ongoing improvementsand preventing pollution establishedin its environmental policies. Theimplementation of these systems isa commitment renewed every yearand specified in the annualmanagement programme, wherethe objectives and goals forcomplying with environmental policyare set forth and documented.

CEPSA invested a total of 41.11million Euros in facility projects andenvironmental initiatives in 2009,showing the Company’scommitment to environmentaltargets, irrespective of its businessresults.

The main investment within theRefining area was earmarked toreduce atmospheric emissions andimplement the best availabletechniques for the “La Rábida”refinery extension. In the

Petrochemicals area, investmentfocused on measures to reducesubsoil contamination in storageareas and controlling atmosphericemissions.

ENVIRONMENTAL INVESTMENT


88

Environmental investment and expense

2009 2008 2007Expense Investment Expense Investment Expense Investment

Millions of Millions of Millions of Millions of Millions of Millions of Environmental aspect Euros % Euros % Euros % Euros % Euros % Euros %

Waters 27.82 35.2 7.83 19.0 25.81 37.6 7.84 20.4 25.86 43.8 5.36 13.5Atmosphere 25.71 32.6 21.19 51.5 20.06 29.2 22.88 59.5 18.02 30.5 29.44 74.3Waste 10.57 13.4 0.13 0.4 8.49 12.4 0.06 0.01 6.85 11.6 0.05 0.1Soil and groundwater 5.18 6.5 6.77 16.5 6.89 10.0 4.85 12.6 3.98 6.7 1.98 5.0Noise and others 9.59 12.2 5.19 12.6 7.45 10.8 2.81 7.33 4.30 7.4 2.80 7.1

Total 78.87 41.11 68.70 38.44 59.01 39.63

Environmental investment(Breakdown by business area) 2009 2008 2007

Millions of Millions of Millions of Euros % Euros % Euros %

Refining 31.22 76 28.32 73.7 29.6 74.8Petrochemicals 1.54 3.7 3.21 8.3 4.1 10.3Marketing and logistics 8.35 20.3 6.91 18.0 5.9 14.9

Total 41.11 38.44 39.6

Refining and distribution:

• New sulphur plant and otherenvironmental investmentsincluded in the total investmentfor extending the “La Rábida”refinery.

• Elimination of odours in thewastewater treatment plant in the“Gibraltar-San Roque” refinery.

• Adaptation of the “Tenerife”refinery’s sulphur plants tointegrated environmentalauthorisation requirements.

• Marketing and logistics: Work hascontinued on service stationsthrough the subsoil study plan,with the subsequent developmentof a correction plan.

Petrochemicals:

• Continuation of the plan to installdouble floors in tanks andcontinuous atmospheric omissionanalysis equipment in the CEPSAQuímica Guadarranque plant.

The main projects carried out (by business area) are as follows:

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This report details the key indicatorsof resources consumed by CEPSAfacilities. During 2009 the decreasein these indicators was due to thedrop in plant operations, except forthe Exploration and Production area.

Consumption of rawmaterials

The main raw material used byCEPSA is oil. In 2009 the Companyused 19.96 million tonnes of crudeoil for distillation activity at itsrefineries, as well as 0.32 milliontonnes of other raw materials.

RESOURCE CONSUMPTION INDICATORS

Consumption of raw materials(Thousands of tonnes) 2009 2008 2007

Refining 20,950 22,085 21,776Petrochemicals 3,417 3,962 3,539


90

In 2009 direct energy consumptiontotalled 96,064.7 thousandgigajoules, a 7% drop on the 2008figure. Indirect energy consumptionalso dropped, down 3.7% on theprior year and totalling 7,555.1thousand gigajoules.

These decreases were due to the fallin industrial activity and the energysavings measures implemented bythe various production centres. Bybusiness area, however, Explorationand Production saw a rise in energyconsumption, which grew by 38.4%.

This was due to increased welldrilling carried out during the year,as this was the first year of fulloperations for the Caracara block(Colombia).

Energy consumption: direct and indirect

Direct energy consumptionBreakdown by primary sources(Thousands of gigajoules)

Fuel gas + fuel oil Natural gas Others (coke, kerosene, diesel)

Indirect energy consumptionElectricity(Thousands of gigajoules)

91

200920082007

55,407

200920082007

7,824 7,8457,555

45,406

5,200

48,544

50,021

5,003

47,426

39,853

8,785

91


This indicator allows parallels to bedrawn between energy consumptionand activity volumes for each area.For refining, the amount of crude oilprocessed is used as a reference,whereas plant production is used forthe petrochemicals area.

Energy efficiency

Direct and indirect energy consumption by volume of activity(Breakdown by business area)

2009 2008 2007

Refining (gigajoule/ tonne of crude oil processed) 2.85 2.90 2.83Petrochemical (gigajoule/ tonne produced) 5.43 5.49 5.36

In addition to CO2 emissions(discussed in the next chapter), theCompany also reports on nitrogenoxide (NOx), sulphur dioxide (SO2)and particle emissions.

In 2009, the Group consolidated thecuts in atmospheric emissions fromthe industrial plants within itsPetrochemicals area.

This reduction was due to the dropin activity (with consequent lowerfuel consumption), as well as themeasures which had commenced inprior years56, consolidated in 2009,to increase the energy efficiency ofproduction processes.

This decrease in atmosphericemissions was not replicated in theRefining area, where emissionsincreased slightly on 2008. This wasalso the case in the Exploration andProduction area, where the rise wasdue to greater activity.

ATMOSPHERIC EMISSIONS

56 For further information see the “Environmental management” chapter in the 2008 Corporate Responsibility Report.


92

200920082007

Atmospheric emissionsBy type of compound (Tonnes)

NOx SO2 Particles

9,585

573 520 573

21,361

9,127

13,96712,580

13,791

200920082007

0.48

0.25

0.17

0.95

0.07

0.63

0.02

0.66

0.38

0.29

0.30

0.33

NOx

SO2

NOxSO2

NOx

SO2

NOx and SO2 emissions(By production unit or crude oil processed)

Refining (Kg/ tonne of crude oil processed) Petrochemicals (Kg/ tonne produced)

In 2009, water consumption totalled35.4 million m3, up 2.3% on 2008 anddue to the rise in the number ofwells drilled during exploration andproduction activity. The Refining andPetrochemicals area, however hasfollowed the trend set in prior years,with a reduction in waterconsumption.

The reuse of water continued in2009 with the double objective ofreducing consumption and bringingdown the amount of liquid effluentsthat need to be treated before finaldischarge. During the year, a total of1,106 million m³ of water wasrecycled, a 78% increase on 2008.

WATER CONSUMPTION AND REUSE

In June 2009, CEPSA held the 5th PA.S.CAL (environmental protection, safety and quality) conference, whichtook place in Campo de Gibraltar and was entitled “Environmental protection: a matter of internalawareness”.

The areas of environmental protection, safety and quality form the cornerstone of the Group’s day-to-dayactivity, and this event clearly shows CEPSA’s interest in assuming responsibility in managing resourcesand in all its public actions.

Aware of the importance of these issues, the Company has opened the PA.S.CAL conference to the generalpublic by sharing the conclusions drawn from the event every year. On this occasion 150 industry professionalstook part in the event, which was held over two days and involved seven conferences and a round table.

In the words of the CEPSA Group’s technical director Pedro Miró, the PA.S.CAL conference has become aforum for “joint reflection”, and encourages debate and consideration of the relationship between industrialdevelopment and respect for the environment.

5th PA.S.CAL conference: “Environmental protection: a matter of internal awareness”

Volume of water recycled (V. REC)57

By business area (Thousands of m³) 2009 2008 2007Total vol. Rec. vol. % Total vol. Rec. vol. % Total vol. Rec. vol. %

Refining 13,355.21 1,033.96 7.74 13,438.59 608.21 4.53 12,792.36 2,206.46 17.25Petrochemicals 9,095.23 14 0.15 10,607.95 13.16 0.12 11,590.23 14.51 0.12Exploration and Production 10,105.56 56.99 0.56 8,367.38 0 0 21,325.60 0 0Marketing and Logistics 1,801.62 1.12 0.06 1,186.74 0.022 0.020 997.47 0.018 0.002Others (NGS and research centre) 1,051.05 0 0.00 994.63 0 1,068.94 0 0

Total 35,408.67 1,106.07 3.12 34,595.29 621.39 1.80 47,774.60 2,220.99 4.65

57 For calculating the volume of water recycled/reused, the number of production cycles in which a single load of water is used is considered. If 20 m³ of water is requiredfor a cycle and it is subsequently reused for a further three cycles, the total amount recycled/reused for this process is 60 m³.

9393


All CEPSA’s production facilitieshave effluent treatment plants toensure that discharges are withinthe limits established by prevailinglegislation.

Unlike prior years, the informationreported in 2009 did not include thevolume of discharge from NuevaGeneradora del Sur Mixed CombinedCycle. This is because this dischargeis clean refrigeration water, and theonly alteration made to the liquidduring the process is an increase intemperature. The exclusion of thisdischarge explains the significantdecrease in the total dischargevolume.

CONTROLLED DISCHARGE MANAGEMENT

Treatment methods have beenimplemented in production centresto ensure controlled discharges.These involve a sieving process toseparate larger solids, a physicaland chemical treatment process toseparate oils and greases fromhydrocarbons, and a biologicaltreatment which reduces theorganic burden.

In 2009 there was a major decreasein all discharge parameters withinthe Refining area (suspended solids,oils and greases and TOC – totalorganic carbon), consolidating thereductions achieved in prior yearsfrom investment in the primarysegregation of currents andmodifications and extensions totreatment plants.

All discharge parameters increasedin the Petrochemicals area duringthe year, due to the inclusion in thereport for the first time ofdischarges from the CEPSA QuímicaMontreal plant.

Quality of effluent discharges

Volume of controlled dischargesBy business area (Thousands of m3) 2009 2008 2007

Refining 7,832.68 8,401.86 7,649.73Petrochemicals 5,503.39 6,476.71 5,004.89Exploration and Production 27.42 27.08 25.51Marketing and Logistics58 1,721.36 1,259.19 996.93Others (Research centre and NGS) 0.00 127,491.27 141,629.84

Total 15,084.85 143,656.11 155,306.90

58 No data is provided for liquefied gas or CECOMASA, as they are not representative of the total.


94

Waste is removed from sites bygovernment-authorised wastemanagement companies.Depending on its composition andcharacteristics, waste is separatedby type when generated, forsubsequent treatment, recycling ordumping. Waste generated by theExploration and Production areamainly comprises solid waste fromwell drilling, considered as non-hazardous. The variation in thiswaste over time is due to increasesor decreases in the number of wellsdrilled in oil beds.

WASTE MANAGEMENT

Pollutants – refining(Tonnes) 2009 2008 2007

Total organic carbon (TOC) 306.18 446.79 446.18Suspended solids 260.30 390.13 647.01Oils and greases 42.81 67.12 88.35

Pollutants – petrochemicals(Tonnes) 2009 2008 2007

Total organic carbon (TOC) 992.86 142.67 163.78Suspended solids 509.44 207.98 203.76Oils and greases 10.18 8.47 8.73

Waste generated(Tonnes) 2009 2008 2007

Hazardous waste 21,212.50 31,450.99 45,852.78Non-hazardous waste 20,772.89 15,230.39 23,352.63

Total 41,985.39 46,681.38 69,205.41

9595


Exploration and production waste(m3) 2009 2008 2007

Non-hazardous waste (from drilling) 5,572.38 1,872.60 4,550.00

Hazardous waste generated by activity volumeBy business area (Production unit or crude oil processed) 2009 2008 2007

Refining (Kg/tonne of crude oil processes) 0.59 1.03 1.21Petrochemicals (Kg/tonne produced) 2.11 1.42 3.27

MARPOL (marine pollution) is an international convention to prevent contamination by tankers, with the goal ofpreserving the marine environment by completely eliminating pollution from hydrocarbons and other harmfulsubstances, as well as minimising the possibility of accidental spillages.

CEPSA has five plants for the storage and treatment of MARPOL, which receive waste from tankers (ballast water,bilge water, etc.). These plants are located in the three refineries, in ASESA and in ATLAS. In 2009, a total of48,816.30 tonnes of MARPOL waste was treated, a 41% increase on 2008.

MARPOL Convention


96

No significant legislation wasenacted in 2009. Nevertheless, theCompany closely monitored thefollowing:

• Environmental Responsibility Actand Royal Decree 2090/2008.

• The IPPC Directive59.

CEPSA’S POSITION ON RECENTLY ENACTED LEGISLATION

This Act is developed through RoyalDecree 2090/2008, chapter IV,Appendix I of which concernsfinancial guarantees and establishesthe criteria to determine whetherdamages caused to the flora orfauna of a specific habitat aresignificant. This regulation defines:

• How to establish the amount ofthe obligatory financial guarantee.

• Obligatory notification in the eventof environmental damage.

• The rectification of any damagecaused and the establishment ofrestoration measures.

The regulation came into effect on23 April 2009, except for theperformance of environmental riskanalyses (required to establish theamount of the financial guarantee),which will not be obligatory untilpublication of the required orders bythe Ministry of the Environment andRural and Marine Affairs, after 30

April 2010. CEPSA has decided tomonitor all activity related to thisarea through an internal workinggroup, as specific regulatorydevelopments are subsequentlyintroduced for each industrialsector.

The following actions were taken bythe Group in this regard during 2009:

• Monitoring of the publication oflegal regulations.

• Participation in the workinggroups created within sectorassociations to prepare a standardmodel for environmental riskreports (known by its Spanishacronym MIRAT).

• Creation of an internal monitoringgroup comprising Legal Advisory,the Insurance Department andCorporate EnvironmentalProtection.

• CEPSA’s strategy is to await theregulatory developments foreseenin Law 26 of 23 October 2007 onenvironmental responsibility, dueto the current uncertaintiessurrounding the application of thislegislation.

The Environmental Responsibility Act

59 Further information in the “CEPSA’s position on public policies” section in chapter one, CEPSA.

9797


CASE STUDY

The CEPSA Química plant in Palos de la Frontera has a closed hot oilcircuit, which provides the heat required by the distillation columns inthe cumene-phenol-acetone units.

The system has two furnaces which heat the oil distributed throughthe different exchangers to reach the temperatures required to distilthese products: the B-401 and the B-8001.

In 2009, the B-401 furnace was replaced to improve the energyefficiency of the process. This furnace, which operated with naturalgas and fuel oil, was replaced by the B-401N furnace, which onlyoperates with natural gas and, therefore, has increased energyperformance, with a consequent saving in natural resources andreduced atmospheric emissions (mainly CO2 and NOx). A total of Euros7 million was invested in these modifications.

Reduction in atmospheric emissions (tonnes)

Carbon dioxide (CO2) 32,300Nitrogen oxide (NOx) 17

A study was also carried out to evaluate furnace functions andperformance, showing that the new furnace system led to a 22%decrease in annual fuel combustion and improved performance.

Performance (%)

B-401 + B-80001 system 83.36New B-401N + B-80001 system 91.76Increase in performance 10.07

The new furnace was designed using advanced technology, allowingmaximum fuel efficiency to be obtained and reducing the impact onthe environment. The furnace has an energy saving system whichrecovers heat from the smoke it generates, which is then used to pre-heat the combustion air. The burners installed generate low NOx

emissions (concentrations of 120 mg per cubic metre of smoke emittedunder normal conditions), as well as adjusting oxygen levels in thesmoke flow to 3%.

Replacement of furnaces at the CEPSA Química Palos plant


98

Due to the possible negative impacton the natural habitats located inthe areas where the Companyoperates, CEPSA has implementedan extensive programme ofinitiatives over the years, gearedtowards reducing the impact onbiodiversity.

These effects may be direct orindirect in nature, as the Company’soperations comprise a wide range ofprocesses, and may involve air,water, land, natural resources, flora,fauna and mankind. CEPSAtherefore places great importanceon this issue, and has adopted apreventative approach based oncontinuous improvement, with theaim of reducing these impacts.

In 2008 the Company prepared a setof biodiversity protection standards,allowing it to define policies andcriteria on the protection andconservation of biodiversity. Toensure that this policy is in line withthe highest standards of protection,contact was made with theMediterranean office of the IUCN(the International Union forConservation of Nature).

To be better prepared for theintroduction of new environmentalresponsibility regulations,environmental risk evaluation workcontinued throughout 2009. Thiswork has been carried out usingmethodologies which provide adetailed and objective evaluation ofthe risk of accidental environmentaldamage, simulating the most

probable risk scenarios andquantifying the potential impact onthe environment, as well as thecosts involved in restoring the areato its former conditions.

During 2009 CEPSA worked on thefollowing initiatives with CIRCE (theassociation for the study andconservation of cetaceans):

• Study into conservation of the long-finned pilot whale (globicephalamelas) population in the SpanishMediterranean. This study, whichwas completed in summer 2009,provided the scientific informationrequired to establish a conservationpolicy for this species and review itsprotection status.

PROTECTION OF BIODIVERSITY

In 2008 the Companyprepared a set ofbiodiversity protectionstandards, allowing it todefine policies andcriteria on the protectionand conservation ofbiodiversity

9999


In Tenerife, CEPSA, along with the Loro Parque Foundation, has lent its support to the “Diving with turtles” virtualworkshop, involving the simultaneous online broadcasting of a series of underwater videoconferences in schoolsall over Spain. The aim of this initiative was to increase awareness of this sea creature which is present all overthe Canary Islands seabed.

In Huelva, for the eighth year running, International Wetlands Day was held, under the slogan “Upstream,Downstream”. As part of the event, 600 schoolchildren visited the Primera de Palos lake to observe plants, birdsand animal tracks, as well as learning about the water cycle and its importance for life on earth.

In Canada, CEPSA Química Bécancour supports the Biodiversity Interpretation Centre at the San Lorenzo River,bringing the area’s youth and visitors to the region closer to the river’s rich flora and fauna.

In Brazil, DETEN Química, through its involvement in COFIC60, has supported the campaign to recover the forestring in the Camaçari area (a green belt which separates the industrial estate from the nearby communities). Workinvolved both production of the seedlings and organisation of their planting, which took place on WorldEnvironment Day.

In Colombia, the “Bio” socio-environmental education programme was developed, aimed at young people andadults alike and geared towards strengthening environmental awareness through theoretical and practicalworkshops. The most significant results of this initiative include the implementation of methods to use organicwaste to produce fertilisers. Likewise, as an environmental solution and based on the ideology and strategy of“thinking globally and acting locally”, a pilot project was carried out involving biodiversity conservation processes,creating agro-ecological orchards by planting indigenous, fruit and ornamental trees.

CEPSA: Firm commitment to awareness of environmental protection

60 The Camaçari Industrial Promotion Committee, an association which represents the companies located in this city’s industrial estate.


100

• Distribution of information onRoyal Decree 1727/207, on theprotection of cetaceans, to fishingand diving clubs along the coast ofAndalusia. A total of 56 talks weregiven along the entire coast, and30,000 leaflets and 5,000 stickerswere handed out.

• Preparation of an educationalmanual for environmentalteachers specialising in cetaceanson the Campo de Gibraltar coast.These teaching units took the formof a briefcase containing a rangeof educational materials, andproviding teachers and instructorson boats for marine lifeobservation with materials to carryout awareness activities.

• The “Cetaceans of our coast”workshop, which was run invarious schools in Algeciras(Cadiz) as part of the agreementsigned with CIRCE.

CASE STUDY

In 2009 CEPSA approved its biodiversity standards, which comprise all the directives in this area and go beyondmere compliance with legal requirements. A number of Biodiversity Action Plans have been implemented in theCompany’s facilities, geared towards the long-term conservation of the natural environment.

Work has started to identify natural environment and biodiversity conditions in the San Roque area (Cadiz) wherethe Company operates, the “Gibraltar-San Roque” refinery and the CEPSA Química Guadarranque and CEPSAQuímica Puente Mayorga plants.

Preliminary studies identified a plot of land owned by CEPSA alongside the CEPSA Química Guadarranque plantwhich has potential ecological value, due to its natural wealth and as it is a fertile lowland through which theMadrevieja river flows. Close to this area is the Fontetar lake, which was drained in the first half of the 20thcentury to be used for agricultural purposes.

From the outset, botanical and ornithological studies have confirmed the area’s particular richness, and CEPSAmanagement has therefore decided to use this land (which was acquired for future development) to create anatural conservation project and encourage biodiversity.

The project consists of recovering habitats (which are very scarce in the area) to encourage the reproduction ofendangered species, such as freshwater lakes for birds and temporary pools for amphibians. The initiative alsoaims to regenerate the olive trees in the area, which have been significantly depleted due to the grazing activitycarried out on this land.

Once the regeneration and development activities have been carried out, the initiative plans to create theMadrevieja environmental station over the coming years. This centre will be used to encourage study of the

Biodiversity Action Plan in San Roque (Cadiz)

Biodiversity action plan stages

Analysis of thenatural

environment andidentification ofactivity-related

risk

Prioritisation andplanning ofprotective

measures toprevent negative

impacts

Implementationof protective

measures and the

communicationplan

Regularevaluation of

protectivemeasures andintegration into

the environmentalmanagement and

continuousprotectionsystems

environment and to promote natural values, throughvisits and conservation workshops for thecommunities located close to the Company’s facilities.

Application of the CEPSA biodiversity standards hastherefore detected an extremely valuable habitat,allowing the Company to define a set of protectivemeasures which, in practice, show its commitment tosociety and to protecting the environment throughthese standards.

101101


10Greenhouse Gases • 2009 milestones / 2010 challenges ............................................................102

• GHG emissions: 2009 results.....................................................................105

• Improving processes..................................................................................108

• Improving products.....................................................................................110

• Challenges derived from GHG legislation ..................................................110

• Case study: Project Supernova...................................................................112

2009 milestones

102

• Compliance with theNational Allocation Planfor Emission Rights,with a 7% reduction inemissions compared to2008.

• Target to reduce CO2

emissions by 8%(320,000 tonnes between2005 and 2009), reachedthanks toimplementation of theProfit ImprovementProgramme at the“Gibraltar-San Roque”,“Tenerife” and “LaRábida” refineries.

• Ongoing work onimplementation of ProfitImprovementProgramme projects toreduce the energyconsumed by refineries.

• Participation in theemissions tradingmarket.

2010 challenges

• Work alongside other participating companies in themeasures involved in closing the Spanish Carbon Fund(FEC) portfolio.

• Ensure that the emission reductions established by theEuropean Commission for 2020 for the refining andorganic base chemistry sectors are equal to or lessthan 21% (working with the support of the sector, and toavoid so-called “carbon leakage”).

CEPSA is committed to reducing its greenhouse gas (GHG) emissions.The Company understands that the best way to bring about thesereductions is by applying energy saving and efficiency measures.

Corporate Responsibility Report 2009 | 10 Greenhouse Gases

103

Our commitment

103

To reduce greenhouse gas (GHG)emissions, the European Union hasundertaken to comply with the KyotoProtocol (2008-2012). The Spanishgovernment is also committed tothis cause, preparing strategies thatensure compliance with theobligations for Spain. These includerenewable energy plans, energysavings measures, support for railtransportation and modification ofthe National Allocation Plan forEmission Rights.

During 2009 all eyes were on the 15th

International Climate ChangeConference, which was held inCopenhagen to prepare futuretargets to replace the Kyoto Protocolwhen it comes to an end in 2012.Debate will continue in this regardso that a binding agreement can bereached during the Mexico Summitin 2010.

The most noteworthy agreementsreached in Copenhagen includefinancing to combat climate changein developing countries, acommitment to ensure that theaverage global temperature doesnot rise by more than 2ºC (in linewith directives established by theinternational scientific community),and the definition, by 31 January2010, of obligatory and voluntaryreduction and limitation targets forthe 192 countries involved.

CEPSA has assumed the sameposition as the EU in this regard,and is attempting to cut down itsGHG emissions through variousinitiatives, including controlmeasures, energy saving and theoptimisation of processes to improveenergy consumption. The Companyis also playing an active role inmonitoring the latest technologicaladvances in the geological capture

of carbon (injections in geologicalformations and mines) and studiesfor the capture and/ortransformation of CO261. In additionto these measures, CEPSA is alsoinvolved in initiatives such as CleanDevelopment Mechanisms62 andJoint Application Mechanisms63

through the Spanish Carbon Fund. Atotal of 15,967 credits from cleandevelopment projects were receivedfrom the Spanish Carbon Fund in2009. Furthermore, for the first timeCEPSA has participated in theemission rights trading market,selling 103,465 rights andexchanging rights for 681,721 creditsfrom clean development projects.

10Greenhouse Gases

61 Further information on this issue is included in the chapter entitled “Commitment to technology”

62 The Clean Development Mechanism is an arrangement under the Kyoto Protocol whereby companies with greenhouse gas reduction commitments can participate inprojects to reduce emissions in developing countries, as an alternative means of acquiring certified emission reductions at lower costs than in their own markets.

63 The Joint Application Mechanism is an arrangement under the Kyoto Protocol whereby companies can meet with their greenhouse gas reduction commitments byparticipating in projects in Annex I countries (developed countries and economies in transition), acquiring the rights generated by the emissions savings made throughthe use of better technology than that conventionally used in the host country.

CEPSA has two units for GHG management, the first of which is the CO2 Committee, which monitors compliancewith prevailing GHG legislation and plans initiatives relating to flexible mechanisms. The second unit is the GHGmanagement department, which oversees compliance with Kyoto Protocol directives and European and Spanishregulations, establishes systems for monitoring CO2 emissions, collaborates with different Spanish and Europeanorganisations to optimise the application of various directives concerning GHG emissions from Group facilities(AOP, FEIQUE, CEOE, CONCAWE, EUROPIA), and defines, proposes and manages the strategies required toachieve the Company’s targets for cutting GHG emissions.

GHG management at CEPSA

104

When calculating its GHGemissions64, CEPSA considers thefacilities included in the NationalAllocation Plan for EmissionRights - three refineries, threepetrochemical plants, fivecogeneration plants, one mixedcombined cycle plant, one asphaltsplant (ASESA) and Lubrisur. For theremaining facilities (threepetrochemical plants in non-EU

countries and the Company’sexploration and production activity) acalculation is made based on fuelconsumption data and emissionfactors for each GHG, in accordancewith the procedures recommendedby CONCAWE65.

Total emissions figures(international and domestic) showthat Group emissions fell by 7% in2009 compared to the prior year.With respect to the National

Allocation Plan for Emission Rights,as in 2008 the Company’s emissionswere once again lower than theallocated amounts. An increase inCO2 emissions is expected in 2010,with the start-up of the newextension to the La Rábida refinery.

GHG EMISSIONS: 2009 RESULTS

64 See the Appendix for the criteria used to define the scope of the inventory.

65 CONCAWE: Report 9/05R 2006.

In 2009 the Group’semissions were down7% compared to theprior year

105105


10Greenhouse Gases

Direct GHG emissions2009 2008 2007

(Kt CO2 eq) % variation (Kt CO2 eq) % variation (Kt CO2 eq) % variationTotal domestic emissions66 5,207 - 8.7 5,704 0.3 5,687 0.7International emissions 548 10.6 496 34.1 369 - 19.5

Total 5,756 - 7.2 6,200 2.4 6,056 - 0.9

Carbon dioxide emissions from theRefining area were down on 2008due to the improvementsintroduced, although they wereaffected by the decrease in distilledcrude oil and the implementation ofnew production units, maintainingthe ratio between tonnes ofemissions and tonnes of processedcrude.

CO2 emissions from thePetrochemicals area decreasedbecause of projects implemented bythe Company to improve energyefficiency, as well as the drop inproduction.

Following these improvementmeasures, the level of CO2

equivalent per tonne of productobtained was down 11% on the prioryear. As the results in 2008 weresimilar to 2009, the improvement inprocess efficiency is clear.

In the Exploration and Productionarea emissions have risen, mainlydue to the year-long exploration ofthe Caracara oil field in Colombia,the seismic campaigns in Peru andthe drilling of three exploratorywells in Egypt.

Finally, in comparison with the prioryear’s emissions, within thecombined production area of steamand electricity, there was anincrease in cogeneration emissionsand a decrease in emissions fromthe mixed combined cycle. Thesechanges were due to variations intotal production, as well as changesin the tonnes of steam per MWh ofelectricity due to a drop in demand.

Emissions by business area

66 Facilities included in the National Allocation Plan for Emissions Rights and emissions which were excluded and which come from processingfurnaces, furnaces and flares.

106

Emissions by business area (Kilotonnes) 2009 2008 2007

CO2 CO2Eq CO2 CO2Eq CO2 CO2EqRefining 3,139 3,159 3,372 3,399 3,316 3,329Petrochemicals 638 641 837 840 837 855Exploration and Production 389 407 320 337 206 217Cogeneration 887 893 860 864 885 893Mixed Combined Cycle 652 657 755 761 755 762

Total 5,704 5,756 6,144 6,200 5,999 6,056

Emissions by business area67

107

67 CO2 equivalent is the result of adding CO2 emissions, tonnes of methane and N2O multiplied by their global warming potential.

0.147Refining: t CO2 eq. / t processed

Petrochemicals: t CO2 eq. / t product obtained

Exploration and Production: t CO2 eq. / t oil produced

Cogeneration: t CO2 eq. / net total MWh produced

Mixed combined cycle: t CO2 eq. / MWh net electricity produced

0.2230.044

0.239

0.392

0.147

0.2020.0620.256

0.404

0.1470.1780.074

0.262

0.410

200920082007

107


10Greenhouse Gases

For several years CEPSA has beencarrying out an action plan aimed atoptimising its processes, striving forenergy savings and efficiency as keyfactors to minimise GHGs.

The development andimplementation of projects relatedto this plan have been staggeredover recent years, beginning withthose involving high levels of energyrecovery and continuing with thosewith a lower impact.

IMPROVING PROCESSES

Financial data related to GHGs(Thousands of Euros) 2009 2008 2007Investment in R&D 507 334 284Contribution to the FEC68 280 - 535

Investment in projects to save energy and reduce CO2 emissions Refining 12,870 12,520 5,457CEPSA Química 9,670 3,206 255Cogeneration 59,415 9,425 -

Total 82,742 25,485 6,531

68 The 2009 contribution to the Spanish Carbon Fund (FEC) supplemented that made in 2007, and was used to pay the ERCs (emission reduction credits) received, as wellas to pay advances that allowed Clean Development Mechanism (CDM) projects to be carried out that will generate ERCs in the future. Each ERC represents a reductionof one tonne of carbon dioxide.

108

In total, CEPSA invested over 82million Euros in projects to improveenergy efficiency and reduce GHGemissions in 2009, the mostsignificant of which were as follows:

• Implementation of the vacuum IIand hydrogen production units,which have been designed usingthe best available technology, aswell as the hot load unit for theFCC at the “Gibraltar-SanRoque” refinery.

• Implementation of two heatrecovery projects at the “Tenerife”refinery with a consequentreduction in energy consumption:improved heat recovery from theeffluent/unifining load exchangerand completion of the secondstage of the Cadu heat recoveryimprovement process.

• Implementation of the bestavailable technologies in theMiddle Distillate ProductionCapacity Expansion Project of the“La Rábida” refinery.

• Heat recovery from condensationin one of the distillation towers inthe PACOL69 unit at CEPSAQuímica Bécancour (Canada).

• Reduction of electricity andnatural gas consumption at theDETEN Química linearalkylbenzene plant (Brazil).

• Implementation of projects toimprove energy efficiency andemissions reductions in allfacilities.

69 Further information is contained in the case study at the end of this chapter.

At the start of the decade, CEPSA, in collaboration with a consultancy firm specialised in analysing energy savingswithin industrial facilities, prepared the Profit Improvement Program, which aimed to reduce energy consumptionand CO2 emissions at the Group’s three refineries. The goal of the initiative was to reduce CO2 emissions by 1% eachyear (based on 2004 levels) between 2005 and 2009, inclusive.

In these five years, 40% of the projects were carried out, 10% were rejected and 50% are under study or at thedevelopment stage. The following results have been obtained:

• A 0.082 million-tonne reduction in fuel oil equivalent (FOE) consumption, equivalent to a 6.8% decrease comparedto 2004.

• A 320,000 tonne decrease in CO2 emissions, down 8.2% on 2004.

• An increase in the (fuel gas + natural gas)/fuel oil ratio, up from 0.83 tonnes to 1.66 tonnes.

Project to save energy and cut CO2 emissions from refining activity

109109


10Greenhouse Gases

A department of operating excellence has been created within the CEPSA Química organisational structure,comprising professionals from the three petrochemical plants run by CEPSA in Spain. The mission of thisdepartment includes identifying best practices, working methods or technologies to improve plant efficiency (bothdomestic and international, including those owned by CEPSA and by other companies), with a subsequentreduction in emissions and lower consumption of both natural resources (water and fuel) and raw materials. Theapplication of these initiatives is studied and evaluated, along with the measures required for their implementation.

Following the studies carried out in 2009, the following initiatives have been carried out or are in progress:

• A proposal for 49 energy saving measures (currently being studied).

• Daily recommendations to those in charge of product manufacturing, and monitoring of the results of efficiencyimprovements in the day-to-day running of the plants.

• Calculation of a normalised global energy consumption index for all of CEPSA Química.

• Development of methods to monitor energy consumption.

• Energy saving benchmarking in the three plants in Spain, the two plants in Canada and the plant in Brazil.

• Furnaces: In the three Spanish petrochemical plants (Guadarranque, Palos de la Frontera and PuenteMayorga) a comparison has been carried out on the characteristics of each furnace, methods to calculatefurnace output have been standardised and testing has been carried out on a furnace to reduce smoketemperatures.

Operating Excellence Department

Product quality and adaptation todifferent applications arefundamental when reducing GHGs.Both the composition of these gasesand improvements in performancehave a direct impact on emissionlevels.

The most important steps taken bythe Company in this regard are asfollows:

• Incorporation of 75,000 tonnes ofbioethanol into the Company’sgasoline and 219,000 tonnes ofbiodiesel into its diesel oils in2009.

• Launch of two new lubricants forlow-emission industrial vehicles.CEPSA EUROTECH MS (forindustrial vehicles and mixedfleets) and Euromax Synt (forvehicles from different brands andof various ages) have low sulphurcontent, offer high levels ofprotection and eliminate deposits,thereby increasing the useful lifeof the engine and ensuring strictcompliance with EU emissionsregulations.

Challenges derived from GHG legislation

As the main driving force behind theKyoto Protocol, the EuropeanUnion has undertaken a newcommitment to reduce emissionsfrom EU facilities by 2020, bringingthem down by 21% compared to 2005levels. Changes have also beenmade to the emissions tradingsystem.

Over the first two emission tradingperiods (from 2005 to 2012) themajority of emission rights wereissued to facilities free of charge.

IMPROVING PRODUCTS70

70 Further information on products that reduce emissions at www.cepsa.com.

110


The review of the European directivehas introduced auctions as thedistribution method to be used inthe 2013-2020 period. Nevertheless,certain exceptions have beenincluded, due to the potentialnegative impact on economiesbecause of the possibility ofproduction being relocated to areaswith less stringent environmentalpolicies. To avoid this so-called“carbon leakage”, the sectors thatmay be particularly affected havebeen defined, including the refiningand organic base chemistry sectors.As a result of this move, thesesectors can receive up to 100% oftheir rights free of charge up to2020, provided that they meet a setof conditions.

With the exception of theaforementioned sectors, the impacton CEPSA will be as follows:

• The need to acquire approximately50% of cogeneration emissions.

• The risk of having to jointly acquiremore than 20% of refining andpetrochemical emissions. Thissituation would be furtheraggravated if, instead ofimplementation gradualreductions throughout the period,the full reduction were imposed asof the first year.

CEPSA has highlighted the followingrisks up to 2013 which are directlylinked to this new legislation:

• An increase in operating costs ashigher quantities of emissionrights will have to be acquired.

• A loss in profitability due to thedifficulty in passing CO2 costs on toproduct prices, aggravated by theimpact of certain taxes71.

• A contraction in demand due toproblems faced by consumersfaced with price increases.

• A loss of competitiveness and areduced international marketshare, compared to countries withemission reduction demands thatare less extensive or inexistent.

In light of the above, CEPSA willcontinue with its strategy toimplement different measures tobring its emission levels down,including collaboration with variousSpanish and European organisationsto coordinate and minimise thepossible impact that the introductionof this directive may have onCompany facilities.

71 VAT and the tax on retail sales of certain hydrocarbons.

111111


CASE STUDY

In December 2009 the CEPSA Química Bécancour plant implemented Project Supernova, an initiative that aims tooptimise energy consumption during the production of linear alkylbenzene (LAB), a product crucial formanufacturing biodegradable detergents.

During the process for obtaining LAB, high levels of paraffin and benzene are also obtained, which are not fullytransformed. To recycle these reagents they must be first separated in distillation columns, which involvessignificant consumption of energy and, therefore, fuel (in this case natural gas).

In 2008 work began to study a way of optimising energy consumption during this recovery process, applying anadvanced form of the Pinch method, which reduces energy consumption in the heat exchangers used in industrialprocesses. According to this methodology, energy consumption can be optimised by distilling part of the paraffinat higher pressure. In this way the distilled paraffin reaches higher temperatures, and the heat produced can be usedto raise the temperature of the benzene tower through a heat exchanger. In other words, the condensation heatfrom the paraffin distillation process is used to reach boiling point for the benzene distillation process.

The study carried out for this project estimated potential natural gas savings at 5,320 tonnes of oil equivalent peryear (approximately 13% of the chemical plant’s total energy consumption), with a subsequent reduction in CO2

emissions, down by approximately 11,000 tonnes per year. Due to the amount of energy involved the project wasnamed Supernova and, since it was implemented, it has performed in line with and, on occasion, exceededprojections. Based on plant production levels, this project will allow the Company to save between 2 million Eurosand 3 million Euros per year in terms of natural gas.

Project Supernova: energy saving at CEPSA Química Bécancour

112

10Greenhouse Gases

113113


Appendix2009 corporate responsibilityinitiatives

Action Secours, Vie d’espoir and “fullsteam ahead” collective cooking:Support for those in need. (Canada)

Agreement with FEAPS:Agreement for employment of peoplewith learning difficulties. (Huelva)

Aid for maintenance of the HermanasAdoratrices School. (Ceuta)

Aid for the Nazaret retirement home.(Ceuta)

Aid for the San Juan de Díos Hospital.(Cadiz)

Aid for the San Juan de Dios parish.(Ceuta)

AIEM:Non-perishable goods for theunderprivileged. (Canada)

Al Sur del Sur motor club:Motor event in support of Alzheimer’ssufferers.

Amigos de Guinea:Collaboration with this association andother entities to dispatch healthcarematerials and equipment to EquatorialGuinea. (Portugal)

Apoyo ao Desenvolvimiento Infantil(CADIN) centre:Donation for creation of a calendar.(Portugal)

Association for the families ofAlzheimer’s sufferers:Charity tombola for Alzheimer’ssufferers. (Madrid)

Autism association Christmas cards.(Madrid)

Canadian Cancer Society (Canada)

Centraide:Help centre for underprivileged membersof the community. (Canada)

Centro Nacional de InfraestructurasCríticas (CNPIC):Safety collaboration. (Madrid)

Centro Social e Paroquial deAlmacenada. (Portugal)

CEPSA Social Value Awards:Employees of the Company and variousservice companies select and sponsorsocial projects presented by institutions,NGOs, associations and groups involvedin social initiatives. (Huelva, Tenerife,Portugal, Madrid and Campo deGibraltar)

Civil registry and identificationprogramme:In collaboration with the RENIEC publicbody (national civil registry). (Peru)

Club des petits déjeuners:Dinner for underprivileged children.(Canada)

Club de Trafic de la Maurice:Financing for conference organisation.(Canada)

Co-financing of the “let’s make thechildren smile at Christmas” project.(Colombia)

Co-financing of the urban road surfacingproject. (Colombia)

Community Christmas marquee:Children’s creche, in collaboration withthe Salud-La Salle district council.(Canary Islands)

Congregation San Domenico Savio:(Canada)

Construction of communityaccommodation for the indigenouspopulation. (Peru)

Construction of multi-functionalcommunal buildings for the indigenouscommunity. (Peru)

Construction of a tourist lodge.(Colombia)

CEPSA’s social programme: main social initiatives

114

Défi Tête Rasé:Collaboration with the Canadian CancerSociety for research into a cure forleukaemia. (Canada)

Donation of teaching materials to theUniversidad de Huelva. (Huelva)

Donation to underprivileged children.(Canada)

El Drago women’s association:Sports for senior citizens. (Cadiz)

Family aid centre:Food. (Canada)

FEAFFES Huelva workshops:Events for relatives of people sufferingfrom mental illness. (Huelva)

Fondation Cité de la Santé:Foundation for people suffering fromvarious illnesses. (Canada)

Fondation de Bécancour-Nicolet-Yamaska:Support for hospital projects andequipment. (Canada)

Fondation des Auberges du coeur:Centre for young homeless people.(Canada)

Fondation des Aveugles:Foundation for the blind. (Canada)

Fondation Docteur Maurice Bertrand:Research into various illnesses. (Canada)

Fondation Hôpital Général Juif:Foundation for sufferers of illness.(Canada)

Fondation Michel Lancup:Transport assistance for cancersufferers. (Canada)

Food bank to combat hunger:Donation of fuel to transport food itemsto underprivileged individuals. (Portugal)

Fundación Adecco:(Madrid)

Fundación Candeal Proyecto Hombre:(Madrid)

Fundación Energía sin Fronteras (Madrid)

Fundación PRODIS:Collaboration as co-sponsor of thepaddle tennis socially responsible benefitprogramme. (Madrid)

Gentilly Transit Jeunesse youth centre:Helping young people to becomeupstanding members of the community.(Canada)

Health programme:Programme for 1,240 families fromindigenous communities: training ofhealth officers, delivery of communitymedical kits, medical attention forspecial cases, medical campaigns(general medicine, gynaecology, oralhygiene, nutrition). (Peru)

Hermandad del Rocío:Various initiatives for the Huelva home forthe elderly. (Huelva)

Housing Centre:Community activities. (Canada)

Humanitarian aid for Afghanistan,coordinated by the Air Force.(Afghanistan)

IDECO-Cabildo Tenerife:Christmas workshops for children.(Canary Islands)

Implementation of various communitycattle funds. (Colombia)

Instituto Canario de Hemodenación yHemoterapía:Collaboration in a campaign promotingblood donation. (Canary Islands)

L’accorderie:Promotion of services for underprivilegedindividuals living in Quebec. (Canada)


Corporate Responsibility Report 2009 | Appendix

115115115115

La Maison Dalauze:Refuge centre for victims of domesticviolence. (Canada)

“La Mujer es una diosa” association(against domestic violence):Petrol vouchers. (Madrid)

Lar Nossa Senhora do Acolhimento:Improvements to the shelter. (Portugal)

Local Christmas parades:Support of local Christmas parades.(Madrid)

Magazine Authentik:Financial aid for this magazine foradolescents and young people. (Canada)

Maintenance and repairs to a communityelectricity plant. (Colombia)

Médicos con Iberoamérica:Collaboration with this association totransport medical specialists to work inLatin America. (Cadiz)

Mercier-Est and Pointe-de-l’Île youthassociation:Various initiatives to avoid school failure.(Canada)

Modernisation and extension of drinkingwater services for the indigenouspopulation. (Peru)

Montreal foundation for sufferers ofheart problems (Canada)

Novo Futuro:Donation for payment of the electricityconsumed during the market. (Portugal)

Nuestra Señora de las Escuelas Píasschool:Charity tombola to raise money for thirdworld missions. (Africa and the Americas)

Nuevo Futuro:Financial aid to the most disadvantagedsectors of society. (Madrid)

Play4África:Collaboration in the organisation andimplementation of this initiativepromoting the right of African children toplay. (Madrid)

Pointe-aux-Trembles Montreal Eastvolunteer association:Community aid. (Canada)

Pointe-aux-Trembles women’s centre:(Canada)

Portuguese Multiple Sclerosis Society:Aid in purchasing health materials.(Portugal)

Professional training centre:Help in seeking first employment.(Canada)

Project to provide laying hens to morethan 200 families. (Colombia)

Project to supply communities withelectricity.(Peru)

Proyecto Hombre:Prevention and eradication of drugaddiction. (Huelva)

Ramadan:Donation of food to low-income groupsduring Ramadan. (Algeria)

Rebuilding of an indigenous communityschool. (Peru)

Ressources Jeunesse Foundation:(Canada)

Road safety school:Road safety education project for childrenin schools throughout Spain. (Madrid)

San Nicolás special employment centre:Help in resolving problems faced by themore disadvantaged members of society.(Madrid)

Santa Cruz council – Christmas:

Collaboration in the preparation ofChristmas activities in the two districtsclose to the refinery. (Canary Islands)

Sagrado Corazón public school:Transport aid. (Cadiz)

Santa María Polo Association:Collaboration in horse therapy for thedisabled. (Cadiz)

Secours aux plus démunis (aid for themost under-privileged). (Canada)

Social assistance for the development ofprogrammes and the donation of officematerials. (Huelva)

Spanish Cancer Association. (Ceuta)

Spanish Epidermolysis BullosaAssociation:Collaboration in a charity golf event.(Madrid)

Spanish Red Cross. (Madrid)

St-Octave school:Donation of food to the police fordistribution in the school. (Canada)

Tenerife Christmas children’s park:Encouraging entertainment andinteraction between children and theirfamilies. (Canary Islands)

Tenerife diocese:Collaboration in the rebuilding of achurch. (Canary Islands)

Volunteer year:Collaboration with the Department ofSocial Policy of the regional governmentof Asturias. (Madrid)

Youth aid centre: (Canada)


116

Académie Les Estacades:Financing of the school yearbook and aidfor the purchase of school materials.(Canada)

Al calor de tú música:Contest supporting musical values in theprovince of Huelva. (Huelva)

Asociación Amigos de la Música (Ceuta)

Asociación Cultural 'Los del Mixto': Collaboration. (Ceuta)

Asociación de la Prensa de Madrid:Sponsorship of the “first job”programme. (Madrid)

Asociación Prensa Campo Gibraltar:Training seminar on waste. (Cadiz)

Asos Vecinos Puente Romano:Flamenco festival. (Cadiz)

Assistance to improve primary andsecondary education levels among thelocal population and encourageleadership capacities within localcommunities. (Colombia)

Bécancour Chamber of Commerce:Organisation of business activities inBécancour. (Canada)

Canary Islands music festival:Collaboration in the various musicconcerts held in Santa Cruz de Tenerifeand Las Palmas de Gran Canaria. (CanaryIslands)

Cantabria, Basque Country, La Coruñaand Oviedo universities:Seminar on marine lubricants.(Cantabria, Galicia, Basque Country andAsturias)

Carrefour jeunesse emploi:Programme which aims to promote youthtraining. (Canada)

Carrefour Santé et Securité:Organisation of a symposium on healthand safety in the workplace. (Canada)

Carteia:Collaboration agreement with theDepartment of Culture of the regionalgovernment of Andalusia. (Cadiz)

Celebration of children’s day with gifts(sweets and children’s cups withstraws).(Colombia)

CEPSA Chair:This chair comprises initiatives such as: adigital bibliography of technicalmagazines; recognition of the best legalresearch works; the MA in EnvironmentalStudies; the Alumno DiezC programme; askills course; two grants to participate inthe “Global Village for future leaders ofbusiness and industry” programme runby the IACOCCA Institute at LehighUniversity (USA); the industrial tourismcourse; activities programme run by theCEPSA Chair on UNIRADIO; the Iber-American film festival; and thepublication of research on theimportance of tourism to Huelva’sindustry. (Huelva)

CEPSA Chair:To promote training, research and thetransfer of technology related to energy,oil and the environment. (Cadiz)

CEPSA Chair in Energy Universidad deSevilla Engineering School. (Seville)

CEPSA Chair in Energy and theEnvironment:Mining Engineering School at theUniversidad Politécnica de Madrid.(Madrid)

CEPSA classes in Moguer:Collaboration with the town council andthe Universidad de Huelva to promote thecultural and environmental heritage ofthe area. (Huelva)

Choeur Pro-Musica. (Canada)

Collaboration with Holy Weekbrotherhoods:Support in preparing the programmes.(Cadiz)

Collège Notre-Dame de l'assomption:Financing of the school yearbook.(Canada)

Conference of Chemistry Students.Universidad La Laguna. (Canary Islands)

Corpus Cristi parish:Collaboration with the Paso de laMisericordia procession. (Cadiz)

Donation of IT equipment andinstallation of solar panels at a school.(Peru)

Donation of a public address system to acathedral.(Colombia)

Federación Onubense de Empresarios(FOE):Promotion of SME training courses.(Huelva)

Festival de la Bandola Criolla. (Colombia)

Film festival:Collaboration with the most importantcultural event of the year in Huelva.(Huelva)

Fundación Amigos Museo del Prado:Member of the foundation. (Madrid)

Fundación Atapuerca:Collaboration in the excavation campaign.(Madrid)

Fundación Príncipe de Asturias:Collaboration in the development of thefoundation and its sponsorship. (Madrid)

Grants for international MA courses atthe French Petroleum Institute andHeriot-Watt University. (Madrid)

Higher School of Industrial Engineers:CEPSA award for the best end-of-courseproject: funding for the selected projects.(Madrid)

Huelva information in Palos de laFrontera:Postcard exhibition depicting the historyof La Rábida. (Huelva)

Huelva regional council:Contest for ideas on how to develop thearea surrounding La Rábida. (Huelva)

CEPSA’s social programme: main cultural initiatives


117117117117

Iber-American theatre festival. (Cadiz)

Instituto Cervantes in Algiers:Sponsorship of a selection of poemsentitled Encuentros literarios (“literaryencounters”) in Arabic and Spanish topromote the Spanish language inAlgerian universities. (Algeria)

Jacques Hèteu music school.(Canada)

Jimena de la Frontera internationalmusic festival. (Cadiz)

Junior Achievement:Developing business instinct among theyoung. (Canada)

Kerana school:Financing of the school yearbook.(Canada)

La Línea council art gallery:Catalogue sponsorship. (Cadiz)

Language grants for study abroad forstudents with the best academic recordsat schools in Palos de la Frontera andMazagón. (Huelva)

Los Barrios parish:Restoration of windows. (Cadiz)

Matosinhos jazz festival (Portugal)

Montreal Chamber of Commerce:Organisation of conferences. (Canada)

Montreal Spanish community:Organisation of conferences. (Canada)

Muelle de las Carabelas museum:Collaboration in leisure and culturalactivities, including traditional craftworkshops to highlight crafts from timesgone by. (Huelva)

Palos council and department of culture:Showcasing of a collection ofphotography from 1914 to 1920. (Huelva)

PREVECAN 2009 Congress:

Canary Islands health and safety in theworkplace congress. (Canary Islands)

Port authority Christmas concert(Canary Islands)

Quick painting competition in the Parquedel Capricho. (Madrid)

Regulares museum in Ceuta: Recoveryand conservation of heritage. (Ceuta)

Restoration of the Sacrarium at SantaMaría Coronada church. (Cadiz)

Sagrado Corazón school:After-school English lessons. (Cadiz)

Santa Adela neighbourhood associationpatron saint festivities. (Granada)

Santa Cruz de Tenerife Carnival:Collaboration in organisation of the event.(Canary Islands)

School tools campaign. (Peru)

Schools in Algeciras:Science days in the Campo de Gibraltar.(Cadiz)

Société des amis du moulin Michel:Conservation of a historical building.(Canada)

Spanish cinema season. (Portugal)

Support in the preservation andstrengthening of local culture.(Colombia)

Teaching books: "CEPSA and the oilworld":In-school education initiative on oil andrefining. (Cadiz)

Teaching books: "CEPSA and the oilworld":Educational programme geared towardssecondary school teachers and whichaims to increase student knowledge ofthe sector before the refinery visit.(Huelva)

Tenerife council:

Collaboration during the cultural seasonand the theatrical and musical eventsheld throughout the year. (Canary Islands)

Thutmose III:Sponsorship of work involved inrecovering, reconstructing and restoringthis pharaoh’s temple in Luxor. (Egypt)

UNIA:Sponsorship of an event on theimportance of wetlands in Europe andAmerica. (Huelva)

Universidad Autónoma de Madrid:Agreement for the recovery, restorationand operation of the Carteia field. (Cadiz)

Universidad Popular de Mazagón:Support for the cultural programme.(Huelva)

Víctor Pulido exhibition:Picture exhibition. (Huelva)

Virgen del Carmen procession:Collaboration. (Ceuta)

Youth symphony orchestra:Raising the profile of young soloists andpromoting music education in Portugal.(Portugal)

Zarzuela theatre season, La Línea de laConcepción council. (Cadiz)

2nd Conference of Students from theUniversidad de la Laguna PhysicsFaculty. (Canary Islands)

2009 Anagaemerge Festival:Collaboration. (Tenerife)

CEPSA’s social programme: main cultural initiatives

118

Asociación El Quejido, bonsai exhibition.(Cadiz and Huelva)

Biodiversity centre:Promotion of biodiversity and respect fornature. (Canada)

Cetaceans course: Collaboration with theFundación Loro Parque to create aneducational newsletter on theenvironment. (Canary Islands)

Clean beaches and parks project:Maintenance of bins to collect rubbish inBrazil’s parks and beaches, with the aimof preventing sand and watercontamination on the beaches and lakesof the Pituaçu park. (Brazil)

Colecta selectiva:Sale of recyclable materials, with theamounts raised being donated to variouscharities. (Brazil)

Collaboration with the magazine Red Lifeto sponsor the imperial eagle, aprotected species. (Madrid)

Collaboration with the Sonatrach-Tassillifoundation to use solar energy to powerwater pumping stations for irrigationpurposes and to provide electricity tobuildings of cultural interest in the Illiziregion. (Algeria)

Descubrimos Doñana:Initiative in collaboration with OdielInformación to produce a collectablechildren’s publication on the park’snatural heritage. (Huelva)

Environmental advisory services for theimplementation of an environmentalprotection project. (Colombia)

Environmental education throughteaching focused on ecologicalagriculture. (Colombia)

Fundación Doñana 21(Huelva)

GRAMA:Collaboration with this NGO engaged inprotecting the environment. (Brazil)

Loro Parque e-newsletter:Educational newsletter on theenvironment in collaboration with theFundación Loro Parque. (Canary Islands)

Primera de Palos lake:Maintenance activity to guarantee,through conservation, public use andstudy, the future of the species inhabitingthis natural area. (Huelva)

Purchase of materials to protect riversources and guadua forests. (Colombia)

Reacciona, por el futuro de tus Islas(react for the future of your islands)project:Environmental education. (CanaryIslands)

Reforestation of Coto de Montemayor inMoguer, in collaboration with the localcouncil. (Huelva)

Santa Cruz de Tenerife Chamber ofCommerce:Chamber of Commerce reforestationcampaign. (Canary Islands)

Socio-environmental education throughimplementation of the Directriz 12programme on relations with thecommunity. (Colombia)

Tamar project:Protection of sea turtles. (Brazil)

UNED academic conferences:Training conferences. (Cadiz)

Visits and teaching programmes toimprove knowledge of the La Rábidarefinery in non-integrated centres.(Huelva)

World Wetlands Day:Environmental education initiative carriedout with students from ten schools.(Huelva)

4th open doors conference on savingenergy in schools. (Algeria)

CEPSA’s social programme: main environmental initiatives


119119119119

A.D. Taraguilla sports club:Collaboration. (Cadiz)

Algeciras football club:Donation for player transport. (Cadiz)

Algeciras handball club. (Cadiz)

Asociación Cultural Deportiva La Rábida:Organisation of excursions and sportscompetitions for members. (Huelva)

Asociación Deportiva Académica S.Mamede:Institution that promotes sports amongthe youngest members of society.(Portugal)

Bantam tournament: single-seat fighterbiplane. (Canada)

Bay of Gibraltar fishing school:Promoting fishing among the youngermembers of society. (Cadiz)

Bécancour hockey tournament. (Canada)

Caballa swimming club:Sea swimming. (Ceuta)

Caballa water polo club:Collaboration in trips and equipment.(Ceuta)

Canot Èlite: athletics club. (Canada)

CEPSA Campitos wrestling club:Sponsors of local “Canary Islandswrestling”. (Canary Islands)

CEPSA fencing school:Collaboration with Huelva council.(Huelva)

CEPSA Palos cycling club. (Huelva)

CEPSA Palos half marathon:Sponsors of this popular race. (Huelva)

CEPSA training school:Support for the Tenerife sailing federationfor sailing training. (Canary Islands)

CEPSA 7-a-side football tournament:16 pre-junior teams take part in thecompetition where “everyone’s a winner".(Huelva)

Ceuta Triathlon Federation:Collaboration. (Ceuta)

Children’s day: Financing of sporting andrecreational events. (Colombia)

Children’s day: Sporting and recreationalevents. (Colombia)

C.R. Linense rowing club (Cadiz)

Funding for the Las Águilas weights club(Colombia)

Improvements to infrastructures used toenjoy and promote sport during leisuretime in Purificación. (Colombia)

Inter-district football tournament.(Colombia)

Inter-port indoor footballchampionships – Motril port authority.(Granada)

Junior open football championships:Competition between teams of children.(Cadiz)

CEPSA’s social programme: main sporting initiatives

120

CEPSA’s social programme: main sporting initiatives


121121

La Laguna university football team:Collaboration with this team’sinvolvement in the 2009 WorldInteruniversity Games in Milan. (Canary Islands)

La Orden club: badminton. (Huelva)

LIPASAM canoe festival:A trip down the Gualdaquivir river bycanoe to raise funds for this charity.(Seville)

Mountain bike route:Non-competitive sports challengethrough areas of the Doñana “pre-park”.(Huelva)

Organisation of inter-communitycompetitions. (Peru)

Participation in a golf tournament.(Canada)

Pointe-aux- Trembles figure skatingclub:Skating competition. (Canada)

Provision of sports equipment forcommunity football/volleyball teams andschools. (Peru)

Real Balonpédica Linense. (Cadiz)

Sailing school:Promotion of sailing and related sportsamong students in Palos and Mazagón.(Huelva)

San Roque sports club. (Cadiz)

Santo Domingo basketball club. (CanaryIslands)

Seul Gym sports club: supportingTaekwondo for the young. (Cadiz)

Sponsorship of a cycling club. (Cadiz)

Sponsorship of the Cástulo cycling club:Collaboration in the purchase ofequipment. (Jaen)

Sponsorship of La Línea sports teams.(Cadiz)

Sports club funding.(Colombia)

Tenerife roller hockey club:Collaboration. (Canary Islands)

Tenerife Sailing Federation:CEPSA sailing grant. (Canary Islands)

Tenerife sports club: main sponsor ofthe club. (Canary Islands)

Tenerife sports gala. (Canary Islands)

Tenerife volleyball club:Sponsors of the ladies volleyball team.(Canary Islands)

U.D. Castellar football club. (Cadiz)

Unión Linense de Baloncesto. (Cadiz)

Voltigeurs atome C de Mascouche:Collaboration with the junior baseballteam. (Canada)

121121

The GHG management department isresponsible for performing an annualinventory of direct emissions of the threemain GHGs emitted as a result of theactivities carried out by the Company:carbon dioxide (CO2) and, to a muchlesser extent, methane (CH4) and nitrousoxide (N2O).

The following criteria were applied todefine the scope of the inventory:

• For facilities in which CEPSA holdsan interest of more than 50%,emissions data are reported inproportion to the interest held.

• For facilities in which CEPSA holdsan interest of 50% or less, emissionsdata are reported in proportion to theinterest held, provided that theyaccount for more than 5% of CEPSA’stotal emissions.

• In the Exploration and Productionarea, GHG emissions are reported inproportion to the interest held byCEPSA in all facilities.

The following criteria were applied tocalculate GHG emissions:

• Facilities included in the 2008-2012National Allocation Plan for Emissionrights: CO2 emissions are calculatedin accordance with the monitoringand notification systems set forth inthe respective GHG emissionauthorisations, based on a set ofestablished directives. Theseemissions must be certified by officialverification companies, in accordancewith legislation governing theemission rights trading system.

• All other facilities: A calculation isperformed based on fuelconsumption data and emissionfactors for each GHG, in line withprocedures recommended byCONCAWE72.

• Specific emission calculation criteriahave been applied to the followingfacilities:

- Combined cycle power plant NuevaGeneradora del Sur (NGS): CH4 andN2O emissions from this plant (inwhich CEPSA holds a 50% interest)are calculated by applying emissionfactors recommended byCORINAIR73 (for N2O) and the USEnvironmental Protection Agency(for CH4). These criteria have beenset forth by the regionalgovernment of Andalusia, and arealso applied by the owner of thefacility.

- CEPSA Química Montreal: GHGemissions from this facility aremeasured using continuousmeasurement systems.

- CEPSA Química Bécancour:Emissions from Bécancour arecalculated using fuel consumptiondata and emission factors for eachGHG specific to the facility.

- LUBRISUR: GHG emissions fromthis facility are included in therefining area, as determined atEuropean level by the EuropeanRefining Association.

Inventory of greenhouse gas emissions: criteria applied

72 CONCAWE. Report 9/05R 2006.

73 CORINAIR is a European project on atmospheric emission inventories, which aims to meet the reporting requirements set forth in certain European standards and theircorresponding transposition into Spanish legislation. Further information is available at http://www.eea.europa.eu/es.

AppendixInventory of greenhouse gasemissions: criteria applied

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http://www.eea.europa.eu/es

AppendixAssociations of whichCEPSA is a member

AACC, Asociación para la Autorregulaciónde la Comunicación.

AAEP, Asociación Andaluza de EmpresasPetroquímicas.

ABIFINA, Associação Brasileira dasIndústrias de Química Fina, Biotecnologiae suas Especialidades. (Brazil)

ABIPLA, Associação Brasileira daIndústria de Produtos de Limpeza.(Brazil)

ABIQUIM, Associação Brasileira daIndústria Química. (Brazil)

ABNT, Associação Brasileira de NormasTécnicas. (Brazil)

ACP, Association canadienne de la paie.(Canada)

ACCP, Association des chefs de pompiersdu Québec. (Canada)

ACFPC, Association Canadienne desFabricants de Produits Chimiques.(Canada)

ACIG, Associations des consommateursIndustriels de gaz. (Canada)

ACOGEN, Asociación Española deCogeneración.

ADECAGUA, Asociación para la defensade la calidad del agua.

Agenda 21, United Nations (UN)programme to promote sustainabledevelopment.

Agenda 21, Working group promoted bySan Roque council to study and improvethe city’s natural environment.

AGI, Asociación de Grandes Industriasdel Campo de Gibraltar.

AEA, Asociación Española deAnunciantes.

AEC, Asociación Española de laCarretera.

AEC, Asociación Española para laCalidad.

AECE, Asociación Española de ComercioElectrónico.

AECOC, Asociación Española deCodificación Comercial.

AEDHE, Asociación de Empresarios delHenares.

AEGVE, Asociación Española de Gestoresde viajes de empresa.

AeH2, Asociación Española delHidrógeno.

AEIM, Association d’Entraide Industrielleet Municipale. (Canada)

AEMC, Asociación Española de Medicióny Control (ISA).

AENOR, Asociación Española deNormalización y Certificación.

AEQT, Asociación Empresarial Químicade Tarragona.

AEUTRANSMER, Asociación EspañolaUsuarios Transporte de Mercancías.

AGI, Asociación de Grandes Industriasdel Campo de Gibraltar.

AIEM, Association industrielle de l’est deMontréal. (Canada)

AIQB, Asociación de Industrias Químicasy Básicas de Huelva.

AOGLP, Asociación Española Operadoresde Gases Licuados del Petróleo.

AOP, Asociación Española de Operadoresde Productos Petrolíferos.

APAN, Associação Portuguesa dosAnunciantes. (Portugal)

APD, Asociación para el Progreso de laDirección.

APETRO, Associação Portuguesa deEmpresas Petrolíferas. (Portugal)

APLA, Asociación Petroquímica yQuímica Latinoamericana (Brazil).

APM, Asociación de la Prensa de Madrid.

APN, Associação Portuguesa dosAnunciantes. (Portugal)

APPM, Associação Portuguesa dosProfissionais de Marketing. (Portugal)

AQHSST, Association québécoise pourl’hygiène, la santé et la sécurité dutravail. (Canada)

ASEFMA, Asociación Española deFabricantes de Mezclas Asfálticas.

ASELF, Asociación Española de la Luchacontra el Fuego

Associations of which CEPSA is a member


123123123123

ASELUBE, Asociación Española deLubricantes.

ASINCA, Asociación Industrial deCanarias.

Asociación para la Autorregulación de laComunicación Comercial. Autocontrol.

Asociación de la Prensa del Campo deGibraltar.

Asociación de Promoción del Puerto deTenerife.

ATC, Asociación Técnica de Carreteras.

ATEB, Asociación Española deEmulsiones Bituminosas.

ATIEL, The Technical Association of theEuropean Lubricants Industry.

AUSBANC, Asociación de Usuarios deBanca.

BEQUINOR, Asociación Nacional deNormalización de Bienes de Equipo ySeguridad Industrial.

BSCD Portugal, Conselho Empresarialpara o Desenvolvimento Sustentable.(Portugal)

CATIM, Centro de Apoio Tecnológico àIndústria Metalomecânica. (Portugal)

CCCE, Canada-Spain Chamber ofCommerce.

CCDTR, Chambre de commerce de Trois-Rivières. (Canada)

CCIB, Chambre de Commerce etd’industrie de Bécancour. (Canada)

CCMEPAT, Chambre de commerce deMontréal-Est / Pointe-aux-Trembles.(Canada)

CCPI, Chambre de commerce Pointe-de-l’Île. (Canada)

CEA, Confederación de Empresarios deAndalucía.

CEFIC, European Chemical IndustryCouncil.

CEFRIO, Centre Francophoned’informatisation des organisations.(Canada)

CEG, Club de Excelencia en Gestión.

CEOE, Confederación Española deOrganizaciones Empresariales.

CEOE Tenerife.

CEOP, Comité des Entreprises etOrganismes du Parc Industriel deBécancour. (Canada)

Chamber of Commerce of Brazil inSpain.

Chambre de Commerce de la Pointe-de-l’Île. (Canada)

Círculo de Economía.

CLD, Centre local de développement de laMRC de Bécancour. (Canada)

Club Excelencia en Gestión víaInnovación.

Club de Excelencia en Sostenibilidad.

Club Financiero Génova.

CMMI, Comité mixte municipalités -industries de l’Est de Montréal. (Canada)

COASHIQ, Comisión Autónoma deSeguridad e Higiene en el Trabajo deIndustrias Químicas y Afines.

Centro de Iniciativas Turísticas de SantaCruz de Tenerife.

COFIC, Comitê de Fomento Industrial deCamaçari (Brazil).

CONAMA-9, Congreso Nacional delMedio Ambiente 2009.

CONCAWE, Conservation of Clean Air andWater.

Confederación de Empresarios de Cádiz.

Confederación Española de DirectivosEjecutivos.

Confianza On-Line.

CPEQ, Centre patronal del’environnement du Québec. (Canada)

CRAIM, Conseil pour la réduction desaccidents industriels majeurs (Canada)

CRP, Centro Rodoviario Portugués.

CTA, Corporación Tecnológica deAndalucía.

DIALOGO, Asociación de AmistadHispano-Francesa.

DIRCOM, Asociación Directivos deComunicación.

EASA, European Advertising StandardsAlliance.

ECONSTROI, Mercado Electrónico deConstrução Empresariales.

ENERCLUB, Club Español de la Energía.

EPCA, European PetrochemicalAssociation.

EUROBITUME, European BitumenAssociation. European Wax Federation.

EUROPIA, European Petroleum Industry.

FECEMD, Federación de ComercioElectrónico y Marketing Directo.

FEIQUE, Federación EmpresarialIndustria Química Española

124

El Foro del Pequeño accionista.

Forum Nueva Economía.

Fundación Amigos del Museo del Prado.

Fundación Energía de la Comunidad deMadrid.

Fundación Energía sin Fronteras.

Fundación Gómez Pardo.

Fundación Príncipe de Asturias.

Fundación Puertos de Las Palmas.

Hispano-Portuguese Chamber ofCommerce.

IATA, International Air TransportAssociation.

IBP, Instituto Brasileiro do Petróleo.(Brazil)

IGUA, Industrial Gas Users Association.(Canada)

INGEMAN, Asociación DesarrolloIngeniería de Mantenimiento.

Instituto de Auditores Internos.

Instituto de Consejeros yAdministradores.

IPQ, Instituto Português da Qualidade.(Portugal)

ITM, Club de la Industria, Tecnología yMinería.

Manufacturiers et Exportateurs duQuébec. (Canada)

MEC, Manufacturiers et exportateurs duCanada. (Canada)

Mouvement Québécois de la Qualité.(Canada)

MQQ, Mouvement Québécois de laqualité. (Canada)

OME, Observatorio Mediterráneo de laEnergía.

PARC Quimic de Seguretat.

Proyecto Iniciativas.

Real Instituto Elcano.

Santa Cruz de Tenerife Chamber ofCommerce.

SECAT, Sociedad Española de Catálisis.

SEDIC, Sociedad Española deDocumentación e Información Científica.

SEGEM, Servicios Auxiliares deAsistencia Marítima en Vigo.

SEPRAQ, Comité sécurité desentrepreneurs en pétrochimie etraffinage du Québec. (Canada)

SIGAUS, Sistema Integrado de Gestión deAceites Usados.

SINPEQ, Sindicato das Indústrias deProdutos Químicos e Petroquímicos.(Brazil)

SOGILUB, Sociedade de Gestão Integradade Óleos Lubrificantes Usados Lda.(Portugal)

USUPORT, Associação de Usuários dosTerminais de Portos da Bahia. (Brazil)


125125125125

Aromatics: Products derived frombenzene, commonly used as a rawmaterial in the petrochemical industry.

Barrel: Volume measurement equivalentto 159 litres.

Biodiesel: Fuel derived from vegetableoils for use in diesel motors.

Bioethanol: Ethyl alcohol obtained fromvegetable products, such as cereals.

Bioremediation: Any process that usesmicroorganisms, fungi, plants or theirenzymes to restore a contaminatednatural environment to its originalconditions.

Change management: Process toevaluate and control the implementationof any technical and organisationalchanges that may alter the features ofexisting risks, so that these changes canbe analysed from a safety perspectiveprior to implementation and the requiredmeasures can be put in place.

Clean Development Mechanisms (CDM):Projects to reduce emissions indeveloping countries, part of the KyotoProtocol.

Cogeneration: Energy generation systemthat produces heat and electricity in asingle and simultaneous process.

Combined cycle: Energy generationsystems that combine gas and steamturbine cycles to obtain betterperformance with less environmentalimpact.

Commercial risk: Commercial risk isunderstood as the amount of debtpayable by a customer from the time atwhich a commercial area acquires asupply commitment until the supply iscompleted.

Conversion: Process carried outsubsequent to distillation during whichheavier components, such as fuel andgas oil, are transformed into other lightercomponents.

CO2: Carbon dioxide.

COASHIQ: Organisation that preparesstatistics with data from its associates. InSpain forms the largest representation ofthe industry related to chemical products.CEPSA’s refineries and threepetrochemical plants located in Spain areassociated with this organisation.

Crude unit: This is the first distillationunit in the refinery, and desalinates thecrude oil and applies heat to obtain themain crude fractions: gases (propane andbutane), naphtha and petrol, keroseneand diesel oils.

Effluent: Waste in liquid form normallyresulting from the different processes ina production plant.

Emission rights: Allowances or creditsconceded to organisations permittingcompliance with Kyoto Protocol aims,which can consequently be traded withina regulated market.

ETBE: Ethyl tertiary butyl ether – achemical compound used in theproduction of petrol to increase thenumber of octanes.

FCC: Fluidised-bed catalytic crackingunit. Conversion plant which obtains lightproducts from a mixture of heavy gas oil,vacuum gas oil and, in some cases,atmospheric residue. The process iscarried out through thermal cracking andalso uses a catalyst to obtain a greatervariety of products.

Furnaces: Furnaces are the equipmentused in plants to provide the heatrequired for the manufacturing process.

General terms and conditions forpurchasing and contracting: The generalterms of business used for the purchaseof goods and/or contracting of worksand/or services, which are provided to thesuppliers/contractors during thepurchase/contracting managementprocess and form the contractualdocumentation established in theorder/contract, and all the terms andconditions thereof.

GJ: Gigajoule. 109 joules. (1,000 millionjoules). The joule is the work unit of theInternational System, equal to the workdone by a force of one newton, whosepoint of application moves one metre inthe direction of the force.

Health and safety in the workplace: A setof activities geared towards preventingpossible accidents at work centres due toenvironmental conditions at the site,physical conditions of the work, jobconditions or the way in which work isorganised. Each risk has an associatedprevention plan to eliminate the risk orminimise its impact.

Heat exchanger: A unit used to pre-heatthe load, recovering the heat producedduring a reaction.

Hydrocracker: A unit which transfersheavy distillate currents (which, due totheir properties, cannot be used as fuel)into higher value fractions (propane,butane, kerosene and diesel oil) throughhigh-pressure catalytic processes in thepresence of hydrogen.

Glossary

Appendix

Glossary

126

Hydrodesulphurisation (HDS) unit:Process to reduce or eliminate thesulphur content of a product through theuse of hydrogen, along with a catalyst,under high temperature and pressure.

Hydrogen plant: Unit which produceshydrogen of extremely high purity(exceeding 99.9%). The hydrogenobtained from this process is used inother refining units to increase theproduction of diesel oils, as well as toeliminate sulphur from these oils andfrom petrol.

Isomax unit: Moderate hydrocrackingunit.

ILO (International Labour Organisation):United Nations organisation thatpromotes social justice andinternationally recognised human andlabour rights.

IPPC: European directive that aims toprevent and reduce pollution fromdifferent activities.

ISO: International Organisation forStandardisation.

ISO 9001: Certifiable quality managementstandard.

mmHg: Millimetre of mercury, a unit ofpressure also known as the torr after thephysicist who first discovered it,Evangelista Torricelli. The atmosphericpressure that surrounds us is equivalentto 760 mmHg, and therefore any pressureunder this level involves vacuum work.

MWh: Megawatt hour (energymeasurement unit).

National Allocation Plan (NAP) forEmission Rights: Legislation whichregulates the system for tradinggreenhouse gas emission rights(approved by the Spanish governmentand adapted under European directive87/2003), which aims to help reduceemissions which cause climate change,thereby complying with the commitmentassumed by Spain on ratification of theKyoto Protocol.

NOx: Nitrogen oxide.

Pinch: Pinch technology is a methodologywhich optimises the energy recovered atindustrial installations by using hotcurrents which require cooling and coldcurrents which require heating, analysingthese currents and determining theexchange of heat which best complieswith established pinch criteria.

PTA: Purified terephthalic acid.

REACH: Registration, Evaluation andAuthorisation of Chemicals.

Re-stamping: Re-stamping (or hydraulicpressure testing) is carried out every tenyears to evaluate the condition of a bottle,and involves two steps: the bottle is firstlydeactivated by removing all gas contents,and then subjected to pressure to checkthat there are no leaks or pores.

Risk acceptance criteria: A set ofreferences adopted to set the maximumrisk that may be assumed due to theimpact of technological incidents on thepopulation, CEPSA personnel, theenvironment and the Company’s assets.

Risk analysis: Assessment of theprobability of a hazard occurring andstudy of its consequences for people, theenvironment and assets, with a view toeliminating or controlling that risk.

Safety data sheet: Document forcustomers and employees whichincludes the characteristic, propertiesand directions for use of a specificsubstance.

Seismic testing: A method to establishdetailed underground rock structures bydetecting and measuring sound wavesreflected by different rock strata. It isused to locate structures which maypotentially contain crude oil or gas,before drilling takes place. This data canthen be processed to generate 3D imagesof these underground structures.

SO2: Sulphur dioxide.

Sulphur plant: Treatment plant whichrecovers sulphur for control and sale.

T: Metric tonne.

Treatment: A group of plants used tobring products into line withspecifications. The ETBE, alkylation andisomerisation plants are all treatmentplants, and allow high-quality unleadedpetrol to be obtained.

United Nations Global Compact: Initiativethat encourages the private sector toundertake environmental, labour, humanrights protection and anti-corruptioncommitments.

UNE 1500008 EX: Spanish standard forthe evaluation of environmental risksfrom facilities where business activity iscarried out, particularly in the industrialsector.

Vacuum distillation: A method ofdistillation that uses atmospheric fuel asa raw material, which is obtained byreducing the pressure above the liquidmixture to less than atmosphericpressure in a vacuum system installed atthe top of the column to obtain asphaltsand lubricants, amongst other products.

Vacuum unit: This unit recovers morelight crude components by reducingoperating pressure, which allowsdistillation temperatures to be increasedwithout causing thermal decompositionof the crude oil.

Visbreaking unit: Visbreaking (viscositybreaking) is a process which involvestransferring heavy waste in an oildistillation tower into lighter fractions byreducing viscosity through a severe blastof heat.

VOC: Volatile Organic Compounds. Theseare chemical compounds of varyingstructure that are generated in themanufacturing plants, in storage and inproduct loading operations and may beinvolved in the production of troposphericozone.

Waste recovery: Any process whichallows the resources contained in wasteto be used.

Working interest: The total interest heldbefore application of the terms andconditions of production distributionagreements.


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Contact details: Your questions, contributions, suggestions and comments on this report are welcomethrough the following channels:

Post:CEPSADirección de Comunicación y Relaciones InstitucionalesAvenida del Partenón, 12Campo de las Naciones28042 Madrid

Email: [email protected]: (+ 34) 913 776 000Fax: (+ 34) 913 376 819

2009 Corporate Responsibility Report Evaluation Questionnaire, available online atwww.cepsa.com / Quiénes somos / Responsabilidad corporativa

FURTHER INFORMATION ON CEPSA

2009 Annual Report2009 Corporate GovernanceAnnual Report

CEPSA website www.cepsa.com

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2009CEPSA Legal Documentsand Corporate Governance Report


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