Circular Economy

Challenges, Risks, and Impacts

The severe environmental situations caused by the growth of business and society have affected business, including limited natural resources, higher crude oil demands, limited sources of energy, petroleum, and petrochemical products. In addition, the growing volume of waste from the Clean Fuel Project (CFP), especially during the commissioning and start-up process, is anticipated to have an impact on the Company. With these significant challenges, Thaioil Group has managed and optimized its resources consumption to create sustainable and stable business growth. At the same time, the Company seeks opportunities to apply the Circular Economy (CE) principles. This aims to create the value from waste or discarded materials through research, development, and cooperation with peers and society.

Commitments and Targets

Thaioil Group is committed to enhancing environmental management to optimize the efficiency of resource consumption. The Company has established the Circular Economy Working Team to oversee the management of water, energy, environmental friendly products and services, waste, and reuse optimization from upstream to downstream activities. Thaioil Group also integrated Circular Economy principles, in accordance with the international standard BS 8001:2017, into its sustainability strategy to drive forward the circular economy under the environmental dimension. The Company also formed partnerships with external stakeholders, such as governmental agencies, non-governmental agencies, and communities, to improve management efficiency, raise awareness, and contribute value back to the society from Thaioil Group’s operations.

Targets

Remark: (1) Benchmarked the energy intensity index among other refinery businesses in the Asia-Pacific region, as ranked in the Solomon Benchmarking Report.

Management Approach and Performance

Management Approach

Thaioil Group determines its Circular Economy strategy as “Thaioil CE WE GO” and established a working team to drive the plan and implementation towards the set targets. The working team is responsible for framing, scoping, idea generation, feasibility studies, implementation, as well as monitoring and reporting. This aims to optimize resource consumption across Thaioil Group’s activities while also controlling and reducing the impacts of operations on ecosystems and communities in a sustainable manner. The working team regularly report their performance to the management executives and stakeholders in the following four aspects:

W: Water and Wastewater Management

Water Management

Integrated water management is one of the Circular Economy framework components. The 3Rs (Reduce, Reuse, Recycle) have been integrated across all dimensions of Thaioil Group’s water consumption. The Company has established the Water Procurement Working Team to oversee long-term water needs for the production processes. Their responsibilities are monitoring, assessing the situation, developing strategies, and planning for securing sufficient and sustainable water sources for current production processes as well as future expansion projects. The goal is to enhance efficiency in water usage throughout the production processes and mitigate potential natural water scarcity risks that may arise in the future.

Wastewater Management

Thaioil Group controls the quality of wastewater to meet the level required by regulatory requirements prior to releasing treated water from the operational areas. This has resulted in a reduction of wastewater discharge volume. Furthermore, Thaioil Group has designed the wastewater management system to efficiently optimize resource and energy consumption. The wastewater is categorized into three types with different levels of contamination, as follows:

• • Type 1: Effluents from the operation process.
• • Type 2: Continuously Oil-Contaminated Water (COC): water used for washing or rainwater runoff at production sites.
• • Type 3: Accidentally Oil-Contaminated Water (AOC): rainwater runoff in Thaioil Group’s operational areas, water used for washing for areas without oil contamination, water used for fire drills, and water from cooling towers, or steam generators.

Each type of wastewater is treated by Thaioil Group’s wastewater treatment system, which operates 24 hours a day with constant monitoring of treated water quality. The system also directly reports the value of Chemical Oxygen Demand online (COD Online) to the Department of Industrial Works in real-time. The quality of wastewater is tested by Thaioil Group’s laboratories and verified by external independent third parties, ensuring the quality of treated water is higher than the quality level required by the standards. In addition, the Company also emphasizes on human capital development through several activities, such as training operators overseeing wastewater treatment systems to increase their competency in wastewater management efficiency. In 2023, Thaioil Group successfully maintained wastewater quality above regulatory requirements.

1. Highlighted Projects
2. In 2023, Thaioil Group implemented several projects in three focus areas as follows:

• 1. 3Rs in Process: water management projects, including:
  • • Water consumption reduction project for U-2230 (APU-C) production unit.
  • • Water recovery project for TOPSPP power plant.
  • • Project to reduce backwashing in the side stream filters for Q-4707 and Q-85010A cooling towers.
  • • Leaking pipes maintenance project.
  • • Project to Sour Water Stripper 2 to 5 (SWS-2 to SWS-5 (APU-C)) to recover steam or condensate LP steam instead of using Sour Water Stripper 2 to save LP steam.
  • • Backwash water recovery project from the filtration package.
  • • Water saving “Found, Note, Notify, Done” project. This project is a campaign, which aims to promote an awareness of the efficient use of water resources It involves inspecting and repairing equipment to prevent water leakage during regular checks. The campaign focuses employee participation and awareness-building to minimize water losses both in manufacturing process and in the office buildings. If water leaks are discovered during the survey or equipment checks, the quantity of leakage will be recorded and reported through the SAP system to repair, and closely monitored thereafter. As a result, the project successfully saved water consumption by up to 7,700 liters per hour from the 60 submitted cases. The Company provided awards during the QSHE Day event to demonstrate their appreciation and commendation for all participants in the campaign.

Water saving “Found, Note, Notify, Done” Project

• 2. Sustainable water management projects, including:
  • • The TOPSPP Blowdown Reverse Osmosis (RO) Project to filter blowdown water to freshwater.
  • • The continued operation of the desalination unit to increase the proportion of water consumption derived from renewable resources or seawater instead of freshwater from natural water source.
• ​3. The ‘Water Dashboard’ development project was developed to closely monitor water consumption. This project supports efficiency in water management, and effectiveness in responding to unanticipated changes in water conditions.

Performances 2023

E: Energy Conservation

Energy Management

Thaioil Group places significant importance on energy management by setting the Energy Intensity Index (EII) as one of the corporate key performance indicators (Corporate KPIs). In addition, the Company established the Energy and Loss Committee to drive the Company’s energy performance. In 2023, Thaioil Group’s energy consumption was approximately 49.76 gigajoules, representing an increase of  5.11% compared to the previous year due to higher energy demands in fuel oil and consumer goods. Nonetheless, Thaioil Group remains committed to implementing ongoing energy efficiency improvement projects to achieve energy efficiency at various levels of the Company’s production processes. In 2023, there were 23 energy efficiency improvement projects, resulted in  464,839 gigajoules reduction of energy consumption, contributing to reduction of 28,003 tons of carbon dioxide per year, and  215 million THB of cost savings.

1. Highlighted Projects
2. In 2023, Thaioil Group’s energy efficiency improvement projects included:

• 1. Evaluated production efficiency of the Hydrogen Manufacturing Units 1 and 2. This aims to evaluate whether to operate only one Hydrogen Manufacturing Unit during periods of low hydrogen demand. Particularly, it occurs when the overall production capacity declines or the volume of hydrogen increases from the Continuous Catalyst Regeneration Platformer Units 1 and 2. This operational approach therefore operates one Hydrogen Manufacturing Unit instead of both units simultaneously. In addition, the Company has compared its performances and limitation to produce adequate hydrogen to meet the demands and use the lowest energy consumption and production costs.
• 2. Adjusted control variables and improved efficiency of the incinerators of Thai Oil Public Company Limited, such as:
• • Reduced excessive air in the incinerators of Crude Distillation Unit 2, Hydrotreater Unit 2, Hydrosulfurization Unit 3, and Hydrocracking Unit 2. As a result, the Company decreased fuel consumption in the incinerators. 
• • Improved the efficiency of the incinerators in Crude Distillation Unit 2 by improving the walls inside the incinerators to reduce heat loss.
• 3. Increased efficiency of the energy consumption in the production units during major turnaround at Thai Lube Base Public Company Limited, such as:
• • Improved efficiency of heat exchangers and incinerators in the Vacuum Distillation Unit and Propane Deasphalting Unit by cleaning the equipment. This was resulted in the reduction of fuel consumption in incinerators.
• • Repaired the wall of Vacuum Distillation Unit to reduce its heat loss value.
• • Considered changing the catalyst to reduce energy consumption in the Hydrogen Finishing Unit
• 4. Adjusted control variables in the production process to reach the appropriate level in the Paraxylene Unit while the product quality remains as per the requirements, to reduce fuel consumption.
• 5. Increased upper limit of the pressure in incinerators to reduce excessive air flow into the Isomar Unit. This has resulted in reducing fuel consumption in the incinerators.
• 6. Reduced fuel consumption in the hydrocarbon quality improvement unit or Unionfining Unit to the proper level by gradually decreasing the excessive fuel while maintaining the product quality. This has resulted in the reduction of fuel consumption.
• 7. Increased temperature of desorbent that released from the fan heat exchanger in the parafin separation unit or Molex Unit to minimize heat loss. This adjustment can reduce energy consumption by elevating the desorben temperature before entering to the absorbent tower.

In 2023, the top two energy efficiency improvement projects that maximized energy efficiency were the assessment of production efficiency of the Hydrogen Manufacturing Units 1 and 2, which evaluated whether to operate only one Hydrogen Manufacturing Unit during periods of low hydrogen demand. Particularly, it occurs when the overall production capacity declines or the volume of hydrogen increases from the Continuous Catalyst Regeneration Platformer Units 1 and 2. This operational approach therefore operates one Hydrogen Manufacturing Unit instead of operating both units simultaneously. Another project was the improvement of the efficiency of heat exchangers and incinerators in the Vacuum Distillation Unit by cleaning the equipment to reduce the fuel consumption. Both projects were able to reduce 244,639 gigajoules of energy consumption, or 52.6% of the energy saving, equivalents to 14,838 tons of carbon dioxide per year.

Furthermore, Thaioil Group implemented energy conservation initiatives in the workplace. The Company supported and raised employees’ awareness on the importance of energy conservation through various activities and communication channels. For instance, the Company organized an energy saving contest to encourage employees to share creative ideas to increase energy efficiency in the workplace, shared articles or news about energy conservation projects in the Energy and Loss column of the Company’s Akanee monthly magazine, and posted energy efficiency campaign announcements to promote energy conservation, and provided tips on how to save energy around the office areas.

Thaioil Group’s energy saving campaing to encourage employees to share creative energy efficiency ideas in the workplace

In 2023, Thaioil Group submitted three energy efficiency improvement projects that were implemented in 2022 to participate in the Low Emission Support Scheme (LESS) by the Thailand Greenhouse Gas Management Organization (TGO). As a result, the Company received a certificate of honor for the reduction of 639.308 tons of carbon dioxide equivalents.

The certificate of honor for participation in the Low Emission Support Scheme (LESS)

1. Performances 2023
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4. In 2023, Thaioil Group demonstrated an increase in overall production capacity. This was attributed to  stabilized crude oil prices while the national energy demands increased in line with the national economic recovery. This positive trend enhanced the Company’s refinery operational efficiency, especially for the TOP SPP expansion project that was commissioned as planned and secured electricity and steam distribution to Thaioil Group. As a result, the energy intensity index of Thai Oil Public Company Limited and Thai Paraxylene Company Limited exceeded the target. On the other hand, LABIX Company Limited continued to increase its energy efficiency through several projects Despite Thai Lube Base Public Company Limited gained benefits from efficient electricity and steam production, the energy intensity index has declined due to production capacity being lower than planned and Thaioil Group’s management or production plan based on the market demands to maximize hydrocarbon values, leading to an increase in the proportion of petroleum production and a decrease in the proportion of lubricants due to stagnant demand for lubricants.

5. According to the Solomon Benchmarking Report 2022, Thai Oil Public Company Limited had better energy efficiency than in 2020. In comparison with industrial peers in the Asia-Pacific region, the Company’s energy efficiency ranking was classified as the 3^rd Quartile, which declined from the 2^nd Quartile in 2020. The main reason of this decline was attributed to the reduced number of industrial peers during the benchmarking process due to refinery shutdowns or decisions to forego benchmarking. Despite the overall improvement in energy efficiency, the Company still faced challenges in performance grouping due to a smaller number of industrial peers. Although, the Company   showed positive improvement in energy efficiency performance in 2022, the overall energy consumption is expected to reduce while the energy efficiency is expected to improve once all new production units in the Clean Fuel Project (CFP) are commercially operated. This is because the new production unit of the CFP has better energy efficiency than the existing production units. On the other hand, compared to the other companies in the Solomon Benchmarking, Thai Lube Base Public Company Limited and Thai Paraxylene Company Limited maintained energy efficiency in the 1^st Third, and 2^nd Quartile, respectively.

6. For LABIX Company Limited, the Company achieved exceptional results in implementing its energy efficiency improvement projects in accordance with its energy efficiency improvement plan. This led to the Company achieving its energy intensity index target and demonstrating sustained improvement each year.

7. G: Green Label Focus

Promotion of Green Procurement

The behavioral change of consumer, industrial, and public sector, the purchase and promotion of environmentally friendly products and services have become more significant compared to the past. With an increasing attention to climate change and environmental impacts, Thaioil Group adopts the environmental friendly management or “Green Label Focus”, which covers production, product utilization, procurement, and environmental friendly services. This is supervised by working teams to ensure that targets are efficiently and sustainably achieved.

Thaioil Group manages the procurement and service by selecting material, equipment, and service, together with developing green products to reduce upstream waste and to increase efficiency of resource consumption. Since 2020, Thaioil Group has been certified by sustainable procurement or ISO 20400:2017 which applies to all non-crude procurements. Thaioil Group also promotes sustainable procurement across the supply chain through improving the Company’s Procurement Policy and communicating with suppliers to build their readiness in the annual Thaioil Group Supplier Seminar.

• Highlighted Projects
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• In 2023, Thaioil Procurement Team collaborated with the PTT Procurement Team and the Management System Certification Institute of Thailand (MASCI) to initiate the Green Industry Certification Promotion Project for significant suppliers of Thaioil Group for the first time. The objective was to strengthen capacity in collaborative business in the long term. This project involved knowledge-sharing sessions, workshop, and expert recommendation to facilitate the suppliers in obtaining Green Industry certification. A total of 18 suppliers from the Thaioil Group participated in the project, with three companies exceeding the expectations in achieving Green Industry Level 2 Certification.
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• Performances 2023
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• The Company prioritized the environmental friendly products (Green Products) in the procurement of materials, equipment, and office supplies. This aims to motivate suppliers to develop their production processes for environmentally friendly products and reduce negative environmental impacts throughout the supply chain.

1. In 2023, Thaioil Group’s procurement of environmentally friendly products was 98%, which exceeds the target of 95% of total spending in this product category. Additionally, the total spending of green procurement in the new product category for the year 2022 has increased by 5% compared to 2022. In relation to this, Thaioil Group was able to avoid indirect greenhouse gas (Scope 3) of 1,586.47 tons of carbon dioxide equivalents.

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• O: Opportunities for Upcycling

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• Industrial Waste Management

1. Thaioil Group is committed to utilizing resource efficiently, seeking value optimization opportunities in waste recycling, and minimizing waste disposal in waste management. The Company aims to drive performance with the target of 100% of waste management through the 3Rs (Reduce, Reuse, Recycle) in 2023, as well as maintaining the zero waste to landfill target that has been achieved since 2020. The circular economy and the 3Rs principles have been applied throughout the production processes, from upstream to downstream. The Waste Management Committee drives and governs waste management towards the target.
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3. Highlighted Projects
4. In 2023, Thaioil Group implemented projects across three focus areas as follows:

• 1. CE in Process (Circularity in Process): Controlling and managing waste from the production processes through an operational excellence to minimize waste generated. For the waste generated in Thaioil Group, the 3Rs method is applied to manage and maximize the value of the waste. Examples of the initiatives are listed below:
  • • Added value to Spent Catalyst, included 198 tons of HCU 2 spent catalyst, and 140 tons of HDS-3 spent catalyst, through Molybdenum, and Tungsten reclamation projects. The reclaimed materials can be utilized in other industries rather than being disposed of or incinerated.
  • • Upcycled used wooden pallets from the production process, which are uncontaminated and in good condition, into furniture, such as shelves, wooden sofa seats, tables, trash bins etc. The upcycled products are then used within the Company.

• 2. CE in Office (Circularity in Office):  Conducting research on recycle and reuse approach to increase value of office and food waste, for example: 
  • • The Thaioil Group Zero Waste Project aims to raise awareness and provide knowledge for employees and contractors in waste separation and waste management.
    • The Upcycling Plastic Waste Project aims to turn plastic bottles into QSHE shirts through upcycling methods. The shirts were then given to employees and contractors.
    • The Recycling Coffee Grounds from Akanee Coffee Shops Project to create new products such as plant pots, home decoration, and materials for growing mushrooms (mushroom blocks). These items are then distributed to Thaioil Group’s employees, contactors, and suppliers.

• 3. CE for Society (Circularity for Society): Adding value to waste by turning them into community products, and providing knowledge sharing, for example:
  • • The  Circular Economy Projects, such as fertilizers derived from community food waste to fertilize trees during events with the communities, such as the New Year Party, Children’s Day, and the Kathin Festival 2023.
    • The Thaioil CE School Model Project to teach the youths about waste management processes from its origins to disposal. This includes general waste management, the process of composting waste to fertilizer, the way to recycle used oil, and basic accounting. This project was implemented in four schools located in the Laem Chabang area, namely Wat Laem Chabang School, Wat Mano Rom School, Wat Mai Nern Payom School, as well as in Children Development Center of Laem Chabang Subdistrict. Additionally, the Company organized a soap-making activity using used cooking oil and coffee grounds at Wat Laem Chabang School on July 26, 2023.

Update : February 2024