Annual Report 2009

Financial Highlights
INPEX CORPORATION and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars*7

Millions of yen

2007

2008

2009

2009

¥ 969,713¥1,202,965¥1,076,165$10,952,219

Operating income

559,077

714,211663,267

6,750,122

Net income

165,092

173,246

145,063

1,476,318

Cash flows from operating activities

231,982363,995

230,352

2,344,311

ROE*1 (%)

17.7

15.8

11.9

―

Net ROACE*2 (%)

20.4

21.4

14.6

―

Payout ratio (%)

9.9

10.2

13.0

―

Total assets

1,608,107

1,807,901

1,768,045

17,993,538

Net debt (at period end)*3, 6(169,667)（328,353）(324,109)(3,298,484)

64.0

64.0

71.9

―

(18.6)（36.1）(31.2)―Net sales

Equity ratio*4 (%)
Net debt/Total capital employed

*5, 6

(%)

Yen

U.S. dollars*7

Per share data:
Net income

70,423.45

73,510.14

61,601.60

626.92

Cash dividends

7,000.00

7,500.00

8,000.00

81.42

683,000―

Yen

Share price

1,020,000

1,110,000

Millions of
U.S. dollars*7

Billions of yen

Market capitalization

2,405.6

2,617.8

1,610.8

16,393

Notes:*1 ROE = Net income / Average of net assets excluding minority interests at the beginning and end of the fiscal year
*2 Net ROACE = (Net income + Minority interests + (Interest expense – Interest income) × (1 – Tax rate)) / (Average of sum of net assets and net debt at the beginning and end of the
fiscal year)*3 Net debt = Interest-bearing debt – Cash and cash equivalents – Time deposits – Public bonds and corporate bonds and other debt securities with determinable value*4 Equity ratio = (Net assets – Minority interests) / Total assets*5 Net debt / Total capital employed = Net debt / (Net assets + Net debt)*6 Figures in parentheses denote negative amounts.
*7 The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at ¥98.26 = US$1.00, the approximate rateof exchange in effect on March 31, 2009.

INPEX CORPORATION

1

Contents

Our Business ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 3Our Strengths ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 4Our Strategy ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 6

Strategic Focus  ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・

12

Business Risks ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・

16
26
28
30

INPEX Operation48
Corporate Governance ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 49
Corporate Social Responsibility  ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ ・・ 54
Board of Directors ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 56

INPEX Sustainability

57
90
95
97
98

Financial Section

INPEX Direction

To Our Stakeholders ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 8

INPEX Outline

Our Vision ・  ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・ 2

Business Location ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・
Business Performance・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・

Business Activities ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・

Mission & Corporate Social Responsibility Policy ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・

Financial Section ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・
Oil and Gas Reserves and Production Volume ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・
Subsidiaries and Affiliates ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・
Stock Information ・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・
Corporate Data・ ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・  ・

FORWARD-LOOKING STATEMENTS
This annual report includes forward-looking information that reflects the Company’s plans and expectations. Such forward-looking information is based on the current
assumptions and beliefs of the Company in light of the information currently available to it, and involves known and unknown risks, uncertainties, and other factors.
Such risks, uncertainties and other factors may cause the Company’s actual results, performance, achievements or financial position to be materially different from any
future results, performance, achievements or financial position expressed or implied by such forward-looking information. Such risks and uncertainties include, without
limitations, fluctuations in the following:• the price of and demand for crude oil and natural gas;
• exchange rates; and• the costs associated with exploration, development, production and other related expenses.
The Company undertakes no obligation to publicly update or revise any information in this annual report (including forward-looking information).
NOTES REGARDING FIGURES
Financial figures in this annual report have been rounded to the nearest unit (millions, billions, etc.) for purposes of convenience.
The “Business Activities” section (from p. 30 onward) describes the operating situation as of June 30, 2009. Information relating to subsequent progress on projects is
accurate at the time of report publication.

2

INPEX CORPORATION

Our Vision
As a primary energy accounting for about 60% of domestic primaryenergy demand, oil and natural gas are an essential part of life in Japan.
Since the natural resources and the production volume are so limited inJapan, almost all of oil and natural gas are imported from overseas.
Circumstances in the international upstream oil and gas businesshave become increasingly severer: slowdown in global energy demand
due to the worldwide economic downturn, rapidly and drasticallyfluctuating oil and gas prices, intense competition for resources from along term perspective, mainly, among international oil and gas
companies and state enterprises of China and India, technical andeconomic challenges for exploration and production (E&P) projects, andescalated costs and increased risks of schedule delay associated withenvironmental protections.
In these sever business environments, the INPEX Group (hereinafter“INPEX”) aspires to promote oil and gas exploration, development andproduction aggressively as the largest Japanese oil and gas company
involved in the global E&P business, to be a highly competitive oil andnatural gas E&P company. We are committed to fulfilling our social
mission of providing a stable and efficient supply of energy, while
seeking to create sustained growth in corporate value by maintaining
and expanding our reserves and production volumes over the mid-tolong term.

INPEX CORPORATION

3

Our Business

Step 5
�•�•

Step 1INPEX Direction(to expand reserve and production volumes)

Production/sales

Production and operation management
Marketing and sales(crude oil/condensate/LPG/natural gas/LNG, etc.)

Acquisition

INPEX Operation

Advance surveys of target areas
Bidding/contract negotiations for participating interest� • Acquisition of exploration/development licenses, etc.
�•�•

Exploration

Maintain/
expand reserveand production
volumesGeological /geophysical surveys(subsurface/seismic/subsea)� • Drilling of exploratory wells
� • Production tests; discovery of oil and gas•

09(Billions of yen)59.1

(actual)

10
11
12

45.0
39.0
44.0
(Years ending March 31)

Step 3

Evaluation

Drilling of appraisal wells� � • Estimation of reserve volumes� � • Feasibility study/making a development plan��•Drilling of production wells
Construction of Production/logistics infrastructure(pipelines)� • Production start-up�•�•

Investment in development
09(actual)10(Billions of yen)

235.3
273.0

374.0

11
12

529.0
(Years ending March 31)*Including acquisition costs

Financial Section

Investment in exploration*

Development

INPEX Sustainability

Step 4
Step 2

INPEX Outline

Investment in further exploration
and asset acquisitions

Our vision/Our business

INPEX’s business is the upstream business ranging from the acquisition of oil and natural
gas blocks to exploration, development, production, and the sale of products. As of theend of June 2009, we are involved in a total of 74 upstream projects located in 26
countries around the world. INPEX is engaged in supplying energy on a global scale.

4

INPEX CORPORATIONOur Strengths
At INPEX, we are following a mid-to-long term business strategy torealize our vision of fulfilling a social mission and increasing corporate
value sustainably. The critical business resources that underpin thisstrategy are a unique set of strengths of INPEX, such as abundantreserves and resources.
By enhancing unique strengths through the merger* more, wewill raise our market competitiveness based on global scale andstrengthen business base further.
*1 In October 2008, having completed a 30-month integration process that started in 2006, INPEX Holdings Inc. absorbed former INPEXCORPORATION and Teikoku Oil Co., Ltd. and made a fresh start as the new INPEX CORPORATION. Having consolidated head office functions
and fully integrated both organizations, INPEX has secured a more efficient and flexible management structure.

Strong reserve/resource base*2

Reserve Life*3(RP Ratio)（Million boe*4）

5,000

4,774
Gas
2,124

4,000

(44%)

3,176

3,000
2000

32.3
years

1,598

Liquids
2,651

484
1,000

10.8
years

1,114
0

ProvedDeveloped
Reserves

ProvedUndeveloped
Reserves

ProvedReserves

Probable
Reserves

Proved +Probable
Reserves(56%)

Possible Reserves +Contingent Resources*2 Proved reserve volumes are based on the reserves report by DeGolyer and MacNaughton applying SEC regulations. Probable and possible
reserve volumes are based on the reserves report by DeGolyer and MacNaughton applying SPE/WPC/AAPG/SPEE guideline (SPE‐PRMS)
approved in March 2007. Contingent resources, which are expected in addition to our proved, probable and possible reserves, are evaluatedby INPEX. Volumes attributable to the equity method affiliates are included.
*3 Reserve Life = Proved (+Probable) Reserves as of March 31, 2009 / Production for the year ended March 31, 2009 (RP Ratio: Reserve
Production Ratio)*4 Barrels of Oil Equivalent

INPEX CORPORATION

5INPEX is in the process of developing two of the world’s largest LNG projects at Ichthys in Australia and Abadi in

INPEX Direction

2. A large-scale LNG project as an operator

Our strengths

Reserves and resources which are source of corporate value are the critical factor in oil and natural gas upstream
business. With a total of 74 E&P projects in 26 countries around the world, INPEX has the largest proved reserves
among any Japanese companies in the sector. Our net proved and probable reserves total 4,774 million boe*2. Our
reserves-to-production ratio is 10.8 years for proved reserves, 32.3 years if net probable reserves are added. Beyond
our probable reserves, also having an abundance of possible and contingent resources. we expect to continue
increasing reserves over the mid–to-long term.

INPEX Outline

1. Strong reserve/resource base*1

Indonesia. We are the first Japanese company to develop such large LNG projects as an operator. The projectedvolume. We are focusing on these two projects as the most important ones, which contribute to a stable supply of
LNG and growth of our corporate value. We achieved daily production*3 of 405 thousand boe*2 in the year ended
March 2009. Once these two LNG projects come on stream, we expect this figure to climb to 700 thousand boe*2.
By aggressively ramping up our E&P activities, we are targeting daily production levels in the range of 800–1,000

INPEX Operation

scale of the LNG produced by both projects is vast, being equivalent to around 20% of Japan’s current LNG import

thousand boe*2 around the end of the coming decade.

4. Strong financial position
Strong, healthy balance sheet and plentiful cash reserves are essential for oil and gas E&P companies. This reflects
both the high degree of risk associated with these activities and the need to have sufficient funds at hand to takeadvantage of major investment opportunities quickly as they arise. As of the end of March 2009, INPEX had anequity ratio of 71.9%. Compared with the majors and other international peers, this represents a high level offinancial strength. In addition, our cash, bank deposits, government bonds and other highly liquid instruments
exceeded our liabilities. The ratio of net debt to total capital employed*4, which is an indicator of financial
soundness, was –31.2% at that date. This ratio also shows our strong financial position.
*1 Please see *2 of Page 4*2 Please see *4 of Page 4*3 In accordance with the rules of Securities and Exchange Commission of the United States*4 Net debt/total capital employed = Net debt / (Net assets + Net Debt)

Financial Section

INPEX owns a domestic pipeline network stretching approximately 1,400 km that connects the natural gas
resources both in Japan and overseas to the Japanese gas market. Going forward, we plan to enhance theadded value by establishing gas supply chain through linkage between this network and our major overseas
LNG projects. Specifically, in July 2009, we started the construction of a new LNG receiving terminal at
Naoetsu that is scheduled to enter operation in 2014.

INPEX Sustainability

3. Gas supply chain

6

INPEX CORPORATIONOur Strategy
Long-term Goals• We aim to raise the daily production level up to 800,000 to 1 million
barrels (crude oil equivalent) by 2020, and establish a firm position as a
global independent upstream company*1• We aim to maintain RRR*2 to be over 100% in mid-to-long term.
• While the upstream business being our core business, we will establish a
gas supply chain, and will evolve into a company that supplies
diversified energies.
• We will maintain financial health, empower corporate vitality, andenhance corporate value.
*1 Independents are oil and gas E&P companies with smaller operation scales, following the majors.
*2 The reserve replacement ratio (RRR) is an indicator measuring growth in reserves. It is calculated by dividing the increase in proved reserves bytotal production for that accounting period (expressed as a percentage).

Long-term projections of net production*3(Thousand boe*4/d)

Kashagan oil field

1,000

800

(production start in 2012)

CAGR:

New

Ichthys project

2009–2011(production start in 2015)

6.9%

projects

Abadi project(production start in 2016)

600
400

405

424

462

454

452

454

800 1,000

projects〜

200
0Existing

Long-term production outlook(Thousand boe*4/d)

2009
Japan

2010

2011

Asia & Oceania(For the years ended March 31)

2012

2013

Eurasia (Europe & NIS)

2014
Middle East & Africa

2020
AmericasNote: Net production calculated using assumed oil price of US$52.5/bbl for the year
ended March 31, 2010 and US$60 thereafter.

*3 In accordance with the rules of Securities and Exchange Commission of the United States*4 Barrels of 0il Equivalent

INPEX CORPORATION

7

capabilities and the reinforced management, all of which have been formed as a result of
the business integration, INPEX pursues the following three strategies:

Sustainable expansion of our upstream businessconducting the upstream business such as financial strength, technical capability, intelligence, ability to access to
new opportunities and operational capability, through carrying out existing exploration, development andproducing projects. We will also undertake new projects proactively, and will seek to maintain and raise the level ofour own production and reserve volumes in a sustainable manner.

INPEX Sustainability

2.

Establishment of a gas supply chain and proactive expansion of
the gas business

INPEX Operation

With a mission to provide a stable supply of energies, INPEX will enhance our over-all capabilities required for

INPEX Direction

1.

Our strategy

Based on a well-balanced asset portfolio, further strengthened operational and technical

INPEX Outline

Three Fundamental Strategies

In pursuit of diversification and expansion of our gas business, INPEX will establish a gas supply chain by organically
LNG receiving terminal and extending pipeline networks.

3.

Evolvement into a company that offers diversified forms ofenergyINPEX will evolve into a company that offers diversified forms of energy by exerting all of our efforts onto enlarging
the energy supply basis, co-existing harmoniously with local and global communities, and contributing tosustainable advancement of our society.

Financial Section

connecting domestic and overseas gas sources with our mother market (Japanese market) through constructing a

8

INPEX CORPORATIONTo Our Stakeholders
Review of the Year Ended March 2009

A sure and steady advance into
the future
Looking back on the year ended March 2009, our business environment worsened substantially in the second
half of the year amid sharp economic downturn on a
global scale. In particular, we saw a substantial drop in
crude oil prices, which exert a significant impact on our
performance. Also, in the currency markets, the appreciation of yen continued.
We were fortunate in that the deterioration in economic conditions did not coincide with the timing whenhuge investment were required for INPEX. Unlike othercompanies, we did not have to postpone any investment or delay any operating plans. We stay on course
and are making steady progress in realizing our business strategy for the mid-to-long term.
Compared with the previous year, our sales andprofits were down slightly in the year ended March
2009. Yet, despite the severer business environment,
we believe that the management concept we established remains the right one. We intend to continue
executing a business strategy that adopts a mid-to-longterm perspective. We remain convinced that we candeliver sustainable growth in corporate value by continuing to focus on implementing each of our longterm projects steadily and surely while building a solid
earnings structure.
Going forward, while there remains little prospectof a full economic recovery in the short term, we will try
to improve our financial performance by seeking further reductions in costs.

INPEX CORPORATION

Our key priorities are to establish the two large-scale

In terms of the outlook for business environment, while

LNG projects at Ichthys and Abadi that lie at the core of

the economic downturn is depressing energy demand

our mid-to-long term business strategy. In the year

in the short term, we see demand growing over theended March 2009, our progress on the Ichthys project

mid-to-long term with the economic development of

included the selection in September 2008 of a site for

emerging countries. At the same time, however, we

the onshore liquefaction plant in Darwin, Australia.

recognize that circumstances are likely to become

FEED (Front-End Engineering Design) work has now

increasingly severer within the international upstream

begun. We have taken the first important step for theindustry such as an intense competition for resources,

production start targeted in 2015. At the Abadi field in

mainly, among international oil and gas companies andIndonesia, we submitted a plan of development to thestate enterprises of China and others.

Indonesian government in September 2008 andUnder such environment, we believe that it is impor-obtained approval for the project in January 2009. We

tant for INPEX to establish a strong position as a highly

also think that we made a good start for the produc-competitive international upstream company. For thistion start for the Abadi targeted in 2016.

reason, we are pursuing a basic three-pronged strategy

In the other new large-scale project for INPEX in

to increase our net daily production to 800–1,000 thousand boe by 2020.
First, we aim to achieve sustainable growth of anwith the Kazakh government concerning costs, sched-

upstream business. Besides maintaining and expanding

ules and other aspects of the development plan, we

existing projects in production, we are also making

finally concluded an agreement in October 2008. Devel-

steady progress in large-scale development projects

opment work is now underway for the target produc-such as Ichthys and Abadi. In parallel with this, we aretion start in the end of 2012.

also actively engaged in the exploration projects.

It was difficult to handle the business environment

The second element of our strategy is the activein the year, but, as outlined above, we were able toexpansion of our natural gas business through estab-

resolve various issues that are critical to the success oflishing a gas supply chain in Japan while we expect theour mid-to-long term business strategy. I believe thatgrowth in domestic gas demand. Specifically, we are

we made solid and steady progress in line with thelooking to leverage our domestic pipeline network andestablished schedule.

connect our overseas LNG projects such as Ichthys andAbadi to the Japanese gas market to create our own

Financial Sectionof the Caspian Sea, after about a year of negotiations

INPEX Sustainability

Kazakhstan, the Kashagan oil field located in the north

INPEX Operation

A three-pronged strategy

To our stakeholders

Expectation-building results

INPEX Direction

Our 10-Year Vision for INPEX

INPEX Outline

Major E&P Projects

9

10

INPEX CORPORATIONTo Our Stakeholders
gas supply chain. This will require the construction ofdevelopment by adopting an OJT in the field operation

an LNG receiving terminal in Japan. In August 2008, we

in Japan and overseas, and programs that support tomade a final investment decision to build such a termi-

accumulate technological know-how and expertise.

nal at the harbor of Naoetsu in Niigata Prefecture. Con-On the technical side, we will strive to enhance thestruction work is underway to target an operational

level of technology in developing and operating large-

start-up in 2014.

scale projects and development of non-conventional

Thirdly, we are also engaged in the developmenthydrocarbon resources. We will also enhance techno-

and supply of new energy sources in order to become alogical capability, so that we can make technical pro-more diversified energy company over the longer term.

posals and suggestions to producing countries to facili-Over the mid-to-long term we pursue commercializa-

tate the acreage and blocks awarded. Our group hastion and various opportunities of future-oriented alter-

been working on developing technologies for conven-native and renewable energies based on networking

tional hydrocarbon resources, such as development ofwith affiliated companies as well as alliances and busi-

super giant carbonate oil field, application of tech-ness tie-ups.

niques for improved oil recovery (IOR) or enhanced oil
recovery (EOR), underground storage of natural gas,
treatment technology for oil and natural gas containing

Business Resources

CO2, and H2S, GTL (gas to liquid) technology, transfor-

A future-oriented global
approachmational technology creating methane from carbon
dioxide using bacteria, and CCS (carbon dioxide capture and storage) technology .

In order to execute our mid-to-long term growth strategy, it is important to reinforce management resources
such as human resources and technology, which under-

Strategic Investment:

pin this business strategy.
scale operator projects, such as Ichthys and Abadi,

Corporate growth andshareholder compensation

requires technical and managerial expertise in various

In the next three years, we plan to invest 1,400 billion

fields to be of international standards, such as offshore

yen for exploration and development in our existingdevelopment, floating oil production facilities, pipeline

projects. After that, we are going to begin our full-scaleconstruction, LNG plant construction/operation. We areinvestments in Ichthys and Abadi. As investment for

taking a progressive approach to secure adequate

development on large-scale projects is planned toward

human resources by outsourcing and mid-career recruit-mid 2010s, we will seek a flexible and stable financing

ing. We are also actively working on human resource

through a combination of internal and external funds.

In the area of human resources, promoting large-

INPEX CORPORATION

secure funds from reliable financial institutions, such as
governmental finance institutions and commercial
banks. Moreover, we will take all possible measures toensure an optimal financing structure to maintain thesoundness of the balance sheet, taking the future busi-

cators: equity ratio of 50% or higher, debt/total capital
employed ratio of 30% or less. As borrowing increases
these indices may not be maintained for a short period.
However, after production start-up of large-scale projlong term.
Our basic policy for shareholder compensation is: toachieve harmony, in light of the mid-to-long term prospects, between the maximization of corporate value
reserve and production volumes of oil and gas withaggressive investment in exploration and development

believe that the world would be able to satisfy its
energy needs for the foreseeable future without the oiland natural gas resources.
As the largest Japanese oil and gas company, weview a stable energy supply as our social mission todevelop numerous projects around the world. By
expanding our operations further in the future, we
hope to fulfill this mission to an even greater degree.
In that context, I have felt that the whole company
has been going well toward our goals in the last few
years. I, on behalf of the management, would like tothank everyone who has contributed. Going forward, I
hope that all of the employees sharing this sense andwe continue to make steady progress amid today’s
sever economic environment.

in Japan and overseas and direct returns through thepayment of cash dividends to shareholders.

August 2009

As INPEX Group is on a growing stage in a medium

INPEX Sustainability

through ongoing maintenance and enlargement of oursuch as global warming, but to my mind, I do not

INPEX Operationects in mid 2010s they will be secured in the mid-to-

There is a wide variety of opinion on oil and gas topics

To our stakeholders

We have been targeting the following financial indi-

A management’s appreciation

INPEX Direction

ness environment into consideration.

In Closing

INPEX Outline

For external funds, the primary importance is to11

term and therefore huge amounts of funding will beognize the necessity to further consider our shareholder
compensation policy when large-scale projects start
commercial production and enter a period of stability.

Naoki Kuroda
Representative Director, President
INPEX CORPORATION

Financial Section

required, our financial basis must be secured. We rec-

12

INPEX CORPORATION

Strategic Focus
Outline of Two Major Projects and their Progress

1. Ichthys ProjectStatus overview: FEED* launched, aiming for early project realization*FEED: Front-End Engineering Design

Exploration history
INPEX participated in an open bidding conducted by theancient Greek, is derived from the many fossilized fish that

Australian federal government in March 1998 for the WA-

had been discovered in the vicinity of the block.

285-P block, which is located off the coast of Western

Further two wells were drilled from April 2007 to confirm

Australia about 200km from the Kimberley region. In August

the extent of the gas-condensate reserves. After in-depth

1998, INPEX acquired the exploration permit for this block. In

evaluation, including the results from these INPEX’s 8 wells,

the first drilling campaign, which took about one year since

recoverable reserves from the field are currently estimated at

March 2000, three exploratory wells were drilled. The

12.8 trillion cubic feet (Tcf) of gas and 527 million barrels ofpresence of gas and condensate was confirmed in each ofcondensate.

them. Starting in May 2001, INPEX gathered, processed andIn August 2006, INPEX was granted Major Projectinterpreted 3D seismic data. A second drilling campaign

Facilitation status for the Ichthys field by the Federal Minister for

began in June 2003 and three exploratory wells were drilled.

Industry, Tourism and Resources. This status recognized the fact

In the result of that, INPEX discovered the Ichthys gas-that the development of this gas-condensate field would

condensate field. The name “Ichthys”, which means “fish” incontribute to the long-term economic development of Australia.

Future plans and timeline
While FEED is proceeding for the Ichthys project, INPEX has submitted an Environmental Impact Statement (EIS) to theAustralian federal government and the government of the Northern Territory to obtain environmental approval for the project.
INPEX also plans to submit a Field Development Plan (FDP) to the Australian federal government and the government of thestate of Western Australia in due course to secure the necessary production licenses. Both the environmental approval and the
production licenses are expected before the Final Investment Decision (FID) is made on the project.
LNG marketing activities are also ongoing to secure purchasing commitments for the output of the Ichthys field. Once thenecessary conditions such as technical, regulatory, financical and commercial are all met, INPEX plans to make FID with the
project partner Total of France. The post-FID phase will begin with detailed design work on both the onshore and offshore
facilities, followed by equipment procurement and the construction of the LNG plant and other facilities. The target date for
production start-up is 2015.

INPEX CORPORATION

13

FEED was launched in 2009 for the onshore liquefaction plant(principally the federal government, the government of theand offshore production facilities, based on the development

state of Western Australia and the government of theconcept as outlined below. INPEX is working to realize theNorthern Territory) and all other parties associated with the

Ichthys project as quickly as possible while seeking the

project.

INPEX Outline

Development concept overview

understanding and cooperation of authorities in Australia

250m. Development wells will be located adjacent to the subsea drill centerand connected by flowlines to a central processing facility (CPF).

Condensate

15,000 bbl/day❷ Offshore production facilities will consist of the floating CPF for processing(peak)❹
Onshore Plant（Darwin）

Gas Export Pipeline❷❺❸ The gas will be pumped from the CPF to an onshore LNG plant in Darwin via
a 42-inch subsea pipeline of approximately 885km in length. This will be oneof the longest such pipelines in the world. A feasibility study on the laying of
this pipeline has been conducted, with positive results.

Floating Production
Storage &Offloading（FPSO）

0m❹ The onshore production facility at Darwin will first extract condensate andSubseaCondensate
Transfer LineLPG from the natural gas pumped via the pipeline. Using two trains, theliquefaction plant will then cool the gas to –162˚C to form LNG. Plans call forstoring the LNG, LPG and condensate at the onshore facility prior to
shipment.
A planned site in Darwin for the construction of the onshore LNG plant
was selected in September 2008. The site has an ideal location. It is situatedclose to the bay, away from the residential parts of Darwin, and also boasts
relatively easy access to the city’s airport.

❶

Drill Center❺ The plateau production rate from the Ichthys gas-condensate field isDevelopment
Well

-250m

forecasted to be approximately 8.4 million tons of LNG and 1.6 million tons of
LPG per annum, as well as approximately 100 thousand bpd of condensate at
the peak.

FID
Government
Approval
Onshore &Offshore Facilities
Gas Marketing

Application ofEnvironmental ApprovalFirst LNG

Submission of
supplemental
information

Public Comments
Application of Production Licence

To obtain Environment Approval
To obtain Production Licence

FEED

EPC: Engineering, Procurement & Construction

LNG purchase commitment from buyers

2010

2015

Financial Section

Flow LineINPEX Sustainability

Semi-submersible
Central Processing
Facility（CPF）❸

Condensate
85,000 bbl/day(peak)INPEX Operation

the gas and condensate together with a Floating Production, Storage andOffloading (FPSO) facility to handle storage and shipment of condensate.
Plans call for extracting most of the condensate using the CPF and loading it
directly from the FPSO to oceangoing tankers for shipment.
Due to the large scale of projected gas and condensate production, theCPF will be one of the largest of its kind in the world. The FPSO will also belarge, with an oil storage capacity of up to 1.2 million barrels. FEED work has
now commenced after all the technical requirements and design features
were fully evaluated carefully in advance.

Strategic focus❶ Subsea production facilities will be established at a water depth of aroundLPG❺ 1.6 million ton/year

INPEX Direction

LNG

8.4 million ton/year

14

INPEX CORPORATION

Strategic Focus
Outline of Two Major Projects and their Progress

2. Abadi ProjectStatus overview: In preparation for FEED work, having secured approval forthe plan of development from the Indonesian government

Exploration history
In October 1997, based on the preliminary evaluation study,

period of about seven months from March 2002, the Abadi-2

INPEX submitted a bid for the Masela block at a public tenderand Abadi-3 appraisal wells were drilled to survey the extent

conducted by the Indonesian government. A PSC for theof the structure. The extent of gas-condensate reservoirs was

block was concluded in November 1998.

confirmed, indicating that the overall size of the structure

A series of 2D seismic exploration data was recorded for

was larger than initially projected.

the block in February 1999. The Abadi-1 exploration well was

Reserves evaluation and selection of development options

drilled in October 2000, confirming the presence of gas andwere conducted between 2003 and 2007. Over a period ofcondensate. Calendar year 2000 was an extremely fortunate

about 14 months from May 2007, further four appraisal wells

one for INPEX, because both the Ichthys and Abadi fields

were drilled with the aim of enhancing the accuracy ofwere discovered during that year.

reserve estimates. The presence of gas and condensate was

In July 2001, a new series of 3D seismic exploration data
was recorded for the discovered structure of Abadi. Over aconfirmed from each of these wells, enabling INPEX to
upgrade estimates of the field’s reserves substantially.

Future plans and timeline
With the aim of production start in 2016, INPEX will conduct FEED work on the floating LNG and subsea production systems
required for FID .
Environmental and social approval for the project from the Indonesian government is required prior to FID. LNG marketing
activities are scheduled to proceed in parallel with FEED.

INPEX CORPORATION

15INPEX submitted the plan of development (POD) for theobtained. Preparations are currently proceeding steadily to get

Abadi gas-condensate field to the Indonesian government in

the FEED started.

INPEX Outline

Overviews of Abadi gas-condensate field and plan of development

September 2008. Approval for this plan has since beenin the 400–800m range. The field is huge: the reservoir storing the gas
range in depth from 3,700m to 3,900m, and the total area of thisSaumlakireservor is more than 1,000 sq. km. The field is located approximately

Dili

Strategic focus

East Timor

INPEX Direction

The Abadi field is situated in the Indonesian Arafura Sea at water depths
Indonesia

2,600km from the Indonesian capital Jakarta. The nearest land to theblock is the Tanimbar Islands, which are located approximately 150km to
the northeast. Between the Abadi field and these islands lies the Timor
trough, where the seafloor varies from 1,500m to 2,300m in depth. The
Darwinmajor challenge for INPEX is how to develop this remote deepwater gas

Australia

field with promising reserves.

The plan of development to which the Indonesian government has given

INPEX Operation

Abadi Gas / Condensate Field

approval involves the “Floating LNG” (FLNG) concept. Initial development
reserves are concentrated. Since the sheer depth of the waters in the
Masela block makes it unfeasible to use submersible production facilities,
INPEX plans to develop the field using a combination of subsea andfloating production facilities. This will be one of the largest FPSO for LNG
in the world of its kind to produce, store and ship the LNG. Under the
FLNG concept, the FPSO will also be able to store and ship condensate
that is produced along with the natural gas. The field is expected to
produce 4.5 million tons per annum of LNG (over 30 years) and 13

INPEX Sustainability

will be focused on the northern part of the field, where most of thethousand bpd of condensate.

2007 and November 2008. Based on this work, INPEX thinks that FLNG is
technically feasible for the Abadi gas field.

FID
Government
ApprovalFloating LNG
Subsea Production System
Gas MarketingFirst LNG

Public Announcement/Public Consultations
Environmental Permit
Environmental & Social Impact Assessment

FEED

EPC: Engineering, Procurement & Construction

LNG purchase commitment from buyers

2016

Financial Section

The FLNG concept has not yet been realized in the world. The preFEED analysis of the FLNG development was done between September

16

INPEX CORPORATIONBusiness Risks
1

Characteristics of and Risks Associated with the

Oil and Gas Development Business(1) Risk of Failure in Exploration, Development, or Production

The following is a discussion on key items that can be

Payment of compensation is ordinarily necessary to acquire blocks andacreages. Also, surveying and exploratory drilling expenses (explora-considered potential risk factors relating to the business oftion expenses) become necessary at the time of exploration activities
for the purpose of discovering resources. When resources are discov-

INPEX CORPORATION and its consolidated subsidiaries

ered, it is necessary to further invest in substantial development
expenses according to various conditions, including the size of the(“the Group”). From the standpoint of information

recoverable reserves, development costs and details of agreementswith oil-producing countries.

disclosure to investors and shareholders, we proactively

There is, however, no guarantee of discovering resources on ascale that makes development and production feasible. The probability

disclose matters that are not necessarily the business risksof such discoveries is considerably low despite various technologicaladvances in recent years, and even when resources are discovered thebut that can be considered to have important effects onscale of the reserves does not necessarily make commercial production
feasible. For this reason, the Group conservatively recognizes expenses

the investment decisions of investors. The following
discussion does not completely cover all business risks
relating to the Group’s business.
Unless stated otherwise, forward-looking statementsin the discussion are the judgment of the Group as of theend of June, 2009 and are subject to change after suchdate due to various factors, including changes in social

related to exploration investment, maintaining financial soundness bybooking 100% as expenses in consolidated financial statements in thecase of concession agreements（including mining rights awarded inJapan as well as permits, licenses and leases awarded overseas）
and bybooking 100% of exploration project investment as allowances in thecase of production sharing agreements. In addition, if there are impossibilities of recovery of development investment in a project, we also
book the corresponding amount of development expenses as allowances in accordance with the circumstances of each project.
To increase recoverable reserve and production volumes, theGroup always takes interest in promising properties and plans to continue exploration investment. At the same time, we invest in development projects, including the acquisition of interests in discoveredand economic circumstances.

undeveloped fields and producing fields, so as to maintain an overallbalance between assets at the exploration, development, and production stages.
Although exploration investment and development investment
are necessary to secure the reserves essential to the Group’s futuresustainable business development, each type of investment involves
technological and economic risks, and failed exploration or development investment could have an adverse affect on the results of theGroup’s operations.
(2) Oil, Condensate, LPG and Natural Gas Reserves① Proved Reserves
INPEX CORPORATION (“the Company”) commissioned DeGolyer andINPEX CORPORATION

operational conditions. Nevertheless, probable reserves do not offer a

the United States, to assess proved reserves of our Group. The defini-guarantee of the production of total reserves during a future produc-tion of proved reserves evaluated by DeGolyer and MacNaughton istion period with the same certainty as proved reserves.

based on the U.S. Securities and Exchange Commission’s Regulation

For further details on probable reserves of crude oil, condensate,

S-X, Rule 4-10, which is widely known among U.S. investors. Proved

LPG, and natural gas held by the Group, including affiliates under theoil and gas reserves are estimated quantities that geological and engi-

equity method, please see the section “Crude Oil and Natural Gas

neering data demonstrate with reasonable certainty to be recoverable

Reserves” on P90.

ing to the SEC standards, proved reserves are classified into two cate-neering data from oil and gas reservoirs, the maturity of development

gories: “Proved developed reserves” can be expected to be recoveredplans, economic conditions, etc. as of the date such an estimate isthrough existing wells with existing equipment and operating meth-made. Reserves may be revised in the future on the basis of data madeods, and “proved undeveloped reserves” can be expected to be recov-

newly available through progress in production and operations. As aered from new wells on undrilled acreage or from existing wells where

result, there is a possibility that reserves will be restated upwards ora relatively major expenditure is required for recompletion. For defini-downwards. As to the reserves under a Production Sharing Contract,tion as “proved reserves” we assume the existence of a market andnot only production, but also oil and gas prices, investments and costeconomic means of recovery, process and shipment, or the certainty ofrecoveries, and remuneration fees may affect the economic entitle-

gaining such means in the short term. This definition is widely regarded

ment. This may cause reserves to increase or decrease. In this way, theas being conservative. Nevertheless, the strictness of the definition

reserves could fluctuate because of various data, assumptions anddoes not imply any guarantee of the production of total reserves dur-changes of definition.

ing a future production period.
intensive and funds cannot be recovered for a long time

equity method, please see the section “Crude Oil and Natural Gas

Considerable time and expense is required for exploration activities.

Reserves” on P90.

Even when promising resources are discovered through exploration,② Probable reserves

substantial expenses including production facility construction costs,

In addition to the assessment of proved reserves based on the SEC

and an extended period of time, are necessary at the development

standards, the Company commissioned DeGolyer and MacNaughton

stage leading up to production. For this reason, a long period of ten

to assess its probable reserves based on the Petroleum Resources Man-

years or more is required from the time of exploration and develop-

agement System 2007 (PRMS) published by four organizations: thement investment until the recovery of funds through production andSociety of Petroleum Engineers (SPE), the World Petroleum Congresssales. In particular, the development of the Ichthys and the Abadi,(WPC), the American Association of Petroleum Geologists (AAPG), andlarge-scale LNG projects, being pursued by the Company requires a

the Society of Petroleum Evaluation Engineers (SPEE). Probablevery large amount of investment, and the financing of these projects

reserves, as defined by the four organizations, are reserves outside

could be impacted by changes in the economic and financial

proved reserves that are less likely to be recovered than proved reserves

environment.

but more certain to be recovered than possible reserves based on anal-

Following the discovery of resources, in the development process

yses of geological and engineering data. In this context, when proba-

leading up to production and the commencement of sales, the occur-

bilistic methods are employed, there should be at least a 50% proba-

rence of events such as delay of development schedule or the loss ofbility that the quantities actually recovered will equal or exceed thethe economic viability of the properties due to factors such as unan-sum of estimated proved and probable reserves. The difference

ticipated problems related to geological conditions or fluctuations in

between this definition and the definition of proved reserves based on

the price of oil or gas, fluctuations in foreign exchange rates, or otherthe SEC standards is the degree of certainty that oil and gas can bechanges in the business environment, including escalating prices ofrecovered as of the date such an estimate is made. Probable reserves

equipment and materials, could have an adverse affect on the Group’s

can be upgraded to proved reserves after the addition of new techni-

operational results.

cal data, under different economic conditions, and with advances in

Financial Section(3) The period from exploration to sales is highly capital

INPEX Sustainability

For further details on proved reserves of crude oil, condensate,
LPG, and natural gas held by the Group, including affiliates under theBusiness risks

A reserve evaluation depends on the available geological and engi-

INPEX Operation③ Possibility of Change in Reserves

operating conditions, as of the date such an estimate is made. Accord-

INPEX Direction

in future years from known reservoirs under existing economic and

INPEX Outline

MacNaughton, an independent petroleum engineering consultant in

17

18

INPEX CORPORATIONBusiness Risks(4) Operatorship

acquisition of other blocks and acreages, even though the relationshipIn the oil and gas development business, companies frequently form

with the partner may be good.

business partnerships for the purpose of the dispersion of risk andAt times, joint operating agreements contain preemption rightfinancial burden. In such partnerships, one of the companies becomes

provisions. When a joint operating agreement contains such a provi-

the operator, which performs the actual work and bears the responsi-

sion, in the event that the owner of a working interest attempts tobility for operations on behalf of the partners. The companies othertransfer its working interest to a third party, the partners may claim

than the operator, as non-operators, participate in the business by

the right to purchase the working interest on the same terms and con-providing a predetermined amount of funds and either carefully exam-

ditions as those agreed with the third party. Furthermore, although

ining the exploration and development plan devised and implemented

preemption right provisions customarily apply primarily to the directby the operator, or participating in some operations.

transfer of working interests, in certain cases the provisions are also

The Company was a holding company jointly established by INPEX

contained in joint operating agreements, stipulating that the issuance

CORPORATION and Teikoku Oil Co., Ltd on April 3, 2006 through stock

or transfer of shares in the owner of the working interest or its parent

transfer. The two companies were fully absorbed by and integrated

company (including parent company of the parent company, same

into the holding company on October 1, 2008. The resultant company

meaning below) triggers preemption rights. With respect to the joint

possesses abundant operational capabilities thanks to the amalgama-

operating agreements with preemption right provisions to which thetion of the former two companies’ extensive experience and know-Group is a party, we think that there are no transactions in which we

how in exploration, development, and production both within Japan

are involved for which the preemption rights of partners are exercis-

and overseas, as well as their high-level proprietary technologies.

able. It is possible, however, that in cases where we acquire a partner’s

The Group intends to execute operator projects taking into con-working interest, shares of common stock of a project company thatsideration of our business resources and the balance between opera-

directly holds a working interest, or shares of common stock of its par-tor and non-operator projects, based on the Group’s technical capabil-

ent company, or where shares of common stock of such project com-ity, which has been considerably enhanced by the above-statedpany through which we hold a working interest or shares of common

business integration. We believe that by utilizing the services of spe-stock of its parent company are transferred or issued to a third party,

cialized contractors and highly experienced external consultants, aor in cases of company reorganization, other partners may claim thatpractice similar to foreign oil companies including the majors, it will bethey are entitled to exercise preemption rights with respect to thatpossible to execute business appropriately as an operator.

working interest. Should partners prevail in such a claim, we may not

Engaging in project coordination as an operator will contribute to

be able to acquire the working interest as planned or, in the case of athe expansion of opportunities of blocks and acreages acquisitiontransfer or issue of shares of common stock of a project company

through enhancement of technological capabilities and greater pres-through which we hold a working interest or shares of common stock

ence in oil-producing countries and the industry. At the same time,of its parent company, the project company may be forced to transfer

however, there exist risks such as constraints on the recruitment of

the working interest to those partners.

personnel who have specialized operational skills, and a relative
increase in financial burden. Inability to adequately cope with such(6) Disaster and Accident Risks

risks could have an adverse affect on the Group’s results of

Oil and gas development business entails the risk that operational

operations.

accidents, disasters may occur in the process of exploration, development, production, transportation. Should such an accident, disaster(5) Project Partners

and other such incident occur, risks are not limited to the occurrence

In the oil and gas development business, as previously mentioned, sev-

of costs, excluding compensation covered by insurance, due to facility

eral companies often engage in joint business for the purpose of dis-damage, but include the risk of a major accident involving loss of life.

persion of risk and financial burden. In such cases, the partners gener-

In addition, a cost burden for recovery or opportunity loss from theally enter into a joint operating agreement among themselves tointerruption of operations could occur.

decide on the decision-making procedure for execution of the joint

With regard to environmental problems, there is a possibility ofbusiness, or to decide on an operator that conducts business on theirsoil contamination, air pollution, and freshwater and seawater pollu-

behalf. A company that is a partner in one property in which thetion. The Group has established a “Health, Safety and Environment

Group is engaged in joint business may become a competitor in the

Policy,” and as a matter of course abides by the environmental laws,

INPEX CORPORATION

new gas pricing system linked to the price of imported LNG, on thegive due consideration to the environment in the conduct of business,basis of the percentage of the total gas sales accounted for bybased on our independent guidelines. Nevertheless, in the event of animported gas As a result, the selling price of the Company’s naturaloperating accident or disaster that for some reason exerts an impact

gas in the domestic market will be directly affected to a certain extent

on the environment, a cost burden for recovery or loss from the inter-by changes in crude oil prices and in the price of imported LNG, which

ruption of operations could occur. Furthermore, in the event ofis linked to the price of crude oil.

INPEX Outline

regulations, and standards of the countries in which we operate and19changes to or the strengthening of the environmental laws, regula(2) The Effect of Fluctuations in Exchange Rates on Financial

necessary for the Group to devise additional measures, and an associ-Results

ated cost burden could occur.

As the most of Group’s business consists of overseas E&P business con-

Although we maintain accident insurance covering the opera-

ducted overseas, associated revenues (sales) and expenditures (cost) aretions, should such an accident or disaster be attributable to willful mis-denominated in foreign currencies, and profit and loss is subject to the

conduct or negligence on the part of the Group, the occurrence of aeffects of the foreign exchange market. At times of the yen apprecia-

cost burden could have an adverse affect on financial results. Also,tion, yen-denominated sales and profits decrease. Conversely, at times

such accident or trouble would result in receiving administrative pun-of the yen depreciation, yen-denominated sales and profits increase.
pany borrows in foreign currencies. At times of the yen appreciation, aadverse affect on future business activities.

foreign exchange gain on foreign-currency denominated borrowings is2

incurred as a result of fiscal year-end conversion; at times of the yen
depreciation, a foreign exchange loss is incurred. For this reason, theexchange risk associated with the above business is diminished and the

Natural Gas Prices, Foreign Exchange, and Interest

impact of fluctuations in exchange rates on profit and loss tends to be

Rates on Financial Results

mitigated.

(1) Effects of Fluctuations in Crude Oil Prices and Natural Gas(3) The Effect of Fluctuations in Interest Rates on Financial

Crude oil prices and a large percentage of natural gas prices in over-

Resultsseas businesses are determined by international market conditions,

The Group raises some of the funds necessary for exploration andand those prices fluctuate significantly in response to the influence ofdevelopment operations through borrowing. Much of these borrow-global or local supply and demand. The Group’s sales and profits areings are with variable-rates, long-term borrowings based on the U.S.

subject to the effects of such price fluctuations. Such effects are highly

dollar six months LIBOR rate. Accordingly, the Company’s profits arecomplex and are caused by the following factors.

subject to the influence of fluctuations in U.S. dollar interest rates.

① Although a majority of natural gas selling prices in overseas
proportion to crude oil prices.

3② Because sales and profits are determined on the basis of crude oil

The Group engages in a large number of oil and gas development

prices and natural gas prices at the time sales are booked, actual crude

projects overseas. Because the Group’s business activities, including

oil transaction prices and the average oil price during the accounting

the acquisition of blocks and acreages, are conducted on the basis ofperiod do not necessarily correspond.

contracts with the governments of oil-producing countries and otherbusinesses are linked to crude oil prices, they are not in direct

Overseas Business Activities and Country Risk

For the domestic natural gas businesses, the majority of selling

entities, changes in the political, economic, and social circumstances inprices are decided on a full-year basis through contracts with thesuch oil-producing countries or neighboring countries (including gov-

users, but in the event that market prices of competing forms of fuelernment involvement, stage of economic development, economic

such as LNG fluctuate sharply, the selling price of natural gas that is

growth rate, capital reinvestment, resource allocation, government

domestically produced may be affected. From January 2010, the Com-

control of foreign exchange or foreign remittances, and the balance ofpany plans to sell natural gas regasified from imported LNG in additioninternational payments), the application of OPEC production ceilings

to natural gas produced in Japan. Therefore, we plan to introduce ain OPEC member countries, and changes in the legal system of thoseFinancial Section

Prices on Financial Results

INPEX Sustainability

Effects of Fluctuations in Crude Oil Prices,

Business risks

On the other hand, when borrowing necessary funds, the Com-

as an oil and gas development company, and could therefore have an

INPEX Operation

ishment or result in damage to the Group’s credibility and reputation

INPEX Direction

tions, and standards of the countries in which we operate, it may be

20

INPEX CORPORATIONBusiness Risks
countries (including the establishment or abolition of laws or regula-

Field has been extended to March 8, 2026.) Although the Group planstions and changes in their interpretation or enforcement) could have a

to make efforts together with partners to further extend these agree-

significant impact on the Group’s business or results unless the impact

ments, inability to re-extend the agreements or unfavorable contract

is compensated by insurance.

terms and conditions at the time of re-extension could have an adverse

Additionally, against the background of rising development costs

effect on the Group’s results. Even should the agreements be re-and other changes in the business environment, the progress of oil

extended, we anticipate that remaining recoverable reserves may

and gas projects, and the need to address environmental issues, thedecrease at the time of re-extension. Although the Group is striving togovernments of oil-producing countries may seek to renegotiate theacquire interests that can substitute these properties, failure to acquire

fiscal conditions including conditions of existing oil contracts related toproperties to fully substitute for these properties could have an adverse

blocks and acreages. In the event that the fiscal conditions of con-affect on the Group’s results.

tracts were to be renegotiated, this could have an adverse effect on
the Group’s business performance.

4

In addition, in the event that the period for exploration in oil andgas fields currently under exploration is fixed by contracts, and in thecase of fields where oil and/or gas reserves are found that are deemed
to be commercialized, and the Company is unable to decide on the

Dependence on Specific Geographical Areas ortransition to the development stage by the expiration of the current

Properties

contract, efforts will be made through negotiations with the govern-(1) Production Volume

ment of the oil- or gas-producing country in question to have the peri-

The Group engages in stable production of crude oil and natural gas

ods extended. However, there remains the possibility that such nego-in the Offshore Mahakam Block (Indonesia), the ADMA Block (United

tiations may not be successfully concluded, in which event theArab Emirates), the Minami Nagaoka Gas Field (Japan) and so on. The

Company would be forced to withdraw from operations in the oil or

Asia and Oceania regions including Japan, the Group’s core geograph-gas field concerned.

ical business area, accounted for about 54% of the Group’s production volume, and the Middle East accounted for about 36%.

Also, as a rule, when there has been a major breach of contract
on the part of one party, it is customary for the other party to have the

As a result of the business integration, the Company’s operationalright to cancel the agreement before the expiration date. The agree-

areas comprise a very wide range, encompassing the Asia-Oceania

ments for properties in these principal geographical business areas

regions (particularly Japan, Indonesia, and Australia), the Middle East,

contain similar provisions. The Group has never experienced early can-the Caspian Sea area, Central and South America, and Africa. In thiscellation of an agreement due to breach of contract, and we do notway, the merger has resulted in the realization of a more geographi-

anticipate such an occurrence in the future. Nevertheless, a major

cally balanced global portfolio. We will plan to form a further well-breach of contract on the part of a party to an agreement could resultbalanced asset portfolio further in the future.

in cancellation of an agreement before the expiration date. And in the

However, the Group relies heavily on specific geographical areas

overseas gas development and production activities, in many cases weand properties for its production volume, and the occurrence in theseare selling and supplying gas based on long-term sales and supply

properties of an operational problem or difficulty could have ancontracts in which expiration dates are stipulated. We plan to makeadverse affect on the Group’s operational results.

efforts with partners to extend or re-extend the expiration date. Nevertheless, inability to extend the contracts, or the occurrence of cases(2) Principal Business Areas and Contract Expiration Dates

in which extension is made but sales and supply volumes are reduced,

Expiration dates are customarily stipulated in the agreements related

could have an adverse effect on the Group’s business or results.

to blocks and acreages, which are prerequisites for the Group’s overtract expiration date in the production sharing agreement for the Off-5

shore Mahakam Block of Indonesia, the Group’s principal geographical(1) Details of Production Sharing Agreements

business area, an extension was approved in 1991, and the current

The Group has entered into production sharing agreements with

expiration date is December 31, 2017. On the basis of the concession

countries including Indonesia and Caspian Sea area. In the case ofagreement for the ADMA Block, the concession expiration date isIndonesia, where the Group has, in many cases, entered into produc-

March 8, 2018. (However, the expiration date for the Upper Zakum Oiltion sharing agreements with Pertamina, a company that holds mining

seas business activities. Although March 30, 1997 was the initial con-

Production Sharing Agreements

INPEX CORPORATION

amount of the compensation portion is calculated and this amount is

gas in those properties. Owing to the enactment of a new law thatbooked as an adjustment item to cost of sales (“Free of charge pro-went into effect on November 23, 2001, Pertamina’s exclusive owner-duction allocated”). Consequently, only the cost recovery portion ofship of blocks was rescinded, and it was decided that agreements

production after deduction of the compensation portion is booked aswould be concluded with BPMIGAS, which is an enforcement body

cost of sales.

that supervises and regulates oil and gas upstream operations and is a
Indonesia. We are engaged in procedures to convert existing agree-6

ments so as to make BPMIGAS the Indonesian party to the(1) Overview of the Azadegan Oil Field Development Projectagreements.

On February 18, 2004 the Company signed a service contract with thegovernment organization directly under the control of the president ofLtd. (NICO) for the appraisal and development operations of the Aza-

undertake at their own expense exploration and development work

degan Oil Field in Iran. The contract went into effect on March 14,

on behalf of the governments of oil-producing countries or national

2004. The Azadegan Oil Field, located about 80 kilometers south ofoil companies and receive production from the projects as cost recov-

Ahvaz, the capital of Khuzestan Province in Iran, was discovered inery and compensation. That is to say, when exploration and develop-

1999.The Company originally held a 75% participating interest in thisment work results in the production of oil or gas, the contractors

development project, but in October 2006, the Company reduced its

recover the exploration and development costs they incurred by meansinterest to 10% due to constraints in financing for huge developmentof a share in the production. The remaining production (crude oil andcosts.
In view of the difficult economic environment surrounding thepany and the contractors according to fixed allocation ratios. (Theproject, we are currently holding talks with the government of Irancontactors’ share of production after cost recovery is called “profit oilregarding the future development of this project. In the event that theand gas.” In the case of gas in Indonesia, as sales are conducted by

two sides fail to reach an agreement on the development, thereby plac-Indonesia, the contractors receive cost recovery and profit gas in theing a basic change in the way of development of the project, it would

form of cash.) On the other hand, in cases when exploration fails andnot go as planned or would be difficult to recover the investment.

expected production is not realized, the contractors are not to recover(2) Influence of UN Security Council Resolutions with regard to
sanctions against Iran
The United Nations Security Council in December 2006 passed a reso-

When a company in the Group owns participating interests under pro-lution imposing sanctions against Iran, including actions to personnel,

duction sharing agreements, as mentioned above, in the role of con-funds, or materiels to Iran mainly related to its nuclear weapon devel-

tractor it invests technology and funds in the exploration and develop-

opment program. In March 2007 and again in March 2008 the Coun-ment of the property, recovers the invested costs from the production

cil passed resolutions expanding the scope of these sanctions, and in

produced, and receives a share of the remaining production after

September 2008 the Council once again passed a resolution seeking

recovery of invested costs as compensation. Costs invested on theobservation of the previous resolutions by the United Nations Security

basis of production sharing agreements are recorded on the balanceCouncil and response to requests issued by the Board of Directors ofsheet as assets for which future recovery is anticipated under the bal-

the International Atomic Energy Agency (IAEA).

ance sheet item “Recoverable accounts under production sharing.”
After the start of production, recovered costs on the basis of those(3) Influence of Moves to strengthen sanctions against Iranagreements are deducted from this balance sheet item.

originating in the U.S. Iran Sanctions Act of 1996

As production received under production sharing agreements is

The Iran Sanctions Act 1996 (formerly The Iran and Libya Sanctions Act

divided into the cost recovery portion and the compensation portion,1996) is a law of the United States enacted for the purpose of deterring

the method of calculating cost of sales is also distinctive. That is to say,the acquisition of weapons of mass destruction and support for inter-the full amount of production received is temporarily charged to costnational terrorism on the part of Iran. The law stipulates that two orof sales as the cost of received production, and subsequently themore of the six sanctions below be applied to any person, without

Financial Section(2) Accounting Treatment of Production Sharing Agreements

INPEX Sustainabilitygas) is shared among the oil-producing country or national oil com-Business risks

several oil and gas development companies serve as contractors that

INPEX Operation

National Iranian Oil Company and its subsidiary Naftiran Intertrade Co.

INPEX Direction

Azadegan Oil Field Development Project

Production sharing agreements are agreements by which one or

their invested funds.

INPEX Outline

rights, the Group has acquired rights to explore and develop oil and

21

22

INPEX CORPORATIONBusiness Risks
distinction between U.S. and non-U.S. entities, who has made anof common shares issued) and a special-class share as of 30 June,

investment of U.S.$20 million or more in any twelve-month period and2009, the Company autonomously exercises business judgment as a

who the president of the United States determines has directly and sig-

private corporation, and there is no control relationship such asnificantly contributed to development of oil resources in Iran.

through the dispatch of officers or other means between the Com-

①The prohibition of export assistance to any sanctioned person frompany and the Japanese government. Moreover, we believe that nothe Export-Import Bank of the United Statessuch relationship will develop in the future. Furthermore, there is no②The prohibition of the issuance of export licenses to any sanctioned

concurrent posting or secondment to the Company of officers or

person by the U.S. government

employees from the Japanese government.

③The prohibition of loans of U.S.$10 million or more in any twelvemonth period to any sanctioned person by U.S. financial institutions(2) Ownership and Sale of the Company’s Shares by the④If a sanctioned person is a financial institution, the prohibition ofJapanese Government (the Minister of Economy, Trade anddesignation as a primary dealer of U.S. government bonds

Industry)⑤The prohibition of procurement of goods or services from any sanc-

The Japanese government (the Minister of Economy, Trade and Indus-

tioned person on the part of the U.S. governmenttry) holds 29.35% of the shares of the common stock issued by the⑥The restrictions of import from any sanctioned person on the basis

Company. For this reason, it is possible that in the future the Ministerof the International Emergency Economic Powers Act of the Unitedof Economy, Trade and Industry, in accordance with the purport of theStatesafter-mentioned Report, may sell off the Company’s shares in Japan orSanctions under this law have never been applied to any non-U.S.
oil company that has investments in oil resource development in Iran.

overseas in an additional offering or by other means. This could havean impact on the market price of the Company’s shares.

Also, although extraterritorial application of the laws of a country on

The Minister of Economy, Trade and Industry holds one share ofother countries is not internationally recognized, it is not possible at

the Company’s special-class share. The Minister of Economy, Trade andthis time to predict whether in the future the U.S. government will

Industry, as the holder of the special-class share, has veto rights over

apply the act to the Azadegan Oil Field Development Project. In thecertain resolutions of the Company’s general shareholders’ meetings

event that the U.S. government decided to apply sanctions under theand meetings of the Board of Directors. For details on the special-classact to this project, this could have an indirect adverse impact on theshare, refer to the section “9 Special-Class Share” below.

Company’s involvement in the Azadegan Oil Field Development Project or other projects.
A number of legislative bills have recently been submitted to8Treatment of shares of the Group’ projectHouse and Senate in the United States Congress with the aim ofcompany owned by Japanese government andstrengthening the above-described sanctions against Iran. In the event

JOGMEC

that one or more of such bills were to become law, depending on their(1) Treatment of shares of the Group’ project company owned

provisions, this could have an indirect adverse effect on the Company’s

by Japan National Oil Corporation (JNOC)

involvement in the Azadegan Oil Field Development Project or other

With regard to the liquidation and disposition of the oil and gas

projects.

upstream assets owned by JNOC, which was dissolved on April 1,

Additionally, similar sanctions have been enacted by the state leg-

2005, the Policies Regarding the Disposal of Oil and Gas Development-

islatures in the U.S. The legislatures of some states, such as Florida andRelated Assets Held by Japan National Oil Corporation (hereinafter theLouisiana, have established state laws to promote or mandate curbs“Report”) was announced on March 18, 2003 by the Japan Nationalon possession and divestment of the shares of companies doing busi-

Oil Corporation Asset Evaluation and Liquidation Deliberation Subcom-

ness in Iran by state-owned public pension funds and similar entities.

mittee of the Advisory Committee on Energy and Natural Resources,7

an advisory body of the Ministry of Economy, Trade and Industry.
In the Report, INPEX CORPORATION (prior to the integration withRelationship with the Japanese Government

Teikoku Oil; reorganized on October 1, 2008) was identified as a com-

(1) The Company’s Relationship with the Japanese Government

pany that should comprise part of a core company, and is expected to

Although the government of Japan (the Minister of Economy, Tradeplay a role in efficient realization of a stable supply of energy for Japanand Industry) holds common shares of the Company’s stock (29.35%

through the involvement by a national flagship company. In response

INPEX CORPORATION

are in place. However, the transfer of shares held by JNOC in the abovetion of a stable supply of energy for Japan while taking advantage ofcompanies has not been decided and the shares in the above projectsynergy with the efforts of active resource diplomacy on the part ofcompanies were succeeded to by the Japan Oil Gas and Metals

the Japanese government, and has aimed to maximize shareholder

National Corporation (hereinafter “JOGMEC”) on the dissolution ofvalue by engaging in highly transparent and efficient business

JNOC on April 1, 2005, except shares related to INPEX North Makas-

operations.

sar, Ltd., to which the Minister of Economy, Trade and Industry succeeded. JOGMEC states in its “medium-term objective” and “medium-shares held by JNOC proposed in the Report, INPEX CORPORATION

term plan” that the shares succeeded to from JNOC will be disposed

and JNOC concluded the Basic Agreement Concerning the Integrationof in an appropriate manner, but the timing and manners of the dis-of Assets Held by JNOC into INPEX CORPORATION of February 5, 2004

posal have not been decided, and it is possible that the Company will

(hereinafter the “Basic Agreement”) and a memorandum of under-

be unable to acquire the shares.

INPEX Direction

As a result, with regard to the integration by means of transfer of

INPEX Outline

to the Report, the Company has sought to promote efficient realiza-

23

standing related to Basic Agreement (hereinafter “MOU”). On March
Development owned by the Japanese government

Assets Held by JNOC into INPEX CORPORATION (hereinafter the “Basic

The Japanese government (the Minister of Economy, Trade and Indus-

Contract”), achieving the agreement on the details including the treat-try) owns 50% shares of SODECO. SODECO was established in 1995

ment of the project companies subject to the integration and share-

to engage in an oil and gas exploration and development project

holding ratios.

located on the northeast continental shelf off Sakhalin Island. SODECO
owns a 30.0% interest in the Sakhalin-1 Project, of which ExxonMobil

Japan Oil Development Co., Ltd. (JODCO), INPEX Java Ltd. and INPEX

of the Unites States is the operator. This project started production in

ABK, Ltd. which are three of four companies covered by the Basic

October 2005. Furthermore, there is a plan for additional development

Agreement. Although INPEX Southwest Caspian Sea Ltd. (hereinafter

operations (Phase 2) for the purpose of the full-scale production of“INPEX Southwest Caspian”) would become a wholly-owned subsid-

natural gas. The Company holds a 5.74% of SODECO shares issued

iary of INPEX CORPORATION by means of a share exchange and theand outstanding.

procedures were undertaken, the share exchange contract was invali-

In the previously mentioned Report, SODECO, along with INPEX

dated owing to failure to accomplish the terms and conditions of the

CORPORATION and JODCO, has been identified as a company thatshare exchange contract and the planned share exchange was can-should comprise part of a core company in Japan’s oil and gas

celled. Following the dissolution of JNOC on April 1, 2005, the Minis-

upstream industry in the future.
In accordance with the Report, it is assumed that private-sector

Caspian shares held by JNOC. The Company continues to study theshareholders, including INPEX CORPORATION, will acquire shares ofpossibility to acquire the shares. However, the future treatment of

SODECO issued and outstanding to which the Minister of Economy,these shares is undecided and acquisition of INPEX Southwest CaspianTrade and Industry succeeded and that were previously held by JNOC

shares could be unavailable.

(50.0%). The Company plans to hold a maximum of 33% of the

The treatment of Sakhalin Oil and Gas Development Co., Ltd.

SODECO shares to become its largest shareholder. In the event that

(hereinafter “SODECO”), INPEX Offshore North Campos, Ltd., INPEX

the consent of SODECO’s joint-venture partners, the relevant Russian

North Makassar, Ltd., INPEX Masela, Ltd., and INPEX North Caspiangovernment entity, or other parties is necessary for the acquisition ofSea, Ltd. was agreed between INPEX CORPORATION and JNOC in thethe shares, obtaining the consent is a prerequisite for acquisition. In

MOU of February 5, 2004. Regarding the treatment of shares ofaddition, it will be necessary to reach agreement on the shareholder

SODECO, refer to the section “(2) Treatment of shares of Sakhalin Oil

composition for SODECO, the share transfer price, and other matters.

and Gas Development owned by the Japanese government” below.

In the event that the additional acquisition of the SODECO shares isWith regard to the transfer to INPEX CORPORATION of the shares inrealized, the Group will hold a substantial ownership interest in oil andthe above project companies other than SODECO, it was decided thatgas assets in Russia, as well as in Asia and Oceania, the Middle East,

the shares are to be transferred for cash compensation as soon as pre-Caspian Sea area, and other regions, and we expect the acquisition torequisites such as the consent of the oil-producing country and joint

contribute to the achievement of a more balanced overseas asset port-

venture partners and the possibility of appropriate asset evaluations

folio for the Group.

Financial Section

ter of Economy, Trade and Industry succeeded to the INPEX Southwest

INPEX Sustainability

In 2004 INPEX CORPORATION accomplished the integration ofBusiness risks(2) Treatment of the shares of Sakhalin Oil and Gas

tracts including the Basic Contract Concerning the Integration of

INPEX Operation

29, 2004, INPEX CORPORATION and JNOC entered into related con-

24

INPEX CORPORATIONBusiness Risks
However, at this time it is undecided whether agreement concern-shareholders’ meetings and resolutions of meetings of the Board ofing acquisition of the shares with the Minister of Economy, Trade andDirectors for the decision on certain important matters such as theIndustry will be reached as anticipated and will be realized. Also, evenappointment or removal of Directors, disposition of material assets,in the event that the acquisition is realized, the conditions and time ofchanges to the Articles of Incorporation, capital reduction or company

acquisition are undecided and the acquisition by the Company could

dissolution in connection with the business of the Company. Accord-

be unavailable.

ingly, the Minister of Economy, Trade and Industry, as the holder of the9

special-class share, has veto rights over these important matters.
④ Criteria for the Exercise of Veto Rights Provided in theSpecial-Class Share

Guidelines(1) Overview of the Special-Class Share

Guidelines concerning the exercise of the veto rights have been estab-① Reason for the Introduction

lished in a Ministry of Economy, Trade and Industry Notice (No. 220,

The Company was established as the holding company through a2008) (hereinafter the “Notice”). The guidelines stipulate the exercise

stock transfer between INPEX CORPORATION and Teikoku Oil Co., Ltd.

of veto rights only in the following specific cases.

on April 3, 2006. Along with this, a classified share originally issued by

 ・When resolutions pertaining to appointment or removal of Directors

INPEX CORPORATION (prior to the merger) was transferred and at theand Integration are not voted down and it is judged that the probabil-same time the Company issued a classified share with the same effectity is high that the Company will engage in management inconsistent(hereinafter the “special-class share”) to the Minister of Economy,

with the role that a core company should perform for efficient realiza-

Trade and Industry. The classified share originally issued by INPEX COR-

tion of a stable supply of energy to Japan.

PORATION was the minimally required and a highly transparent mea-

 ・When resolutions pertaining to disposition of material assets are notsure to eliminate the possibility of management control by foreign

voted down and the objects of disposition are oil and gas exploration

capital while not unreasonably impeding the efficiency and flexibility

or production rights or rights similar thereto or shares or ownershipof management based on the concept in the Report discussed in theinterest in the Company’ subsidiary whose principal assets are said

above section 8. INPEX CORPORATION is identified as a company thatrights and it is judged that the probability is high that the Company

should comprise part of a core company for Japan’s oil and gas

will engage in management inconsistent with the role that a core

upstream industry and is expected to play a role in efficient realizationcompany should perform for efficient realization of a stable supply ofof a stable supply of energy for Japan as a national flagship company.

energy to Japan.

On the basis of the concept of the Report, the Company issued the

 ・When resolutions pertaining to amendments to the Company’s Arti-

special-class share because it can be considered an effective means ofcles of Incorporation relating to changes in the Company’s businesspreventing risks such as a speculative hostile takeover.

objectives, capital reduction, or dissolution are not voted down and it② Shareholders’ Meeting Resolutions, Dividends, Distribution

is judged that the probability is high that the Company will engage inof Residual Assets, and Redemption

management inconsistent with the role that a core company should

Unless otherwise provided by laws or ordinances, the special-classperform for efficient realization of a stable supply of energy to Japan.

share does not have any voting rights at the Company’s general share-

 ・When resolutions pertaining to amendments to the Articles of Incor-

holders’ meetings. The holder of the specia-class share will receive theporation granting voting rights to any shares other than the common

same amount of dividends, interim dividends, and distributions ofshares of the Company are not voted down and could have an effectresidual assets as a holder of common stock. The special-class shareon the exercise of the voting rights of the special-class share.

will be redeemed by resolution of the Board of Directors of the Company if the holder of the special-class share requests redemption or if

It is provided that the above guidelines shall not be limited in the eventthe special-class share is transferred to a party other than the govern-that the Notice is changed in the light of energy policy.

ment of Japan or an independent administrative body that is fully
funded by the government of Japan.

(2) Risk in Connection with the Special-Class Share③ Veto Rights in the Articles of Incorporation

Although the special-class share was issued as a minimally required

The Articles of Incorporation of the Company provide that an approvalmeasure to eliminate the possibility of management controlled by for-resolution of the meeting of the holder of the special-class share iseign capital while not unreasonably impeding the efficiency and flexi-

necessary in addition to resolutions of the Company’s generalbility of management, anticipated risks in connection with the special-

INPEX CORPORATIONAt the same time, however, the shareholder corporations are① Possibility of Conflict of Interest between National Policy andinvolved in businesses that overlap with those of the Company. The

the Company and Its Common Shareholders

Company therefore recognizes that it must pay particular attention to

It is conceivable that the Minister of Economy, Trade and Industry

corporate governance to avoid conflicts of interest in connection withcould exercise the veto rights in accordance with the above guidelines

competition and other matters.
To this end, all Company directors, including the outside directors,

standpoint of efficient realization of a stable supply of energy to Japan,

are required to sign a written undertaking to carry out their duties as

it is possible that the exercise of the veto rights by the Minister ofofficers of the Company appropriately and with the highest regard for

Economy, Trade and Industry could conflict with the interest of otherthe importance of such matters as their obligations in connection withshareholders who hold the Company’s common shares. Also, it is pos-non-competitive practices under the Japanese Companies Act, thesible that the above guidelines could be changed in the light of energy

properpolicy.

confidentiality.

mannerfor

dealingwith

conflictofinterest,

INPEX Direction

provided in the Notice. As the guidelines have been provided from the

INPEX Outline

class share include the following.

25

and

② Impact of the Exercise of Veto Rights on the Price of Sharesof Common Stock
As mentioned above, as the holder of the special-class share has thetain matter could have an impact on the price of the Company’s sharesof common stock.
③ Impact on the Company’s Degree of Freedom in Business andBusiness Judgment
share with the previously mentioned veto rights, the Company needs aresolution of the meeting of the holder of the special-class share concerning the above matters. For this reason, the Company’s degree of
freedom in management in those matters could be restricted by the
judgment of the Minister of Economy, Trade and Industry. Also, attendant on the need for a resolution of the meeting of the holder of thespecial-class share concerning the above matters, a certain period of
meetings and resolutions and for the processing of formal objections,
if necessary.

10

Concurrently Serving Outside Directors

As of June 30, 2009, the Board of Directors of the Company is composed of 16 members, four of whom are outside directors.
The four outside directors have many years of management experience in the Company’s business and are able to offer objective, professional advice regarding operations. For this reason, they were asked
to join the Board of Directors to contribute to the development of theCompany’s business. The four outside directors concurrently serve as
directors or advisors of Japan Petroleum Exploration Co., Ltd., Mitsubishi Corporation, Mitsui Oil Exploration Co., Ltd. and Nippon Oil Corporation (“shareholder corporations”), respectively.

Financial Section

time is required for procedures such as the convening and holding of

INPEX Sustainability

As the Minister of Economy, Trade and Industry holds the special-classBusiness risks

ness of the Company, the actual exercise of the veto rights over a cer-

INPEX Operationveto rights over certain important matters in connection with the busi-

26

INPEX CORPORATIONBusiness Location
Eurasia(Europe & NIS)

Page 37
54

54
55
56
57
58

P799 (U.K.)
ACG Oil Fields (Azerbaijan)
BTC Pipeline Project (Azerbaijan･Georgia･Turkey)
Offshore North Caspian Sea Block (Kashagan Oil Field and Others)(Kazakhstan)
57
SakhalinⅠProject (Russia)

Japan
Page 4658

1 Minami-Nagaoka Gas Field★

and Domestic Natural Gas
Pipeline Network Business (Japan)

55

1

56
53
52

46 47
45

44
50

49
51

35
36
38
37

32

Middle East & Africa
48
41
39 40
42

43

Page 40
35
36
37
38
39
40
41
42
43
44
★
45
★
46
★
47
48
49
50
★
51
52
53

*Our E&P operations

Azadegan Oil Field (Iran)
Soroosh & Nowrooz Fields (Iran)
ADMA Block (UAE)
Abu Al Bukhoosh Block (UAE)
3/05A Block (Angola)
3/05 Block (Angola)
3/85 Block (Angola)
3/91 Block (Angola)
Onshore Cabinda North Block (Angola)
Block 42-2&4 (Libya)
Block 113-3&4 (Libya)
Block 81-2 (Libya)
Block 82-3 (Libya)
Offshore D.R. Congo Block (Congo)
South October Area (Egypt)North Qarun Area (Egypt)
West Bakr Area (Egypt)
Ohanet Block (Algeria)
El OuarⅠandⅡBlocks (Algeria)29
4 31 30

6

5

3
8
2
10 7
28
22 21 25 24 27
2019 26
23

13
16 18
17
15
14

9
11
12
27

33
34

INPEX CORPORATION

27

INPEX Outline

Asia & Oceania
Page 30
2 Offshore Mahakam Block

INPEX Direction

72
Business location

71
70 69
63
64

60
61

59

65

Americas
Guarico Oriental Block (Venezuela)
MoruyⅡBlock (Venezuela)
Copa Macoya Block (Venezuela)
Block 18 (Ecuador)
Block Cuervito (Mexico)
Block Fronterizo (Mexico)
Block 31 (Surinam)
Frade Project (Brazil)
Albacora Project (Brazil)
BM-C-31 (Brazil)
Ship Shoal Block 72 (U.S.A.)
West Cameron Blocks 401 and 402 (U.S.A.)
Main Pass Blocks 118 (U.S.A.)
Louisiana Block SL19372 (U.S.A.)
Joslyn Oil Sands Project (Canada)
Athabasca Block (Canada)

Financial Section

59
60
★
61
62
63
64
★
65
66
67
68
69
70
71
72
73
74

66 68
67

INPEX Sustainability

62

Page 43

INPEX Operation

3
4
5
6
7
8
9
10
11
★
12
13
14
15
16
17
18
19
20
21
22
★
23
★
24
★
25
★
26
27
28
29
30
31
32
33
34

73

74
(Indonesia)
Attaka Unit (Indonesia)
South Natuna Sea Block B (Indonesia)
Offshore Northwest Java Block (Indonesia)
Offshore Southeast Sumatra Block (Indonesia)
Tengah Block (Indonesia)
East Kalimantan Block (Indonesia)
Berau Block, Tangguh LNG Project (Indonesia)
South East Mahakam Block (Indonesia)
Semai Ⅱ Block (Indonesia)
Masela Block (Abadi) (Indonesia)
WA-10-L (Australia)
WA-155-P (Australia)
WA-35-L (Australia)
WA-255-P Block 1081 (Australia)
WA-12-L (Australia)
WA-357-P (Australia)
WA-274-P (Australia)
WA-281-P (Australia)
WA-410-P (Australia)
WA-411-P (Australia)
WA-285-P (Ichthys) (Australia)
WA-341-P (Australia)
WA-343-P (Australia)
WA-344-P (Australia)
Bayu-Undan Project (JPDA)
JPDA06-105 (JPDA)
Blocks 05-1b and 05-1c (Vietnam)
Block SK-10 (Malaysia)
Block SK-8 (Malaysia)
Offshore Martaban (Myanmar)
PDL3 & PDL4 Unitization (Papua New Guinea)
PPL190 (Papua New Guinea)

28

INPEX CORPORATIONBusiness Performance
2007

Years ended March 31

2008

2009

Net proved reserves (End of period) :*1

Crude oil, condensate and LPG (MMbbls)

1,139

1,088

1,048

Natural gas (Bcf)

3,782

3,346

3,300

Total (MMboe)

1,770

1,645

1,598

242.5

241.5

223.2

1,051.1

1,088.8

1,090.0

417.7

423.0

404.9

8.5

10.2

12.4

1.7

1.6

2.5

Acquisition

1,144

17,98010,405

Exploration

30,54464,746

48,653Development

185,957

232,958

235,306

Total

217,646

315,684

294,364

Proved reserves as of the end of the fiscal year/Production in the fiscal year

11.6

10.7

10.8

Proved reserves + Probable reserves, as of the end of the fiscal year/
Production in the fiscal year

24.5

28.2

32.3

1,347,128

1,701,806

613,273

293

122

61

6.9

17.5

28.3

Crude oil, condensate and LPG (MMbbls)

1,610

1,274

1,603

Natural gas (Bcf)

2,095

8,682

9,442

Total (MMboe)

1,959

2,721

3,176

Net production*1:

Crude oil, condensate and LPG (Thousand bbls/day)Natural gas (MMcf/day)Total (Thousand boe/day)Average expenses per boe produced (US$) :*2

Production*3
General and administrative
Costs incurred (Millions of yen) :*4

Reserves to production ratio (Years):Standardized measure of discounted future net cash flows fromproved reserves (Millions of yen)*1*5:
Reserve replacement ratio (3-year average as %) :*6

Finding and development cost per boe (3-year average in US$)

:

*2*7

Net probable reserves (End of period) :*1*1 See item on page 90 regarding “Oil and Natural Gas Reserves and Production Volume.” Proved reserves and production volume are calculated inaccordance with U.S. Security Exchange Commission (SEC) rules.
*2 Figures are translated into U.S. dollars based on the average exchange rate of ¥116.62 per U.S. dollar for the year ended March 31, 2007, ¥113.61 per U.S.
dollar for the year ended March 31, 2008, and ¥100.85 per U.S. dollar for the year ended March 31, 2009. Figures exclude all equity-method affiliates
except those of Japan Oil Development Co., Ltd. (JODCO).
*3 Operating expenses plus royalties due others.
*4 Excluding our proportional interest of equity-method affiliates except JODCO’s equity-method affiliate.
*5 The exchange rate was the telegraphic transfer middle (TTM) rate of ¥118.09 per U.S. dollar as of March 31, 2007, ¥100.20 per U.S. dollar as of March 31,
2008, and ¥98.26 per U.S. dollar as of March 31, 2009.
*6 Reserve replacement ratio = Proved reserves increase including acquisition / production*7 The sum of total costs incurred, for exploration and development of oil and gas fields and total costs incurred for acquisitions divided by the sum of proved
reserve extensions, acquisitions and revisions.

398.3

2009
650.4
2008

2008
2009

27.5
391.1

783.5
607.4

Net salesby product
Crude oil
Natural gas

2007

29.4

OthersFor the year ended March 31, 2009

1,076.2 billions of yen
398.3

2009
650.4
73.7

93.4

2008
2009

93.9

2007
2008

29.4

Crude oil77.3
Natural gas
118.6Others

2007

387.5

Japan

2009

and LPG

56%

8.1

2007
2008

464.5

0.2

Japan

Eurasia

Middle East & Africa

Americas

73.7

2008
2009

Crude oil,

77.3

2007
condensate
2008

and LPG
Japan

56%

452.5
1,598
118.6

Asia & Oceania

2007

Natural gas

44%

Americas

46%

44

20

56

10.4

2009

235.3

235.3

233.0

4,774 million boe*

1.1

186.0

Middle East 30.5
& Africa

Natural gas

46%

Crude oil,
Acquisition Exploration
AmericasDevelopment%
condensate Crude oil, condensate%
and LPG%
Eurasia

19

1

55%

54

(Europe & NIS)

20%

Japan

3%
Natural gas

45

Asia & Oceania
%
%

56

48.7
233.0
64.7

Net production (by product)
1.1

For the year ended
30.5 March 31, 2009
Acquisition

Exploration

404.9 million boe*/d

For the year ended March 31, 2009404.9 million boe*/dDevelopment

Middle East & Africa
Crude oil,
Americas%condensate%
and LPG
Eurasia19

Net production (by product)

186.0

1

55%

(Europe & NIS)

20%

Japan

3%
Natural gas

45

Asia & Oceania%%

56

Middle East & Africa
Crude oil,
Americas%condensate%
and LPG
Eurasia

36

4

55
%
6%

(Europe & NIS)

Japan

8%

Natural gas

45

Asia & Oceania%%

46*Barrels of 0il Equivalent

Middle East & Africa
Crude oil,
Americas
%

36

Japan

8%

Middle East & Africa

36%

Americas

Japan

8%

Financial Section

18.0

2008

2007

56

As of2008
March 31, 2009
2007

46%

INPEX Sustainability

56

44

Natural gas

Business performance

233.0

3

1

56

54

64.7

Japan
Crude oil,Net proved
reserves Americas
Net probablereserves
1.1
186.0
%
%
2007
condensate
30.5%
and LPG
Natural gas
Acquisition Exploration
Development
Eurasia
Asia & Oceania(Europe & NIS)
%
%
%
%

19

1

3

INPEX Operation

1,959

1,770
Middle East & Africa
64.7

19

18.0

2,721

18.0

2007
2008

Japan
Crude oil,
48.7
Americas1,959% 18.0Crude oil, condensate
%
233.0
2007
condensate
2008
1,770 %
64.7
and LPG
Natural gas%
Net proved
reserves
1.1 reserves Net probable
186.0
Eurasia
2007
Asia & Oceania(Europe & NIS)
% 30.5%%%
Exploration
Acquisition
Development

2009
48.7
Net proved reserves
and net probable reserves (by region)

4,774 million 235.3
boe*

1,645
48.7

Americas

2,721
235.3

10.4

3,176

2009
1,598
Net proved reserves
and net probable reserves (by product)
10.4

46%

294.43,176
billions of yen

20

Net probable reserves

2008
As of
March 31, 2009
2009

284

Net probable reserves

2008
MiddleEast & Africa
2009
1,645

Natural gas

Middle East & Africa
1,959

1,770

Net proved reserves

Middle East & Africa
1,959

10.4

464.5

Eurasia

3,910

1,598

8.1
3,176
0.2
2,721
386.0

387.5
1,645

464.5

Natural gas

原油

Natural gas
売上高

1,770

For 2009
the year ended March 31, 2009

463.2
183.9

天然ガス

463.2
6,503
275
8.1
3,176

44

Eurasia

その他

3,982

INPEX Direction

435.8

93.9

Americas

Exploration and development cost

10.1

4,774 million boe*

As ofMarch 31, 2009
2009

284

0.2
2,721 7,834
386.0
%

387.5
1,645

Net proved reserves

Net proved reserves and net probable reserves
93.4

118.6

Asia & Oceania

10.1

10,761

12,029

452.5

1,598
2008

売上高

1,076.2 billions of yen

183.9

77.3

2007

Middle East & Africa

435.8

93.9
condensate
2008

386.0

Asia & Oceania

73.7

2009

天然ガス
29 原油

INPEX Outline

183.9
607.4
452.5

Eurasia

For the year ended March 31, 2009
93.4

7,834

その他

386.0

Net salesby region
Japan
Asia & Oceania

Crude oil,

28.4

463.2
332.9

0.2

387.5

2009

27.5
391.1
10.1

783.5

435.8

93.9

2008
Crude oil77.3
Natural gas
118.6Others

332.9

2007

2009

2007
2008

28.4

650.4
27.5
391.1
73.7
10.1
10,761
3,982
783.5
28.4
435.8
463.2
275
CORPORATION
332.9 6,503 INPEX
183.9
8.1
607.4
12,02929.4 464.5
3,910
452.5

93.4

30

INPEX CORPORATIONBusiness Activities — Asia & Oceania¥435.8¥435.8¥435.8billionbillionbillion

Net
Net
Net
reserves
reserves
reserves
185
185
185
thousandthousandthousand
boe/d
boe/d
boe/d bybyregion
2,689
2,689
MMboe
MMboe
MMboe
byregion
region 2,689

Net
Net
Net
production
production
production
bybyregion
byregion
region

Net
Net
Net
sales
sales
sales
bybyregion
byregion
region40
40
40*1 *1 *1

*2 *2 *2

(proved(proved(provedandandandprobable)
probable)
probable)

46
46
46

%%%

オセア
オセ
オセ

56
56
56

%%%

%%%

*1 Thousands of barrels of oil equivalent per day*2 Millions of barrels of oil equivalent
Net
Net
Net
production
production
production
¥73.7
¥73.7
¥73.7
billionbillionbillion25
25
thousandthousandthousand
boe/d
boe/d
boe/d
byregion
byregion
region 25
Interest by
Owned

Net
Net
Net
sales
sales
sales

Contract Area

1

Offshore Mahakam

INPEX CORPORATIONINPEX CORPORATION 50% TOTAL* 50%

Attaka Unit

(Est. February 21, 1966)

INPEX CORPORATION 50% Chevron* 50%

2South Natuna Sea Block
B

3

Masela777

INPEX Natuna, Ltd.

666

INPEX Masela, Ltd.
MI Berau B.V.

MI Berau 16.3% BP* 37.16% CNOOC 13.9% Nippon Oil Exploration (Berau) 12.23%
KG Berau, KG Wiriagar 10.0% LNG Japan 7.35% Talisman 3.06%*1 *1 *1

(Est. September 1, 1998)

INPEX Browse 20% Chevron 50% Santos* 30%
INPEX Browse 20% Santos* 47.8306% Chevron 24.8300% Beach 7.3394%

43
43
43

WA-341-P

36
36
36

INPEX Browse* 60% TOTAL 40%%%%

WA-343-P

INPEX Browse* 60% TOTAL%%% 40%WA-344-P

INPEX Browse* 60% TOTAL 40%

WA-410-P

INPEX Browse 20% Santos* 30% Chevron 50%

INPEX Alpha, Ltd.

WA-12-L (Deep)(Est. February 17, 1989)
Net
Net
Net
sales
sales
sales
bybyregion
byregion
region

19
19
19

%%%

INPEX Alpha 20% BHPBP* 45% ExxonMobil 35%
INPEX Alpha 18.67% ExxonMobil* 81.33%
Net
Net
Net
production
production
production
Net
Net
Net
reserves
reserves
reserves*1 *1 *1
billionbillionbillion INPEX Alpha
thousandthousand
boe/d
boe/d
boe/d
28.5%
39.999%Apache31.501%
bybyregion
byregion
regionbybyregion
byregion
region BHPBP* thousand

¥10.1
¥10.1
¥10.1

17
17
17

Van Gogh Defined Area

INPEX Alpha 47.499% Apache* 52.501%

WA-155-P（PartⅡ）

INPEX Alpha 18.67% Apache* 81.33%

WA-357-P

INPEX Alpha 35% Apache* 65%

111

WA-35-L

444

INPEX Alpha 47.499% Apache* 52.501%
%%%

%%%

(Excluding Van Gogh Defined Area)

WA-255-P Block 1081
JPDA06-105

中東
中東
中東

INPEX Browse 26.6064% Santos* 63.6299% Beach 9.7637%

WA-10-L
WA-155-P（PartⅠ）*2 *2 *2

(proved(proved(provedandandandprobable)
probable)
probable)

WA-411-P

8

%%%

Net
Net
Net
production
production
production
Net
Net
Net
reserves
reserves
reserves¥463.2¥463.2¥463.2billionbillionbillion146
146
146
thousandthousandthousand
boe/d
boe/d
boe/d bybyregion
913
913
MMboe
MMboe
MMboe
byregion
region 913
bybyregion
byregion
regionINPEX Browse*
76% TOTAL 24%

Net
Net
Net
sales
sales
sales
bybyregionbyregionregionINPEX Browse,
Ltd.

WA-281-P

7

20
20
20

Ml Berau 22.856% BP* 48.0% Nippon Oil Exploration (Berau) 17.144% KG Breau
12.0%

Tangguh Unit

WA-274-P

6

ユーラ
ユー
ユー

INPEX Masela* 100%

(Est. August 14, 2001)

WA-285-P

5*2 *2 *2

(proved(proved(provedandandandprobable)
probable)
probable)

INPEX Natuna 35% ConocoPhillips* 40% Chevron 25%
%%%

%%%

(Est. September 1, 1978)

941
941
941
MMboe
MMboe
MMboe

Net
Net
Net
reserves
reserves
reserves
bybyregion
byregion
region(Est. December 2, 1998)

Berau

4

*1 *1 *1

bybyregion
byregion
regionVenture Company

69
69
69

*2 *2 *2
MMboe
MMboe
MMboe
(proved(proved(provedandandandprobable)
probable)
probable)

米国
米国
米国

111

%%%

INPEX Alpha 23.7495% Apache* 26.2505% Woodside 50.0000%

INPEX Timor Sea, Ltd.

INPEX Timor Sea 35% Eni* 40% Talisman 25%(Est. November 25, 1991)

JPDA03-12

INPEX Sahul, Ltd.

Bayu-Undan Unit

(Est. March 30, 1993)
Net
Net
Net
sales
sales
sales
bybyregion
byregion
regionINPEX Sahul 19.0712244% ConocoPhillips* 61.6624238% Santos 19.2663518%
INPEX Sahul 11.274908% ConocoPhillips* 57.150852% Eni 10.985973% Santos
Net
Net
Net
production
production
production
Net
Net
Net
reserves
reserves
reservesGas) 9.198000%
Tokyo
Timor Sea
Resources(TokyoElectric/Tokyo*1 *1 *1
*2 *2 *2billionbillionbillion 11.390267%
thousandthousandthousand
boe/d
boe/d
boe/d
MMboe
MMboe
MMboe
bybyregion
byregion
regionbybyregion
byregion
region

¥93.4
¥93.4
¥93.4

2

32
32
32

199
9

4 888

%%%

%%%

7
6

5

162
162
162

(proved(proved(provedandandandprobable)
probable)
probable)

333

%%%

3

8
百万
百万
百万

*Operator

日本
日本
日本

2

INPEX CORPORATION

1

31

4
7

3

8

5
6

Asia & Oceania
INPEX Outline

1

INPEX Direction

Offshore Mahakam Block and Attaka Unit

INPEX entered into a production sharing contract (PSC) with the IndonesianNatuna Sea
government in October 1966, at that time acquiring
a 100% working interest
Bontang LNG Plants

Attaka Unit

Santan Terminal

Attaka Field

Badak Field
Tunu Field

Nilam Field

Sisi Field
Nubi Field

Senipah Terminal

Bekapai Field

Balikpapan

Peciko Field

Offshore
Mahakam BlockSouth Mahakam Fields(now Chevron), with each company taking a 50% interest. The Attaka field
was subsequently discovered, and production of crude oil and natural gas
Natuna Island
began in 1972. INPEX farmed out a 50% working
interestin the Offshore
Hiu

Mahakam block to CFP (now TOTAL) in July 1970. This venture subsequently
Sembilang

Belanakmade a series of discoveries in the Bekapai (oil), Handil (oil), Tambora (oil andgas), Tunu (gas), Peciko (gas), Sisi and Nubi (gas) fields, all of which have con-

Oil field

Oil and gas field

Gas field

Oil field

Oil and gas field

The crude oil and condensate produced from these fields is shipped mainly
to oil refineries and power utilities in Japan by tanker from the Santan and

INPEX Sustainability

tinued to produce crude oil and natural gas.
Gas field

Business activities

Handil Field

South Natuna Sea

through unitization of part of adjacent
blocksowned
Block B by INPEX and Unocal
BelidaKerisi

INPEX Operation

Tambora Field

Belutwas established in April 1970
in the Offshore Mahakam block. The AttakaNorth
Unit

Senipah terminals. Most
アジア･オセアニア
1 of the natural gas is supplied to Bontang, one of the
アジア･オセアニ
largest liquefaction plants in the world before being shipped as LNG to Japan,
etc.

Indian Ocean

WEST TIMOR

A 20-year extension to the PSC lasting until 2017 underpins the Mahakam

WA-255-P (1081)
WA-357-P

WA-10-L

Timor Sea are underway withblock’s role as a key profit center for INPEX. Negotiations
Darwin beyond 2017.
the Indonesian authorities to secure a further contract extension

Griffin Fields

WA-285-P and others

WA-155-P (Part II)
WA-12-L
WA-155-P (Part I)
Ravensworth Field

WA-35-L

Financial Section

Barrow Island

Van Gogh Field

Onslow

ExmouthBroomeAUSTRALIA

AUSTRALIA

Oil field

アジア･オセアニア 5

アジア･オセアニ

32

2

INPEX CORPORATION

1

4
7

3

8

5
6

Asia & Oceania

2

In July 1977, INPEX acquired a 17.5% working interest in the South Natuna
Natuna Sea

Sea block B, which includes the Udang oil field. Later, in January 1994, INPEX
increased its total working interest in the block to 35% with the purchase of

North Belut

BelidaSouth Natuna Sea
Block B

Kerisi

Tanimbar Island

an additional 17.5% interest.

Masela Block

INDONESIAThe following fields were subsequently discovered within the block:
AUSTRALIA

Belanak (oil and gas), Hiu (gas), North Belut (gas), Belida (oil), Sembilang (oil),Natuna Island
Hiu

Sembilang

Timor Sea

Timor Sea Joint
Petroleum
Development Area

and Kerisi (oil and gas).

Crude oil production has continued since 1979. A sales agreement toBelanakDarwindeliver natural gas to Singapore via Indonesia’s first international
pipeline wasconcluded in January 1999. The pipeline started supplying gas from the block
as well as the two adjacent blocks of Natuna Sea block A and Kakap block in
Gas field

Oil field

Oil and gas field

2001. Additional deliveries of natural gas from this pipeline to Malaysia started
in 2002. These supply milestones have contributed to the extension of the PSC

アニア 1

アニア 5

South Natuna Sea Block B

covering the block until
アジア･オセアニア
2 2028.

アジア･オセアニア 3

Production operations in the Belanak field utilize a world-class FPSO (Floating Production, Storage and Offloading) system. Production of crude oil andWEST TIMOR

condensate began in December 2004 and of LPG in Abadi
April
Field2007. The Hiu andEast Timor

Timor Sea

Kerisi fields came on-stream in 2006 and 2007, respectively. Development of
DarwinWA-285-P and others

Timor Sea Joint

the North Belut field is underway for Petroleum
productiondue
Development
Areato commence in the third
quarter of 2009.

Darwin Gas Pipeline

Bayu-Undan Gas-Condensate Field
DarwinBroomeAUSTRALIA

AUSTRALIA

Gas field

アジア･オセアニア 6

アジア･オセアニア 7

INPEX CORPORATION

3

33

Masela Block (Abadi)
INPEX Outline

INPEX acquired a 100% working interest in the Masela block in November
Natuna Sea

1998 through an open bidding process. The Abadi gas-condensate field was
Belut of the first exploration well in the block in 2000.
discovered during the North
drilling

Tanimbar Island

South Natuna Sea

This marked theof hydrocarbon(crude oil and natural gas) in the
Block
B
Belidafirst discovery
Kerisi

INDONESIA

Masela BlockIndonesian Arafura Sea. Two appraisal wells were drilled in 2002 to confirm the
AUSTRALIA

extent of the gas structure. Subsequently, reserve evaluation and studies forwere drilled between May 2007 and July 2008 to enhance the accuracy ofSembilang

Timor Sea Joint
Petroleum
Development Area

INPEX Direction

Natuna Island

selection of development scenario
were conducted. Further four appraisal wells
Hiu

Timor Sea

Belanakreserve estimates and confirm the extent of the Abadi field. Pre-FEED (Front

DarwinEnd Engineering Design) work on a Floating LNG was also conducted in parallel. Utilizing the resulting data, INPEX submitted a development proposal in
Gas field

Oil field

Oil and gas field

September 2008 to the Indonesian government based on the concept of a

アジア･オセBusiness activities

the government. FEED 2
ア･オセアニア 1plan of development (POD) was approved in principle byアジア･オセアニア
work and environmental and social impact assessment will be in process fordevelopment of Abadi
field.
WEST
TIMOR
Abadi Field

East Timor

Timor Sea

WA-285-P and others

4

Timor Sea Joint
Petroleum Development Area

Darwin Gas Pipeline

Berau Block, Tangguh LNG Project
Bayu-Undan Gas-Condensate Field

DarwinMI Berau B.V., a joint venture established by INPEX (44%) and Mitsubishi
Cor-

PapuaBroome
Province (INDONESIA)

AUSTRALIA

poration (56%), acquired in October 2001 an interest of around 22.9% in the
AUSTRALIA

Berau block, a hub within the Tangguh LNG Project. MI Berau owns a 16.3%

INPEX Sustainability

DarwinINPEX Operation

Floating LNG for natural gas liquefaction within the Abadi field. The proposed

working interest (including an actual interest held by INPEX of about 7.17%)

the adjoining Wiriagar and Muturi blocks. MI Berau Japan Ltd., a second joint
Kaimana

ア･オセアニア 5

venture between INPEX (44%) and Mitsubishi Corp. (56%), also acquired

アジア･オセアニア 6

approximately 16.5% of KG Berau Petroleum Ltd. shares in October 2007,
Berau Blockbringing INPEX’s total interest in the project up to approximately 7.79%.
In March 2005, the Indonesian government approved a development planfor the Tangguh LNG Project and an extension of the PSC until 2035. SubseGas field

quently, development works such as drilling production wells and constructionof LNG plant were conducted for four years. The first cargo of LNG was

セアニア 3shipped in July 2009. 4
LNG of 7.45 million tons per annum has been supplied
アジア･オセアニア
to buyers in China, South Korea and North America which long-term sales
agreements have been concluded with.
Abadi Field

East Timor

JPDA06-105
Timor Sea Joint
Petroleum Development Area
Undersea gas pipeline
Kitan Oil Field
Bayu-Undan Gas-Condensate Field

Financial Sectionin the Tangguh Unit, which is a unitized area spanning
Gasthefield Berau block andアジア･オセ34

2

INPEX CORPORATION

1

4
7

3

Natuna Sea

8

5

Bontang LNG Plants

6

Attaka Unit

Santan Terminal

North Belut

South Natuna Sea
Block B

Attaka Field

BelidaBadak Field

KerisiTunu Field

Nilam Field
Tambora Field

Sisi Field

Handil Field

Nubi Field

Senipah Terminal

Asia & Oceania
Balikpapan

Natuna Island

Bekapai Field

Hiu

Peciko Field

Offshore
Mahakam Block

Sembilang

BelanakSouth Mahakam Fields

Gas field

5

Oil field

Oil and gas field

Gas field

Oil field

Oil and gas field

WA-285-P (Ichthys) and its Surrounding
アジア･オセアニア 1
Blocksアジア･オセINPEX acquired a working interest in WA-285-P offshore Western Australia
Indian Ocean

after winning an open bid in August 1998. In 2000, after pursuing exploration

WEST TIMOR

WA-255-P (1081)

activities as an operator,
INPEX discovered
the high-potential Ichthys gas andBarrow Island
Van Gogh Field
condensate field.

WA-357-P

Timor Sea

WA-10-L

DarwinThe eight exploratory wells drilled by INPEX to date confirm the presence
Griffin Fields

of

WA-155-P (Part II)

sufficient reserves for a large-scale gas and condensate project. Engineer-

WA-285-P and others

WA-12-L
WA-155-P (Part I)

ing work and feasibility
studies, field data collection and environmental impact
Ravensworth Field
Onslow
assessment are all WA-35-L
ongoing, and INPEX
is also undertaking gas marketing activExmouthities for commercial LNG production. A site in Darwin was selected for con-

BroomeAUSTRALIA

AUSTRALIA

struction of an LNG plant in September 2008, and FEED work on this plantbegan in January 2009. Having established an office in Darwin in April 2009
Oil field

and commenced the basic design work on the offshore production facilities,
INPEX is actively focused on driving the project forward. Commercial production of LNG, condensate and LPG is scheduled to commencein 2015. Current
アジア･オセアニア
5projections are for initial annual output of roughly 8.4 million tons of LNG and
1.6 million tons of LPG. INPEX plans to consider expanding future LNG and
LPG production further depending on reserve capacity and market conditions.
Peak production is estimated at 100,000 bpd of condensate.
INPEX has also acquired interests in seven blocks surrounding WA-285-P(namely WA-274-P, WA-281-P, WA-341-P, WA-343-P, WA-344-P, WA-410-P
and WA-411-P). Exploration activities are ongoing: any discoveries of major oilor gas reserves in these blocks could considerably augment the potential of
the Ichthys field benefitting from synergy effects.

アジア･オセBontang LNG Plants

Attaka Field

INPEX CORPORATION

Badak Field

35

Tunu Field

Nilam Field
Tambora Field

Sisi Field

Handil Field

Nubi Field

Senipah Terminal

Bekapai Field

Balikpapan

Peciko Field

Offshore
Mahakam BlockSouth Mahakam Fields

Gas field

Oil and gas field

アジア･オセINPEX Outline

6

Oil field

WA-10-L (Griffin Oil Fields), WA-35-L (Van Gogh Oil Field),
WA-155-P (Part I) Block (Ravensworth Oil Field) and Others

INPEX acquired a 20% working interest in the WA-210-P offshore Western
Indian Ocean

Australia in February 1989. Subsequent exploration activities resulted in the

WA-255-P (1081)

discovery of the Griffin oil fields. The Australian government granted a produc-

Barrow Island

Van Gogh Field

WA-357-P

tion license (WA-10-L) for the contract area covering four blocks that include

WA-10-Lthe fields. Commercial crude oil and natural gas production from the fields

Griffin Fields

WA-155-P (Part II)

INPEX later acquired working interests for areas around the WA-10-L.
These comprised interests in the WA-155-P (Part II) and the WA-12-L (Deep) in
July 1994, in the WA-155-P (Part I) in July 1999, in the WA-357-P in July 2006,

INPEX Directioncommenced in January 1994.

WA-12-L
WA-155-P (Part I)
Ravensworth Field

WA-35-L

Onslow

Exmouth
AUSTRALIA

and in a block of the WA-255-P in March 2009. The Van Gogh and RavensPapua Province (INDONESIA)

worth oil fields were discovered in the WA-155-P (Part I). It was agreed among
Oil field

includes the Van Gogh field in the WA-35-L contract area in October 2008.
Development work is underwaywith a target production start-up in the final
Kaimanaquarter of 2009. A final investment decision was taken to develop the Ravens-

Business activities

ernment granted a production license (WA-35-L) for the two blocks which

INPEX Operation

the partners to develop the Van Gogh field in April 2007. The Australian gov-

アジア･オセBerauworth fieldin Block
November 2007, and development is proceeding toward a

Gas field

7

アジア･オセアニア
4
JPDA06-105(Kitan Oil Field)

INPEX Sustainability

scheduled production start-up in mid-2010.

セアニア 3

INPEX acquired an interest in January 1992 in JPDA06-105, a contract area
located within the Timor Sea Joint Petroleum Development Area (JPDA). Oil in

Abadi Field

the Jahal, structure and the Kuda Tasi structure was discovered in 1996 andEast Timor

JPDA06-105

2001 by exploration works.

Timor Sea Joint
Petroleum Development Area
Undersea gas pipeline
Kitan Oil Field

Oil was found in March 2008 by the Kitan-1 exploration well and the presence of a commercial oil accumulation was confirmed by the Kitan-2 appraisal

Bayu-Undan Gas-Condensate Field
Darwinwell drilled subsequently. In line with the provisions of the PSC, INPEX made adeclaration in April 2008 to the Timor Sea Designated Authority (TSDA), cur-

AUSTRALIA

rently Autoridade Nacional do Petróleo (ANP) for the JPDA that an oil field ofcommercial scale had been found at Kitan. The TSDA approved the Kitan oil
field as a development area in May 2008. The development plan for the Kitan

Gas field

Oil field

field is currently being under review by the joint venture partners and the
Authority; a final investment decision on its development is expected in thesecond half of 2009. 8
アジア･オセアニア

Financial Section

セアニア 7

Attaka Unit

Santan Terminal

36

2

INPEX CORPORATION

1

4
7
5

3

8

6

Natuna Sea

North Belut

Asia & Oceania
BelidaTanimbar Island

South Natuna Sea
Block B

Kerisi

INDONESIA

Masela Block

AUSTRALIA
Natuna Island
Hiu

Sembilang

Timor Sea
Timor Sea Joint
Petroleum
Development Area

BelanakDarwin8

オセアニア 1

Gas field

Oil field

Oil and gas field

JPDA03-12, Bayu-Undan Project
アジア･オセアニア 2

アジア･オセア

In April 1993, INPEX acquired a working interest in the JPDA03-12, a contract
WEST TIMOR

area located in the Timor Sea Joint Petroleum Development Area (JPDA).
Abadi Field

Exploration within this contractTimor
area
resulted in the discovery of oil and gas inSea
the Elang, Kakatua, Kakatua North andDarwin
Undan structures.
Oil production in the Elang, Kakatua and Kakatua North oil fields began in

East Timor
Timor Sea Joint
Petroleum Development Area

Darwin Gas Pipeline

WA-285-P and others

1998, but ceased in 2007 due to natural depletion.
Geological studies revealed that the Undan structure and the Bayu struc-

Bayu-Undan Gas-Condensate Field
Darwinture in the adjacent JPDA03-13 contract area were a single body. Final agreeAUSTRALIA

Broomement on unitization
was reached in 1999 between interest holders of both

AUSTRALIA

contract areas, allowing joint development of the Bayu-Undan gas and condensate field to proceed. The commercial production of condensate and LPG
from the project commenced in 2004. LNG sales agreement was concluded

Gas fieldwith Tokyo Electric Power Co., Inc. and Tokyo Gas Co., Ltd. in August 2005

gas is transported 6
オセアニア 5stipulating a total annual supply of 3 million tons. The
アジア･オセアニア
through a 500-km subsea pipeline to an LNG plant built in Darwin in Australia’s Northern Territory. LNG shipments from the plant commenced in February
2006.

アジア･オセア

INPEX CORPORATION¥435.8¥435.8¥435.8billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

37

NetNetreserves
Net
reserves
reserves
185
185
185
thousandthousandthousand
boe/d
boe/d
boe/d
2,689
2,689
MMboe
MMboe
MMboe
by region
by region
by region2,689

NetNetproduction
Net
production
production
by region
by region
by region

*1

*1

*1

*2

*2

*2

オ

(proved(proved(provedand andprobable)andprobable)
probable)Business Activities— Eurasia 56
40
40
40
46
46
46
56
56
% % %

¥73.7
¥73.7
¥73.7
billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

% % %

% % %

252525

941
941
941

NetNetreserves
Net
reserves
reserves
NetNetproduction
Net
production
production*1*1*1
thousandthousandthousand
boe/d
boe/d
boe/d
by region
by region
by region
by region
by region
by region

20
20
20

666

% % %

INPEX Outline

777

*2
*2
*2
MMboe
MMboe
MMboe
(proved(proved(provedand andprobable)andprobable)
probable)

% % %

% % %

ユ

*1 Thousands of barrels of oil equivalent per day*2 Millions of barrels of oil equivalent
NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves¥463.2¥463.2¥463.2billionbillionbillion146
146
thousandthousandthousand
boe/d
boe/d
boe/d
913
913
MMboe
MMboe
MMboe
by region
by region
by region913
by region
by region
by region146
Interest Owned

NetNet
sales
Net
sales
sales
by region
by region
by region

Venture Company

*1

*1

*1

*2

*2

INPEX North Caspian Sea 7.56% Eni 16.81% ExxonMobil 16.81% KMG 16.81%
Shell 16.81% TOTAL 16.81% ConocoPhillips 8.40%

2

ACG (Azeri, Chirag,
Gunashli)

INPEX Southwest Caspian Sea,
Ltd.
% %
%

INPEX Southwest Caspian
SOCAR% % Sea% 10.00% BP* 34.14% Chevron 10.28%% % %10.00% StatoilHydro 8.56% ExxonMobil 8.00% TPAO 6.75% Devon Energy
5.63% Itochu 3.92% Hess 2.72%

INPEX BTC Pipeline, Ltd.

INPEX BTC Pipeline 2.5% BP* 30.1% SOCAR 25% Chevron 8.9% StatoilHydro
8.71% TPAO 6.53% Eni 5% TOTAL 5% Itochu 3.4% ConocoPhillips 2.5% Hess
2.36%

3

BTC Pipeline(Est. October 16, 2002)

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves *Operator
*1
*1
*1
*2
*2
*2
thousandthousandthousand
boe/d
boe/d
boe/d
MMboe
MMboe
MMboe
by region
by region
by region
by region
by region
by region

171717

111

111

% % %

323232

162
162
162

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves*1*1*1
thousandthousandthousand
boe/d
boe/d
boe/d
by region
by region
by region
by region
by region
by region

*2
*2
*2
MMboe
MMboe
MMboe
(proved(proved(provedand andprobable)andprobable)
probable)

888

% % %

333

% % %

% % %

1
3

2
百万 百万 百万Financial Section

999

中

米

% % %

INPEX Sustainability

¥93.4
¥93.4
¥93.4
billionbillionbillion696969(proved(proved(provedand andprobable)andprobable)
probable)

444

% % %

NetNet
sales
Net
sales
sales
by region
by region
by region

19
19
19

Business activities

¥10.1
¥10.1
¥10.1
billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

36
36
36

INPEX Operation

Offshore North Caspian INPEX North Caspian Sea, Ltd.
(Est. August 6, 1998)
Sea

43
43
43

*2

(proved(proved(provedand andprobable)andprobable)
probable)1(Est. January 29, 1999)

INPEX Direction

Contract Area日38

INPEX CORPORATION

1
2

3

Eurasia1

Offshore North Caspian Sea Block (including Kashagan Oil Field)

In September 1998, INPEX acquired a working interest in the Offshore NorthKAZAKHSTAN

Caspian Sea block inside Kazakhstan’s territorial waters. Today INPEX holds anapproximately 7.56% interest.
The Kashagan oil field was discovered during the first exploratory drillings

Kashagan

KairanKashagan Southwest

AktoteCaspian Sea

in the block in September 1999. The first discovery in the Kazakhstan-controlled part of the Caspian Sea, the Kashagan field is among the largest finds
in the history of oil exploration. A phased development of this super-giant field
is planned, with the Phase 1 experimental program now underway. Target
peak production for the fully developed field is 1.5 million bpd.

Offshore North
Caspian Sea Block

Kalamkas

Besides the Kashagan field, hydrocarbon reserves have also been confirmed in the four other structures of Kalamkas, Kashagan Southwest, Aktote
and Kairan. Appraisal of these structures is continuing in parallel with development of the main Kashagan field with a view to expanding the total produc-

ユーラシア 1tion of the block.

2

ACG Oil Fields

INPEX acquired a 10% working interest in the Azeri-Chirag-Gunashli (ACG) oil
fields in April 2003. The fields are located in a region of the South Caspian Sea
RUSSIA

controlled by the Republic of Azerbaijan.
AZERBAIJANACG Fields

Baku
Sangachal

Tbilisi

Caspian Sea

Black Sea
Oil production started in the ChiragfieldGEORGIA
and has since expanded to
AZERBAIJAN

include the Central Azeri field (February 2005), the West Azeri field (December
ARMENIA

2005) and the East Azeri fieldTURKEY(October 2006). The Deep WaterBaku
Gunashli field

Oil Pipeline

BTC Pipeline

Deep Water
Gunashli Field
Chirag Field
Azeri Fieldcame on-stream in April 2008. Operations continues to increase oil output
IRAN

from the ACG fields to the 1.0 million Ceyhan
bpd mark.
Mediterranean
Sea
SYRIA

Most of the crude oil
produced by the ACG fields is being transported
キプロス
IRAQ

Caspian Sea

from Azerbaijan to Turkey via Georgia for shipment from the Mediterranean
coast using the Baku-Tbilisi-Ceyhan (BTC) pipeline, a major oil transportation
Oil field

system that began full-scale operations in June 2006.

ユーラシア 2ユーラシア 3

BTC Pipeline
INPEX Direction

3

39

INPEX Outline

INPEX acquired a 2.5% interest in the BTC pipeline project in October 2002.
The 1,770-kilometer BTC pipeline stretches from the Azeri capital of Baku

RUSSIA

to Ceyhan on Turkey’s Mediterranean coast through Tbilisi, Georgia. The origi-

Tbilisinal transportcapacity of the route is 1.0 million bpd. Commencing full-scale
AZERBAIJANBlack Sea

ACG Fields

Baku

AZERBAIJAN

operation in June 2006,
the pipeline was originally built to transport crude oil
Sangachalproduced in the AGC oil fields in Azerbaijan. The pipeline’s capacity is planned
Oil Pipeline

ARMENIA
TURKEY

Gunashli Field
Azeri Fieldof 1 million barrels and a jetty with 2,000 meters long where two 300,000-ton
tankers can dock at the same time.

IRAN

Ceyhanoutput from the Kashagan
oilFieldfield in Kazakhstan.
Chirag
Caspian Sea

Baku

BTC Pipeline

キプロス

Mediterranean
Sea
SYRIA
IRAQ

Business activities

to expand up to 1.2 million
bpd so that it can also accommodate future oil
Deep Water
The Ceyhan marine terminal has seven crude oil strage tanks with capacity

Caspian Sea

GEORGIAINPEX Operation

Oil field

INPEX is participating in the development of the ACG fields in Azerbaijan
and the Kashagan field in Kazakhstan, both of which rank among the world’s
limited number of super-giant oil fields. Completion of
the BTC pipeline
ユーラシア
2 has
enabled direct shipment of oil from these fields by supertanker from a Mediterranean port without passing through the congested shipping lanes of Turkey’s Bosporus straits. The BTC pipeline is expected to play a major role in

INPEX Sustainability

ラシア 1

INPEX CORPORATION

ユーラシア

transporting the crude oil produced in the ACG and Kashagan fields as their

Financial Section

output grows.

40
40
40

%% %

40

46
46
46

56
56
56

%% %

%% %

INPEX CORPORATION

¥73.7
¥73.7
¥73.7
billionbillionbillionNetNetsales
Netsalessales
by byregionregionby region

25
2525

941
941
941

NetNetreserves
Net
reserves
reserves
NetNetproduction
Net
production
production*1 *1
thousandthousandthousand
boe/d
boe/d
boe/d*1 by byregionregionby region
by byregionregionby region

*2 *2
*2
MMboe
MMboe
MMboe
(proved(proved(provedandandprobable)
probable)and probable)

Business Activities& Africa
20
20
20
777
666— Middle East%% %¥463.2¥463.2¥463.2billionbillionbillionNetNetsales
Netsalessales
by byregionregionby region

ユーラ
ユー
ユ

%% %

%% %

NetNetreserves
Net
reserves
reserves
146
146
146
thousandthousandthousand
boe/d
boe/d
boe/d
913
913
MMboe
MMboe
MMboe
by by
regionregionby region913

NetNetproduction
Net
production
production
by byregionregionby region

*1

*1

*1

*2

*2

*2

(proved(proved(provedandandprobable)
probable)and probable)

中東
中東
中

43
43
43

%% %

36
36
36

%% %

19
19
19

%% %

*1 Thousands of barrels of oil equivalent per day*2 Millions of barrels of oil equivalentContract Area

1

2
3

¥10.1
¥10.1
¥10.1
billionbillionbillionNetNetsales
Netsalessales
by byregionregionby region

Venture Company

17
1717

Umm Shaif Field/Lower Japan Oil Development Co., Ltd. (JODCO)(Est. February 22, 1973)
Zakum Field

JODCO 12% ADNOC 60% BP 14.67%
TOTAL 13.33%

Upper Zakum Field

JODCO 12% ADNOC% % 60%% ExxonMobil 28%

111

%% %

444

Umm Al-Dalkh Field

JODCO 12% ADNOC 88%

Satah Field

JODCO 40% ADNOC 60%

Offshore Democratic
Republic of the CongoWest Bakr

69
6969

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves
*1 *1
*2 *2
*2
thousandthousandthousand
boe/d
boe/d
boe/d*1 by by
MMboe
MMboe
MMboe
regionregionby region
by byregionregionby region

Interest Owned(proved(proved(provedandandprobable)
probable)and probable)

111

%% %

Teikoku Oil (D.R. Congo) Co., Ltd.

Teikoku Oil (D.R. Congo) 32.28% Perenco* 50% Chevron 17.72%(Est. August 1, 1970)
NetNetsales
Netsalessales
billionbillionbillionbyregionregionby region
The Egyptian byPetroleum
Development
Co.,

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves*1 *1thousandthousandthousand
boe/d
boe/d
boe/d*1 by byregionregionby region
EPEDECO*by byregionregionby100%
region

¥93.4
¥93.4
¥93.4

32
3232

Ltd.(EPEDECO)

米国
米国
米

162
162
162

*2 *2
*2
MMboe
MMboe
MMboe
(proved(proved(provedandandprobable)
probable)and probable)(Est. July 17, 1970)

4

El Ouar I/II

Teikoku Oil Algeria Co., Ltd.

999

(Est. December 21, 2001)%% %Teikoku Oil Algeria 10.29% Sonatrach 67.33% Eni* 22.38%

888

%% %

333

%% %

*Operator

百万百万 百万

4

3

2

1

日本
日本
日

3

INPEX CORPORATION

41

1

2

Middle East & Africa

1

ADMA Block

INPEX Outline

In May 2004, INPEX made Japan Oil Development Co., Ltd. (JODCO) a wholly
owned subsidiary by acquiring all of the JODCO shares held by Japan National

ADMA Block

Oil Corporation through a share exchange. Established in 1973, JODCO owns
an interest in the ADMA block located offshore Abu Dhabi in the United Arab

Satah Field
Das Island

Umm Shaif Field

Emirates. Oil production currently spans five fields in the block. Production
started from the Upper Zakum (UZ) oil field (the largest in the block) in 1982,
followed by the Umm Al-Dalkh (UA) oil field in 1985 and the Satah (ST) oil

INPEX Direction

Upper Zakum/
Lower Zakum Field

Zirku Island
Umm Al-Dalkh Field

field in 1987. JODCO has been involved in the development of these fields.

Abu Dhabi

The Umm Shaif (US) and the Lower Zakum (LZ) oil fields have also been producing crude oil steadily since 1962 and 1967, respectively. The oil produced

UNITED ARAB EMIRATES

from these fields is transported by subsea pipelines to the islands of Das (fromOil field

Business activities

US & LZ) and Zirku (from UZ, UA & ST) for shipment onward.
A number of development projects are currently underway to maintain

INPEX Operation

中東・アフ

and expand oil output from the ADMA block, including plans to develop
promising untapped structures in the block; construction of new gas injection
facilities for the Umm Shaif field; installation of additional gas treatment facili-

INPEX Sustainability

ties for the Lower Zakum field; and redevelopment plans for the Upper Zakum
field that involves the use of artificial islands.
Operation and development of these fields is undertaken by ADMA-OPCOand ZADCO, the two local operating companies whose shares are owned by
JODCO, Abu Dhabi National Oil Company (ADNOC) and other participating oil
companies. Through JODCO, INPEX continues to assign engineers and otherpersonnel to both of these operating companies.

2

Offshore Democratic Republic of
the Congo
Mediterranean Sea

MwambeMiasato
Libwa

MibaleMotobaLukami

MuandaMoko

BananaTshialaGCOINPEX acquired a 17.03% working interest in July 1970 in an offshore area in

Financial Section

フリカ 1

4

the country now known as Democratic Republic of the Congo (DRC) and has
been participating in oil exploration and developmentin this region. An
Cairo
additional interest was acquired in July 1972, increasing
its participating
Gulf of Suez
interest to the current share of 32.28%.
EGYPT

West Bakr

Oil production commenced in 1975 from the GCO oil field, which was
Soyodiscovered in 1971. Including GCO, a total of 11 oil fields have been
discovered in the Offshore DRC block. The contract covering this block was
extended until 2023 in May 1995, and production levels from existing fields
Oil field

remain stable.

中東・アフリカ 2

中東・アフリカ 3

42

INPEX CORPORATION

4

3

1

2

Middle East & Africa

3West Bakr Block

The Egyptian Petroleum Development Co., Ltd. (EPEDECO), a joint venture
established by a consortium including INPEX and Mitsui & Co., acquired a
Mwambe100% working interest in the West
Bakr block in June 1975. EPEDECO as
Miasatooperator conducted
exploration activities
Libwa within the block, which is located in
MibaleCairo

Motobaa desert regionin Egypt on the west bank of the Gulf of Suez. Three oil fields
Lukami

Gulf of Suez

were discovered
and oil production Muandacommenced in 1980.
Moko
BananaTshialaThe contract
covering the West Bakr block was extended until 2020 in July
GCO

EGYPT

West Bakr

2005. Production levels from the Soyo
existing fields remain stable. EPEDECO islooking to increase production through further exploration activities.

Oil field

アフリカ 1

カ3

Mediterranean Sea

中東・アフリカ 2

4

El Ouar I/II Blocks

In November 2001, INPEX acquired a 10.29% working interest in the El Ouar
I and II onshore blocks located in eastern Algeria. Exploratory drilling in 1997
and the subsequent drilling of appraisal wells confirmed the presence of natural gas, condensate and crude oil in the El Ouar I block. Natural gas andcondensate were also found in the El Ouar II block in exploratory drilling in

ALGERIALIBYAEl Ouar Block

2001. Joint development studies of these blocks and surrounding fields are
currently ongoing.

中東・アフリカ

777

20
20
20

666

% % %

% % %

% % %

INPEX CORPORATION¥463.2¥463.2¥463.2billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

43

NetNetreserves
Net
reserves
reserves
146
146
146
thousandthousandthousand
boe/d
boe/d
boe/d
913
913
MMboe
MMboe
MMboe
by region
by region
by region913

NetNetproduction
Net
production
production
by region
by region
by region

*1

*1

*1

*2

*2

*2

(proved(proved(provedand andprobable)andprobable)
probable)中Business Activities— Americas 19
43
43
43
36
36
36
19
19
% % %

% % %

¥10.1
¥10.1
¥10.1
billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

171717696969NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves
*1
*1
*1
*2
*2
*2
thousandthousandthousand
boe/d
boe/d
boe/d
MMboe
MMboe
MMboe
by region
by region
by region
by region
by region
by region(proved(proved(provedand andprobable)andprobable)
probable)

444

% % %

INPEX Outline

111

% % %

111

% % %

% % %

米

*1 Thousands of barrels of oil equivalent per day*2 Millions of barrels of oil equivalent

OSL 7280060T24

1

OSL 7405070799(Est. November 28, 2006)

Guarico Oriental*2*2Main Pass 118*2(proved(proved(provedand andprobable)andprobable)
probable)

INPEX Canada 10% TOTAL* 75% Occidental 15%

999

888

% % %

333

% % %

% % %

Teikoku Oil and Gas Venezuela, C.A.
(Est. June 7, 2006)

Teikoku Oil and Gas Venezuela 70% PDVSA 30%

Frade Japão Petróleo Limitada（FJPL）

FJPL 18.2609% Chevron* 51.7391% Petrobras 30%

Teikoku Oil and Gas Venezuela 30% PDVSA 70%(Est. July 5, 1999)

Ship Shoal 72

4*1

Teikoku Oil（North America）Co., Ltd.

Teikoku Oil (North America) 25% PetroQuest* 50.5% Other 24.5%(Est. May 30, 2003)

Teikoku Oil (North America) 10% XTO* 50% Other 40%

百万 百万 百万

Teikoku Oil (North America) 25% PetroQuest* 38% Other 37%

West Cameron 402

Teikoku Oil (North America) 25% PetroQuest* 25% Other 50%

Louisiana SL19372

Teikoku Oil (North America) 18.75% PetroQuest* 41.25% Other 40%*Operator

1

INPEX Sustainability

West Cameron 401

Business activities

Frade Block*1

INPEX Operation

3

Copa Macoya*1

INPEX Canada, Ltd.

OSL 7404110452

2

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves
¥93.4
¥93.4
¥93.4
billionbillionbillion32
thousand32
thousandthousand
boe/d
boe/d
boe/d by region
162
162
MMboe
MMboe
MMboe
by region
by region162
by region
by region
by region32
Interest Owned

NetNet
sales
Net
sales
sales
by region
by region
by region

Venture Company

INPEX Direction

Contract Area

Financial Section

4
2

3

日

カ1

44

INPEX CORPORATION
1

4
2
3

Americas1

Joslyn Oil Sands Project

In November 2007, INPEX acquired a 10% interest in the Joslyn Oil Sands
Upstream Project in Alberta, Canada.
The Joslyn project plans to conduct a multi-phase mine development
which is expected to produce 100,000 barrels of bitumen per day as Phase-1
development in Joslyn North Mine. The development framework is underinvestigation and the project start-up is expected to be in the next decade.

Athabasca River

Joslyn Oilsand Lease

Along with acquiring an interest in the Oil Sands Upstream Project, INPEX
acquired the right to participate in the Upgrader project planned by TOTAL inAlberta

Edmonton, Alberta. This project plans to construct a new upgrader that
anticipates a capacity of 130,000 barrels of synthetic crude oil as Phase-1

Fort McMurraydevelopment.

中東・アフリカ2

Copa Macoya and Guarico Oriental Blocks

INPEX was awarded a 100% working interest in a central onshore area, theEast Guarico block, in July 1992. INPEX participated in oil and natural gas field
Copa Macoya Block/Guarico Oriental Block

Camposrehabilitation, exploration and development activities
as an operator under the
BRAZIL
operating service agreement (OSA)
terms.
Macae
The existing OSAs were changed to joint
venture agreements in 2006 after

CaracasFrade Block

Georgetown
GUYANAVENEZUELA
Bogotaa change of policy by the Venezuelan government. Based on the new policy,
INPEX established gas and crude oil venture companies jointly with Petroleos
Atlantic Ocean
de Venezuela, S.A. (PDVSA), the Venezuelan national
petroleum company, and

COLOMBIA

from April 2006 continued the gas business in the Copa Macoya block and the
BRAZIL

crude oil business in the Guarico Oriental block (which replaced the East Guarico block). The new joint venture agreement also features contract extensions
until 2026 for each of the two blocks.

中東・アフリカ 2

中東・アフリカ 3

INPEX CORPORATION

3Frade Block
INPEX Outline

Frade Japão Petróleo Limitada (FJPL), a joint venture established by INPEX and
UNITED STATES OF AMERICA

Sojitz Corporation, acquired a 12.75% working interest in the Frade block inLouisiana SL19372

Brazil’s offshore Northern Campos basin in July 1999. FJPL increased its work-

Camposing interest to 15% in July 2001. FJPL’s working interest rose further in June

BRAZIL
Macae

Frade Block2006 in line with contractual agreements, to approximately 18.3%.
Ship Shoal 72

INPEX Direction

After its initial discovery in 1986, the reserves of the Frade oil field were
MEXICO
Main Passwells
118 after FJPL
first estimated in 2001 with thedrilling of two appraisal

Atlantic Ocean

acquired a participating interestWestin theblock. A final investment decision to
Cameron 401/402
develop Frade was made in June 2006 after subsequent feasibility studies.
Commercial production started in June 2009, marking the first crude oil to be
produced in Brazil by an enterprise with a significant Japanese equity interest.

Business activities

中東・アフリカ 3

INPEX has participated in oil and gas development projects in the shallow
UNITED STATES OF AMERICA

waters of the U.S. Gulf of Mexico since April 2006. Following production start-

Louisiana SL19372

Camposup from Ship Shoal 72 in July
2006, Main Pass 118 started production in April
BRAZIL
2007, and West
Cameron 401/402 and Louisiana SL19372 started production

in 2008.

INPEX Sustainability

4

Ship Shoal 72, Main Pass 118, West Cameron 401/402,
Louisiana SL19372 Blocks

INPEX Operation

アフリカ 2Macae

Frade Block

Ship Shoal 72

MEXICO
Atlantic Ocean

West Cameron 401/402

中東・アフリカ 3

Main Pass 118

Financial Section

東・アフリカ 2

45

43
43
43

% % %

46

36
36
36

% % %

19
19
19

% % %

INPEX CORPORATION

¥10.1
¥10.1
¥10.1
billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

171717696969NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves
*1
*1
*1
*2
*2
*2
thousandthousandthousand
boe/d
boe/d
boe/d
MMboe
MMboe
MMboe
by region
by region
by region
by region
by region
by region(proved(proved(provedand andprobable)andprobable)
probable)Business Activities
111
444— Japan
% % %

¥93.4
¥93.4
¥93.4
billionbillionbillionNetNet
sales
Net
sales
sales
by region
by region
by region

999

% % %

111

% % %

323232

米国
米国
米

% % %

162
162
162

NetNetproduction
Net
production
production
NetNetreserves
Net
reserves
reserves*1*1*1
thousandthousandthousand
boe/d
boe/d
boe/d
by region
by region
by region
by region
by region
by region

*2
*2
*2
MMboe
MMboe
MMboe
(proved(proved(provedand andprobable)andprobable)
probable)

888

% % %

333

% % %

*1 Thousands of barrels of oil equivalent per day*2 Millions of barrels of oil equivalent

百万 百万 百万日本
日本
日

INPEX CORPORATION

47

Japan
INPEX Outline

Minami-Nagaoka Gas Field
and Domestic Natural Gas Business
Echigo Line

Discovered in 1979 and in production since 1984, Minami-Nagaoka is thelargest gas field in Japan and accounts for nearly 50% of the country’s total

見附市

Sekihara Gas Field

Sea of Japan(Underground Storage)

along a 1,400-km trunk pipeline network stretching across the Kanto andHigashi-Kashiwazaki
Gas Field

NagaokaCity

Koshinetsu regions that surround the greater Tokyo metropolitan area, andJoetsuShinkansenLinedelivered to city gas companies and industrial customers along this network.
In recent years, demand for natural gas has grown substantially in Japan as

INPEX Direction

Shinetsu
honsennatural gas production. After being processed, the natural gas is transported

Kashiwazaki City

Minami-Nagaoka
Gas Field
Ojiya City

prices of competing fuels have soared. The clean and eco-friendly profile ofBusiness activities

projection is for further growth in annual demand to the 2–3 billion m3 range,

Gas field

reflecting further active expansion of the supply network into new regions.
Supply capacity and reliability will be dramatically enhanced through

LNG import terminal

Echigo Line

Sekihara
Gas Field
line network. To
boost
overallscale of this business, INPEX has decided to
Sea ofJapan theShinetsu

Nagaoka
Higashi-Kashiwazaki
Sea coast. The
target operational start-up dateis 2014. Constructing this terCity

Gas Field

minal will enable INPEX to connect overseas gas assets to the domestic JapaJoetsu
ShinkansenLinenese natural gas market to establish an integrated gas supply chain. Prior to
Minami-Nagaoka
the completionof theCityreceiving
terminal at Joetsu, INPEX will start to receive
Kashiwazaki
Gas Field

Ojiya
LNG from Shizuoka Gas Co., Ltd.
inCity2010.

Shin Tokyo Line

Gunma Interconnection Line
(INPEX/Tokyo Gas:
planned)Tokyo Line

Ryomo Line
Matsumoto Line

Iruma Line

Kofu Line
Shizuoka Line
Sodeshi LNG Terminal

Minamifuji Line
(INPEX/Shizuoka Gas/Tokyo Gas)

[Shizuoka Gas]

Joetsu Linein water is contained in “brine water” in the underground. We pump up theGas field

brine water, extract natural gas and supply the gas to surrounding area. Thebrine water also contains high levels of iodine. We refine and export all the

日本 1Second Suruga Trunk Line
[Shizuoka Gas]

Domestic pipeline network

Financial Section

INPEX also produces natural gas dissolved in water. Natural gas dissolved

iodine.

Minami-Nagaoka
Gas Field

Shin Oumi Line
(under construction)

INPEX Sustainability(Underground Storage)

build an LNG receiving terminal at Joetsu inhonsen
Niigata Prefecture on the Japan日本 1(under construction)

dynamic reinforcement of production facilities coupledwith expansion of pipe見附市

INPEX Operation

Joetsu Linenatural gas has also encouraged its increased use. The medium-to-long-term

日本 2

48

INPEX CORPORATION

Mission & Corporate Social Responsibility Policy

MissionThe mission of the INPEX Group is to provide a stable andefficient supply of energy to our customers by exploringand developing oil and natural gas resources throughout
the world. Through its business, we aim to become an
integrated energy company, which contributes to thecommunity and makes it more livable and prosperous.

Corporate Social Responsibility Policy
The INPEX Group conducts our business efficiently and proactively with a long-term perspective.
Guided by the leadership of top management, we are committed to fulfilling our corporate social
responsibilities. Our key principles include.
1. Deliver energy in a stable and efficient manner.
2. Comply with laws, rules and regulations and adhere to ethical business conduct.
3. Communicate timely and openly with shareholders, employees, customers, business partners and other stakeholders.
4. Value the individuality of our employees, secure a safe, healthy and worker-friendly environment, and provide
opportunities for career development.
5. Recognize our responsibility to help preserve the environment and contribute to sustainable development.
6. Contribute to the development of our host countries and communities based on the understanding of cultural
diversity.

INPEX CORPORATION

49

Corporate Governance

INPEX Outline

Under the Mission, INPEX recognizes the importance of improving the efficiency, soundness of its management andenforcing compliance in order to continue to increase corporate value and maintain the trust of its stakeholders including
shareholders and society at large. INPEX will continue to reinforce its corporate governance.
The following contents are based on conditions as of June 30, 2009, unless otherwise stated.

Financial Sectione) Accounting Audit
The Company receives accounting audits from Ernst & Young
ShinNihon LLC in accordance with the Companies Act and the
Financial Instruments and Exchange Law. Certified Public Accountants(CPAs) and assistants for audits during the fiscal year under review aredescribed as follows.
• Names of CPAs:
Kenji Endo, Yusuke Kosugi, Takeshi Nakano, Satoshi Takahashi• Accounting audit members:
Four CPAs, 12 assistant CPAs and 14 others
Ernst & Young ShinNihon LLC changed its Japanese corporatename on July 1, 2008, reflecting the change in its classification.

INPEX Sustainabilityc) Statutory Auditors and Board of Statutory Auditors
The Company employs a statutory auditor system. As of March 31,
2009, the Board of Auditors is composed of five members, including
three from outside the Company.

d) Internal Audit
The Internal Audit Unit was established as an internal audit
department independent from business divisions and units anddirectly responsible to the president, to ensure the appropriatenessand efficiency of business activities. The Internal Audit Unit (with ninefull-time members) examines and evaluates the status of management
bodies, the efficiency of business operations and other matters,
pinpointing problem areas, making necessary reports and conducting
follow-up audits to confirm the status of improvements. The Internal
Audit Unit also contributes to proper operational management by
exchanging opinions with independent and statutory auditors asnecessary.

INPEX Operationb) Management Committee and Executive Officer System
The Management Committee has been established to speed up
decision-making and resolve matters that do not require a decision by
the Board of Directors, and to conduct discussions that facilitate theBoard’s decisions by conducting meetings on a weekly and an asneeded basis. In addition, with the aim of responding more
appropriately and rapidly to the fast-changing business environment
and expanding businesses, the Executive Officer System wasintroduced on October 1, 2008 to implement an increasingly flexible
and efficient management system.

The statutory auditors attend meetings of the Board of Directors
and the Management Committee, conduct interviews with divisions
and units as necessary and audit the business execution of directors
with regard to overall operations and individual projects based onreports from relevant divisions and units and other information. The
statutory auditors also receive reports related to regular and special
audits from the independent auditors and regular reports from theInternal Audit Unit on the status of internal audits.
The outside auditors have much of know-how and experience in
the Company’s business and finances, and utilize them in the audit
work. Two of the three outside auditors concurrently serve as
directors of Japan Petroleum Exploration Co., Ltd. and Marubeni
Corporation and are involved in businesses that overlap with those of
the Company.
Mission & corporate social responsibility policy
Corporate governancea) Directors and Board of Directors’ Meeting
As of March 31, 2009, the Board of Directors of INPEX is composedof 16 members, four of whom are outside directors. The Board of
Directors meets once a month and when necessary to discuss andmake decisions regarding important operational matters and oversees
the execution of directors’ operations.
The four outside directors have many years of management
know-how and experience in the Company’s business and are able tooffer objective, professional advice regarding operations. For thisreason, they were asked to join the Board of Directors to contributeto the development of the Company’s business. The four outside
directors concurrently serve as directors or advisors of Japan
Petroleum Exploration Co., Ltd., Mitsubishi Corporation, Mitsui Oil
Exploration Co., Ltd. and Nippon Oil Corporation (“shareholder
corporations”), respectively.
At the same time, however, the shareholder corporations are
involved in businesses that overlap with those of the Company. The
Company therefore recognizes that it must pay particular attention tocorporate governance to avoid conflicts of interest in connection withcompetition and other matters. To this end, all Company directors,
including the outside directors, are required to sign a written
undertaking to carry out their duties as officers of the Company
appropriately and with the highest regard for the importance of suchmatters as their obligations in connection with non-competitive
practices under the Japanese Companies Act, the proper manner for
dealing with conflict of interest, and confidentiality.

INPEX Direction

1. Corporate Organization Overview

50

INPEX CORPORATION

Corporate Governance

2. Internal Control Systema) System to Ensure that Directors and Employees Conduct
Business in Compliance with Laws and Regulations as well aswith the Company’s Articles of Incorporation and Other
Systems to Secure Operational AppropriatenessIn order to ensure that directors and employees conduct business incompliance with laws and regulations as well as with the Company’s
Articles of Incorporation, the Company has formulated a Corporate
Social Responsibility Policy and is building a structure to make surethat all concerned thoroughly abide by its contents.
To this end, the Company has appointed a representative director
with compliance responsibilities. Simultaneously, the Company
established a Compliance Committee chaired by the director
responsible to ensure that directors and employees remain incompliance with laws and regulations as well as the Company’s
Articles of Incorporation in the execution of their business duties.
Furthermore, the Company set up an internal notification system withthe responsible in-house divisions and units and an outside specialist(lawyer) as points of contact.
In order to maintain an effective compliance system and related
in-house rules, the Company also makes timely improvements byimplementing inspections and evaluations of these systems throughaudits carried out by the Internal Audit Unit, which reports directly tothe president.
Furthermore, in its efforts to secure the accuracy and reliability of
its financial reports, the Company has taken steps to establish andutilize the requisite system. Ongoing efficacy is maintained throughsystem evaluation.
b) System for Administration and Storage of Information
Regarding Execution of Directors’ Business Duties
In accordance with laws and regulations, the Company’s Articles ofIncorporation and in-house rules, directors administer and store
documents as well as information regarding the execution of theirbusiness duties.
c) Management System for Losses and Other Risks
To deal with all risks relating to the Group’s business activities, theCompany has designated a division to support risk management
conducted by directors and formulated a basic risk management
policy. In concert with these initiatives, the Company has establisheda group-wide risk management system, which is handled in liaison
with other Group companies based on the Group Management
Regulations.
With regard to the management of risks relating to daily business
operations, the Company makes timely improvements byimplementing inspections and evaluations of these systems throughaudits carried out by the Internal Audit Unit.
d) System to Ensure the Efficient Execution of Directors’Business
DutiesTo ensure efficient business execution, directors engage in business
operations with particular attention to the following:i. Holding the Management Committee, composed of fulltime
directors, on a weekly and an as-needed basis in a timely manner,and performing their duties promptly and appropriately.

ii. For daily business duties, responsibility is delegated in accordancewith rules governing job demarcation and administrative authority,
those responsible at each level performing their duties in a prompt
manner.
e) System to Ensure Appropriate Business Conduct in a BusinessGroup Composed of the Company and Its Subsidiaries
In accordance with the Group Management Regulations, theCompany entered into a Group Management Contract with its
subsidiaries, and require each subsidiary’s important matters reported
to and approved by the Company.
For risk management, compliance management and internal
auditing, the Company also pursues closer collaboration withsubsidiaries based on the Group Management Contract.
f) Matters Concerning Auditor-approved Employees Appointed
to Assist Auditors’ Duties
A designated company employee concurrently serves as an auditor’s
assistant. The assistant concerned is engaged in business inaccordance with auditors’ instructions.
g) Matters Concerning the Impartiality of the Employee
Mentioned in Preceding Clause
Any changes in personnel involving the auditors’ assistant are
discussed with auditors.
h) System for Directors and Employees to Report to Auditors,
Other Systems for Reporting to Auditors
Directors and employees report and provide information to auditors
for matters stipulated in law, matters that may cause significant
impact on the Company and its Group companies, and other mattersthat are judged as necessary to be reported in relation to the
execution of auditors’ business duties.
Auditors shall always obtain information on business execution
by attending the Board of Directors’ meetings and other important inhouse meetings as well as receiving in-house approval documents.
i) System to Ensure Efficient Audit Implementation
Upon the implementation of audits, the Company ensures close
coordination with outside specialists including lawyers, CPAs andcertified tax accountants.
In addition, the Company is in close liaison with the internal audit
system to enhance audit efficiency by receiving reports as required.

INPEX CORPORATION

51

goal of securing a stable supply of energy to Japan as a flagshipcompany; (2) will likely adversely affect the goal of efficiently securing
a stable supply of energy to Japan as a flagship company; or (3) may
affect the exercise of voting rights of special-class shareholder. These
guidelines were once again announced in a Ministry of Economy,
Trade and Industry Notice (No. 220, October 9, 2008) due to a partial
revision of the Company’s Article of Incorporation on October 1,
2008, which involved the name change of the Company.
The Company believes that the ownership of the special-classshare of the Minister of Economy, Trade and Industry would be
effective as a countermeasure to prevent control over the business of
the Company or against hostile takeovers for speculation purposes. In
addition, the Company, as a national flagship company, expects thatthe ownership of the special-class share of the Minister of Economy,
Trade and Industry will play a key role in efficiently realizing a stablesupply of energy to Japan, while bringing the Company positive
results in terms of international negotiations and credits. These werethe major purposes of the Company’s issuance of the special-classshare. Moreover, because the scope of the special-class shareholder’sveto rights is limited and the guidelines have been set for the exercise
of veto rights, the special-class share is an absolute minimum
necessary measure that is highly transparent and does not unjustly
impinge on the Company’s ability to operate with flexibility andefficiency.

The Company seeks to improve management transparency andaccountability by disclosing information in a timely manner through IR
activities directed at shareholders and investors, the shareholders’meeting, Web site, public relations activities and in other ways, andwill constantly strive to enhance these efforts.

In terms of internal system, the Company reinforces theinformation disclosure system by establishing rules for corporate
information disclosure that systematically outline a timely disclosure
process, while setting up a manual for the information management,
transmission and disclosure processes for the entire Group.

Financial Section

5. Information Disclosure

Corporate governanceCompliance is also a vital element of continuous corporate
development. The Company has methodically developed its
compliance system to ensure strict observance of laws, regulations
and corporate ethics.

INPEX Sustainability

The Company recognizes that two factors are vital for increasing
corporate value amid drastic changes in its operating environment:
forestalling losses by properly managing risk inherent in business
operations; and maintaining and strengthening trust with customers,
investors and other parties. As such, the Company will strive toenhance its risk management on an ongoing basis.

INPEX Operation

4. Risk Management and Corporate Ethics

INPEX Direction

The Company’s Articles of Incorporation stipulate that certain major
corporate decisions require a resolution by the holder of a specialclass share in addition to the approval of the shareholders’ meetingsor Board of Directors. The special-class share is issued to the Ministerof Economy, Trade and Industry. The special-class share does not havevoting rights at the shareholders’ meetings of the Company unlessotherwise stipulated by law.
Major corporate decisions include the appointment or removal of
directors, disposal of the entire or part of important assets,amendments to the Articles of Incorporation, mergers, shareexchanges or share transfers, capital reductions and dissolutions.
Director appointments or removals, mergers, share exchanges orshare transfers require a resolution by the holder of the special-classshare, provided a 20 percent or more of the voting rights attached toshares of common stock is held by a single non-public entity or asingle non-public entity and its joint shareholders.
The Minister of Economy, Trade and Industry announced theestablishment of guidelines for the exercise of special-classshareholder’s veto rights (with respect to decisions not approved by aresolution of the special-class shareholder) in a Notice (No. 74, April 3,2006). The Minister of Economy, Trade and Industry may veto any oneof the aforementioned major corporate decisions only to the extent
that it determines a proposed action or transaction (1) will likely resultin the Company being managed in a manner inconsistent with its

INPEX Outline

3. Special-Class Share52

INPEX CORPORATION

Corporate Governance6. Corporate Governance Structure
A diagram of the Company’s corporate governance structure is as follows.
Shareholders’ Meeting
Appoint/dismiss
Independent Auditors

Appoint/dismiss
Board of Statutory Auditors

5 Statutory Auditors
Including 3 Outside Statutory Auditors

Accounting audit

Appoint/dismiss

Audit

Board of Directors
16 Directors Including 4 Outside Directors

Accounting
audit

Audit

Appoint/
supervise/dismiss

Appoint

Management Committee

President
ReportAudit Unit

Internal audit

Corporate Officers

10 Concurrent Directors and Corporate Officers
16 Corporate Officers Total 26

Divisions and Subsidiaries

Compliance
Committee

7. Director Compensation
In the year ended March 31, 2009, the Company’s compensation
to directors and auditors was as follows:¥593 million for 18 directors(including ¥12 million for 3 outside directors)¥90 million for 6 auditors(including ¥35 million for 4 outside auditors)
Notes: (1) The amount of compensation for directors includes no portionof salaries for those who concurrently serve as ordinary
employees. However, there was no payment of salaries todirectors for concurrent service as ordinary employees during
the year ended March 2009.
(2) The total compensation includes a ¥113 million bonus (¥104
million for directors and ¥9 million for auditors) approved at thethird Ordinary General Meeting of Shareholders held on June25, 2009 as well as provision for accrued retirement benefits toofficers. The Company abolished the system of accrued
retirement benefits to officers at the end of the second Ordinary
General Meeting of Shareholders held on June 25, 2008.
Therefore, the fiscal 2009 provision for accrued retirement
benefi ts to offi cers fi gure i ncl uded i n total di rec tor
compensation is for the period from April 2008 to June 25,
2008.
(3) The number of eligible directors includes three directors retired
on September 30, 2008 due to the expiration of their term ofoffice as well as one outside auditor who resigned at the end of
the second Ordinary General Meeting of Shareholders.
(4) Compensation was not paid to one of the 16 directors as of theend of March 31, 2009.
(5) In addition to the aforementioned compensation, the amountof directors’ compensation for outside directors from theCompany’s subsidiaries during the fiscal year was ¥5 million.

8. Regular Number of Directors
The Company’s Articles of Incorporation stipulate that the number of directors shall be up to 16.

9. Conditions for Appointment and Removal of Directors
The Company’s Articles of Incorporation stipulate that theappointment of directors shall be approved by a majority of the voting
rights with the presence of shareholders representing at least one
third of all shareholders. The Articles of Incorporation also stipulatethat the appointment of directors shall not be determined by acumulative vote.

The Articles of Incorporation also stipulate that the appointment
or removal of directors requires approval from a General Meeting ofSpecial-Class Shareholder in addition to that from an ordinary General
Meeting of Shareholders. For details, please refer to the precedingclause, “3 Special-Class Share.”INPEX CORPORATION53

INPEX Outline

10. Matters Arising from the General Meeting of Shareholders and Resolved at
Board of Directors’ Meetings

INPEX Direction(including a person who was a director and a person who was a
statutory auditor in the Company) from liability, by resolution of theboard of directors.
For the purpose of implementing flexible profit return toshareholders, the Company may make cash distribution to theshareholders or pledge right holders registered or recorded in the final
shareholders’ register as of September 30 of each year in accordancewith Article 454, Paragraph 5 of the Companies Act.

In accordance with Article 165, Paragraph 2 of the Companies Act,
the Company may acquire its own shares by market transactions byresolution of the board of directors in pursuit of flexible
implementation of capital policy in the future.
Furthermore, in order for directors and statutory auditors to fulfill
the roles expected of them and in accordance with Article 426,
Paragraph 1 of the Companies Act, the Company may, within thelimits of laws and ordinances, exempt directors and statutory auditors

Auditor Compensation
1. Compensation to Certified Public Accountants (CPAs)

INPEX Operation(Millions of yen)

For the year ended March 31, 2008

For the year ended March 31, 2009

Compensation for nonauditing services

Compensation for auditing
services

Compensation for nonauditing services

The Company

-

-

173

14

Consolidated subsidiary

-

-

52

0

Total

-

-

225

15

The Company’s consolidated subsidiary, INPEX Browse, Ltd., pays
compensation for the auditing of its branch offices to Ernst & Young,which belongs to the same network as the Company’s auditing firm.

In addition, INPEX DLNGPL Pty Ltd. and other overseas consolidated
subsidiaries of the Company pay compensation to Ernst & Young for
local statutory audits.

Non-auditing services for which the company pays compensation to the CPAs primarily consist of advisory services related to the establishment of
an internal control system for financial reporting.

(3) Determination of Auditor Compensation
The amount of compensation paid to the CPAs is determined in total based on the audit plan and the number of auditing dates, after obtaining
approval from the Board of Auditors.

Financial Section(2) CPAs Non-Auditing Services to the Company

Corporate governance(1) Other Important Compensation

INPEX Sustainability

Compensation for auditing
services

54

INPEX CORPORATION

Corporate Social Responsibility

INPEX carries out E&P business around the world with commitment to the protection and preservation of environment
and to the safety and well-being of our employees. To turn this commitment into action, we have implemented our own
HSE (Health, Safety and Environment) Management System as a guiding framework for undertaking a series of initiatives.
In order to develop energy resources efficiently in different parts of the world, we must have a dialogue with those
who live in the regions in which we operate, and solicit their understanding and support. We make a positive contribution
to their community, such as promoting mutual understanding through intercultural exchange, multifaceted support forsocial and economic development, community-oriented corporate citizenship activities, and transmission of information
to promote understanding of business activities.

Overview of HSE Management System
A stable supply of energy can be disrupted for any number ofreasons. Of most concern to us is the risk of incidents that not only
could interrupt the energy supply, but also could cause environmental
pollution, jeopardizing our business continuity. Given the inseparable
relationship between environmental protection and disasterprevention, INPEX constantly engages in the improvement andenhancement of its health and safety programs as well as
environmental protection activities under its “HSE Management

System,” which enables us to continuously enhance our HSE
performance.
This system is comprised of document structure, as specified in
documents that include the Health, Safety and Environment Policy,
the HSE Management System Manual and other procedures andguidelines for HSE, the HSE Committee structure established at boththe Head Office and business office levels, and objectives regarding
HSE and action plans renewed every fiscal year.

Implementation Framework for HSE Management System
In conjunction with the launch of a new company in October 2008,
INPEX established an HSE Unit at its Head Office, while setting up an
HSE Group in organizations responsible for operator projects uponnecessity.
At the same time, to promote systematic group-wide HSE
initiatives, we established the Corporate HSE Committee, which task
is to formulate HSE Management System Manual and procedures,and objectives for INPEX Group. During the year ended March 2009,10 Corporate HSE Committee meetings were held to discuss andapprove 18 HSE-related procedures.
Under the Group’s HSE Management System, a business unit thatis in charge of an operator project is called an Operational
Organization. Each Operational Organization is in a position to
implement HSE activities at each operational front, and has its own

HSE Committee, which is responsible for promoting HSE activities inaccordance with the HSE Policy for the project that the Organization
undertakes inside and outside Japan.
Furthermore, Head Office management as well as responsible
personnel in each Operational Organization worked diligently to raise
the HSE awareness of staff and to facilitate knowledge sharing. In
addition, aiming to thoroughly inform all relevant parties of the major
objectives of the Corporate HSE at each office, we held an HSE
personnel meeting in February 2009 as a follow up to the meeting
held in 2008. In March 2009, the second Annual HSE Meeting wasconvened with the participation of representatives from Operational
Organizations in Egypt, Indonesia, Australia, Venezuela, Surinam andJapan.

HSE management system implementation framework
Corporate

Naoki Kuroda (President)
Masatoshi Sugioka (Representative Director)[In charge of HSE] (Director for HSE)

Corporate HSE Committee

Operational Organization

Operational Organization

Operational Organization

Operational Organization

Operational Organization
Representative

Operational Organization
Representative

Operational Organization
Representative

Operational Organization
Representative

HSE Committee

HSE Committee

HSE Committee

HSE Committee

INPEX CORPORATION

55

HSE-related documents published by March 31, 2009 are as follows.
Structure of the HSEMS documents
Corporate HSE Management System Manual
Corporete HSE Procedures
Corporete HSE Guidelines

MissionCorporate Social
Responsibility Policy
Health, Safety andEnvironmental Policy

HSE Plan(s)INPEX Direction

Ideals and principles of INPEX’s Mission and Corporate Social
Responsibility Policy cover a variety of aspects. In relation to theseobjectives, INPEX set up the Health, Safety and Environment Policy.
Together with this, we established corporate-level HSE Management
Manual and procedures as a foundation of management system toachieve our goals in a systematic and steady manner. Furthermore,each Operational Organization prepares related documents such asprocedures and plans in accordance with the aforementioned Manualand procedures. Under the PDCA cycle-based management systemregulated by these documents, Corporate and Operational
Organizations are making group-wide efforts to ensure health, safety
and environmental protection.

INPEX Outline

Management Structure of HSE Management System

Corporate
HSEMS documents

Related documents such as Procedures,
Work Instructions, etc.

Operational
Organization
HSEMS documents

Bridging documents with Contractors
HSEMS documents
Contractors HSEMS documents

Dhabi, other dignitaries and local
university students are introduced to
the Japanese tea ceremony, a symbolof Japanese culture.

A program in Venezuela to supply
fresh water for drinking and irrigation
will help to raise living standards and

INPEX sent the message “coexistAPPEA conference in Darwin,
Australia, which is the planned
construc tion site of a liquefaction
plant.

Financial Section

support local industrial development.

ence” with the Ichthys project at theCommunity-oriented corporate citizenship activities
INPEX was a participant and exhibitor at the annual conference
organized by the Australian Petroleum Production & Exploration
Association (APPEA) in Darwin, Australia in May–June 2009.
Highlighting the themes of “Energy” “Employment” and“Community,” the INPEX stand promoted the message of coexistencewith the community of Darwin, which is selected as the site for anatural gas liquefaction facility for the Ichthys project. We alsoorganized workshops for local high school students to introduce theoil and gas E&P industry and related employment opportunities.

Corporate social responsibility

Multifaceted support for social and economic development
Gas Guarico, S.A., a joint venture for gas development undertaken in
Venezuela, in which INPEX has a 70% equity stake, is working to raise
living standards in the region and support local industrial
development. In 2007 the company offered to help the local
municipalities in the construction of a water-supply system from alake to the local town for drinking and irrigation purposes. Oncecompleted, this project is expected to make a major contribution to
the community. Plans have now received approval from both thecentral and the local government, and preparations are ongoing tocommence construction in 2009.

His Highness Crown Prince of Abu

INPEX Sustainability

Promoting mutual understanding through intercultural
exchang
In November 2008, in response to a request from His Highness Crown
Prince of Abu Dhabi, INPEX supported the Japanese Tea ceremony
held by the Urasenke. The significance and history of the tea
ceremony and the benefits of tea drinking are explained to His
Highness, other dignitaries and local university students. A
demonstration was also organized to provide a glimpse into this
aspect of Japanese culture. As a result, plans have been made to build
a teahouse in Abu Dhabi and to establish a dispatch program toenable students to visit Japan to learn more about the Urasenke
tradition of tea. These intercultural exchanges are expected tostrengthen ties between the two countries.

INPEX Operation

Contributing to Local Communities

56

INPEX CORPORATION

Board of Directors

14

12

10

7

9

4

5
2

11

1

13

6

15

8
3

1

Representative Director, Chairman

Kunihiko Matsuo

13 Statutory Auditor

Shigeru Hayashi

2

Representative Director

Masatoshi Sugioka

14 Statutory Auditor

Haruhito Totsune

3

Representative Director, President

Naoki Kuroda

15 Statutory Auditor

Shigeru Watanabe

4

Director

Katsujiro Kida

Director (Adjunct)

Kazuo Wakasugi

5

Director

Seiji Yui

Director (Adjunct)Hisanori Yoshimura

6

Director

Kunio Kanamori

Director (Adjunct)Yoshiyuki Kagawa

7

Director

Masaharu Sano

Director (Adjunct)

Shigeo Hirai

8

Director

Shunichiro Sugaya

Statutory Auditor (Adjunct)

Hiroshi Sato9

Director

Masahiro Murayama

Statutory Auditor (Adjunct)Fumiya Kokubu

10

Director

Seiya Ito11

Director

Wataru Tanaka

12

Director

Takahiko Ikeda

INPEX CORPORATION

57

Financial Section
Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

61

Consolidated Balance Sheets

68

Consolidated Statements of Income

70

Consolidated Statements of Changes in Net Assets

71

Consolidated Statements of Cash Flows72

Notes to Consolidated Financial Statements

73

Report of Independent Auditors

88

INPEX Direction

58

INPEX Outline

Background Information
Oil and Gas Accounting Policies and Treatment

INPEX Operation
INPEX Sustainability
Financial Section

58

INPEX Corporation

Background Information
Oil and Gas Accounting Policies and Treatment

Accounting Methods for Types of Agreements
The crude oil and natural gas business generates the bulk ofare production sharing contracts (PSCs) and concession

consolidated net sales revenues for INPEX CORPORATION

agreements. The latter category also includes domestic min-and consolidated subsidiaries (“the Group”). Two types ofing rights as well as overseas permits, licenses and leaseagreement govern the Group’s oil and gas operations. These

agreements.

— Production sharing contracts
Cost recovery and production sharing

Calculation of items in the income statement based on the

PSCs determine the allocation of crude oil and natural gas

above PSC-related considerations is as follows:

production among the host country’s government (or related— The Group records as net sales its share of total sales

entity) and the contractors such as the Group. The allocation

relating to the oil and gas production that is allocated toformula generally differs according to the terms of the indi-

contractors under PSCs.

vidual PSC. The overview below is specific to one type of— The Group books as cost of sales the portion of “Recov-

PSC typical of many oil and gas projects in Indonesia, aerable accounts under production sharing” that is recov-

country with which the Group has concluded numerous

ered through the allocation of its share of the “costPSCs.

recovery portion.”

Under this type of arrangement, the total production in
any given year or other accounting period is allocated at the

Recoverable costs under PSCs

end of the period between three portions:

Exploration costs(1) “First tranche petroleum”

The share of recoverable exploration costs incurred by the		This is a prescribed portion of total production allocatedGroup under the terms of the relevant PSC is capitalized

between the host country’s government and the contrac-

within “Recoverable accounts under production sharing.”

tors in line with agreed percentages.

Development costs(2) “Cost recovery portion”

The share of all development costs incurred by the Group		This is the oil and gas equivalent of (a) non-capital pro-that is recoverable under the terms of the relevant PSC is

duction-related expenditures incurred in that period, plus

recorded within “Recoverable accounts under production(b) the scheduled depreciation expenses in that period forsharing.”

capital expenditures, as calculated under the PSC. The

Production costs

equivalents are determined based upon the current unit

Any operating costs incurred during the production phaseprices of crude oil and natural gas, and allocated between

that are recoverable under the relevant PSC are initiallythe contractors alone. The quantity of oil and gas in therecorded within “Recoverable accounts under production“cost recovery portion” decreases as unit prices increase,sharing.”

while that of the “equity portion” (explained below) rises.

Administrative expenses

If the actual production for the period is insufficient to

Any administrative expenses that are recoverable under thecover the quantity of oil and gas equivalent calculated forrelevant PSC are recorded within “Recoverable accounts

the cost recovery portion, the latter is capped at actual

under production sharing.”

production and any surplus amount is carried forward toInterest expense

the following period, as stipulated in the PSC.

Any interest expense that is recoverable under the relevant(3) “Equity portion”

PSC is recorded within “Recoverable accounts under produc-		This is any residual production that is left after the firsttion sharing.”

two portions have been allocated. It is allocated between
the host country’s government and the contractors based

As discussed above “Cost recovery and production sharing,on agreed percentages.

“ these costs are recovered either as capital or non-capital
expenditures.

INPEX Corporation

Non-recoverable costs under PSCs
Acquisition costs

projects already in the development or production phase are

Costs relating to the acquisition of rights (recorded as intan-

capitalized within “Exploration and development rights” andgible assets under “Exploration and development rights”)

amortized based on the units-of-production method. Thesefor any projects governed by PSCs that are entirely in theamortization costs are recorded within “Depreciation andexploration phase are expensed as incurred and amortized.

amortization.” Cost recovery provisions in PSCs do not gen-

Expenditures or costs relating to the acquisition of rights toerally cover these expenditures.

— Concession agreements
Acquisition costs

sion

Costs relating to the acquisition of rights (recorded as intan-

units-of-production method for mining assets located out-

gible assets under “Mining rights”) for projects governed byside Japan and the straight-line method for domestic facili-

concession agreements are treated in the same way as proj-

ties. These depreciation expenses are recorded within theects governed by PSCs, as described above.

cost of sales.

Exploration costs

Production costs

The Group’s share of exploration costs is expensed as

The Group’s share of operating costs that are incurred dur-

incurred.

ing the production phase is recorded within the cost ofDevelopment costs

sales.

The Group’s share of any development costs related to min-Administrative expenses

ing facilities is capitalized within tangible fixed assets. Depre-

The Group’s share of administrative expenses is expensed as

ciation of tangible fixed assets that are governed by conces-

incurred.

agreements

iscomputedprimarily

using

the

Critical Accounting Policies and Estimates
The Group’s consolidated financial statements are preparedin conformity with Japanese GAAP. The preparation of these— Allowance for recoverable accounts under production sharing

financial statements requires the application of estimates,

Any expenditures made during the exploration, develop-

judgments and assumptions that affect the reported values

ment and production phases of projects governed by PSCs

of assets and liabilities at the date of the financial statements

are capitalized within “Recoverable accounts under produc-

as well as the reported amounts of revenues and expenses

tion sharing” if they are recoverable under the relevant PSC.

for the reporting period. Actual results may differ from the

A reserve equal to exploration costs is recorded withinpreviously estimated or assumed values.

“Allowance for recoverable accounts under production shar-	Accounting estimates pursuant to the preparation of theing” to provide for potential losses from unsuccessful explo-

consolidated financial statements are deemed critical if theration. This reserve typically remains unchanged on the bal-degree of uncertainty associated with such estimates is high,ance sheet until it exceeds the residual balance of exploration

or if rational changes to such estimates could exert a mate-costs that had previously been capitalized within “Recover-rial impact on financial condition or operating results. Criti-

able accounts under production sharing” during the explo-

cal accounting policies and estimates relating to financial

ration phase. Reflecting the uncertainty associated with oilpresentation are outlined below.

and gas projects, a reserve is recorded within “Allowance for

59

60

INPEX Corporation

recoverable accounts under production sharing” to provide— Deferred tax assets

for probable losses on development activities, as individually

Deferred tax assets reflect temporary differences (including

estimated for each project. Although assessments andnet operating loss carry-forwards) arising mainly from theaccounting estimates are made on a reasonable basis, actual

write-down of investments in related parties or foreign taxes

operating results can change depending on project status.

payable. Valuation allowances are provided once it is judgedthat the non-realization of deferred tax assets has become— Units-of-production method

the more probable outcome. The effect of foreign tax credits

Overseas mining facilities, mining rights and exploration,

is taken into account in the calculation of such valuationand development rights that are acquired during the pro-allowances. Realization of deferred tax assets is principally

duction phase are mainly depreciated or amortized based on

dependent on the generation of sufficient taxable income,the units-of-production method. This approach requires thebased on the available evidence. Adjustments to deferred

estimation of reserves. While the Group believes that the

tax assets could be required if future taxable income wereassessment of reserves is done in an appropriate manner,

lower than expected due to market conditions, foreign

any changes in these estimates could significantly affectexchange rate fluctuations or poor operating performance.

future operating results.
— Retirement benefits to employees— Liabilities for site restoration and decommissioning
costs

Accrued retirement benefits to employees are recognized at
the net present value of future obligations as of the end of

Liabilities for future expected decommissioning costs are rec-the accounting period, taking into account any periodic ben-ognized based on decommissioning plans. While the Groupefit costs that have arisen during the period. The determina-

believes that assessments of such costs produce reasonabletion of retirement benefits and periodic benefit costs is based

estimates, any changes to decommissioning plans could sig-on various actuarial assumptions, including the discountnificantly affect future operating results.

rate, employee turnover and retirement rates, remuneration
growth rates, and the expected return on pension plan

— Liabilities for losses on development activities

assets. Future operating results could be significantly affected

Liabilities relating to provable losses on oil and gas develop-

if prior service costs were to arise due to changes in the sys-

ment activities that are caused by delays or other factors are

tem of retirement benefits, or if any deviation between therecognized and estimated on an individual project basis.

base assumptions and actual results or revision of such

While the Group believes that assessments of such liabilities

assumptions were to generate actuarial gains or losses.

produce reasonable estimates, any changes in the status of

Since certain subsidiaries are classified as small enterprises

projects could significantly affect future operating results.

in line with the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 14) as published by the Account-— Allowance for investments in exploration­companies

ing Standards Board of Japan (ASBJ), a simplified approach is
employed to calculate the retirement benefit obligations for

A reserve is recorded to provide for probable losses on invest-

these subsidiaries (since the individual retirement benefit

ments made by the Group in other companies engaged inplans for these companies cover less than 300 people). The

oil and gas activities, as estimated based on the net assets ofsimplified approach calculates the overall retirement benefit

such companies. While the Group believes that the assess-obligation assuming that all active employees voluntarily ter-ments and estimates relating to such investments are rea-minated their employment as of the balance sheet date.

sonable, changes in actual production volumes, prices orforeign exchange rates could significantly affect future operating results.

INPEX Corporation

Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Business Environment
The Japanese economy deteriorated rapidly in the second

Movements in currency markets also have a significant

half of the year ended March 2009 due to the impact of a

influence on Group performance. The yen began the fiscal

stronger yen and a sharp slowdown worldwide caused by theyear ended March 2009 trading at close to ¥100 to the US

global financial crisis that had originated in the US subprime

dollar. Amid forecasts that monetary policy worldwide would

loan market. Corporate earnings and exports both declined,

remain tight due to extremely high commodity prices, theleading to harsher employment conditions.

yen remained susceptible to selling pressure as the effects ofInternational crude oil prices as measured by the closing

the credit crunch caused by the problems in the US subprime

spot market price of West Texas Intermediate (WTI) exert aloan market began to ease somewhat. By August 2008, thesignificant influence on the operating results of the Group.

yen had weakened to close to the ¥110 level against the US

After trading at the beginning of April 2008 at US$100.98

dollar. Selling pressure tapered off abruptly as the United

per bbl, the WTI benchmark rose steadily before setting an

States and other major economies entered a sharp downturn

all-time record of US$147.27 per bbl in July 2008. The mainand commodity prices fell. The collapse of leading US finan-factors pushing up the oil price remained the growth incial institutions in September 2008 precipitated a financial

demand for oil in China, India and other developing coun-crisis, which in turn caused a flight from risky assets andtries, the perceived geopolitical risk associated with major oil-sharp cuts in interest rates worldwide. The yen appreciatedproducing nations, and an influx of speculative capital into oil

rapidly against all other major currencies, soaring to the

futures markets. However, with demand in rapid decline as¥87.0–87.5 range against the US dollar by the end of 2008.

the global economy tipped into recession, the price of WTI

The flight from risky assets corrected slightly during thefell back to 4.5-year lows of under US$40 per bbl in Decem-

remainder of the fiscal year under review, and the yen was inber 2008. The price remained within the US$30–55 per bbl

a downward trend at the end of March 2009. The closing

range during the first quarter of 2009, closing at US$49.66

USD-JPY rate at the year-end on a Telegraphic Transfer Middle

per bbl at the end of March 2009. Prices of crude oil and(TTM) basis was ¥98.26, representing a net increase in the

petroleum products in Japan generally followed international

yen’s value against the US dollar of ¥1.94 since the previous

benchmark fluctuations.

year-end.

61

62

INPEX Corporation

Operating Results(Millions of yen, except percentages)

Years ended March 31,
Net sales:
Crude oil
Natural gas
Other
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses
Depreciation and amortization
Operating income
Other income:Interest income
Dividend income
Net gain on redetermination of unitized field
Net gain on taking effect of exploration and production agreement
Foreign exchange gain
Other
Other expenses:
Interest expense
Provision for allowance for recoverable accounts under production sharing
Provision for exploration projects
Loss on valuation of investment securities
Foreign exchange loss
Other
Income before income taxes and minority interests
Income taxes
Minority interests
Net income

2008

2009

ChangePercentage change¥1,202,965
783,465
391,091
28,409390,554
812,411
34,09548,34615,759714,211
33,09010,984
5,440
4,005
3,482
2,747
6,432
61,501
10,88820,587
3,104
21,350̶
5,572
685,800
491,349
21,205¥ 173,246¥1,076,165
650,352
398,267
27,546
319,038
757,127
25,98250,683
17,195663,267
32,0359,536
12,338̶̶̶
10,161
79,135
3,934
16,643
3,387
31,79914,571
8,801
616,167
470,378726¥ 145,063¥(126,800)(133,113)
7,176
(863)
(71,516)(55,284)(8,113)2,337
1,436(50,944)(1,055)(1,448)
6,898(4,005)(3,482)(2,747)
3,729
17,634(6,954)(3,944)283
10,44914,571
3,229(69,633)(20,971)(20,479)¥ (28,183)(10.5)%(17.0)
1.8(3.0)(18.3)(6.8)(23.8)
4.8
9.1
(7.1)
(3.2)
(13.2)
126.8(100.0)(100.0)(100.0)58.0
28.7(63.9)(19.2)
9.1
48.9
—
57.9
(10.2)(4.3)(96.6)(16.3)%Net sales

pally due to lower sales volumes from ACG oil fields. Sales ofConsolidated net sales in the year ended March 2009

natural gas declined by 1 billion cubic feet (Bcf), or 0.3%, todecreased by ¥126.8 billion from ¥1,203.0 billion to ¥1,076.2

401 Bcf. At 340 Bcf, sales of natural gas produced overseas

billion, representing a decline of 10.5% compared with thewere 0.2 Bcf, or 0.1%, higher than in the previous year. Sales

previous year. Although the higher prices for oil and gasof domestically produced natural gas declined by 33 million

inflated sales revenue, this was more than offset by them3, or 2.0%, to 1,625 million m3 (equivalent to 61 Bcf).

appreciation in the yen’s average exchange rate during the	The average price of crude oil produced overseas wasyear coupled with lower crude oil sales volumes. Net sales of

US$82.70 per bbl, an increase of US$2.63 per bbl, or 3.3%,

crude oil declined by ¥133.1 billion, or 17.0%, from ¥783.5

compared with the previous year. The average price of natural

billion to ¥650.4 billion. Net sales of natural gas grew by ¥7.2

gas produced overseas was US$9.22 per thousand cubic feetbillion, or 1.8%, from ¥391.1 billion to ¥398.3 billion. Sales(Mcf), which represented a year-on-year increase of US$0.96,

revenue from other sources declined by ¥0.9 billion, or 3.0%,

or 11.6%. Hence, natural gas increased more in price thanfrom ¥28.4 billion to ¥27.5 billion.

crude oil during the year ended March 2009. This mainly

Sales of crude oil in volume terms dropped by 10,288 thou-reflected the fact that the price of LNG produced at the Bon-sand bbl, or 12.0%, in year-on-year terms during the yeartang facility in Indonesia, which accounts for the majority ofended March 2009, to 75,427 thousand bbl. This was princi-

the Group’s natural gas produced overseas, is calculated based

INPEX Corporationon the oil price in the preceding month. For this reason, theaccounts under production sharing” rather than capitalizing

impact of the drop in oil prices in the second half of the year

these costs within tangible fixed assets and depreciatingon natural gas prices was delayed by one month. The averagethem. Costs that are recovered in any given year based on

price of domestically produced natural gas was ¥37.39 per

the terms of PSCs are included within the cost of sales.

cubic meter, a year-on-year increase of ¥1.69, or 4.7%. The
average yen exchange rate for the Group’s sales during the

Operating income

year ended March 2009 was ¥102.95 against the US dollar.

Reflecting the above, operating income declined by ¥50.9

This equated to an appreciation in the yen’s value against thebillion, from ¥714.2 billion to ¥663.3 billion. This equated to

US dollar relative to the previous year of ¥10.76, or 9.5%.

a fall of 7.1% in year-on-year terms.

	Analyzing the factors contributing to the year-on-year fallof ¥126.8 billion in net sales, lower sales volumes were

Other income

responsible for a drop in sales of ¥91.0 billion, and the

Other income declined by ¥1.1 billion, or 3.2%, to ¥32.0 bil-increase in average unit prices pushed up sales by ¥67.8 bil-lion (compared with ¥33.1 billion in the year ended Marchlion. The yen’s stronger average exchange rate had a negative

2008). This was primarily due to the absence of factors that

impact on sales of ¥102.8 billion, while other factors

had inflated this item in the year ended March 2008, specifi-

depressed sales by ¥0.8 billion.

cally the net gain on re-determination of unitized field relating to the Bayu-Undan gas-condensate field and the net gain

Cost of sales

on taking effect of exploration and production agreement in

The cost of sales declined by ¥71.6 billion, or 18.3%, fromconnection with a project in Venezuela. Dividend income¥390.6 billion to ¥319.0 billion. This mainly reflected reduc-received on the Group’s investments was higher than in thetions in the cost recovery portions at ACG oil fields and theprevious year.

Offshore Mahakam block.
Other expenses
Exploration expenses

Other expenses increased by ¥17.6 billion, or 28.7%, toExploration costs rose in Australia for the Ichthys and sur-

¥79.1 billion (from ¥61.5 billion in the year ended Marchrounding blocks, but were lower in other regions. Total explo-

2008). This was primarily due to foreign exchange losses

ration expenses fell by ¥8.1 billion, or 23.8%, from ¥34.1

caused by a rise in the average value of the yen on currency

billion to ¥26.0 billion.

markets during the year under review. The Group also
recorded a higher loss on valuation of investment securities

Selling, general and administrative expenses

due to falls in share prices.

Selling, general and administrative (SG&A) expenses were
4.8% higher than in the previous year, rising by ¥2.4 billion

Income taxes

from ¥48.3 billion to ¥50.7 billion. Higher taxes levied by East

Income taxes declined by ¥20.9 billion, or 4.3%, from ¥491.3

Timor associated with the Bayu-Undan project and increases

billion to ¥470.4 billion. The Group pays the majority of thesein labor costs outweighed savings in transport costs for crude

taxes outside Japan. In addition to the high corporate tax

oil from ACG fields due to lower sales volumes.

rates imposed in a number of regions, the Group is generally
unable to deduct expenses incurred in Japan for such taxes.

Depreciation and amortization

Despite the positive effects attributable to application of theDepreciation and amortization expense increased by ¥1.4 bil-foreign tax credit system, this has resulted in a high effective

lion, or 9.1%, from ¥15.8 billion to ¥17.2 billion. This mainly

income tax rate (of 76.3% in the fiscal year under review).

reflected higher depreciation costs for domestic gas pipelines.
The Group records depreciation costs for production facilities

Minority intereststhat are covered by concession agreements within the cost of

Minority interests fell by ¥20.5 billion, or 96.6%, from ¥21.2

sales. In addition, under its accounting treatment of PSCs,

billion to ¥0.7 billion. This mainly reflected a drop in profits

the Group records capital expenditures within “Recoverable

earned from ACG oil fields due to lower sales volumes.

63

64

INPEX Corporation

Net income

lion, from ¥173.2 billion to ¥145.1 billion. This represented a

Net income for the year ended March 2009 fell by ¥28.1 bil-

year-on-year decline of 16.3%.

Investments and Funding— Investments in upstream oil and gas projects

the project (or contract area) if it contains a field in active

Continuous exploration for new reserves of crude oil andproduction and/or development.

natural gas is an essential part of maintaining and growing

These definitions of exploration and development expendi-

the Group’s earnings.

tures and the basis of preparation for the following tables

	The information in this section on upstream oil and gas

differ from the stipulations of Statement of Financial Account-

investments is based on the data reported by project opera-

ing Standard No. 69, “Disclosures about Oil and Gas Produc-

tors relating to exploration expenditures, development expen-

ing Activities” (SFAS 69) in at least the following respects:

ditures and operating expenses. Categories of expenditure• Group expenditures relating to PSC-governed joint ventures

are defined as follows:

where the Group is not the operator are disclosed on a cash

• Exploration expenditures include the costs of exploratory

basis, rather than an accruals basis as required by SFAS 69.

drilling and any geological or geophysical studies. The costs• The tables below have been prepared based on the costof local personnel and office operations and related admin-

definitions used by operators in their reporting, which may

istrative expenses are also included in this category if a proj-

not be consistent with SFAS 69.

ect (or contract area) is entirely in the exploration phase.

• Project-related administrative costs are not necessarily• Development expenditures include the costs of develop-

excluded from these expenditures, whereas SFAS 69

ment drilling and any production facilities.
• Operating expenses include the costs of well operations,maintenance and the supervision of production activities.

requires that administrative costs not directly related to
exploration and development activities be excluded from
exploration and development expenditures.

This category also includes the administrative expenses for
Expenditures for the years ended March 31, 2008 and 2009 are shown in the following table:(Millions of yen, except percentages)

Exploration
Development
Subtotal
Operating expenses
Total

2009

2008

Years ended March 31,¥ 64,746
232,958
297,704
88,270¥385,974

16.8%
60.3
77.1
22.9
100.0%¥ 48,653
235,306
283,959
93,833¥377,792

12.9%
62.3
75.2
24.8
100.0%

Exploration and development expenditures by geographical region for the years ended March 31, 2008 and 2009 are shown in
the following table:(Millions of yen, except percentages)

Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Total

2009

2008

Years ended March 31,¥ 12,836
169,924
77,442
24,345
13,157¥297,704

4.3%
57.1
26.0
8.2
4.4
100.0%¥ 8,139
170,869
60,18932,873
11,889¥283,959

2.9%
60.2
21.2
11.5
4.2
100.0%

INPEX Corporation

Operating expenses by geographical region for the years ended March 31, 2008 and 2009 are shown in the following table:(Millions of yen, except percentages)

2009

2008

Years ended March 31,

10.5%
54.4
7.7
24.9
2.5
100.0%¥ 9,659
47,2097,799
25,903
3,263¥93,833

10.3%
50.3
8.3
27.6
3.5
100.0%Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
AmericasTotal¥ 9,294
47,992
6,755
21,9942,235¥88,270

Total exploration expenditures, development expenditures— Upstream oil and gas project acquisitions

and operating expenses in the year ended March 2009 were

Consolidated expenditures on acquisitions of upstream oil and¥377.8 billion. This was ¥8.2 billion, or 2.1%, lower than thegas projects by geographical region for the years ended Marchequivalent figure for the previous year of ¥386.0 billion. Lower

31, 2008 and 2009 are shown in the table below. Expenditures

investments in exploration were partially offset by increasedin this category include the costs of acquiring mining rights,

investment in development activities and higher operating

exploration and development rights, signing bonuses, as well

expenses.

as any related tangible fixed assets or recoverable accounts
under production sharing that are also acquired in the process.
(Millions of yen, except percentages)

Years ended March 31,

2009

2008

441
43
9,921
¥10,405

4.2%
0.4
95.4
100.0%¥ 1,029
1,058
15,893¥17,980

Total expenditures on acquisitions of upstream oil and gas— Analysis of recoverable accounts under production

projects in the year ended March 2009 amounted to ¥10.4

5.7%
5.9
88.4
100.0%¥

Asia & Oceania
Middle East & Africa
AmericasTotalsharingbillion, declining by ¥7.6 billion from the previous year’s figure

For upstream projects governed by PSCs, the Group’s share ofof ¥18.0 billion. This mainly reflected a lower figure for acqui-costs arising during the exploration, development and produc-

sitions in the Americas.

tion phases is capitalized within “Recoverable accounts under
production sharing.” The following table shows the changes
in the balance of “Recoverable accounts under production
sharing” during the years ended March 31, 2008 and 2009:(Millions of yen)

Years ended March 31,
Balance at beginning of period
Add: Exploration costs
		 Development costs
		Operating expenses
Less: Cost recovery—capital expenditures
		 Cost recovery—non-capital expenditures
		Other
Balance at end of period
Allowance for recoverable accounts under production sharing at end of period

2008

2009

¥319,150
27,460183,00252,69892,147106,048952
383,163¥ (71,445)¥383,163
23,643
160,589
55,93045,725
104,848
18,830453,922¥ (87,829)

65

66

INPEX Corporation

Taking into consideration their recoverability in the fiscal year

— Funding sources and liquidity

in which they are incurred, a portion of exploration and

The Group maintains access to a wide range of funding

development costs are included in the “cost recovery – non-sources. Oil and gas exploration projects are mainly funded

capital expenditures” recoverable amount in addition tousing cash flow and equity financing, Japan Oil, Gas andoperating expenses.

Metals National Corporation and other partners. Oil and gas

Exploration costs were lower during the year ended Marchdevelopment projects and construction or expansion of2009 than in the previous year. This was mainly due to lower

domestic pipelines and other supply infrastructure are primar-

investment in exploration within the Masela block.

ily funded from cash flow and from long-term loans that theDevelopment costs were lower during the year ended

Group has secured from the Japan Bank of International

March 2009 than in the previous year. This was mainly due to

Cooperation and Japanese commercial banks. Japan Oil, Gas

reduced investment in the development of ACG oil fields.

and Metals National Corporation have provided guarantees

	Operating expenses rose in year-on-year terms during thefor the principal on certain outstanding amounts of theyear ended March 2009, reflecting an increase in costs due toGroup’s long-term debt. The Development Bank of Japan andthe Offshore Mahakam block.

various Japanese commercial banks have been providing

Cost recovery for capital expenditures was substantiallylong-term loans for the construction or expansion of domes-

lower than in the year ended March 2008, mainly due totic pipelines. Going forward, the Group is looking at more

lower cost recovery at ACG oil fields.

diversified funding of projects, including sources such as non-	Other deductions to recoverable accounts under produc-recourse financing, loan arrangement, bond issuance andtion sharing were due to the elimination of related recover-equity financing.

able accounts on block withdrawal and the transfer of min-	The Group’s financing policy is to maintain sufficient cash

ing rights.

on hand at all times to fund expenditures for existing and	The allowance for recoverable accounts under production

new crude oil and natural gas projects in a timely manner,

sharing as of the end of the fiscal year under review waswhile also keeping a cushion of liquidity to provide for steep

higher than the allowance as of March 31, 2008. This largely

falls in oil and gas prices. In line with this policy, excess cashreflected additional allowance provisions in connection withreserves are invested in low-risk, highly liquid financial instru-

the increase in recoverable accounts under production shar-ments. The Group’s strategy is to improve capital efficiency

ing with respect to exploration investments in the Masela

over the long term through business expansion while con-block.

tinuing to maintain a sound financial position with sufficientliquidity.

— Maturities of long-term debt
The composition of the Group’s long-term debt by maturity as of March 31 2009 is summarized in the following table:(U.S. dollars and Millions of yen)
Long-term debt denominated inYears ending March 31,

U.S. dollars

2010
2011
2012
2013
2014
2015 and thereafter
Total

$

0.0
0.0
0.0
0.0
0.0
927.7
$927.7Yen¥ 5,034
4,924
4,425
3,957
1,929
30,039¥50,308

Total yen equivalent

¥

5,034
4,924
4,425
3,957
1,929
121,195¥141,464

INPEX Corporation— Cash flows
Cash flows for the years ended March 31, 2008 and 2009 are summarized in the following table:(Millions of yen)

2008

2009

Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash and cash equivalents at end of period¥ 363,995(261,767)(45,228)¥ 222,270¥ 230,352(240,168)(46,090)¥ 162,845

Cash flows due to operating activities

Cash flows due to investing activities

Cash provided by operating activities in the year ended March

Cash used in investing activities in the year ended March2009 totaled ¥230.4 billion. This was ¥133.6 billion less than2009 amounted to ¥240.2 billion. This represented a ¥21.6

the ¥364.0 billion of positive cash flow generated in the pre-billion fall in cash outflow compared with the negative cash

vious year. In addition to a decline in income before income

flow figure of ¥261.8 billion for the previous year. The cash

taxes and minority interests, this reflected a substantial fall inreceived due to the proceeds from sales of marketable securi-

cash received due to the recovery of recoverable accounts

ties and other factors more than offset increased purchases

under production sharing (capital expenditures) for ACG oilof tangible fixed assets.

Years ended March 31,

fields. Another factor was the payment of income taxes applicable to the previous fiscal year in the fiscal year under review

Cash flows due to financing activities

owing to delays in the collection of taxes when compared toCash used in financing activities in the year ended March

the recognition of profit for accounting purposes.

2009 amounted to ¥46.1 billion. This represented a ¥0.9 billion gain in cash outflow compared with the negative cash
flow figure of ¥45.2 billion for the previous year. The main
factor was the repayment of long-term debt.

Consolidated Financial Forecasts for Year Ending March 2010
Consolidated net sales are forecast to decline 33.1% to ¥720

March 2009. These forecasts, which were announced on

billion in the year ending March 2010. Operating income,August 5th, 2009, assume a lower average oil price (ofordinary income and net income are expected to fall 52.4%,

US$57.0 per bbl for the Brent crude benchmark) and a stron-

52.0% and 61.4%, respectively, to ¥316 billion, ¥296 billion

ger average value for the yen (of ¥95.6 against the US dollar)and ¥56 billion, compared with those for the year ended

than in the year ended March 2009, among other factors.

67

68

INPEX Corporation

Consolidated Balance Sheets
INPEX Corporation and Consolidated Subsidiaries
As of March 31, 2008 and 2009

Thousands of
U.S. dollars(Note 3)

Millions of yen

ASSETS

2008

2009

2009

¥ 222,270
120,949
97,465
19,717
11,236
83,436
10,097(59)565,111¥ 162,845
73,540101,544
18,205
6,145
37,871
10,988(28)
411,110$ 1,657,287
748,423
1,033,421
185,274
62,538385,416
111,826(285)
4,183,900

201,864
180,609240,041
28,38728,721
21,981
701,603(447,122)
254,481

196,639
194,623
249,292
20,752
76,81935,511
773,636(476,000)
297,6362,001,211
1,980,694
2,537,065
211,195
781,793361,398
7,873,356(4,844,290)
3,029,066

121,644
120,177
18,844
4,816
265,481

114,884
115,566
18,593
4,638
253,681

1,169,184
1,176,125
189,222
47,201
2,581,732

383,163

453,922

4,619,601(71,445)
311,718
360,727
9,361
20,61831,279(912)(9,963)722,828¥1,807,901(87,829)
366,093344,699
14,195
26,141
65,926(529)(10,907)805,618¥1,768,045(893,843)
3,725,758
3,508,030
144,464
266,039
670,934(5,384)(111,001)
8,198,840$17,993,538

Current assets:
Cash and cash equivalents
Accounts receivable—tradeMarketable securities (Note 4)Inventories
Deferred tax assets (Note 6)
Accounts receivable— other
Other
Less allowance for doubtful accounts

Tangible fixed assets:
Buildings and structures (Note 5)
Wells (Note 5)
Machinery, equipment and vehicles (Note 5)
Land (Note 5)
Construction in progress
Other
Less accumulated depreciation and amortization

Intangible assets:
Goodwill (Note 12)
Exploration and development rights
Mining rights
Other

Investments and other assets:
Recoverable accounts under
production sharing
Less allowance for recoverable
accounts under production sharing
Investment securities (Notes 4 and 5)
Long-term loans receivable
Deferred tax assets (Note 6)
Other investments
Less allowance for doubtful accounts
Less allowance for investments in exploration
Total assets
Refer to accompanying notes to consolidated financial statements.

INPEX Corporation

Thousands of
U.S. dollars(Note 3)

Millions of yen

LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable—trade
Short-term borrowings and current portion of long-term debt (Note 5)
Income taxes payable (Note 6)
Accounts payable—other (Note 5)
Provision for exploration projects
Accrued bonuses to officers
Other

Long-term liabilities:
Long-term debt (Note 5)
Deferred tax liabilities (Note 6)
Accrued retirement benefits to employees
Accrued retirement benefits to officers
Liabilities for site restoration and decommissioning costs
Liabilities for losses on development activities
Accrued special repair and maintenance
Other (Note 5)
Total liabilities

2008

2009

¥

¥

22,582
19,275131,524
111,506
10,786
209
29,404
325,286

11,87327,81670,41965,441
7,948
135
22,427206,059

2009$

120,833
283,086
716,660
665,998
80,8871,374
228,241
2,097,079

174,81344,296
8,645
475
12,728
1,965
230
650
243,802569,088

136,430
28,171
8,546—
14,192
1,965
404
10,217
199,925
405,984

1,388,459
286,699
86,973—
144,433
19,9984,112
103,979
2,034,653
4,131,732

30,00030,000305,313

Net assets (Note 7):
Common stock:
Authorized: 2008—9,000,001.00 shares
2009—9,000,001.00 shares
Issued and outstanding: 2008—2,358,410.13 shares
2009—2,358,410.00 shares
Capital surplus
Retained earnings
Less: Treasury stock: 2008—2,047.10 shares
2009—4,916.00 shares
Total shareholders’ equity

418,494
718,616(2,215)

418,478
844,833(5,248)4,258,884
8,597,934(53,409)

1,164,895

1,288,063

13,108,722

Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Total valuation, translation adjustments and others
Minority interests
Total net assets(7,468)4(60)(7,524)81,442
1,238,813(6,818)(1)(10,121)(16,940)
90,9381,362,061(69,387)(10)(103,003)(172,400)
925,484
13,861,806¥1,807,901¥1,768,045$17,993,538

Contingent liabilities (Note 14)
Total liabilities and net assets

69

70

INPEX Corporation

Consolidated Statements of Income
INPEX Corporation and Consolidated Subsidiaries
For the years ended March 31, 2007, 2008 and 2009

Thousands of
U.S. dollars(Note 3)

Millions of yen

2007

2008

2009

2009

Net sales¥969,713¥1,202,965¥1,076,165$10,952,219

Cost of sales

343,795

390,554

319,038

3,246,876

625,918

812,411757,127

7,705,343

Exploration expenses

17,781

34,45825,982

264,421

Exploration subsidies

(92)

(363)

—

—

Selling, general and administrative expenses(Notes 10, 11 and 12)

36,28548,346

50,683515,805

Depreciation and amortization

12,86715,75917,195

174,995

Operating income

559,077

714,211663,267

6,750,122

12,843

10,984

9,536

97,048Gross profit

Other income:Interest income
Dividend income

2,292

5,440

12,338125,565

Equity in earnings of affiliates

1,350

1,765

946

9,628

Gain on transfer of mining rights

33,534———

Net gain on re-determination of unitized field

—

4,005

—

—

Net gain on taking effect of exploration andproduction agreement

—

3,482

—

—

Foreign exchange gain

5,738

2,747

—

—

Other

4,323

4,667

9,215

93,78260,08033,09032,035

326,023

Interest expense

12,38910,8883,934

40,037

Provision for allowance for recoverable accounts
under production sharing

6,176

20,587

16,643

169,377

Provision for exploration projects

2,973

3,104

3,387

34,470Loss on valuation of investment securities—

21,35031,799323,621

Foreign exchange loss——

14,571

148,290

Other expenses:

11,356

5,572

8,801

89,56832,89461,501

79,135805,363586,263

685,800

616,167

6,270,782

Current

432,894

496,852

488,262

4,969,082

Deferred(19,655)(5,503)(17,884)(182,007)

413,239491,349

470,3784,787,075

7,932

21,205726

7,389¥165,092¥ 173,246¥ 145,063$ 1,476,318

Other
Income before income taxes and minority
interests
Income taxes (Note 6):

Minority interests
Net income (Note 8)
Refer to accompanying notes to consolidated financial statements.

INPEX Corporation

Consolidated Statements of Changes in Net Assets
INPEX Corporation and Consolidated Subsidiaries

For the year ended March 31, 2007

Millions of yen

Increase
Balance (decrease) due
as of March to joint stockCash31, 2006
transfer dividends paid

Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Unrealized holding gain
(loss) on securities
Unrealized gain (loss) fromhedging instruments
Translation adjustments
Total valuation, translation
adjustments and others
Minority interests
Total net assets¥— ¥ 30,000 ¥—— 415,892—— 415,734 (10,559)—(19,641)—— 841,985 (10,559)

Bonusestoofficers

Net
incomePurchaseoftreasurystock

Net changes in
items other
Disposal than those intreasury shareholders'stockequity

¥ — ¥
— ¥
— ¥
—
—
—
—
2,599
(147) 165,092———— (1,725) 20,258(147) 165,092 (1,725) 22,857

¥

—
—
—
—
—

Total
changes during
the period¥

Balance
as ofMarch 31, 2007

30,000 ¥ 30,000
418,491
418,491
570,120
570,120(1,108)(1,108)1,017,503
1,017,503—(5,723)

—

—

—

—

—

15,072

9,349

9,349

—
—

—
1,117

—
—

—
—

—
—

—
—

—
—

18
908

18
2,025

18
2,025

15,998
11,392
11,20051,121¥27,198 ¥1,080,016

11,392
51,121¥1,080,016—(4,606)——39,921—¥— ¥877,300 ¥(10,559)

—
—
—
—
—
—
—
—
¥(147) ¥165,092 ¥(1,725) ¥22,857

For the year ended March 31, 2008

Millions of yen
Balance
as of MarchCash
31, 2007 dividends paid

Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Total valuation, translation adjustments and others
Minority interests
Total net assets¥

30,000418,491
570,120(1,108)1,017,503
9,349
18
2,025
11,392
51,121¥1,080,016¥——(24,750)—(24,750)—————¥(24,750)

Purchaseoftreasurystock

Netincome¥——173,246—
173,246—————¥173,246

Net changes in
items other
Disposal than those in
Total
Balancetreasury shareholders' changes during
as of
stock
equitythe period March 31, 2008

¥

—
—
—
(1,160)(1,160)—————¥(1,160)

¥—
3
—
53
56
—
—
—
—
—
¥56

¥

—
—
—
—
—
(16,817)(14)(2,085)(18,916)
30,321¥11,405¥—3
148,496(1,107)
147,392(16,817)(14)(2,085)(18,916)
30,321¥158,797

For the year ended March 31, 2009

30,000418,494
718,616(2,215)
1,164,895(7,468)4(60)(7,524)81,442¥1,238,813
Millions of yen

Balance
as of MarchCash
31, 2008 dividends paid

Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Unrealized holding gain (loss) on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Total valuation, translation adjustments and others
Minority interests
Total net assets¥¥

30,000418,494
718,616(2,215)
1,164,895(7,468)4(60)(7,524)81,442¥1,238,813¥——(18,846)—(18,846)—————¥(18,846)

Purchaseoftreasurystock

Netincome¥——145,063—
145,063—————¥145,063

Net changes in
items other
Disposal than those in
Total
Balancetreasury shareholders' changes during
as of
stock
equitythe period March 31, 2009

¥

—
—
—
(3,563)(3,563)—————¥(3,563)

¥ —
(16)
—
530
514
—
—
—
—
—
¥514

¥

—
—
—
—
—
650
(5)
(10,061)(9,416)
9,496
¥
80

¥

—
(16)
126,217(3,033)
123,168650(5)(10,061)(9,416)
9,496¥123,248¥

30,000418,478
844,833(5,248)1,288,063(6,818)(1)(10,121)(16,940)
90,938¥1,362,061

Purchaseoftreasurystock

Net changes in
items other
Disposal than those in
Total
Balancetreasury shareholders' changes during
as of
stock
equitythe period March 31, 2009

Thousands of U.S. dollars (Note 3)
Balance
as of MarchCash
31, 2008 dividends paid

Net
incomeCommon stock$ 305,313 $— $—Capital surplus
4,259,047——
Retained earnings
7,313,413 (191,797) 1,476,318
Treasury stock(22,542)——
Total shareholders' equity
11,855,231 (191,797) 1,476,318
Unrealized holding gain (loss) on securities(76,002)——
Unrealized gain (loss) from hedging instruments
41——
Translation adjustments
(611)
—
—
Total valuation, translation adjustments and others(76,572)——
Minority interests
828,842——
Total net assets$12,607,501 $(191,797) $1,476,318
Refer to accompanying notes to consolidated financial statements.

$

—
—
—
(36,261)(36,261)—————$(36,261)

$

—
(163)
—
5,394
5,231
—
—
—
—
—
$5,231$— $— $ 305,313—(163)
4,258,884— 1,284,521
8,597,934—(30,867)(53,409)— 1,253,491 13,108,722
6,615
6,615
(69,387)
(51)
(51)
(10)
(102,392) (102,392)(103,003)(95,828)(95,828)(172,400)
96,64296,642925,484$814 $1,254,305 $13,861,806

71

72

INPEX Corporation

Consolidated Statements of Cash Flows
INPEX Corporation and Consolidated Subsidiaries
For the years ended March 31, 2007, 2008 and 2009

Thousands of
U.S. dollars(Note 3)

Millions of yen

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Provision for allowance for recoverable accounts under production sharing
Provision for exploration projects
Provision for accrued retirement benefits to employees
Provision for site restoration and decommissioning costs
Other provisions
Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in earnings of affiliates
Gain on transfer of mining rights
Loss (gain) on the sales of investment securities
Loss on the valuation of investment securities
Accounts receivable—trade
Recovery of recoverable accounts under production sharing (capital expenditures)
Recoverable accounts under production sharing (operating expenditures)
Inventories
Accounts payable—trade
Accounts receivable-otherAccounts payable-other
Advances received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Increase in time deposits
Decrease in time deposits
Purchase of marketable securities
Proceeds from sales of marketable securities
Purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Investment in recoverable accounts under production sharing (capital expenditures)
Decrease (increase) in short-term loans receivable
Long-term loans madeCollection of long-term loans receivable
Payments for purchase of mining rights
Proceeds from transfer of mining rights
Other
Net cash used in investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from minority interests for additional shares
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Dividends paid to minority shareholders
Stock transfer payment
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Refer to accompanying notes to consolidated financial statements.

2007

2008

2009

2009

¥ 586,263
30,599
6,978
6,081
3,038
845
1,215
1,377
(15,135)
12,389(1,653)(1,350)(33,534)
2,613—(10,385)
105,950(18,955)(8,086)(879)———(3,810)663,561
20,560(11,993)(440,146)
231,982¥ 685,800
36,181
6,617
21,207
3,937
276
815
(2,377)(16,424)
10,8881,036(1,765)—15
21,350(39,393)
92,147(26,052)(2,275)481(16,986)
21,80910,352
7,156
814,795
17,515(11,508)(456,807)
363,995¥ 616,167
42,967
6,760
20,310(2,320)
(97)
1,598
3,468
(21,874)
3,934
10,087(947)—(81)
31,79944,20045,725(27,020)
2,348(9,825)27,558(47,813)
4,229(6,489)744,684
21,258(4,801)(530,789)
230,352$ 6,270,782
437,279
68,797
206,696(23,611)(987)
16,26335,294(222,613)
40,037
102,656(9,638)—(824)
323,621449,827
465,347(274,985)
23,896(99,990)
280,460(486,597)
43,039(66,039)
7,578,710
216,344(48,860)(5,401,883)
2,344,311(17,078)
2,798(5,141)
23,643(37,845)955(1,778)(109,823)
43,609(111,314)(6,524)
(832)
889
—
6,707
2,491
(209,243)(2,765)18,997(39,949)
51,495(59,465)183(2,012)(112,378)
105(131,060)
10,534(7,453)527(15,887)
27,891(530)(261,767)(6,464)
4,498(19,082)
111,451(88,611)
246(2,865)(137,447)
16,531(108,294)
71(5,896)762——(5,068)(240,168)(65,785)
45,776(194,199)
1,134,246(901,801)
2,504(29,157)(1,398,809)
168,237(1,102,117)
723(60,004)
7,755——(51,578)(2,444,209)(120)
30,083(38,662)3,606(1,170)22,397(10,791)
(81)
(868)
9,400
13,794
1,741
38,274
151,143¥ 189,417(50)
40,785(67,745)8,344(1,105)—(24,719)
(737)
(1)
—
(45,228)(24,147)
32,853
189,417¥ 222,270

20,934
12,041(66,365)
9,370(3,049)—(18,833)
(82)
—
(106)
(46,090)(3,519)(59,425)
222,270¥ 162,845

213,047
122,542(675,402)
95,359(31,030)—(191,665)(834)—(1,079)(469,062)(35,813)(604,773)
2,262,060$ 1,657,287

INPEX Corporation

Notes to Consolidated Financial Statements
INPEX Corporation and Consolidated Subsidiaries

1. BASIS OF PRESENTATIONINPEX CORPORATION (the “Company”) is primarily engaged

18, issued on May 17, 2006). In accordance with PITF No.

in the exploration, development and production of natural

18, the accompanying consolidated financial statements forgas and crude oil.

the year ended March 31, 2009 have been prepared by

	The Company and its domestic subsidiaries maintain theirusing the accounts of foreign consolidated subsidiaries pre-accounting records and prepare their financial statements inpared in accordance with International Financial Reporting

accordance with accounting principles generally accepted inStandards or the accounting principles generally accepted inJapan.

the United States as adjusted for certain items.

Until the year ended March 31, 2008, the accompanying

	The accompanying consolidated financial statements haveconsolidated financial statements had been prepared bybeen prepared in accordance with accounting principles

using the accounts of foreign consolidated subsidiaries pre-generally accepted in Japan, which may differ in certain

pared in accordance with accounting principles generallymaterial respects from accounting principles generally

accepted in their countries of domicile.

accepted in the United States of America, and are compiled

Effective the year ended March 31, 2009, as described infrom the consolidated financial statements prepared by theNote 2(w), the Company applies “Practical Solution on Uni-

Company as required by the Financial Instruments andfication of Accounting Policies Applied to Foreign Subsidiar-

Exchange Law of Japan.

ies for Consolidated Financial Statements” (ASBJ PIFT No.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation and accounting forinvestments in affiliates

Until the year ended March 31, 2007, INPEX Browse, Ltd.
had been consolidated on the basis of fiscal periods ended

The accompanying consolidated financial statements include

December 31, which differs from that of the Company.

the accounts of the Company and companies controlled

Effective the year ended March 31, 2008, its financial state-

directly or indirectly by the Company. Companies over whichments prepared for consolidation purpose as of the consoli-

the Company exercises significant influence in terms of theirdation closing date have been used due to increase in its

operating and financial policies are included in the consoli-

materiality. Accordingly, the consolidated operating results

dated financial statements on an equity basis. All significant

for the year ended March 31, 2008 included operatingintercompany balances and transactions are eliminated inresults for 15 months from January 1, 2007 to March 31,

consolidation.

2008. The effect of this change does not have a significant

For the 36 companies for which the closing date differedimpact on the consolidated financial statements.

from the consolidated closing date, including but not limited

	The excess of cost over underlying net assets excluding

to, INPEX Sahul, Ltd. and INPEX Masela, Ltd., the financial

minority interests at fair value as of their dates of acquisition

statements for the year ended December 31 were used.

is accounted for as goodwill and amortized over 20 years on

However, the necessary adjustments have been made to thea straight-line method.

financial statements of those companies to reflect any significant transactions made between the Company’s closing(b) Business Combination

date and those of the consolidated subsidiaries.

INPEX Holdings Inc. was established as a joint holding com-

For the 10 companies, including but not limited to, Japanpany through stock transfer by INPEX CORPORATION andOil Development, Co., Ltd., Teikoku Oil D.R. Congo, Co.,

Teikoku Oil Co., Ltd. on April 3, 2006. The Company, INPEXLtd., INPEX Southwest Caspian Sea, Ltd., and INPEX North

Holdings Inc. as a surviving company, merged with INPEX

Caspian Sea, Ltd., the financial statements for the year

CORPORATION and Teikoku Oil Co., Ltd. on October 1, 2008

ended on the consolidated closing date were used, evento achieve more efficient and proactive management andthough their closing date is December 31.

changed the trade name to INPEX CORPORATION.

73

74

INPEX Corporation

	The transaction was treated as a business combination

lower of cost or market). Domestic inventories are carried

among entities under common control based on "Account-mainly at cost, determined by the moving-average method

ing Standard for Business Combinations" (issued by the(balance sheet value is carried at the lower of cost or market).

Business Accounting Council on October 31, 2003) and"Accounting Standard for Business Combinations and(g) Allowance for doubtful accounts

Accounting Standard for Business Divestitures" (ASBJ Guid-

The allowance for doubtful accounts is provided at anance No. 10, issued on November 15, 2007).

amount determined based on the historical experience ofbad debt with respect to ordinary receivables, plus an esti-(c) Cash equivalents

mate of uncollectible amounts determined by reference to

All highly liquid investments with a maturity of three months

specific doubtful receivables from customers which are expe-or less when purchased are considered cash equivalents.

riencing financial difficulties.

(d) Foreign currency translation(h) R ecoverable accounts under production sharing

Monetary assets and liabilities denominated in foreign cur-and related allowance

rencies are translated into yen at the exchange rates prevail-

Cash investments made by the Company during exploration,

ing at the balance sheet date. All revenues and expenses

development and production project under a production

associated with foreign currencies are translated at the rates

sharing contract and a service contract (buyback arrange-of exchange prevailing when such transactions were made.

ment) are recorded as “Recoverable accounts under produc-

The resulting exchange gain or loss is credited or charged totion sharing” so long as they are recoverable under theincome.

terms of the relevant contract. When the Company receives

	The revenue and expense accounts of the overseas subsid-

natural gas and crude oil in accordance with the relevant

iaries are translated into yen at the average rates of exchange

contract, an amount corresponding to the purchase costs ofduring the period. Except for the components of net assets

the products (i.e., a cost recovery portion of the investments)

excluding minority interests, the balance sheet accounts areis released from this account.

translated into yen at the rates of exchange in effect at the

Because these investments are recoverable only wherebalance sheet date. The components of net assets excludingcommercial oil or gas is discovered, an allowance for recov-

minority interests are translated at their historical exchange

erable accounts under production sharing is provided for

rates. Differences arising from the translation are presented

probable losses on investments made during the exploration

as translation adjustments and minority interests in thestage under production sharing contracts arising from theaccompanying consolidated financial statements.

failure to discover commercial oil and gas. In light of thisuncertainty, an allowance for recoverable accounts under(e) Securities

production sharing is provided for probable losses on devel-

In general, securities are classified into three categories: trad-

opment investment individually estimated for each project.

ing, held-to-maturity or other securities. Securities held by
the Company and its subsidiaries are all classified as other(i) Allowance for investments in exploration

securities. Other securities with a determinable market value

The allowance for investments in exploration is provided forare mainly stated at fair value with any changes in unrealized

future potential losses on investments in exploration compa-

holding gain or loss, net of the applicable income taxes,

nies at an estimated amount based on the net assets of the

included directly in net assets. Other securities without ainvestees.

determinable market value are stated at cost. Cost of securities sold is determined by the moving average method.

(j) Provision for exploration projects
Provision for exploration projects is provided for future(f) Inventories

expenditures of consolidated subsidiaries at the exploration

Overseas inventories are carried mainly at cost, determined bystage based on a schedule of investments in exploration.

the average cost method (balance sheet value is carried at theINPEX Corporation(k) Accrued bonuses to officers

their respective internal rules. However, during the year

Accrued bonuses to officers are provided at the expected

ended March 31, 2009, the Company abolished its retire-payment amount for the fiscal year.

ment benefit program to officers and makes a payment attheir retirements, which is based on the amount to be paid(l) Tangible fixed assets (except leased assets)

at the point of abolishment. Accrued retirement benefits to

Depreciation of overseas mining facilities is mainly computed

officers up to point of abolishment are reversed and unpaid

by the unit-of-production method.

amounts is recorded in other long term liabilities.

For other tangible fixed assets, the straight-line method ofdepreciation is applied. The useful lives of fixed assets are
based on the estimated useful lives of the respective assets.

(q) L iabilities for site restoration and decommissioning
costs
Liabilities for site restoration and decommissioning costs are(m) Intangible assets (except leased assets)

provided for expected future costs for site restoration and

Exploration and development rights at the exploration stage

decommissioning.

are fully amortized in the year such rights are acquired, andthose at the production stage are amortized by the unit-of-(r) Liabilities for losses on development activities

production method.

Liabilities for losses on development activities are provided

Mining rights are amortized mainly by the unit-of-production method.

for provable losses on oil and natural gas development activities individually estimated for each project.

Capitalized computer software costs are being amortizedover a period of five years.

(s) Accrued special repair and maintenance	Other intangible assets are amortized by the straight-line

Accrued special repair and maintenance are provided formethod.

planned major repair and maintenance activities on tanks incertain subsidiaries at amounts accumulated through the(n) Leased assets

next activity.

Leased assets are amortized on the straight-line method overthe lease period assuming no residual value.

(t) Hedge accounting
The simplified accounting method is applied to interest rate(o) Accrued retirement benefits to employees

swaps. For certain equity accounted companies, deferred

Accrued retirement benefits to employees are provided athedge accounting is adopted. In addition, the nominal

the amount calculated based on the expected retirement

amount of the derivative transaction is limited to within thebenefit obligation and the fair value of pension plan assets

scope of actual demand, and the Company does not engage

at the end of this period. Because certain subsidiaries arein speculative derivative transactions.

classified as small enterprises, we employ a simplified
method (at the amount which would be required to be paid(u) Research and development expenses

if all active employees voluntarily terminated their employ-Research and development expenses are charged to income

ment as of the balance sheet date) for the calculation of theas incurred.

retirement benefit obligation of the subsidiaries.
Past service cost and actuarial gains and losses are charged
or credited to income as incurred.

(v) Income taxes
Deferred tax assets and liabilities are determined based on
the differences between financial reporting and the tax(p) Accrued retirement benefits to officers

bases of the assets and liabilities and are measured using theUntil the year ended March 31, 2008, retirement benefits toenacted tax rates and laws which will be in effect when theofficers had been accrued at the amount which would havedifferences are expected to reverse.

been required to be paid as if all officers voluntarily terminated their services as of the balance sheet date based on

75

76

INPEX Corporation(w) Adoption of new accounting standard

pany applies "Accounting Standard for Lease Transactions"

Effective the fiscal year ended March 31, 2008, as for tangi-(ASBJ Statement No.13, revised on March 30, 2007) andble fixed assets acquired on or after April 1, 2007, the Com-

"Guidance on Accounting Standard for Lease Transactions"pany and certain subsidiaries have changed the depreciation(ASBJ Guidance No.16, revised on March 30, 2007). Thismethod based on an amendment in corporate tax law. As

does not have significant impact on the consolidated finan-for other tangible fixed assets whose book value reachedcial statements.

their residual value, the Company and certain subsidiaries

Effective the fiscal year ended March 31, 2009, the Com-

depreciate the residual value equally over 5 years in accor-pany applies "Accounting Standard for Measurement ofdance with the method prescribed in amendment in corpo-

Inventories" (ASBJ Statement No.9, issued on July 5, 2006).

rate tax law. These changes do not have significant impact

This does not have significant impact on the consolidated

on the consolidated financial statements.

financial statements.

Effective the fiscal year ended March 31, 2009, the Com-

Effective the fiscal year ended March 31, 2009, the Com-pany applies "Practical Solution on Unification of Account-pany applies “Accounting Standard for Related Party Disclo-ing Policies Applied to Foreign Subsidiaries for Consolidated

sures” (ASBJ Statement No.11, issued on October 17, 2006)

Financial Statements" (ASBJ Practical Issues Task Forceand “Guidance on Accounting Standard for Related Party

No.18, issued on May 17, 2006). This does not have signifi-

Disclosures” (ASBJ Guidance No. 13, issued on October 17,

cant impact on the consolidated financial statements.

2006).

Effective the fiscal year ended March 31, 2009, the Com-

3. U.S. DOLLAR AMOUNTS
The translation of yen amounts into U.S. dollar amounts isshould not be construed as a representation that yen haveincluded solely for convenience, as a matter of arithmetic

been, could have been, or could in the future be, converted

computation only, at ¥98.26=US$1.00, the approximate rate

into U.S. dollars at the above or any other rate.

of exchange in effect on March 31, 2009. This translation

4. SECURITIESa) Information regarding other securities with determinable market value as of March 31, 2008 and 2009 is as follows:
Millions of yen

March 31, 2008

Securities with fair values exceeding their acquisition cost:
Stock
Bonds:
Public bonds
Other debt securities
OthersSubtotal
Securities with fair values exceeding their acquisition cost:
Stock
Bonds:
Public bonds
Corporate bonds
Other debt securities
OthersSubtotal
Total						

Acquisition cost

¥

4,768

Carrying value

¥

5,388

Unrealized gain (loss)¥

620

241,84336501
247,148

243,098
38
505
249,029

1,255
2
4
1,881

76,51570,427(6,088)58,897
325
373
9,228
145,338¥392,486

55,809
301
334
7,422
134,293¥383,322(3,088)(24)(39)(1,806)(11,045)¥ (9,164)

INPEX Corporation

Millions of yen

March 31, 2009

Acquisition cost

Carrying value

Thousands of U.S. dollars
Unrealized gain
(loss)

Acquisition cost

Carrying value$$

Unrealized gain
(loss)

Securities with fair values
exceeding their acquisition cost:
Stock

¥

431

¥

507

¥

76

4,386

5,160

$

774

Bonds:
Public bonds

279,599

281,760

2,161

2,845,502

2,867,494

21,992Others

68

75

7

692

763

71

Subtotal

280,098

282,3422,244

2,850,580

2,873,417

22,83755,29849,466(5,832)562,772

503,419(59,353)

43,72340,883(2,840)444,973

416,070(28,903)

417

355

(62)

4,244

3,613

(631)

5,857

5,857

—

59,60759,607—

Securities with acquisition costs
exceeding their fair value:
Stock
Bonds:
Public bonds
Other debt securities
OthersSubtotal

105,295

96,561(8,734)

1,071,596

982,709(88,887)

Total¥385,393¥378,903¥(6,490)$3,922,176$3,856,126$(66,050)b) Information regarding sales of securities classified as other securities for the years ended March 31, 2007, 2008
and 2009 is as follows:
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,

2007

Proceeds from sales

2008

2009

2009

¥67,260¥51,580¥127,974$1,302,402

Gain on sales

—

—

107

1,089

Loss on sales¥ 2,610

¥

16

¥

—

$

—

c) Components of other securities without a determinable market value as of March 31, 2008 and 2009 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,

2008

2009

2009

¥38,286¥28,176$286,749¥38,286¥28,176$286,749

Other securities:
Unlisted securities*
Total*An allowance is provided for investments in exploration companies at an estimated amount based on the financial position of the investees.

77

78

INPEX Corporationd) Redemption schedule for securities with maturity dates classified as other securities as of March 31, 2009 is asfollows:
Millions of yen

March 31, 2009

Debt securities:
Public bonds

1 year or lessMore than 1
year but lessthan 5 years

More than 5
years but lessthan 10 years

More than 10
years¥101,218¥180,542¥20,058¥20,825

326

29

—

—

¥101,544¥180,571¥20,258¥20,825

Other
Total

Thousands of U.S. dollars
More than 1
year but lessthan 5 years

More than 5
years but lessthan 10 years

More than 10
years$1,030,104 $1,837,391$204,132$211,938

1 year or less

295

—

—

$1,033,422 $1,837,686

3,318$204,132$211,938

5. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

March 31,

2009

2008

2009

Short-term borrowings from banks and others(Interest rates ranging from 1.240% to 1.875% and from1.325% to 2.150% at March 31, 2008 and 2009)
Total

¥325

¥22,782$231,855¥325¥22,782$231,855

Long-term debt as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

March 31,

2008

2009

2009

¥193,763¥141,464$1,439,690

Loans from banks and others, due through 2023
(Interest rates ranging from 1.000% to 5.800% and from1.100% to 3.240% at March 31, 2008 and 2009)
Less: Current portion

18,9505,034

51,231¥174,813¥136,430$1,388,459

Assets pledged as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

March 31,

2008

2009

2009

¥ 2,447¥ 2,615$ 26,613

Wells

3,166

6,919

70,415

Machinery, equipments and vehicles

10,0599,391

95,573

Land

1,826

1,826

18,584

Buildings and structures

Investment securities
Total

6,513

7,861

80,002¥24,011¥28,612$291,187

INPEX Corporation

The above assets were pledged against the following liabilities:
Thousands of
U.S. dollars

Millions of yen

March 31,
Short-term loans

2009

2008
¥

¥

95

2009
145

$

1,476

Accounts payable—other

3,724

5,264

53,572Long-term debt

13,218

11,500117,036

Other

17

17

173

Total

¥17,054¥16,926$172,257

In addition, investment securities of ¥6,908 million as of March 31, 2008 and ¥ 5,508 million ($ 56,055 thousand) as of March
31, 2009 are pledged as collateral for the BTC Pipeline Project Finance.
The aggregate annual maturities of long-term debt subsequent to March 31, 2009 are summarized as follows:
Years ending March 31,

Millions of yen

2010

¥

5,034

Thousands of U.S. dollars$

51,231

2011

4,924

50,112

2012

4,426

45,044

2013

3,956

40,261

2014

1,929

19,6322015 and thereafter

121,195

1,233,411

Total¥141,464$1,439,691

6. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to a number of taxes based on income which, in theaggregate, resulted in a statutory tax rate of approximately 40.7% in 2007, 40.7% in 2008 and 36.2% in 2009.
	The effective tax rates reflected in the consolidated statements of income for the years ended March 31, 2007, 2008 and2009 differ from the statutory tax rate for the following reasons:Years ended March 31,

2007

2008

2009

Statutory tax rate

40.7%

40.7%

36.2%

Permanently non-taxable income such as dividends income

(0.3)

(0.7)

(1.4)

Valuation allowance

(0.1)

0.2

2.6

Effect of:Foreign taxes

68.0

70.5

75.6

Foreign tax credits(18.4)(19.1)(18.4)

Adjustment of deducted amounts of foreign taxes(15.9)(11.3)(18.1)Net operating losses utilized

—

(0.9)

—

Equity in earnings of affiliates

(0.1)

(0.1)

(0.1)

Amortization of goodwill

0.5

0.4

0.4

Differences of effective tax rates applied to income of foreign subsidiaries

(4.6)

(4.7)

—

Differences of effective tax rates applied to tax effect accounting

—

(4.2)

—

Other

0.7

0.8

(0.5)

Effective tax rate

70.5%

71.6%

76.3%

79

80

INPEX Corporation

The significant components of deferred tax assets and liabilities as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

March 31,

2008

2009

2009

¥ 53,308¥ 57,315

4,543

4,839

49,247—

11,726

119,336

11,881

6,379

64,920

Deferred tax assets:
Investments in related parties
Loss on revaluation of land
Non-deductible accounts payable—other
Recoverable accounts under production sharing (foreign taxes)$

583,299

Allowance for investments in exploration

3,122

5,236

53,287

Foreign taxes payable

11,326

19,063

194,006

Net operating loss

6,071

19,112

194,504

Accumulated depreciation

14,99022,950233,564

Accrued retirement benefits

3,772

3,092

31,468Translation differences of asset and liabilities denominated inforeign currencies

1,004

597

6,076

Liabilities for site restoration and decommissioning costs

2,256

2,937

29,890

Unrealized holding loss on securities

3,058

—

—

Other

8,472

8,200

83,452

Total gross deferred tax assets

123,803

161,446

1,643,049

Valuation allowance(77,114)(128,233)(1,305,038)

Total deferred tax assets

46,68933,213

338,011

15,595

9,853

100,275—

6,950

70,731

Translation differences due to an application of purchaseaccounting method

22,5263,884

39,528Reserve for exploration

5,235

757

7,704

—

66

671

Translation differences of asset and liabilities denominated inforeign currencies

9,676

7,540

76,735

Other

7,487

2,339

23,804

Deferred tax liabilities:
Foreign taxes
Reserve for overseas investment loss

Unrealized holding gain on securities

Total deferred tax liabilities
Net deferred tax assets (liabilities)

31,38960,519¥ (13,830)

¥

1,824

319,448$

18,563

INPEX Corporation

7. NET ASSETS
As of March 31, 2009, the total number of the Company’s• Dissolution

shares issued consisted of 2,358,409 shares of common

	The special class shareholder may request the Company tostock and 1 special class share. The special class share has no

acquire the special class share. Besides, the Company may

voting rights at the common shareholders’ meeting, but thealso acquire the special class share by the resolution of meet-ownership of the special class share gives its holder a righting of Board of Directors in case of that special class share isof veto over certain important matters by imposing thetransferred to a non-public subject.

requirement to obtain a class vote. However, requirements

	The Corporate Law of Japan provides that an amountstipulated in the Articles of Incorporation need to be met inequal to 10% of the amount to be disbursed as distributions

cases involving the appointment or removal of directors, theof capital surplus (other than capital reserve) and retained

disposition of important assets or the exercise of the veto;earnings (other than legal reserve) be transferred to the cap-

• Appointment and removal of directors

ital reserve and the legal reserve respectively until the total• Disposition of all or part of the material assets

of capital reserve and the legal reserve equals 25% of the• Amendments to the Article of Incorporation with respectcommon stock account.

to (i) the purpose of the Company’s business and (ii) the

Such distribution can be made at any time by resolution of

granting of voting rights to the Company’s shares otherthe shareholders, or by the Board of Directors if certain con-than common stock

ditions are met, but neither the capital reserve nor the legal• Mergers, share exchanges or share transfers

reserve is available for distributions.

• Capital reduction

8. AMOUNTS PER SHARE
Yen

Years ended March 31,
Net income
Cash dividends
Net assets

U.S. dollars

2007

2008

2009

2009

¥ 70,423.45¥ 73,510.14¥ 61,601.60$ 626.92

7,000.00

7,500.00

8,000.00

81.42¥436,467.92¥491,168.09¥540,100.10$5,496.64

Net income per share is computed based on the net income

proposed by the Board of Directors together with the interim

available for distribution to shareholders of common stock

cash dividends paid.

and the average number of shares of common stock outstanding during the year.
Cash dividends per share represent the cash dividends

Net assets per share are computed based on the net assets
excluding minority interests and the number of common
stock outstanding at the year end.

81

82

INPEX Corporation

9. DERIVATIVES(a) Hedging instruments and hedged items

actions, but any such risk would not be material because the

The Company has entered into interest rate swap transac-

Company enters into transactions only with financial institu-

tions in order to reduce its exposure to interest rate fluctua-

tions or trading companies with high credit ratings.

tions.
(d) Risk management(b) Hedging policies

The execution and control of derivative transactions are

The nominal amount of the derivative transaction is limited

based on internal rules. All transactions are reported to theto within the scope of actual demand, and the Company

director in charge on a timely basis and transaction confir-

does not engage in speculative derivative transactions.

mations obtained from counterparties on a regular basis.

(c) Credit risk(e) Fair value of derivatives

The Company is exposed to credit risk in the event of non-No derivatives are disclosed because hedge accounting is

performance by the counterparties to those derivative trans-applied for all derivative transactions.

10. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses included in selling, general and administrative expenses amounted to ¥301 million,¥2,229 million and ¥643 million ($6,544 thousand) for the years ended March 31, 2007, 2008 and 2009 respectively.

11. RETIREMENT BENEFITS
1. Retirement benefit obligation as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

March 31,

2008

2009

2009

Retirement benefit obligation¥(15,750)¥(15,231)$(155,007)Plan assets at fair value

7,105

6,685

68,034

Unfunded retirement benefit obligation(8,645)(8,546)(86,973)———¥ (8,645)¥ (8,546)$ (86,973)

Unrecognized actuarial gain or loss
Accrued retirement benefits to employees

2. Retirement benefit expenses for the years ended March 31, 2007, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,
Service cost

2007
¥ 912

2008

2009

2009

¥ 846

¥1,001$10,187

Interest cost

273

274

282

2,870

Expected return on plan assets

(106)

(108)

(86)

(875)

Amortization of actuarial gain or loss

(145)

153

462

4,702

Retirement benefit expenses¥ 934¥1,165¥1,659$16,884

INPEX Corporation

Except above retirement benefits expenses, in accordance with the change of retirement benefit plan as the Company mergedwith non - surviving companies, past service gain amounted to ¥644 million ($6,554 thousand) are credited to other income(other) during the year ended March 31, 2009.
3. The assumptions used in accounting for the above plans are as follows:
Years ended March 31,

2007

2008

2009

Discount rate

2.0%

2.0%

2.0%

Expected return on plan assets

1.5%

1.5%

0.5%

Amortized as
incurred

Amortized as
incurred

Amortized as
incurred——

Amortized as
incurred

Period for amortization of actuarial gain or loss
Period for amortization of past service cost

12. GOODWILL
The changes in the carrying amount of goodwill for the years ended March 31, 2007, 2008 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,

2007

2008

2009

2009

Balance at beginning of year¥—

¥132,106¥121,644$1,237,981

Goodwill acquired during the year

139,084(3,845)——(6,978)(6,617)(6,760)(68,797)¥132,106¥121,644¥114,884$1,169,184

Amortization of goodwill
Balance at end of year

Goodwill acquired during the year ended March 31, 2007 mainly consisted of goodwill related to the business integration.
Negative goodwill acquired during the year ended March 31, 2008 consisted of negative goodwill related to the taking
effect of exploration and production agreement in Venezuela.

13. LEASESThe following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of the leased
assets prior to the initial year of application of new accounting standards as of March 31, 2008, which would have beenreflected in the consolidated balance sheets if finance lease accounting had been applied to the finance leases accounted for
as operating leases.
Millions of yen

March 31,2008

Acquisition costs of leased property¥961

Accumulated depreciation

614

Net book value¥347

Lease payments relating to finance leases accounted for as operating leases amounted to ¥182 million for the year ended
March 31, 2007 and ¥174 million for the year ended March 31, 2008, which were substantially equal to the depreciation
expense of the leased assets computed by the straight-line method over the lease terms.

83

84

INPEX Corporation

Future minimum lease payments subsequent to March 31, 2009 for operating lease transactions are summarized asfollows:
		Years ending March 31,

2010

Millions of yen

Thousands of U.S. dollars¥1,827$18,594

2011 and thereafter

6,740

68,594

Total¥8,567$87,188

14. CONTINGENT LIABILITIESAs of March 31, 2009, the Company and its consolidated subsidiaries were contingently liable as guarantors of indebtednessof affiliates in the aggregate amount of ¥31,235 million ($317,881 thousand).

15. SEGMENT INFORMATIONBusiness segment information
As net sales, operating income and total assets of the oil and natural gas business constituted more than 90% of the consolidated totals for the years ended March 31, 2007, 2008 and 2009, the disclosure of business segment information has been
omitted.
Geographical segment information
The geographical segment information for the Company and its subsidiaries for the years ended March 31, 2007, 2008 and2009 is summarized as follows:
Millions of yen

Year ended March 31, 2007

Sales to third partiesJapan

Asia &
Oceania (a)NIS (b)¥ 77,322¥387,543¥118,618

Middle East
& Africa (c)¥386,009 ¥Americas
(d)

Total

221 ¥ 969,713

Eliminations¥

Consolidated— ¥ 969,713

Total sales

77,322

387,543

118,618

386,009221

969,713—969,713

Operating expenses

54,306145,638

82,996

119,282

1,660

403,8826,754

410,636

266,727(1,439)565,831(6,754)

559,077

Operating income (loss)
Total assets

23,016

241,905

35,622¥197,405¥322,116¥320,574¥254,072 ¥17,776 ¥1,111,943(a) Asia & Oceania: Indonesia, Australia, East Timor, Vietnam(b) Newly Independent States (NIS): Azerbaijan, Kazakhstan(c) Middle East & Africa: UAE, D.R.Congo, Iran, Libya, Egypt, Algeria(d) Americas: Venezuela, Ecuador, USA¥496,164 ¥1,608,107

INPEX Corporation

Millions of yen

Year ended March 31, 2008

Sales to third partiesJapan

Asia &
Oceania (a)Eurasia (Europe& NIS) (b)Middle East
& Africa (c)Americas(d)¥ 93,882¥452,542¥183,879¥464,523 ¥ 8,139 ¥1,202,965 ¥Total

Eliminations

Consolidated—¥1,202,965

Total sales

93,882452,542

183,879

464,5238,139

1,202,965—

1,202,965

Operating expenses

61,950165,837

97,843

140,492

16,101

482,223

6,531

488,754

324,031(7,962)

720,742(6,531)

714,211¥299,563 ¥60,656 ¥1,296,007 ¥511,894¥1,807,901

Operating income (loss)
Total assets

31,932286,705

86,036¥212,306¥360,298¥363,184(a) Asia & Oceania: Indonesia, Australia, East Timor, Vietnam(b) Eurasia (Europe & NIS): Azerbaijan, Kazakhstan, UK(c) Middle East & Africa: UAE, D.R.Congo, Iran, Libya, Egypt, Algeria, Angola(d) Americas: Venezuela, Ecuador, USA, Canada, Suriname
While the classification of region until the year ended March 31, 2007 had been “Japan,” “Asia & Oceania,” “NIS,” “Middle East & Africa,” and “Americas,” the “NIS” was changed to “Eurasia (Europe & NIS)” due to acquisition of interest in UK
project during the year ended March 31, 2008.
Millions of yen

Year ended March 31, 2009

Japan

Asia &
Oceania (a)Sales to third parties¥93,423¥435,824¥73,688¥463,151¥10,079 ¥1,076,165

Total sales

93,423435,824

73,688463,151

10,079Operating expenses

59,540150,416

39,223

144,460

11,419(1,340)671,107(7,840)663,267¥85,169 ¥1,258,237¥509,808¥1,768,045

Eliminations

Consolidated

Operating income (loss)
Total assets

Eurasia (Europe& NIS) (b)Middle East
& Africa (c)Americas(d)33,883

285,408

34,465

318,691¥208,326¥409,558¥365,914¥189,270

Total

Eliminations

Consolidated¥—¥1,076,165

1,076,165—

1,076,165

405,058

7,840

412,898

Thousands of U.S. dollars
Asia &
Oceania (a)Eurasia (Europe& NIS) (b)Middle East
& Africa (c)Americas(d)Year ended March 31, 2009

Japan

Sales to third parties$950,774 $4,435,416$749,929 $4,713,525 $102,575 $10,952,219 $Total sales

950,774

4,435,416

749,929

4,713,525

102,575

Operating expenses

605,944

1,530,796

399,176

1,470,181

116,212

Operating income (loss)

344,830

2,904,620

350,753

3,243,344(13,637)

Total assets

Total

—

$10,952,219

10,952,219—

10,952,219

4,122,309

79,7884,202,097

6,829,910(79,788)

6,750,122$2,120,151 $4,168,105 $3,723,936 $1,926,216 $866,772 $12,805,180 $5,188,358$17,993,538(a) Asia & Oceania: Indonesia, Australia, East Timor, Vietnam(b) Eurasia (Europe & NIS): Azerbaijan, Kazakhstan, UK(c) Middle East & Africa: UAE, D.R.Congo, Iran, Libya, Egypt, Algeria, Angola(d) Americas: Venezuela, Ecuador, USA, Canada, Suriname, Brazil
The geographical segment information for the Company and its subsidiaries has been reflected in the regions based on thelocation of operations.

85

86

INPEX Corporation

Overseas sales
Overseas sales, which include sales (other than exports to Japan) of its overseas subsidiaries, for the years ended March 31,
2007, 2008 and 2009 are summarized as follows:
Millions of yen

Year ended March 31, 2007
Overseas sales

Asia & Oceania (a)Other (b)Total¥319,548¥53,557¥373,105

Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales

969,713
33.0%

5.5%

38.5%

(a) Asia & Oceania: South Korea, Taiwan, Indonesia, Singapore, Thailand, China, Malaysia, Philippines, Australia(b) Other: USA, Italy
Millions of yen

Year ended March 31, 2008
Overseas sales

Asia & Oceania (a)Other (b)Total¥381,147¥84,470¥ 465,617

Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales

1,202,965
31.7%

7.0%

38.7%

(a) Asia & Oceania: South Korea, Taiwan, Indonesia, Singapore, Thailand, China, Philippines, Australia(b) Other: USA, Italy
Millions of yen

Year ended March 31, 2009

Overseas sales

Asia & Oceania (a)¥371,102

Other (b)¥46,281

Total

Asia & Oceania (a)Other (b)¥ 417,383$3,776,735$471,006 $ 4,247,741

1,076,165

Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales

Thousands of U.S. dollars

34.5%

4.3%

38.8%

10,952,219
34.5%(a) Asia & Oceania: South Korea, Taiwan, Indonesia, Singapore, Thailand, China, Philippines, Australia(b) Other: USA

Total

4.3%

38.8%

INPEX Corporation

16. RELATED PARTY TRANSACTIONSThere were no related party transactions for the years ended March 31, 2007 and 2008.
Related party transactions for the year ended March 31, 2009 is as follow:
Transactions with Affiliated Company
Name ofrelated party

Location

Capial investment

Nature of operations

Voting interest

Description of thebusiness relationshipTransaction
detailAmounts

MI Berau

Amsterdam,

e656,279

Exploration and devel-

Directly

Serve the officer

Guarantee¥20,380

B.V.

Netherlands

thousand

opment of natural gas

44.00%

millionconcurrently,

for debt inin Berau Block con-capitalU.S. dollars

ducted in West Papua

subscription(Note)

province, Indonesia and$207,409
thousandTangguh LNG Project(Note) The Company guarantees the financial institution loans to finance the development of the LNG project. The guaranteedamounts above is as of March 31, 2009.

87

88

INPEX Corporation

Report of Independent Auditors

Report of Independent Auditors
The Board of Directors
INPEX CORPORATION
We have audited the accompanying consolidated balance sheets of INPEX CORPORATION andconsolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated
statements of income, changes in net assets, and cash flows for each of the three years in the
period ended March 31, 2009, all expressed in yen. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of INPEX CORPORATION and consolidated
subsidiaries at March 31, 2009 and 2008, and the consolidated results of their operations andtheir cash flows for each of the three years in the period ended March 31, 2009 in conformity
with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect
to the year ended March 31, 2009 are presented solely for convenience. Our audit also
included the translation of yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 3.

June 25, 2009

INPEX Corporation

Operating Data andCorporate Information
Oil and Gas Reserves and Production Volume

90

Subsidiaries and Affiliates

95

Stock Information

97

Corporate Data

98

89

90

INPEX Corporation

Oil and Gas Reserves and Production Volume

1.Oil and Gas Reserves
Proved Reserves
The following tables list the proved reserves of crude oil,

	Our proved reserves as of March 31, 2009 were 1,047.92

condensate, LPG and natural gas of our major subsidiaries

million barrels for crude oil, condensate and LPG, 3,300.5

and equity method affiliates. Disclosure items of proved

billion cubic feet for natural gas and 1,598 million boe

reserves are based on the U.S. Statement of Financial(Barrels of Oil Equivalent) in total.

Accounting Standards No. 69.
Asia &
OceaniaJapan
Crude oil(MMbbls)

Gas
(Bcf)

Crude oil(MMbbls)

21

845

̶

̶

̶

̶

0

0

(0)

(0)

(1)
20

(59)
786

̶

Eurasia(Europe & NIS)

Middle East &AfricaAmericasInterest in Reserves
Held by EquityMethod Affiliates

Subtotal
Crude oil(MMbbls)

Gas
(Bcf)

Crude oil(MMbbls)

853 3,336
50
̶

286

Gas
(Bcf)

Total

Gas
(Bcf)

Crude oil(MMbbls)

Gas
(Bcf)

Crude oil(MMbbls)

Gas
(Bcf)

Crude oil(MMbbls)

Gas
(Bcf)

Crude oil(MMbbls)

Gas
(Bcf)

106 2,398
20
̶

203
29

̶

523

̶

̶

93

̶

̶

̶

1

̶

1

̶

̶

̶

̶

̶

40

0

41

0

3

0

44

(77)

(5)

̶

(5)

̶

̶

1

(10)

(75)

(4)

(8)

(14)

(83)

(20)
207

̶

(30)
489

̶

̶

̶

(0)
1

(29)
106

(64) (397)829 2,905

̶(13) (309)
112 2,014
0
̶

̶

̶

̶

̶

̶

̶

̶

̶

(23)
259
(2)

̶
(88) (397)440 1,088 3,346
̶
(1)
̶

̶

̶

̶

̶

(12)

̶

̶

̶

6

5

(6)

5

̶

̶

(6)

5

(0)

(14)

28

217

78

49

281

(1)

65

48

346

Proved developed
and undeveloped
reserves
As of March 31, 2007
Extensions anddiscoveries
Acquisitions andsales
Revisions ofprevious estimatesInterim production
As of March 31, 2008
Extensions anddiscoveries
Acquisitions andsales
Revisions ofprevious estimatesInterim production
As of March 31, 2009

25

̶

(3)

̶

(1)

(1) (60) (16) (307)(9)
18 713 124 1,923 211

̶

(30)
457

̶

̶

̶

(1) (30) (57) (397) (23)̶(81) (397)
5 159 815 2,795 233 505 1,048 3,300

Proved developed
reserves
As of March 31, 2009

17

̶

454

̶

5

668

75

989

38

142

Notes: 1. Reserves of the following blocks and fields include minority interests.
Asia & Oceania: Offshore Northwest Java (16.5%), Offshore Southeast Sumatra (16.5%)
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)
Middle East & Africa: Abu Al Bukhoosh (5%), West Bakr (47.3%)
Americas: Copa Macoya (30%)
2. MMbbls: Millions of barrels
3. Bcf: Billions of cubic feet
4. Crude oil includes condensate and LPG

̶589 1,799 226

446 1,139 3,782
̶
50
̶

̶

814 1,799

INPEX Corporation

Standardized Measure of Discounted Future Net Cash Flows and Changes Relating to Proved Oil and
Gas Reserves
In calculating the standardized measure of discounted

regulations. The discount is computed by application of afuture net cash flows, year-end constant price and cost

10% discount factor to the estimated future net cash flows.

assumptions are applied to our estimated annual future

We believe that this information does not represent the

production from proved reserves to determine future cash

fair market value of the oil and natural gas reserves or the

inflows. Future development costs are estimated basedpresent value of estimated cash flows since no economic

upon constant price assumptions and assume thevalue is attributed to potential reserves, the use of a 10%

continuation of existing economic, operating, anddiscount rate is arbitrary, and prices change constantly from

regulatory conditions. Future income taxes are calculated by

year-end levels. Disclosure items are based on the U.S.

applying the year-end statutory rate to estimated futureStatement of Financial Accounting Standards No. 69. We

pretax cash flows after provision for taxes on the cost of oil

use the exchange rates of ¥100.20 and ¥98.26 to US$1.00

and natural gas properties based upon existing laws andas of March 31, 2008 and 2009, respectively.
Millions of yen

As of March 31, 2008

Consolidated subsidiaries
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing ofc ash flows
Standardized measure of discounted future net
cash flows
Share of equity method investees standardized
measure of discounted future net cash flows

Total

Japan

Asia &
Oceania

10,784,073(2,693,818)(4,882,340)
3,207,915(1,583,464)

879,942(153,954)(145,218)
580,770(310,255)

3,055,125(751,518)(1,011,368)
1,292,239(423,485)

2,030,128(487,550)(384,543)
1,158,035(765,939)

4,792,848(1,279,902)(3,339,299)
173,647(82,604)

26,030(20,894)(1,912)
3,224(1,181)

1,624,451

270,515

868,754

392,036

91,043

2,043

77,355

̶

43,219̶

18,68015,456

Notes: 1. Reserves of the following blocks and fields include minority interests.
Asia & Oceania: Offshore Northwest Java (16.5%), Offshore Southeast Sumatra (16.5%)
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)
Middle East & Africa: Abu Al Bukhoosh (5%), West Bakr (47.3%)
Americas: Copa Macoya (30%)
2. The geographical segment NIS will be changed to Eurasia (Europe & NIS) from March 31, 2008.

Eurasia(Europe & NIS)

Middle East &AfricaAmericas91

92

INPEX CorPoratIoN

Millions of yen

As of March 31, 2009

Consolidated subsidiaries
Future cash inflows
Future production and development costs
Future income tax expenses
Future net cash flows
10% annual discount for estimated timing of
cash flows
Standardized measure of discounted future net
cash flows
Share of equity method investees standardized
measure of discounted future net cash flows

Total

Japan

Asia &
Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericas5,089,166(2,179,952)(1,704,618)
1,204,596(61 7,598)

666,124(141,203)(169,144)
355,777(178,323)

1,547,449(706,891)(341,036)
499,522(172,777)

788,338(425,575)(89,052)
273,711(214,198)

2,034,401(876,844)(1,098,893)
58,664(48,704)

52,854(29,439)(6,493)
16,922(3,596)586,998

177,454

326,745

59,513

9,960

13,32626,275

̶

12,888

̶

13,476

(89)

Japan

Asia &
Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericas270,515

868,754

392,096

91,043

2,043(50,382)(428,573)(113,727)(217,340)(2,271)(77,468)
7,611
6,760
(6,536)32,784(15,202)(815,640)
82,634(63,952)
100,001
146,413459,898(407,345)
45 ,102(26,211)
46,20845,171
57,027(1,024,751)
9,333(61,675)(8,001)
133,3211,011,337

589
2,129
1,157
4,899
363
(2,469)6,488
398
13,326

Notes: Reserves of the following blocks and fields include minority interests.
Asia & Oceania: Offshore Northwest Java (16.5%), Offshore Southeast Sumatra (16.5%)
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)
Middle East & Africa: Abu Al Bukhoosh (5%), West Bakr (47.3%)
Americas: Copa Macoya (30%)
Millions of yen
Total

Standardized measure, beginning of period
As of April 1, 2008

1,624,451

Changes resulting from:
Sales and transfers of oil and produced,(812,293)
net of production costs
Net change in prices, and production costs(2,324,615)
Development cost incurred
146,809
Changes in estimated development costs(143,921)
Revisions of previous quantity estimates
136,571
Accretion of discount358,052
Net change in income taxes
1,510,591
Extentions, discoveries and improved recoveries
6,488
Other
84,865
Standardized measure, end of period
586,998
As of March 31, 2009

̶

̶

̶

̶

9,372
177,454(22,790)326,745

21,19259,513

76,6939,960

Note: Reserves of the following blocks and fields include minority interests.
Asia & Oceania: Offshore Northwest Java (16.5%), Offshore Southeast Sumatra (16.5%)
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)
Middle East & Africa: Abu Al Bukhoosh (5%), West Bakr (47.3%)
Americas: Copa Macoya (30%)

INPEX Corporation

Probable Reserves
The following tables list the probable reserves of crude oil,million barrels for crude oil, condensate and LPG, 9,442

condensate, LPG and natural gas of our major subsidiaries

billion cubic feet for natural gas and 3,176.44 million boe

and equity method affiliates.

(Barrels of Oil Equivalent) in total.

	Our probable reserves as of March 31, 2009 were 1,627.7

As of March 31, 2009

Crude oil, condensate and
LPG (MMbbls)
Natural gas (Bcf)
Notes: 1. MMbbls: Millions of barrels
2. Bcf: Billions of cubic feet

Americas

SubtotalInterest in Reserves
Held by EquityMethod Affiliates

Total

127

1

1,487

116

1,603

̶

108

9,333

109

9,442

Japan

Asia &
Oceania

Eurasia(Europe & NIS)

Middle East &Africa

3

626

730

133

9,092

̶

93

94

INPEX Corporation

2.Oil and Gas Production
The following tables list average daily productions for crude

Teikoku Oil took place in the year ended March 31, 2006.

oil, natural gas, and the total of crude oil and natural gas by

	Our productions for the year ended March 31, 2009 wereregion. The proportional interests in production by our

223 thousand barrels per day for crude oil, condensate andequity-method affiliates are not broken down by geographi-

LPG, 1,090 million cubic feet per day for natural gas andcal regions. The Company was established on April 3, 2006.

405 thousand boe (Barrels of Oil Equivalent) per day in

Therefore, the figures for the year ended March 31, 2006 in

total.

the following table assume that integration of INPEX and
For the years ended March 31

2006

2007

2008

2009

Crude oil, condensate and LPG (Thousands of barrels per day):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interest in production by equity-method affiliates
Total
Annual production (Millions of barrels)

3.2
44.7
27.1
79.6
2.2
156.8
61.2
218.0
79.6

3.9
40.4
47.9
82.3
0.1
174.7
67.8
242.5
88.5

4.9
36.5
54.5
80.7
0.4
177.0
64.6
241.5
88.4

4.9
44.7
24.8
81.0
2.7
158.1
65.1
223.2
81.5

96.7
787.8

127.8
865.8

161.5
845.7

164.9
842.8

−

−

−

−

−

−

−

−

76.6
961.2

57.5
1,051.1

81.6
1,088.8

82.3
1,090.0

Natural gas (Millions of cubic feet per day):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interest in production by equity-method affiliates
Total
Annual production (Billions of cubic feet)
Crude oil and natural gas (Thousands of barrels of oil equivalent per day):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interest in production by equity-method affiliates
Total
Annual production (Millions of barrels of oil equivalent)

−

−

−

−

961.2
350.8

1,051.1
383.6

1,088.8
398.5

1,090.0
397.8

19.3
176.1
27.1
79.6
14.9
317.0
61.2
378.2
138.0

25.2
184.7
47.9
82.3
9.7
349.8
67.8
417.7
152.5

31.9
177.4
54.5
80.7
14.0
358.4
64.6
423.0
154.8

32.4
185.1
24.8
81.0
16.4
339.7
65.1
404.9
147.8

INPEX Corporation

Subsidiaries and Affiliates
As of March 31, 2009

Consolidated Subsidiaries
Issued Capital*(Millions of yen)

Voting Rights
Held by Us (%)

Japan Oil Development Co., Ltd.

18,800100.00%INPEX Natuna, Ltd.

5,000

100.00%INPEX Alpha, Ltd.

6,554

100.00%Exploration, development, production and sales of oil and natural gas in WA-10-L
Block and others, Australia

INPEX Sahul, Ltd.

4,600

100.00%Exploration, development, production and sales of oil and natural gas in JPDA03-12
Block and Bayu-Undan gas-condensate field in the timor Sea JPDA

INPEX Jawa, Ltd.

4,804

83.50%

Exploration, development, production and sales of oil and natural gas in Off-shore
Northwest Java Block, Indonesia

INPEX Sumatra, Ltd.

400

100.00%Exploration, development, production and sales of oil and natural gas in Off-shore
Southeast Sumatra Block, Indonesia

INPEX ABK, Ltd.

2,500

95.00%

Exploration, development, production and sales of oil in Abu Al Bukhoosh Block,
United Arab Emirates

Company Name

Main Business

Exploration, development, production and sales of oil in ADMA Block, United ArabEmirates
Exploration, development, production and sales of oil and natural gas in SouthNatuna Sea Block B, Indonesia

INPEX Southwest Caspian Sea, Ltd.

53,59451.00%

Exploration, development, production and sales of oil in ACG Oil Fields, Azerbaijan

INPEX Tengah, Ltd.

1,020

100.00%Exploration, development, production and sales of oil and natural gas in tengah
Block in Offshore East Kalimantan, Indonesia

INPEX Browse, Ltd.

40,190100.00%Exploration and development of oil and natural gas in WA-285-P Block and others,
Australia

INPEX Masela, Ltd.

30,26350.84%

Exploration and development of oil and natural gas in Masela Block in the timorSea, Indonesia

INPEX North Caspian Sea, Ltd.

50,48045.00%

Exploration and development of oil in Offshore North Caspian Sea Block,Kazakhstan

Azadegan Petroleum Development, Ltd.

9,975

100.00%Appraisal and development of Azadegan Oil Field, IranINPEX Timor Sea, Ltd.

5,597

100.00%Exploration and development of oil and natural gas in JPDA06-105 Block in thetimor Sea JPDA

INPEX Offshore Northeast Mahakam, Ltd.

3,875

100.00%Exploration of oil and natural gas in East Kalimantan Block in Offshore East
Kalimantan, Indonesia

INPEX Libya, Ltd.

2,780

100.00%Exploration of oil and natural gas in the 42-2&4 and 113-3&4 Blocks, Libya

INPEX Trading, Ltd.

50

100.00%

Sales, agency, and brokerage of crude oil and market research and sales plan-ningin connection with oil and natural gas sales

INPEX Canada, Ltd.

16,000100.00%Exploration, development, production and sales of oil and natural gas including oil
sands in Canada

INPEX BTC Pipeline, Ltd.

63,800(Thousands of
U.S. dollars)

100.00%Investment in pipeline construction and management business which connects Baku
(Azerbaijan), tbilisi (Georgia) and Ceyhan (turkey)

INPEX DLNGPL Pty Ltd

86,135(Thousands of
AUS dollars)

100.00%Investment in Darwin LNG Pty Ltd., that constructs and operates the under sea
pipeline and LNG plant connecting Bayu Undan Gas/Condensate Field and Darwin(Australia)

100

100.00%

Reactivation of oil and gas fields, exploration, development, production and sales ofoil in the Guarico Oriental area, Venezuela

Teikoku Oil Libya UK LTD

48,855(Thousands of
U.S. dollars)

100.00%Exploration and development of oil in the 81-2 and 82-3 Blocks, Libya

Teikoku Oil（North America）Co., Ltd.

16,593(Thousands of
U.S. dollars)

100.00%Exploration, development, production and sales of oil in the United States ofAmerica708

100.00%Exploration and development of oil in the eastern onshore, Algeria

Teikoku Oil (Venezuela) Co., Ltd.

Teikoku Oil Algeria Co., Ltd.

95

96

INPEX Corporation

Issued Capital*(Millions of yen)Company Name

Voting Rights
Held by Us (%)

Main Business

Teiseki Pipeline Co., Ltd.

100

100.00%Natural gas transportation, pipeline operation, maintenance and management

Teiseki Propane Co., Ltd.

80

100.00%

Sales of LPG and petroleum products

Teiseki Topping Plant Co., Ltd.

70

100.00%Refining domestic crude oil, storage and shipment of petroleum products

Teikoku Oil (D.R. Congo) Co., Ltd.

10100.00%Exploration, development, production and sales of oil in Offshore D. R. Congo Block35(Thousands of
U.S. dollars)

100.00%Exploration, development, production and sales of oil in the Block 18, Ecuador

Teikoku Oil Ecuador

60

62.00%

City gas sales

TEIKOKU OIL (SURINAME) CO., LTD.

Saitama Gas Co., Ltd.

1,357

54.79%

Exploration of oil in the Northern offshore, Suriname

The Egyptian Petroleum Development

10,72252.70%

Exploration, development, production and sales of oil in the West Bakr Block, Egypt

10100.00%Transport by motor trucks and sales of petrochemical products

Co., Ltd.
Teiseki Transport System Co., Ltd.

Other 21 subsidiaries

Equity Method Affiliates
Issued Capital*(Millions of yen)

Voting Rights
Held by Us (%)

Main Business

6,525(Thousands of reis)

50.00%

Lease of production facilities in Albacora Oil Field in Offshore North Campos, Brazil

656,279(Thousands ofeuros)

44.00%

Exploration and development of natural gas in Berau Block and tanggu LNG Project,

6,852

37.50%

Company Name

Albacora Japão Petróleo Limitada
MI Berau B.V.

INPEX Offshore North Campos, Ltd.

Indonesia
Financing for oil and natural gas exploration and development projects in Frade
Block in Offshore North Campos, Brazil

Angola Japan Oil Co., Ltd.
JJI S&N B.V.

Japan Ohanet Oil & Gas Co., Ltd.

8,000

19.60%

Exploration, development, production and sales of oil in Offshore 3/05 Block, Angola

36,883(Thousands ofeuros)

25.00%Development and production of oil in Soroosh and Nowrooz Fields, Iran

6,400

15.00%Development and production of natural gas in the southeastern onshore, Algeria

Other 7 equity method affiliates

Subsidiaries of Equity Method Affiliates
Issued Capital*(Millions of yen)Company Name

Frade Japão Petróleo Limitada

103,051(Thousands of reis)

Other one subsidiary of equity method affiliates* Rounding off fractions less than the unit.

Voting Rights
Held by Us (%)

0.00%

Main Business

Exploration and development of oil and natural gas in Frade Block in Offshore North
Campos, Brazil

INPEX Corporation

Stock Information(As of March 31, 2009)

Share Data
Authorized shares
9,000,000 common shares
1 special class share
Total number of shareholders and Issued shares
Common shares: ............ 23,631 shareholders ..................................................................................... 2,358,409 shares
Special class share*:............... 1 shareholder (Minister of Economy, Trade and Industry)....................................... 1 share* The Company s Articles of Incorporation stipulate that certain major corporate decisions require a resolution by the holder of the special class share in addition to the approvalof the shareholders meetings or Board of Directors.

Shareholding by Shareholder Type*1
Treasury Stock: 0.21%

Financial Institutions (Including Trust Accounts): 13.79%

Shareholders: 1

Shareholders: 115

Shares: 4,916

Shares: 325,322

Individuals and Other: 2.46%

Securities Companies: 0.39%

Shareholders: 22,541

Shareholders: 40

Shares: 58,119

Shares: 9,219

Foreign Corporations and Other: 16.24%

Other Domestic Corporations: 37.55%

Shareholders: 636
Shares: 382,999

Shareholders: 296
Shares: 885,483

Government and municipalities*2: 29.36%
Shareholders: 2
Shares: 692,351*1 Shareholding ratios are for all issued and outstanding shares*2 Excludes one special class share

Major Shareholders (Common Shares)
Name

Minister of Economy, Trade and Industry

Number of Shares

Holding (%)

692,307

29.35

Japan Petroleum Exploration Co., Ltd.

267,233

11.33

Mitsubishi Corporation

193,460

8.20

Mitsui Oil Exploration Co., Ltd.

176,760

7.49

Nippon Oil Corporation

111,920

4.75

Japan Trustee Services Bank, Ltd. (Trust Account)

66,6592.83

The Master Trust Bank of Japan, Ltd. (Trust Account)

65,562

2.78

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

63,482

2.69

Marubeni Corporation

46,446

1.97

Sumitomo Mitsui Banking Corporation

23,129

0.98

97

98

INPEX Corporation

Corporate Data
Company Name

Company Headquarters

INPEX CORPORATION

Akasaka Biz Tower 5-3-1 Akasaka, Minato-ku,
Tokyo 107-6332, Japan

Established

Number of Employees (Consolidated)

April 3, 2006

(As of March 31, 2009)

1,814

Capital (As of March 31, 2009)

Main Business¥30 billion

Research, exploration, development, production and sales of oil,natural gas and other mineral resources, other related businesses andinvestment and lending to companies engaged in these activities.

Organization Chart
Shareholders’ Meeting

Audit Unit
HSE Unit

Board of Directors

General Administration Division

Board of Auditors

Corporate Strategy & Planning Division
Compliance Committee

Management Committee

Finance & Accounting Division
Logistics & IT System Division

President

Technical Division
Oil & Gas Business Division 1
Oil & Gas Business Division 2
Asia, Oceania & Offshore Japan Project Division
America & Africa Project Division
Eurasia & Middle East Project Division
Abu Dhabi Project Division
Masela Project Division
Ichthys Project Division
Domestic Project Division
Pipeline Construction Division
LNG Receiving Terminal Construction Division(As of June 30, 2009)

HomepageInquiries

The Company s Web site provides investors with the most up-to-date
IR information, including financial statements.

Please contact us at:
INPEX CORPORATION
Corporate Strategy & Planning DivisionCorporate Communications Unit
Investor Relations Group
Phone: +81-3-5572-0234
Facsimile: +81-3-5572-0235

http://www.inpex.co.jp/

Akasaka Biz Tower 5-3-1 Akasaka, Minato-ku,
Tokyo 107-6332, Japan
Phone: +81-3-5572-0200
http://www.inpex.co.jp/

Photo: Rig in the WA-344-P, offshore Western Australia

This report is printed using environmentally friendly soy ink on paper
made from trees grown in properly managed forests.

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