Page 36 - HRC_AR2020

34 I 2020 ANNUAL REPORT I mANAgEmENT DISCUSSION & ANALYSIS

PERFORmANCE REvIEW

STRATEGIC DIRECTION 3: UPDATES ON
Strengthen CSR and External Stakeholders’ Engagement KEY INvESTmENT PROJECTS

Due to the economic effects of the pandemic and MCO
restrictions, HRC had to reduce physical gatherings and Euro 4 mogas (Euro 4m)
community engagements during the year. However, we were
steadfast in maintaining our engagement channels and, The Euro 4M project is crucial for the sustainability of the
when required, continued our face-to-face engagements business to meet the new Malaysian petrol specification
in strict adherence to the Government’s standard operating requirements, and will allow the refinery to continue optimising
procedures (SOP). its crude slate to be commercially competitive. The plant uses
a combination of hydro-processing and liquid extraction
• Good rapport with our neighbours was maintained during technology that has been applied successfully by the licensor
the year. Several engagements were held to manage in various operating plants in China, and when completed, will
concerns from our neighbours through our community have a production capacity close to 1.2 million tonnes per year.
feedback mechanism. There were public complaints
received on noise and intermittent black smoke that CURRENT STATUS:
arose from maintenance activities, management of plant Due to the COVID-19 pandemic and consequent international
upsets and emergency plant situations. All of these lockdowns, the Euro 4M project is expected to be completed
complaints were quickly addressed and resolved. in the third quarter of 2021. The delay is not expected to have

• There were continued engagement sessions with fence any significant adverse effects to the Company’s operations
line communities to address concerns and engage with and its ability to supply to the market. We have put in
the residents by sharing relevant operational updates place proper mitigation plans and have managed to catch up in
and insights. project progress.
• We continued with our annual contributions of festive The Malaysian Government mandated the switch to Euro 4
treats to underprivileged groups during traditional standard for Mogas effective 1 January 2020. The Company
celebrations, albeit on a smaller scale, and strict COVID-19 has been able to produce some volumes of Euro 4 Mogas
preventive measures were observed during the event. based on the plant’s existing configuration and is fulfilling its
supply obligations to customers.
For more details on our Community Engagement initiatives,
please refer to page 49 of our Sustainability Report 2020.
EURO 5 gASOIL

Future Focus The Malaysian Government deferred the mandated
implementation date for Euro 5 Gasoil specification compliance
HRC’s goal is to create and assure a sustainable and strong from 1 September 2020 to 1 April 2021. Upon completion,
foundation for profitable future business. We actively scout the refinery will be able to refine higher sulphur crudes than at
possible long-term growth options and work to ensure agile present, which could potentially produce higher refining margins.
operations in a changing business environment. CURRENT STATUS:
The stringent border controls in Malaysia and other countries
STRATEGIC DIRECTION 1: have delayed the arrival of major equipment and technical
Drive Readiness for Euro 4m and Euro 5 gasoil Roll-out experts, especially from overseas. However, the Company has
Initiatives implemented in FY2020 under this strategy included: put in continuous efforts to minimise the risk of delays and is
working towards expediting the deliveries.
• Minimising margin impacts from late delivery.
We have managed to catch up on all the above delays by
• Euro 4M – Maximise blending of high sulphur Catalytic implementing proper mitigation plans.
Cracked Gasoline (CCG) into Mogas pool.
In March 2021, HRC successfully implemented Euro 5 Gasoil
• Commence planning and preparation for Turnaround before the stipulated due date.
2023 to optimise on productivity savings.