INPEX CORPORATION

Annual Report 2015

Year ended March 31, 2015

Energy for a bright future
INPEX is the largest oil and gas E&P
company in Japan. The Company currently
is engaged in more than 70 projects spread
across more than 20 countries worldwide.
As a company that is engaged in oil and natural gas exploration,
development and production activities worldwide, INPEX boasts the highest
reserve and production volumes among companies in Japan. On the international stage,
the Company is positioned as a mid-tier E&P player just behind the world’s oil majors.
The Ichthys LNG Project in Australia being one of its key initiatives, INPEX is actively
engaged in oil and natural gas projects in Japan and overseas. In addition to securing
a stable and efﬁcient supply of energy, the Company is working diligently
to ensure sustainable growth in its corporate value.

Annual Report 2015 Contents
1 Message from the President ............................ 002
2 Financial and Operating Highlights ............... 008
3 Market Trend and Management Policy
Business Model and Strengths......................... 010
The Structure and Mechanism of Oil andNatural Gas Exploration and Development... 012
Business Environment in
Oil and Gas Development ............................ 014
The Medium- to Long-Term Vision of
INPEX and Investment Plans ........................ 016
4 Project Overview
Segment Overview............................................. 018
Project Overview by Region
Asia & Oceania ............................................... 020
Eurasia.............................................................. 028
Middle East & Africa ...................................... 030
Americas .......................................................... 032
Japan................................................................ 036
5 Sustainability & Governance
Sustainability ....................................................... 038
Corporate Governance ..................................... 042

Our Mission
The mission of the INPEX is to provide
a stable and efﬁcient supply of energy tocustomers by exploring and developing oil andnatural gas resources both domestically andthroughout the world. Through its business,
we aim to become an integrated energy
company, which contributes to our community
and makes it more livable and prosperous.

6 Financial & Corporate Information
9-Year Financial Information ............................. 050
Message from the Senior Vice President,
Finance & Accounting ................................... 052
Background Information: Oil and Gas
Accounting Policies and Treatment ............ 053
Management’s Discussion andAnalysis of Financial Condition and
Results of Operations .................................... 056
Consolidated Financial Statements/Notes toConsolidated Financial Statements ............ 062
Independent Auditor’s Report ......................... 081
Subsidiaries and Afﬁliates ................................. 082
Business Risks...................................................... 084
Oil and Gas Reserves
and Production Volume................................ 092
Corporate Information ....................................... 095
DISCLAIMER

Information contained in this Annual Report is not an offer or asolicitation of an offer to buy or sell securities. You are requested
to make investment decisions using your own judgment. Although
the Company has made sufficient effort to ensure the accuracy of
information provided herein, the Company assumes no responsibility
for any damages or liabilities including, but not limited to, those due toincorrect information or any other reason.

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 theCompany in light of the information currently available to it, andinvolves 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 bematerially 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 andother 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 basically rounded to
the nearest unit (e.g., millions, billions) for convenience. The “ Project
Overview by Region” section (starting on p. 20) basically describes theoperating situation as of June 30, 2015. Figures in parentheses denotenegative amounts. Natural gas production volume for projects in
production is not the volume at wellheads, but corresponds to sales tobuyers.
INPEX CORPORATION is listed on the First Section of the Tokyo
Stock Exchange under the securities code 1605. The Company is also
included in the Nikkei Stock Average (Nikkei 225) and the JPX-Nikkei
Index 400 (JPX400).

Messagefrom theMessage
Looking Back at the Past YearFor the ﬁscal year ended March 31, 2015, net
sales and net income decreased 12.2% and57.6% year on year to ¥1,171.2 billion and ¥77.8
billion, respectively. Given the harsh market
environment exacerbated by factors such as thedrop in crude oil prices averaging approximately
20% in the ﬁscal year, impairment losses wereincurred on certain projects and INPEX reported
a downturn in revenue and earnings. Judging by
the trends in oil prices, the Company recognizes
that the future remains uncertain. INPEX is therefore currently adopting measures designed tominimize the impact to our earnings to the extent
possible.
In the ﬁscal year ended March 2015, net
production volume, which is a key pillar supporting the Company’s earnings, was essentiallyunchanged year on year at 408 thousand BOED.
Proved reserves, which represent a source of
future earnings, stood at approximately 2.43 billion BOE at the end of March 2015.
Turning brieﬂy to the status of the Company’s
major projects, development work at the Ichthys
LNG Project in Australia is now at its peak, andthe project has surpassed the 70% progress rate.
Preparations for development work to expand
the scale of production have commenced at theAbadi LNG Project in Indonesia following the
conﬁrmation of a greater volume of natural gas
reserves. In April 2015, INPEX announced that it
acquired a 5% participating interest in the ADCO
Onshore Concession in Abu Dhabi, U.A.E. This
concession makes up one of the world’s largest
deposits of oil and currently produces approximately 1.6 million bbl/d. As a result, we anticipate
this project will contribute signiﬁcantly to maintaining and expanding the Company’s proved
reserves and net production volume.

Toshiaki Kitamura
President & CEO

002

INPEX CORPORATION Annual Report 2015

1
Messagefrom the President

President
Update on the Ichthys LNG Project
The Ichthys LNG Project in Australia, which is theﬁrst large-scale LNG project to be operated bya Japanese company, is paramount to the Company’s future growth. Following the ﬁnal investment decision (FID) made in January 2012, development work has proceeded and the project
reached its halfway mark in mid-2014. Currently,
the progress rate is more than 70% and is steadily
taking shape toward ﬁrst production. In terms of
the status of offshore facilities, construction of thecentral processing facility (CPF) and the ﬂoatingproduction storage and ofﬂoading (FPSO) facility
has progressed. As for onshore facilities, the ﬁrst ofover 200 prefabricated modules (large-scale components that make up facilities) currently underconstruction at yards in China, the Philippines andThailand was delivered last year, and steady progress is being made with respect to transportation,delivery and installation work. Concrete steps arealso being taken at the onshore LNG plant to construct storage tanks for LNG, LPG and condensate,
as well as power generation and module ofﬂoad-

Steady progress in construction of the onshore LNG plant

INPEX CORPORATION Annual Report 2015003

ing facilities. As for the 889-km pipeline that willlink the Ichthys gas-condensate ﬁeld locatedoffshore Western Australia to the onshore LNG
plant in Darwin, Northern Territory, the shallow
water pipelay in Darwin Harbour was completed
in November 2014 and the deepwater pipelay
has been ongoing since February 2015. Development well drilling work also began in February
2015 for the eventual recovery of products fromthe gas-condensate ﬁeld. Having personally conducted site inspections on several occasions in
the past year and witnessing the progress on theconstruction of the offshore facilities, pipelineand onshore LNG plant, I was ﬁlled with great
excitement and anticipation. I will collaborate
with all involved parties to ensure further progress on development work in the year ending
March 31, 2016, putting safety as our ﬁrst andforemost priority.
In tandem with development work on the
Ichthys LNG Project, INPEX is conducting exploration work in a bid to locate and secure new gas

reserves across several exploration blocks in thearea surrounding the Ichthys gas-condensate
ﬁeld. During the ﬁscal year ended March 2015,
the Company acquired two additional exploration blocks (WA-513-P and WA-514-P) bringing
the total number of owned exploration blocks inthe surrounding area to 13. We intend to further
strengthen our initiatives in these exploration
blocks with the expectation of tapping the synergies created with the Ichthys LNG Project.

Conceptual image of the completed onshore LNG plant

Advancing Preparation Work for
the Development at the Abadi LNG Project
The Abadi LNG Project is another large-scale
LNG project in which INPEX as Operator isundertaking preparation work for the development of a giant gas ﬁeld offshore Indonesia.
The company aiming to deploy a ﬂoating LNG(FLNG) facility that processes, liqueﬁes, storesand ofﬂoads natural gas with an annual LNG processing capacity of 2.5 million tons as the ﬁrst
stage of development, based on a plan of development for the Abadi Gas Field approved by theGovernment of Indonesia, as a result of evaluations of three appraisal wells drilled between
2013 and 2014, a substantially greater volumeof natural gas reserves was conﬁrmed. Taking
this ﬁnding into consideration, INPEX is studying
ways to optimize development plans centeredon a large-scale FLNG, and is currently in discussions with the Indonesian government alongside
partner Shell.

004

INPEX CORPORATION Annual Report 2015

Drillship deployed in the Abadi LNG Project1
Messagefrom the President

Acquisition of
Onshore Concession in Abu Dhabi
In 2014, we announced the extension of the concession agreement for the Upper Zakum Oil
Field offshore Abu Dhabi in the U.A.E. In 2015,
INPEX has again been successful in achieving
notable results in the region, with the acquisitionof a participating interest in the ADCO Onshore
Concession. The ADCO Onshore Concession is
one of the world’s largest oil ﬁelds and is madeup of 11 ﬁelds currently in production and fourthat remain undeveloped. The Company has
acquired a 5% participating interest based on a
40-year agreement effective January 2015. While
production currently stands at 1.6 million BOD,
INPEX plans to proceed with development work
aimed at increasing oil production to 1.8 million
BOD by 2017.
The company’s acquisition of a participatinginterest in one of the world’s largest oil ﬁelds islikely the result of the value placed by local government authorities and stakeholders on INPEX’s
track record in oil development and production
operations as well as technological contributionsin Abu Dhabi that span over 40 years. In addition
to its oil development business, INPEX is also
involved in social contribution activities in Abu
Dhabi in areas such as human resources development.
It is most rewarding to witness how thesesteadfast initiatives have driven the growth of theCompany, signiﬁcantly contributing to the longterm, stable supply of energy to Japan.

Oil terminal

Strengthening
the Natural Gas Business in JapanThe Naoetsu LNG Terminal completed in Niigata
Prefecture in December 2013 had received a
total of six LNG vessels as of July 2015 and isoperating smoothly. In 2014, INPEX also began
upgrading facilities at its Koshijihara Plant also in
Niigata Prefecture. The Koshijihara Plant reﬁnes
and processes natural gas produced from the
Minami-Nagaoka Gas Field, which the Company is developing as Operator. The upgrades
are expected to enhance the rate of natural gas
and condensate recovery at the ﬁeld, increase
the volume of recoverable reserves by approximately 20% and extend the production life spanof the Minami-Nagaoka Gas Field by nearly 20
years beyond current estimates. This initiative at
one of Japan’s largest natural gas ﬁelds will help
promote the efﬁcient and effective use of Japan’s
energy resources, and allow the Company todeliver a stable supply of energy while securing a
steady source of earnings.

Drilling work at the Minami-Nagaoka Gas Field(Nagaoka City, Niigata Prefecture)

INPEX CORPORATION Annual Report 2015005

Addressing the Fall in Crude Oil Prices
Crude oil prices, which hovered above the
US$100 per barrel mark in mid-2014, plunged
dramatically toward the beginning of the new year
falling temporarily below US$50. Oil prices are
expected to converge to a new equilibrium point
over the medium to long term, INPEX recognizes
the critical need to factor in a prolonged periodof low oil prices when implementing countermeasures to manage risk. In response to the drop in
oil prices, the Company is evaluating the importance level of individual projects while adopting
a comprehensive approach toward determining
investment priorities. Speciﬁcally, we will resolve
to proceed with investments and projects thathave been identiﬁed as essential in accordancewith original plans. For all other projects, we will
make every effort to reduce investments and curtail costs to minimize the impact of oil prices on
our performance. To elaborate, INPEX pursues
the following three policy measures.
We will continue to push forward with the
Ichthys LNG Project and other importantdevelopment projects that serve as key
growth drivers.
During the year ended March 31, 2015, we
took steps to curtail development and exploration costs considering the drop of oil price.
In particular, regarding exploration projects,
we conducted investment reduction byreviewing the schedules and cost structures.
3 We will continue to focus on enhancing theoperational efﬁciency of projects throughout the year ending March 31, 2016, while
cutting back on related expenditures.
As part of our efforts to curtail the costs identiﬁed in the second policy measure above, we
reduced our initial development investment planby about 15% from approximately US$9.9 billion
to around US$8.5 billion. In terms of exploration
investment plans, INPEX adjusted drilling schedules taking into account the upswing in drilling
costs associated with the rise in crude oil prices,while postponing operations at certain exploration wells and other initiatives including thetransfer of certain participating interests. Throughthese initiatives, we streamlined our initial investment plan from about US$1.1 billion to around
US$0.7 billion in the year ended March 31, 2015,006

INPEX CORPORATION Annual Report 2015

a reduction of approximately 37%. In the year
ending March 31, 2016, INPEX will continue its
cost cutting initiatives. Plans are in place to reduce
the total amount of investment by approximately
US$0.4 billion compared with the ﬁscal year
ended March 2015, from around US$9.4 billion toroughly US$9.0 billion.
In assessing the outlook for oil prices over the
medium to long term, it is imperative that we shift
away from the US$100 per barrel mind-set thatpersisted over the past several years. From theperspective of the Company’s business development activities, it is equally important that we put
in place a robust ﬁnancial scheme capable of carrying out the necessary business activities evenin an environment of persistently low oil prices.
It goes without saying that energy is an essential resource for both the economy and society
at large irrespective of short-term ﬂuctuations indemand. At the same time, there is no denying
the importance of the long-term and stable development of energy and its efﬁcient consumption
not only to Japan but also to the rest of the world.
I am therefore convinced more than ever that themission of the Company is to actively pursue thedevelopment of energy to fulﬁll its responsibility to society while securing sustainable growth.
Despite a persistently difﬁcult operating environment, INPEX is uniﬁed in its commitment toundertake whatever measures are necessary to
carry out its mission and tasks.
Shifts in investment-reduction measures
Development expenditures
Other capital expenditures*

Exploration expenditures* Mainly investment in the Naoetsu LNG Terminal andthe domestic pipeline network, etc.

(US$ million)

11,250
9,381

9,030

9,900
8,464

1,050

300

2015/3（Announced on
May 2014)

662
2015/3(Actual)

8,240

255

470
2016/3（Forecast)320

1
Messagefrom the President

OutlookFinancial forecasts for the year ending March
31, 2016 announced in August 2015 are basedon the assumption that crude oil prices (full year
average) will fall more than US$20 compared tothe ﬁscal year ended March 2015. Taking thisand other assumptions into account, net income
attributable to INPEX is projected to decrease by
10% year-on-year, to ¥70.0 billion. Consolidated
net sales, on the other hand, are expected toslightly increase year-on-year, to ¥1,181.0 billion
spurred by revenue generated from the ADCO
Concession and other factors.
Net production volume in the current period
is forecast to rise around 25% compared withthe ﬁscal year ended March 2015 to 512 thousand BOED, due mainly to the addition of production from the ADCO Concession. This willbe the ﬁrst time for the Company to exceed 500
thousand BOED since its public listing. While
the startup of the Ichthys LNG Project and otherfactors are expected to lift the net production
volume of existing projects to around the 700
thousand BOED level, this forecast increase toover 500 thousand BOED prior to the startupof the Ichthys LNG Project is highly signiﬁcant.
Moreover, the volume of proved reserves andthe reserve replacement ratio (RRR), which is theamount of proved reserves added to a company’s reserve base during a given period relative
to the amount of oil and gas produced, are projected to increase substantially as of the end of
March 2016 owing mainly to production from theADCO Concession.
In terms of the Company’s shareholder
return policy, INPEX is implementing a balanced
approach between investments and the payment
of dividends. In the lead-up to production at theIchthys LNG Project, cash ﬂows derived from producing projects are being channeled into reinvestments. In this context, the focus of our activities is directed toward investment. As a result, weplan to pay an annual dividend of ¥18.0 per sharefor the year ending March 31, 2016, unchanged
from the ﬁscal year ended March 2015. However,after production begins at the Ichthys LNG Project,
we would like to provide returns to shareholders
considering the levels of top-class international
oil and gas E&P companies.
Looking back once again on the year ended
March 31, 2015, I personally visited the sites ofa number of projects with a view to promoting
each project while exchanging opinions withthe government authorities of each country andproject partners. At the same time, I placed considerable emphasis on building and maintaining
strong ties of mutual trust with all stakeholders
including institutional investors through directcommunication. As was earlier stated, crude oil
prices plummeted dramatically from the second
half of the ﬁscal year ended March 2015, and as aresult, we took steps to reduce costs. In the ﬁscal
year ending March 31, 2016, the INPEX Groupwill continue to work in unison to push forward
its various business activities and make every
effort to address and overcome a harsh operating environment while clearly deﬁning criticalinvestments and projects the Group needs topursue, as well as investment and cost-reduction
priorities.
In addition to securing the stable and efﬁcient supply of energy on an ongoing basis, theCompany will work diligently to enhance its competitiveness as an international oil and gas E&P
company and ensure sustainable growth in bothshareholder and corporate value. As we work toachieve these goals, we would greatly appreciate your continued understanding and support.
August 2015
President & CEO
Toshiaki Kitamura

INPEX CORPORATION Annual Report 2015

007

Financial and Operating Highlights (Five-Year Comparative Graphs)
As of or years ended March 31
Please refer to p. 51 for notes of major indices.

Proﬁtability Indices } See p. 8 of Fact Book 2015 for more about profitability indices.
Net Income, EBIDAXNet Sales (by product)
Crude oil

Natural gas

1,186.7

1,216.5

28.9

27.1

356.2

326.4

1,171.2

455.4

2010

194.0

2012

2013

2015

2014

2011

11.2

10.8

1,387.5

9.3

7.9

7.0

-349.2

2.7
2.7
2010

2011

2012

2013

-688.8
-30.6

2015

2014

74.5

68.9

8.6

2010

2,481.3

2,791.1

71.1

68.6

2,179.3

1,996.9

7.6

2015

2014

Net assets excluding minority interests
Net debt (¥ billion)
Equity ratio
Net debt/Net total capital employed (%)

16.0

8.1

2013

Net Assets Excluding Minority Interests, Equity Ratio,
Net Debt, Net Debt/Net Total Capital Employed

Net ROACE (%)

10.5

2012

See p. 11 of Fact Book 2015 forStability Indices } more
about stability indices.

Return on Equity (ROE), Net ROACE
ROE

183.7

183.0

77.8

2010

See p. 9 of Fact Book 2015 for
Efﬁciency Indices } more
about efficiency indices.

303.1

128.7

107.2

2011

350.9

274.9

730.4

558.0

486.9

402.2

362.6
242.5

421.9

858.8

788.1

726.2

20.4

EBIDAX (¥ billion)

18.9

397.8

429.1

Net income

1,334.6

30.6

31.4

943.1

840.4

(Earnings before interest, depreciation and amortization, and exploration)

Other (¥ billion)-874.1
-48.9

2011

2012

-815.3-60.7

3,066.7-472.2-725.3
-43.9

2013

68.2

69.1

-16.8

-31.9

2015

2014

Performance Indices } See p. 12 of Fact Book 2015 for more about performance indices.
Price Earnings Ratio (PER), Price Book-Value Ratio (PBR)

Cash Dividends per Share, Payout Ratio
Cash dividends per share

Cash dividends per share (Yen)

Payout ratio (%)

17.50(2nd quarter end)

14.7

12.1

6.25

2010

18.00

17.50

18.00

7.50

10.00

7.50

7.50

2011

2012

14.3

14.0

13.2

9.00

9.00

8.75

9.00

9.00

2014

2015

Note: Cash dividends per share are retroactively adjusted for a stock split at a ratio of 1:400 of common
stock on October 1, 2013.

008

INPEX CORPORATION Annual Report 2015

PBR (Times)

24.9

15.1

8.75

2013

PER

33.8

15.00

13.75

7.50

(Fiscal year-end)

15.5
10.5

10.0

10.6

1.2

1.2

0.9

0.7

0.7

0.6

2010

2011

2012

2013

2014

2015

Reserve/Production Indices } See p. 13 of Fact Book 2015 for more about reserve/production indices.
Net Proved Reserves (by product),
Reserve Replacement Ratio (3-year average)
Crude oil
Natural gas (Million boe)
Reserve replacement ratio (3-year average) (%)

2,432

2,532

409

980

981

899

35
2010

1,259

29.8
1,254

1,221

1,278

1,213

929

100

2012

2013

2014

2015

Average expenses per boe produced
Exploration and development cost per boe (3-year average)

2011

2012

1,945

1,907

15.6

2,188

14.7 2,532

2013

27.2

2014

1,610

17.1

2,434

16.4

2

2015

Net Production (by product, barrels of oil equivalents)
Crude oil

405

78.6

1,308

8.5

2,432

4,044
30.2

27.5

27.4

26.7

2,818

1,475 10.0

2010

Average Expenses per BOE Produced,
Exploration and Development Cost per BOE (3-year average)(US$/boe)

2,929

4,477

4,095

1,823

25
2011

4,256

4,126

Financial andOperating Highlights

1,451

4,404

2,434

255

1,308

495

Proved reserves
Probable reserves (Million boe)
Reserves (proved + probable) -toProved reserves-to-production ratio (Years)
production ratio

370

2,188
282

1,475

Net Proved and Probable Reserves, Reserves-to-Production Ratio

Natural gas (Thousand boed)

423

426

184

175

162

164

165

239

251

246

245

243

2011

2012

2013

2014

2015

408

409

408

58.2
55.4

187
218

11.2

11.4

2010

2011

16.4
6.3
2012

17.9

18.3

11.2

11.7

2013

2014

17.8

2015

2010

The Environment
Volume of Water Sources Used, Total GHG Emissions

Exploration Success Ratio (3-year average),
Number of Exploratory and Appraisal Wells

Volume of water sources used (Thousand m3)
Total GHG emissions (Thousand t-CO2)

Exploration success ratio (3-year average) （％）
Number of exploratory and appraisal wells （Number）

19651
15 59.5

64.5
13

50.6
46.8

15
52.9

45.0

513
439

392

7
1,115

2

2010

2011

2012

2013

2014

2015

2010

1,283

2011

1,436

1,749

381

2012

2013

605
2,006

1,557

2014

2015

INPEX CORPORATION Annual Report 2015009

Business Model and Strengths
In its oil and gas development business, INPEX
employs a business model that focuses on stableproduction and supply, as well as the reinvestmentof cash ﬂows obtained from production activities
toward the acquisition of new reserves and the discovery and development of oil and gas which contribute to further production revenues. This cycle is
the wellspring for sustainable growth as a company.
INPEX’s Strength 1

Dynamic Growth
Scenario

Ichthys/Abadi

INPEX is in the process of developing twoof the world's large-scale LNG projects at
Ichthys in Australia and Abadi in Indonesia. We are the ﬁrst Japanese company todevelop such large-scale projects as an
operator. The Company’s net production
volume is currently at the level of 400-500
thousand boed, and there are prospectsof an increase to 600-700 thousand boedfollowing the start of production at Ichthysand other projects. We are focusing on Ichthys development work, which will increase
the corporate value of our company.

INPEX’s Strength 2

A Balanced Portfolio andStrong Reserve
Volume/Resources

4.04 billion boe(Proved and probable reserves)

INPEX has secured a balanced portfolio
while establishing appropriate risk management by combining different projects
to ensure an optimal balance across such
key parameters as the oil and natural gas
ratio, regional distribution as well as exploration, development and production activities. Turning to the Company's reserve
volume, the source of its corporate value,
INPEX holds a proved and probablereserve volume of 4.04 billion boe as wellas an abundance of possible reserves andcontingent resources that are not included
in probable reserves. Looking ahead, we
expect to expand proved and probablereserves over the medium to long term.

010

INPEX CORPORATION Annual Report 2015

Growth of
Production
VolumeIncreasing
Reserves

Busi
Mo

INPEX’s Strength 3

Natural Gas
Supply Chain

Domestic natural gas
pipeline network

1,400 km

Proactive
Exploration andDevelopment
Investment

3
Market Trend andManagement Policy

ness
del

Accounting of
Revenue
Attributable to
Sales

INPEX owns a natural gas pipeline network in Japan of around 1,400 km. The
Naoetsu LNG Terminal commenced
operations in December 2013, bringing
one step closer the realization of a natural gas supply chain that links natural gas
assets in Japan and overseas and thedomestic market. By receiving LNG fromthe large-scale Ichthys project and othersources, the Company will build a global
gas supply chain and plan further valueadded improvements.

INPEX’s Strength 4Strong Financial Base
Equity ratio:

68.2%

Net debt/Net total
capital employed:-16.8%

A healthy balance sheet and cash reserves
are essential for oil and gas E&P companies. This reﬂects both the high degreeof risk associated with E&P activities
and the need to have sufﬁcient funds on
hand to take advantage of major investment opportunities. INPEX has secured astrong ﬁnancial position. As of March 31,
2015, our company had an equity ratio of
68.2% and a ratio of net debt to net total
capital employed of –16.8%. (Cash andcash equivalents and public bonds weregreater than interest-bearing debts.)
Compared to the oil majors and otherglobal peers, this represents a soundlevel of ﬁnancial strength.

INPEX CORPORATION Annual Report 2015

011

The Structure and Mechanism of
Oil and Natural Gas Exploration and Development
The business activities of the oil and gas industry can be envisioned as the ﬂow of a river. The upstream consists of development and production of oil and natural gas. The midstream
is where products are transported. The downstream refers to
reﬁning and sales. Our mainstay business is to handle operations in the upstream including the exploration, drilling,
production, lifting and sales of crude oil and natural gas. As
shown in the business ﬂow at right, upstream business activities can be further classiﬁed into the acquisition of blocks,
exploration, appraisal, development, production and sales.

There are many methods forselling crude oil linked tospot prices (market prices
established one time pertransaction), the spot prices
themselves being mainly
decided based on crude oil,which has become the transaction benchmark. Representative crude oil spot prices arethose quoted for Middle East
Dubai crude, North Sea Brent
crude and West Texas Intermediate (WTI) from the UnitedStates, to name but a few.
In contrast, because projects characteristically requirelarge-scale investment, inmany cases sales of liquefied
natural gas (LNG) result fromlong-term sale and purchase
contracts concluded fromboth producers and buyers.

Acquisitionof
Blocks

Sales

Production

The extracted oil andnatural gas are refined andprocessed. After separating
oil and removing impurities(e.g., carbon gas, hydrogen),
we ship natural gas that canbe used as a product.

Where do crude oil and natural gas come from?

LNG tanker

012

INPEX CORPORATION Annual Report 2015

Crude oil and natural gas are thought to originate from organic
matter, such as the remains of once-living organisms that accumulated at the bottom of seas and lakes, that was then subjected to
extreme heat and pressure underground. Crude oil and natural
gas that have formed deep underground are lighter than thewater in the earth, allowing them to gradually rise to the surface
over a long period of time. If the crude oil and natural gas encounter highly dense geological formations on the way to the surface,
however, deposits form that become oil and gas ﬁelds.

75 projects

We collect extensive information on legal
system and country risks related to areasin which oil and natural gas are expected
to exist. We then apply and bid for mining
rights and/or exploration and development rights and enter into a contract for
exploration and development.

In addition to geological surveys, we utilize geophysicalsurveys conducted throughsatellite images and seismic
waves in order to assess thepotential subsurface accumulations of oil and naturalgas. Furthermore, we drill
exploratory wells in order to
conﬁrm the presence of oil
and gas. The bit, a special drill
attached to the tip of the pipe,
drills through hard rock while
digging into the ground.

Signing ceremony of a contract

Exploration

3
Market Trend andManagement Policy

in 25 countries

Geophysical surveys

AppraisalOnce the presence of oil
and natural gas has been
conﬁrmed, we drill appraisal
wells to assess the extent of
the oil and gas ﬁelds andto evaluate the amount ofreserves. In addition, we
make comprehensive judgments regarding the commercial viability of the ﬁelds.

Development

Drilling of appraisal wells

After a ﬁnal investment decision (FID) has been made, steps aretaken to construct the necessary facilities to engage in crude
oil and natural gas production and shipment. This includes facilities that separate resources into their liquid and gaseous states
to remove impurities and pipelines to facilitate transportation. In
addition, the drilling of production wells is undertaken to extract
crude oil and natural gas.
Drilling of production wells

INPEX CORPORATION Annual Report 2015013

Business Environmentin Oil and Gas Development
The forecast is for further expansion of global primaryenergy demand, including oil and natural gas, to be centered on developing countries, such as China and India.
Of that demand, that for natural gas is expected to see asigniﬁcant increase. Due to the mature nature of exploration and development, as well as such factors as risingresource nationalism, however, the scope of potential oil
and natural gas development will continue to be biased
toward frontier regions where development is besetwith difﬁculties.

Natural gas

Europe/Eurasia

97.0
billion cf/dNatural gas
production
volume10 billion cf/d

Crude oil17.20 MMbbl/d
Crude oilproduction volume
1 MMbbl/dNatural gas

58.1
billioncf/d

Middle East
Crude oil28.56 MMbbl/dAfricaCrude oil8.26
MMbbl/dAsia/PacificNatural gas

Crude oil

51.4
billion cf/d

8.32
MMbbl/dNatural gas

19.6 billion
cf/dRepresentation of main oil and natural gas production areas

Global Proved Reserves and Reserves-to-Production Ratio
Global proved reserves of crude
oil and natural gas total approximately 1.7 trillion barrels and 6.6
quadrillion cubic feet, respectively. By region, the Middle Eastholds the largest reserve volumesof both crude oil and natural gas
in existence. There are also extensive proved reserves of crude oilin South and Central America andNorth America and of natural gas
in Europe and Eurasia.

Proved Reserves by Region and Reserves-to-Production Ratio (PR ratio) (As of December 31, 2014)
Africa 7.6%

Asia/Pacific 2.5%

6.5%

Europe/Eurasia

Africa9.1%

NorthAmerica

13.7%

7.6%

Crude oil

1,700.1
billion bbl

South andCentral America

19.4%

South andCentralAmerica

North America

PR ratio

52.5 years

Middle
East

47.7%

Asia/
Pacific

8.2%

4.1%
Natural gas

6,606.4
trillion cf

Europe/Eurasia

31.0%

MiddleEast

42.7%

PR ratio

54.1 years
Source: BP Statistical Review of World Energy 2015014

INPEX CORPORATION Annual Report 2015

Oil and Natural Gas Demand in JapanLNG Import Trend in Japan(Million tons/year)100

2014: 88.51 million tons

Crude oil

80

18.72
MMbbl/d60

Natural gas

91.8 billion
cf/d

40
20
0

1995

2000

2005

North America

2010

Demand for LNG is increasing in Japan. This reﬂects the upswing in
LNG use for thermal power generation in the wake of the shutdownsof nuclear power plants.
Trade Statistics of Ministry of FinanceJapan’s Primary Energy Supply (2013)
Hydroelectricity3.3%
Nuclear power 0.4%

Renewables, etc. 2.1%

3

Coal 24.7%

Market Trend andManagement Policy

Oil

Natural gas

22.9%

46.6%

Oil that is broadly used as a source of heat and power, as well as in
the production of materials, even now accounts for more than 40% ofJapan’s primary energy demand.

South andCentral America

Source: Energy & Economic Statistics in Japan 2015

Production Volume by Region
There are many countries and regions that produce oil and natural gas,
but countries that have large-scale production, have opened their mining
areas to foreign oil companies or are capable of exporting LNG are limited
to just a few. Due to the rise in resource nationalism, the securing of new oiland natural gas interests by energy development companies has in recent
years continued to be biased toward frontier regions where development
is beset with difﬁculties. Among these regions, however, are promisingareas where large-scale reserve volumes are to be expected.

Natural gas

Crude oil7.61
MMbbl/d16.9 billion
cf/dProduction volume source: BP Statistical Review of World Energy 2015

Global Energy Demand
Oil and natural gas account for
more than half of the amount of
global primary energy consumption. The main focus is on otherforms of energy, such as solar,hydro, biomass and geothermal,
as these are renewable within ashort time of ﬁrst use and emit
less CO2 during power generation when compared to ﬁnite fossil fuels.

World Primary Energy Consumption (2014)
Hydroelectricity 6.8%
Nuclear
power

Coal

2.5%

Oil

32.6%
Total

Natural gas
Biomass

Nuclear power
Other renewable energy(Million toe)
5,000
4,000
3,000

12.93

Natural gas to grow

1.6% annually

2,000

billion toe

30.0%

Oil

Hydroelectricity

Renewables

4.4%

Coal

World Primary Energy Demand by Fuel

Naturalgas

23.7%
Source: BP Statistical Review of World Energy 2015

1,000
0

2012

2020

2040

Source: IEA World Energy Outlook 2014 in the New Policies Scenario

INPEX CORPORATION Annual Report 2015

015

The Medium- to Long-Term Vision of
INPEX and Investment Plans
In May 2012, the Company formulated the INPEX Medium- to Long-Term Vision thatclariﬁed such aspects as key initiatives up to the ﬁscal year ending March 2017 towardmedium- to long-term growth targets and the achievement of those targets. The
Medium- to Long-Term Vision deﬁned three growth targets and three management
policies and clearly speciﬁed the key initiatives over the following ﬁve-year period.

ThreeGrowth Targets
We have set three growth targets necessary for sustainablegrowth and will conduct key
initiatives over the next ﬁve
years to achieve them.

1
2
3

Continuous
Enhancement of
E&P Activities

Strengthening
Gas Supply
Chain

Achieve net production volume of

1 million boedby the early 2020s

Achieve domestic gas supply volume of3

2.5 billion m /yearby the early 2020s(3.0 billion m³/year in the long term)

Promote efforts to commercialize
Reinforcement of renewable energies and reinforce
Renewable
Energy Initiatives R&D activities
for the next generation

We are positioning ourselves to become a top-classinternational oil and gas E&P company and are
improving and building our management base to
evolve into an integrated energy company.

1

Investment

INPEX CORPORATION Annual Report 2015

Dividend Payout Ratio
33.8%

30

20

14.7%

Recruit and utilize personnel in and outside ofJapan to develop global professionals.

016

From the period in which Ichthys starts
production, we will be aware of ourposition as a top-class international oil
and gas E&P company and will plan
appropriate returns for our shareholders.
(%)
40

Securing/Developing
Human Resources andBuilding an Efﬁcient
Organizational Structure

Establish an efﬁcient business execution
system to facilitate decision making.

2

Investment for Growth andReturn for Shareholders

ThreeManagement Policies

13.2%

14.0%

2012/3

2013/3

10
From the year ended March 31, 2013,
to March 31, 2017

14.3%

0

2011/3

2014/3

2015/3

Proved Reserves, Net Production Volume and the Market Valueof the Major International Oil and Gas E&P Players

800

To achieve 1 MMboed of net
production by the early 2020s
through medium- to long-term
investment

Anadarko (US)Apache (US)600

408 thousand boed

Net production volume (Thousand boed)

1,000

400

200

Talisman (CA)INPEX

Santos (AU)
Woodside (AU)

0

0.5

1.0

1.5

Proved reserves: 2.43 billion boe

BG (UK)

Occidental (US)Probable reserves to
upgrade to proved
through the shift ofdevelopment

Seeking to establish afirm position as an international
oil and gas E&P company
by the early 2020s
2.0

2.5

3.0

3.5

4.0

Probable reserves: 1.61 billion boe

Proved and probable reserves (Billion boe)

Proved reserves and production volume indicated in this chart are from documents disclosed by the major E&P companies inﬁscal 2014. The size of the circle shows the market value of each company as of March 31, 2015. Currently, INPEX is positioned
as a mid-tier E&P player. As our operations expand through new milestones including the start of production at the Ichthys LNG
Project in Australia, we will endeavor to secure a foothold among the world’s oil majors by the early 2020s. A comparison between
the proved reserves, net production volume and market value of the major international oil and gas E&P players is presented in
the above diagram.

Becomean Integrated
Energy Company
with natural
gas as the core

Market Trend andManagement Policy

Becomea Top-ClassInternational
Oil and Gas
E&P Company

3

MEDIUM- TO LONG-TERM VISION OF INPEX:

Ichthys and Our Growth Beyond

For details, please refer to the booklet entitled “MEDIUM- TO LONG-TERM VISIONOF INPEX: Ichthys and Our Growth Beyond,” or refer to the following Web site:
4www.inpex.co.jp/en/vision

Maintain Financial
Strength

Funding Source
Own funds
Approximately ¥1.2 trillionof cash available on hand
(As of March 31, 2015)

Cash flows
Future operating cash ﬂows
obtained each year

Bank loans

3

Responsible Management
as a Global Company
Promote continuous improvements
in corporate compliance and HSE initiatives.
Build trust-based working relationships
with stakeholders throughinteractive communications.

■ Lending from JBIC
■ Guarantee from JOGMEC■ Project ﬁnance

INPEX CORPORATION Annual Report 2015

017

Segment Overview

Asia &
Oceania

Eurasiau p. 28

u p. 20

4

16

Number of projects
In production

43

10

Under development

1,218

1,245

1,296

1,551

7

Number of countries

1

14
1

6

1

2

1

3

Preparation for development
Under exploration(oil and gas reservoirs conﬁrmed)

018

INPEX CORPORATION Annual Report 2015

68,319

197
27

191

190
26

25

188

2015

94,0502013

2014

96,341

2012

2013

85,541

2011

2012

84,325

2011

2014

2015

2010

2011

2014

2015

2012

2013

32,22842,601

41,75247,076

36,461

39,769Operating income (¥ million)

2010

25

2010

409,776
264,849

281,623

2015

2014

485,069

2013

485,275

483,187
299,599

235,814352,3832012

178,225

Net sales (¥ million)

191,070

Net sales/
Operating income

2011

406,828

2010

73,574

27

28

207

166

167

179

201

Net production (thousand boed)

195

Proved reserves (million boe)

214

Production/Reserves

210

367

Other

466

Under exploration

Middle East
& Africa

Americas

Japan

6

7

1

u p. 32

u p. 36

u p. 30

9

3

7

1

4

2013

2014

2015

2010

163

174
27

2013

2014

2015

129,522

2012

120,268

2011

25

130

138
29

28

117

126
25

2010

113,662

2015

30

74
21

65

2014

104,525

2013

20

68

36

17

18

2012

2011

2012

2013

2014

2015

2010

2011

2013

2014

16,693

22,771

118,937

2012

28,56824,60725,95932,555(15,303)

13,351

11,435(7,646)(6,089)

5,945

5,525
(5,518)(3,035)

12,673

16,692
2012

2011

333,213

1,028

2011

30

40

2010

93,9592015

524,528

621,513421,184

357,343

354,136

350,735

2014

243,113

303,819
205,5722013

520,8352012

500,033

2011

21

21

169

168

505

518
158

155

135

132

Natural gas
pipeline network(Approx. 1,400 km)
etc.

10

Project Overview

2010

2010

16

Naoetsu LNG
Terminal

583

636

857

1

Minami-Nagaoka
Gas Field

2

783

1

2015

INPEX CORPORATION Annual Report 2015019

Project Overview by Region

Asia & Oceania

In the Asia and Oceania region, INPEX holds participating interests in the Offshore
Mahakam Block in Indonesia, which is contributing signiﬁcantly to earnings, and thelarge-scale Ichthys and Abadi LNG projects, where development and preparatory
development activities are under way. The Company is also actively advancing morethan 20 exploration projects with growth potential across the region.

020

INPEX CORPORATION Annual Report 2015

1 Offshore Mahakam Block and Attaka Unit
INPEX entered into a production sharing contract (PSC) with the Indonesian
Government in October 1966, at thattime acquiring a 100% interest in the
Offshore Mahakam Block. The Attaka
Unit was established in April 1970
through the unitization of part of theadjacent blocks owned by INPEX andUnocal (now Chevron), with each company taking a 50% interest. Productionof crude oil and natural gas has continued since 1972. INPEX farmed out 50%
of its interest in the Offshore Mahakam
Block to CFP (now TOTAL) in July 1970.
Contract area
(block)Offshore Mahakam
Attaka Unit

This venture subsequently made a seriesof discoveries in the Bekapai (oil), Handil(oil), Tambora (oil and gas), Tunu (gas),
Peciko (gas), Sisi and Nubi (gas), as wellas the South Mahakam (gas), ﬁelds, eachof which has continued to produce crude
oil and natural gas. The crude oil and condensate produced from these ﬁelds areshipped mainly to oil reﬁneries and powercompanies in Japan by tanker from theSantan and Senipah terminals. Most of
the natural gas is supplied to the Bontang
LNG Plant, and then shipped as LNG tocustomers in Japan and elsewhere.

Project status(production on the basis of all fields and average rate of FY2014)
In production

Crude oil: 72 Mbbld
Natural gas: 1,257 MMcf/d
LPG: 11 Mbbld

Bontang LNG Plant

The Offshore Mahakam Block has
begun to see output decline after morethan 40 years of production. In 2012,
impediments at production wells led toa large drop in output, in addition to natural attrition. Thereafter, successful steps
were taken to control the decline in production. In addition to measures aimed
at counteracting sand problems, INPEX
accelerated the pace at which it undertook development well drilling. Production volumes have remained stable since
2013.

Venture company(established)

Interest owned(*Operator)

INPEX CORPORATION(February 21, 1966)

INPEX 50% TOTAL* 50%
INPEX 50% Chevron* 50%

Attaka Unit

Santan Terminal

Attaka Field

Badak Field
Nilam Field

Tunu Field

4

Tambora Field
Sisi Field

Handil Field
Senipah Terminal

Project Overview

Nubi Field
Bekapai Field

Balikpapan

Peciko Field

Offshore
MahakamBlock

INDONESIASouth Mahakam Field
Gas field

Oil field

Oil and gas field

1

2

1: Compression unit 2: Production facility

INPEX CORPORATION Annual Report 2015021

2 South Natuna Sea Block B

FPSO vessel

In July 1977, INPEX acquired a 17.5%
interest in the South Natuna Sea Block B in
Indonesia. Later, in January 1994, INPEX
increased its total interest in the block to
35% with the purchase of an additional
interest. Crude oil production began in
1979, and supplies of natural gas to Singapore via Indonesia’s ﬁrst international
pipeline commenced in 2001. Additionaldeliveries of natural gas from this pipeline
to Malaysia started in 2002. These supply
milestones contributed to the extensionof the PSC covering the block until 2028.
Production operations in the Belanak
oil and gas ﬁeld, which is part of SouthNatuna, utilize a world-class ﬂoating pro-duction, storage and ofﬂoading (FPSO)
system. Production of crude oil and condensate began in December 2004, with
LPG production commencing in April
2007. After 2006 at this same block, production began at the Hiu Gas, Kerisi Oiland Gas, North Belut Gas and Bawal Gas
ﬁelds. Most recently, production commenced at the South Belut Gas Field in
April 2014.

Natuna Sea
North Belut
BelidaBawal

SembilangSouth Natuna Sea
Block B

KerisiSouth Belut
Hiu
BelanakGas field

NatunaIslandOil field

Oil and gas field

Contract area
(block)Project status(production on the basis of all fields andaverage rate of FY2014)

Venture company(established)

Interest owned(*Operator)

South Natuna
Sea B

Crude oil: 27 Mbbld
In production Natural gas: 354 MMcf/d
LPG: 12 Mbbld

INPEX Natuna, Ltd.
(September 1, 1978)

INPEX Natuna 35%
ConocoPhillips* 40%
Chevron 25%

3 Sebuku Block Ruby Gas Field

Offshore production facility in the Ruby Gas Field

022

In September 2010, INPEX obtained a
15% interest in the Sebuku Block off theshore of South Makassar, Indonesia. Thereafter, work began to develop the Ruby
Gas Field in the block, and productionof natural gas followed in October 2013.
The natural gas produced here is transported from offshore production facilities
via undersea pipeline to onshore storage
facilities that receive products from the
Offshore Mahakam Block. The natural gas
is then mainly sent via inland pipeline to a
fertilizer plant in East Kalimantan.

Bontang LNG Plant
Santan Terminal

Fertilizer plant
Attaka Field
Tunu Field

Senipah Terminal
Balikpapan

Peciko Field

Kalimantan

South Mahakam Field
Makassar Strait

INDONESIA

Sebuku BlockGas field
Oil field

Sulaewesi

Ruby Gas Field

Contract area
(block)Project status(production on the basis of all fields and average rate of FY2014)

Venture company(established)

Interest owned(*Operator)

SebukuIn production (Natural gas: 73 MMcf/d)

INPEX South Makassar, Ltd.
(May 17, 2010)

INPEX South Makassar 15％
PEARL OIL (Sebuku) Ltd.* 70% TOTAL 15%

INPEX CORPORATION Annual Report 2015

4 Abadi LNG Project
INPEX acquired a 100% interest in the
Masela Block in November 1998 throughan open bid conducted by the Indonesian government and subsequently went
about exploratory activities as Operator,
discovering the Abadi Gas Field throughthe ﬁrst exploratory well drilled in 2000.
The company subsequently drilled two
appraisal wells in 2002 and four in 2007–2008, all of which conﬁrmed the presence of gas and condensate reservoirs.
In December 2010, Indonesian authorities approved the initial plan of development (POD-1) deploying a ﬂoating LNG(FLNG) plant with an annual processing
capacity of 2.5 million tons, and from
November 2012 to November 2014,
INPEX undertook SURF (subsea, umbilical, riser and ﬂowline) and FLNG FEED

work. Meanwhile, INPEX also has studied
the feasibility of full ﬁeld development,
drilling three appraisal wells between
2013 and 2014 with the aim of expanding the volume of recoverable reserves.
Evaluations of these wells resulted in the
conﬁrmation of a substantially greater
volume of natural gas reserves, which
was certiﬁed by Indonesian authorities.
Taking those into consideration, INPEX isstudying ways to optimize development
plans centered on a large-scale FLNG
and is currently in discussions with theIndonesian government.

Tanimbar Island
INDONESIA

Abadi Gas Field

Timor Sea

Arafura Sea

AUSTRALIA

DarwinGas field

Contract area (block)

Project status

Venture company (established)

Interest owned (*Operator)

MaselaPreparation fordevelopment

INPEX Masela, Ltd.
(December 2, 1998)

INPEX Masela* 65%
Shell 35％

4
Project Overview

1

2

3
1: Drillship for the Abadi LNG Project 2: Production test 3: Floating LNG (rendering)

INPEX CORPORATION Annual Report 2015023

5 The Ichthys LNG Project and Surrounding Blocks
Project Overview
In 1997, INPEX placed an open tenderbid to acquire the petroleum exploration
permit WA-285-P located approximately
200 km northwest of Western Australia’s
Kimberley coast. This bid was acceptedin August 1998. During the initial phaseof exploration, which began in March
2000, the Company drilled three exploratory wells that conﬁrmed the presenceof gas and condensate. As part of a second drilling campaign, INPEX conducted
three-dimensional seismic surveys while
drilling an additional two wells. These
activities helped to identify the existence of sufﬁcient recoverable reserves
to warrant commercial development.
Thereafter, progressive steps were taken
to transition toward development. In
addition to undertaking front-end engineering and design (FEED) operations,the Company channeled its energies
toward acquiring government approvaland engaging in LNG marketing andother related activities from 2009. A ﬁnal
investment decision (FID) was madein January 2012 triggering the start offully ﬂedged development work. In the

Status of Development Work
Development work was more than half
complete as of June 2014 and is currently approaching its peak. Looking at
the status of offshore facilities, work continues on the manufacture and installation of a subsea production system aswell as the construction of a central processing facility (CPF) and a ﬂoating production, storage and ofﬂoading (FPSO)
facility. Construction of modules foronshore facilities is under way at yards
in China, the Philippines and Thailand.
Onsite work to install the ﬁrst module
was undertaken in 2014 with approximately one-third of all module installation work completed as of June 2015. In
Darwin, progress is being made on theconstruction of LNG, LPG and condensate storage tanks as well as other essential equipment and facilities including
electric power generation systems and13

jetties to accommodate module shipment. Currently, pipe-laying work for the889-km-long gas export pipeline (GEP)
that will connect the Ichthys gas-condensate ﬁeld with onshore facilities in
Darwin is in progress. Following successful completion of the shallow watersection in November 2014, open ocean
work began from February 2015 in conjunction with the drilling of production
wells.

ensuing period, INPEX has continued toengage in engineering, equipment procurement and construction work activities with respect to both onshore andoffshore production facilities.

Surrounding Exploration Blocks
INPEX holds 13 exploration blocks in thevicinity of the Ichthys gas-condensate field
and is currently engaging in exploration
activities. Of this total, evaluation workon the gas already discovered at thethree WA-56-R, WA-281-P, and WA-274-P
blocks is under way. In the event that
substantial amounts of crude oil andnatural gas are confirmed as a result of
this exploration and evaluation activity,
synergies and other effects with the
Ichthys LNG Project are expected tofurther expand business.

2

4

1: FPSO under construction 2: ENSCO5006 drilling rig for a production well 3: Subsea wellhead assembly 4: CPF construction at ﬂoating dock

024

INPEX CORPORATION Annual Report 2015

Contractarea(block)WA-50-L
Timor Sea

WA-51-L

WA-513-P
WA-504-P

WA-341-P

WA-343-P

WA-410-P/
WA-57-R

WA-56-R

WA-56-R

WA-514-P

AC/P36

WA-285-P

WA-494-P

INPEX
Browse, Ltd.
(September 1,
1998)

Under
exploration

IchthysWA-50-L
WA-51-L

Under
exploration

WA-410-P/
WA-57-R(Oil/gas reservoirs
conﬁrmed)

WA-502-P
AUSTRALIA

WA-504-P

Ichthys gas-condensate field

WA-513-P
WA-514-P

Under
exploration

Interest owned(*Operator)
INPEX Ichthys Pty* 62.245%
TOTAL 30.000%
CPC 2.625%
Tokyo Gas 1.575%
Osaka Gas 1.200%
Kansai Electric Power 1.200%
Chubu Electric Power 0.735%
Toho Gas 0.420%
INPEX Browse E&P Pty* 60%
TOTAL 40%
INPEX Browse E&P Pty* 60%
TOTAL 40%
INPEX Browse E&P Pty* 60%
TOTAL 40%

(Oil/gas reservoirs
conﬁrmed)

Under
WA-274-P/ exploration
INPEX Browse(Oil/gas reservoirs
WA-58-R
E&P Pty Ltd
conﬁrmed)(October 21,
Under
2013)
exploration
WA-281-P

WA-494-P
WA-281-P

Under
exploration

Venturecompany(established)
INPEX Ichthys
Pty Ltd(April 5, 2011)

WA-343-P

WA-341-P

WA-502-P

Underdevelopment

WA-285-P

AC/P36

WA-274-P/
WA-58-R

Project status

INPEX Browse E&P Pty* 50%
Murphy 50%
INPEX Browse E&P Pty* 100%
INPEX Browse E&P Pty 20%
Santos* 30% Chevron 50%
INPEX Browse E&P Pty 20.0000%
Santos* 47.8306%
Chevron 24.8300%
Beach 7.3394%
INPEX Browse E&P Pty 20%
Santos* 30% Chevron 50%
INPEX Browse E&P Pty 40%
Santos* 60%
INPEX Browse E&P Pty 40%
Santos* 60%
INPEX Browse E&P Pty 40%
Santos* 60%
INPEX Browse E&P Pty 40%
Santos* 60%

4
Project Overview

5

6

7

8

9

5: Gas export pipeline laying work 6: Onshore gas liquefaction plant under construction 7: CPF module installation work 8: Module of onshore liquefaction plant delivery work 9: Onshore gas liquefaction plant

INPEX CORPORATION Annual Report 2015025

6 Prelude FLNG Project (WA-44-L Block)
In June 2012, we acquired from Shella 17.5% interest in the Prelude FLNG
Project, which is located in WA-44-L,
approximately 475 km north-northeastof Broome, off the coast of Western
Australia. A production, liquefaction
and shipment project using FLNG, thePrelude FLNG Project consists of thePrelude and Concerto gas ﬁelds and willapproximately produce 3.6 million tons
per year of LNG, 400 thousand tons per
year of LPG at peak and approximately
36 thousand barrels per day of condensate at peak.

Shell (the operator) made the FID
on the Prelude FLNG Project, which willbe the world’s ﬁrst FLNG project, in May
2011. Development of the Prelude FLNG
Project is currently under way, with thestart of production targeted at around10 years from when the Prelude Gas

Field was ﬁrst discovered in early 2007.
Through its participation as a project partner in the Prelude FLNG Project,
INPEX is gaining experience and knowledge about FLNG, which it expects toleverage in the Abadi LNG Project inIndonesia.

Contract area (block) Project status Venture company (established)
WA-44-L

Under
development

Interest owned (*Operator)

INPEX Oil & Gas Australia 17.5%
INPEX Oil & Gas Australia Pty Ltd
Shell* 67.5% KOGAS 10.0% CPC(February 28, 2012)
5.0%

Timor Sea

Concerto Gas Field
Prelude Gas Field

WA-44-L

Ichthys Gas-Condensate Field

AUSTRALIA

Gas field
FLNG vessel

7 Tangguh LNG Project (Berau Block)
MI Berau B.V., jointly established by INPEX
and Mitsubishi Corporation, acquired aninterest in the Berau Block in October
2001. In October 2007, MI Berau Japan
Ltd., a joint venture with Mitsubishi Corporation, acquired a stake in KG Berau

Petroleum Ltd., effectively increasing theCompany’s interest to around 7.79% in
the Tangguh LNG Project.
In March 2005, the Indonesian Government approved an extension of the
production sharing contract (PSC) andproject development plans for the Tangguh LNG Project through 2035. Development work commenced thereafter, andthe ﬁrst shipments of LNG began in July
2009.

Papua Province (Indonesia)

Kaimana

Berau BlockGas field
Shipping facility

Contract area
(block)Berau
Tangguh Unit

026

Project status
Venture company(production on the basis of all fields and average rate of FY2014) (established)
Crude oil: 6 Mbbld
In production
Natural gas: 1,027 MMcf/d

INPEX CORPORATION Annual Report 2015

MI Berau B.V.
(August 14, 2001)

Interest owned(*Operator)
Ml Berau 22.856% BP* 48.000％
Nippon Oil Exploration (Berau) 17.144% KG Berau 12.000%

MI Berau 16.30% BP* 37.16% CNOOC 13.90%
Nippon Oil Exploration (Berau) 12.23%
KG Berau, KG Wiriagar 10.00% LNG Japan 7.35% Repsol 3.06%

8 Van Gogh Oil Field, Ravensworth Oil Field and Others
INPEX acquired interests in offshore
Western Australia WA-155-P (Part I) in
July 1999, after which the Van Gogh andRavensworth oil ﬁelds were discovered.
The Australian Government granted production licenses for the above oil ﬁelds as
the WA-35-L and WA-43-L blocks, at which
oil production commenced in Februaryand August of 2010, respectively. The
development of the Coniston Oil Field,
which saddles WA-35-L and WA-55-L, wasstarted in December 2011, and crude oil
production commenced in May 2015.

Indian Ocean

WA-35-L & WA-55-L
Barrow Island
Unitization(Coniston Oil Field)
Van Gogh Oil Field

WA-35-L

WA-155-P（Part II）
WA-155-P（Part I）
Ravensworth Oil Field

WA-43-L

Onslow

AUSTRALIA
ExmouthOil ﬁeld
Van Gogh FPSO vessel

Contract area (block)

Project status(production on the basis of all
fields and average rate of FY2014)

WA-35-L (Van Gogh Oil Field)

In production (Resumed since April 2015)

INPEX Alpha 47.499% Quadrant* 52.501%

In production (Crude oil: 10 Mbbld)

INPEX Alpha 28.500% BHPBP* 39.999% Quadrant 31.501%

WA-43-L (Ravensworth Oil Field)

VentureInterest owned
company(established) (*Operator)

WA-155-P (PartⅠ)

INPEX
Alpha, Ltd.
Under exploration (Oil/gas reservoirs conﬁrmed) (February
Under exploration (Oil/gas reservoirs conﬁrmed) 17, 1989)

WA-155-P (PartⅡ)

Under exploration

WA-35-L & WA-55-L Unitization area (Coniston Oil Field) In production (Since May 2015)
WA-35-L (excluding Van Gogh Oil Field)

INPEX Alpha 47.499% Quadrant* 52.501%
INPEX Alpha 47.499% Quadrant* 52.501%
INPEX Alpha 28.5% Quadrant* 71.5%
INPEX Alpha 18.670% Quadrant* 40.665%
OMV 27.110% JX 7.000% Tap 6.555%

9 Bayu-Undan Project (JPDA03-12 Block) and Kitan Oil Field (JPDA06-105 Block)
The presence of oil was conﬁrmed
through exploration drilling of the Kitan-1
and Kitan-2 wells in March 2008 in the
JPDA06-105 contract area, which INPEX
acquired in January 1992. Thereafter, we

obtained approval for the ﬁnal development plan from the Timor Sea JPDA
authorities in April 2010. After development work, production at the Kitan Oil
Field commenced in October 2011.

Project status
Contract area
Venture company(production on the basis of all(block)(established)fields and average rate of FY2014)

Interest owned(*Operator)

JPDA03-12

INPEX Sahul 19.2458049%
ConocoPhillips* 61.3114766%
Santos 19.4427185%

Bayu-Undan
Unit

In production
Crude oil: 24 Mbbld
Natural gas: 519 MMcf/d
LPG: 14 Mbbld

INPEX Sahul, Ltd.
(March 30, 1993)

Project Overview

In April 1993, INPEX acquired an interestin JPDA03-12, a contract area located in
the Timor Sea JPDA, which is jointly managed by Australia and East Timor. Exploration within this contract area resulted
in the discovery of oil and gas ﬁelds. Of
these, studies revealed that the Undan
structure and the Bayu structure in theadjacent JPDA03-13 contract area were asingle structure. The interest holders unitized both contract areas in 1999, allowing
joint development of the Bayu-Undan
Gas-Condensate Field to proceed. The
commercial production and shipment ofcondensate and LPG started in 2004, and
LNG in February 2006.

4

INPEX Sahul 11.378120%
ConocoPhillips* 56.943372%
Eni 10.985973% Santos 11.494535%
Tokyo Timor Sea Resources(TEPCO/Tokyo Gas) 9.198000%

JPDA06-105
INPEX Timor Sea, Ltd. INPEX Timor Sea 35%
In production (Crude oil: 6 Mbbld)
Repsol 25%(Kitan Oil Field)(November 25, 1991) Eni* 40% Talisman
25%

EAST TIMORINDONESIA
Abadi Gas Field

JPDA06-105 (Kitan Oil Field)
Timor Sea
Joint Petroleum Development Area

Darwin Gas Pipeline
Bayu-Undan Gas-Condensate Field
DarwinAUSTRALIA

Gas field

Oil field

Kitan Oil Field (Production test)

INPEX CORPORATION Annual Report 2015027

Eurasia

The Company’s activities in this region revolve mainly around the ACG projects in Azerbaijan and the Kashagan project in Kazakhstan, large-scale oil projects. The Company
has been aggressively exploring for resources with the acquisition of exploration projects in Greenland and the Far East region of Russia.

1 Offshore North Caspian Sea Contract Area (Kashagan Oil Field and Others)
In September 1998, INPEX acquired aninterest in the Offshore North Caspian
Sea Contract Area in Kazakhstan’s territorial waters. The Offshore North Caspian
Sea Contract Area consists of two blocks:
the East Block is about 4,300 km2 and theWest Block is about 1,275 km2 in area (fora total of about 5,575 km2). The Kashagan Oil Field, which is in the East Block,is located in the Caspian Sea at depths of
3–5 m and is approximately 75 km southeast of Atyrau, Kazakhstan.
Since the ﬁrst exploratory well was
drilled in September 1999, the Kashagan
Oil Field was conﬁrmed in 2000 and commercial discoveries were announced in
2002. After development work, the Kashagan Oil Field began producing crude oilin September 2013, but production was028

suspended due to gas leaks from thepipeline.
Besides the Kashagan ﬁeld, hydrocarbon reserves were also conﬁrmed in fourother structures: Kalamkas, Aktote, Kairan

and Kashagan Southwest. Appraisal ofthese structures is continuing in parallelwith the development of the main Kashagan ﬁeld with a view to expanding thetotal production of the contract area.

Offshore facility

Contract area (block)

Project status

Venture company (established)

Interest owned

Offshore
North Caspian Sea

Production undersuspension

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

INPEX North Caspian Sea 7.56% Eni 16.81% ExxonMobil 16.81%
KMG 16.87% Shell 16.81% TOTAL 16.81% CNPC 8.33%

INPEX CORPORATION Annual Report 2015

2 ACG Oil Fields
INPEX acquired an interest in the
Azeri-Chirag-Gunashli (ACG) Oil Fields
in a region of the south Caspian Sea in
Azerbaijan in April 2003. At the ACG Oil

Offshore production facilities

Fields, oil is being produced at the Chirag, the Central Azeri, the West Azeri, theEast Azeri, the Deepwater Gunashli and
the West Chirag.

Contract
area(block)Project status(production on
Venture company
the basis of all fields(established)
and average rate of FY2014)

ACG

In production(Crude oil: 642 Mbbld)

INPEX Southwest
Caspian Sea, Ltd.
(January 29, 1999)

Interest owned(*Operator)
INPEX Southwest Caspian Sea 10.96%
BP* 35.78% Chevron 11.27% SOCAR 11.65%
Statoil 8.56% ExxonMobil 8.00% TPAO 6.75%
Itochu 4.30% ONGC 2.72%

KAZAKHSTAN
AtyrauRUSSIA

Offshore
North Caspian Sea
Contract Area

Black Sea

4

Caspian Sea

Project Overview

GEORGIA Tbilisi
Baku

ARMENIA
TURKEYAZERBAIJANBTC Pipeline

ACG Oil Fields

CeyhanMediterranean
Sea

IRAN

IRAQ

SYRIA

Oil ﬁeld

3 BTC Pipeline Project
The 1,770-km BTC pipeline stretchesfrom Baku in Azerbaijan on the coast of
the Caspian Sea to Ceyhan in Turkey.
Full-scale operation commenced in June

2006. Total transportation capacity stands
at 1.2 million barrels per day, mainly for
crude oil produced in the ACG Oil Fields
in Azerbaijan.

Contract area
(block)Venture company(established)

Interest owned(*Operator)

BTC Pipeline

INPEX BTC Pipeline 2.50% BP* 30.10%
INPEX BTC Pipeline, Ltd. Azerbaijan (BTC) Limited 25.00% Chevron 8.90% Statoil 8.71%(October 16, 2002)
TPAO 6.53% Eni 5.00% TOTAL 5.00% Itochu 3.40%
ConocoPhillips 2.50% ONGC 2.36%
Shipping terminal

INPEX CORPORATION Annual Report 2015029

Middle East & Africa

In the Middle East, the ADMA Block in Abu Dhabi in the United Arab Emirates and theADCO Block, in which INPEX took up a participating interest from April 2015, are contributing substantially to the Company’s oil production capacity. In Africa, oil production is ongoing at various locations including the Offshore Angola Block 14.

1ADMA Block

Zirku Island

Contract area (block)Umm Shaif, Lower Zakum, Umm Lulu Field, Nasr Field
Upper Zakum Field
Umm Al-Dalkh Field
Satah Field

030

INPEX CORPORATION Annual Report 2015

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 Oil
Corporation (at that time) through a shareexchange. JODCO owns an interest in the
ADMA Block located offshore Abu Dhabi
in the United Arab Emirates. Oil production currently spans seven ﬁelds in theblock.
In addition, a number of development
projects are under way to maintain andexpand oil output, such as redevelopmentof the Upper Zakum Oil Field involving the
Project status

Venture company (established)Japan Oil Development Co., Ltd.
In production (JODCO)(February 22, 1973)

use of artiﬁcial islands, as well as Phase 2
development and other work, with theaim of engaging in early production at the
Umm Lulu and Nasr oil ﬁelds.

Satah Field
Das
IslandNasr Field
Umm Shaif Field
Upper Zakum/
Lower Zakum
Field

Zirku Island

Umm Al-Dalkh Field
Umm Lulu Field
Abu Dhabi

U.A.E.

Oil field

Subsea pipeline

Interest owned
JODCO 12.00% ADNOC 60.00% BP 14.67% TOTAL 13.33%
JODCO 12.00% ADNOC 60.00% ExxonMobil 28.00%
JODCO 12.00% ADNOC 88.00%
JODCO 40.00% ADNOC 60.00%

2 ADCO Onshore Concession
Through its wholly owned subsidiary,
Japan Oil Development Co., Ltd.
(JODCO), INPEX acquired a 5% interestin the ADCO Onshore Concession in
Abu Dhabi in April 2015 following its
participation bid. The Company also
concluded a 40-year agreement with
the Supreme Petroleum Council of the
Emirate of Abu Dhabi and Abu Dhabi
National Oil Company (ADNOC) thatcame into effect on January 1, 2015. The

Abu Dhabi

United Arab Emirates

Crude oil pipelines
Oil field in production

Undeveloped oil fields

concession is made up to 15 principal
onshore oil fields in Abu Dhabi of which
11 are currently in production and four
remain undeveloped. Combined, thesefields make up one of the world’s largest
deposits of oil producing 1.6 million
barrels per day. Steps are being taken
to pursue development work with theaim of increasing oil production to 1.8
million barrels per day by 2017.

Contract area (block)

Project status

Venture company (established)

Interest owned

ADCO

In production

JODCO Onshore Limited (April 15, 2015)

JODCO 5%, etc.

Concession agreement signing ceremony held in April 2015

4

Onshore pipeline

Project Overview

3 Offshore Angola Block 14
Participating through a joint venture company with TOTAL S.A., INPEX acquired a
9.99% indirect interest in the oil producing Angola Block 14 in February 2013.
Block 14 is located approximately 100
km offshore from Cabinda, Angola. It isan oil-producing block that includes discovered undeveloped ﬁelds. Crude oil
is currently being produced from threedevelopment areas. At the same time,energies are being channeled toward
the development of certain discovered
undeveloped ﬁelds. In this manner, steps
are being taken to pursue exploration
potential within the block.
CONGO

Offshore Atlantic
Ocean
AngolaThe State ofBlock 14
CabindaProduction facility

Contract area
(block)Project status(production on the basis of all fields and average rate of FY2014)

Offshore Angola
In production (Crude oil: 118 Mbbld)
Block 14

Democratic
Republic of
Congo

ANGOLA

Venture company(established)

Interest owned(*Operator)

Angola Block 14 B.V.
(April 19, 2012)

Angola Block 14 B.V. 20.00% (including 9.99% of INPEX’s interest)
Chevron* 31.00% Sonangol 20.00% Eni 20.00% Galp 9.00%

INPEX CORPORATION Annual Report 2015031

Americas

In Canada, INPEX participates in shale gas projects and others. The Company is also
engaged in a major deepwater exploration project in the U.S. Gulf of Mexico (Lucius),
projects in Venezuela and offshore oil projects in Brazil.

032

INPEX CORPORATION Annual Report 2015

1 Shale Gas Project in Canada
In August 2012, INPEX acquired a 40%
interest in the shale gas projects in theHorn River, Cordova and Liard basins in
British Columbia, Canada, from Nexen Inc.
The shale gas projects in the Horn
River, Cordova and Liard basins containdiscovered and undeveloped shale gas.
We will proceed with development workand are aiming for production of a maximum of 1,250 million cubic feet per day(approximately 200 thousand boed).
The shale gas that is produced will
be converted into LNG with studies
under way to consider commercialization through exports from the Canadianwest coast.

Yukon Territories

Northwest Territories

Acquired area
British Columbia

Highway
Major pipelines

Cordova Area

CANADA

Horn River Area

Liard Area

Project status

Venture company (established)

Interest owned (*Operator)

Horn River,
In production
Cordova and Liard areas (partly)

Contract area (block)

INPEX Gas British Columbia Ltd.
(November 28, 2011)

INPEX Gas British Columbia 40%
Nexen* 60%

4
Project Overview

2

1

3

1: Drilling site 2: Finishing operation 3: Hydraulic fracturing site

INPEX CORPORATION Annual Report 2015033

2 U.S. Gulf of Mexico Projects and Others
In August 2012, INPEX acquired a 7.2%
interest from Anadarko Petroleum Corporation in the Lucius Oil Field in the
deepwater of the Gulf of Mexico. Oiland gas production commenced at the
Lucius Oil Field in January 2015.
We participated in the deepwater exploration blocks of Walker Ridge
95/139 in the Gulf of Mexico in February
2011. In exploratory work since then, theYucatan North-1 exploratory well was
drilled and conﬁrmed the presence of
crude oil in an about 36-m thick sandstone bed formation. We are analyzing
data obtained thus far and are working
with our partners on more exploration
and appraisal activities.

Contract area
(block)Project status
Venture company(production on the basis of all fields and(established)average rate of FY2014)

Blocks 874/875/918/919(Lucius Oil Field)

In production

Ship Shoal Block 72
West Cameron Blocks 401/402
Walker Ridge Blocks 95/139

Crude oil: 6 Mbbld
Natural gas: 5 MMcf/d

In production (Natural gas: 3 MMcf/d)Under exploration(Oil/gas reservoirs conﬁrmed)

Teikoku Oil(North America) Co.,
Ltd. (May 30, 2003)

Cuervito/
Fronterizo
BlocksUNITED STATES

Ship Shoal
Block 72
Walker Ridge
MEXICO
95/139West Cameron Blocks 874/875/918/919
Blocks 401/402 (Lucius Oil Field)

Interest owned(*Operator)
Teikoku Oil (North America) 7.8％ Anadarko* 23.8％ Other 68.4％
Teikoku Oil (North America) 25.0% PetroQuest* 42.5% Other 32.5%
Teikoku Oil (North America) 25.0% PetroQuest* 38.0% Other 37.0%

INPEX Gulf of Mexico
Teikoku Oil (North America) 12.29% Shell* 57.37% Other 30.34%
Co., Ltd. (April 28, 2010)

1

2

3

1,3: Lucius Oil Field 2: Cuervito Block in Mexico034

INPEX CORPORATION Annual Report 2015

3 Copa Macoya and Guarico Oriental Blocks
INPEX was awarded a 100% interest in acentral onshore area, the East Guarico
Block in Venezuela, in July 1992. INPEX
participated in oil and natural gas ﬁeld
rehabilitation, exploration and development activities as an operator. Thereafter,
the existing operational service agreements were changed to joint ventureagreements in 2006. Around the sametime, the East Guarico Block was newly
reconﬁgured into a gas business in the
Copa Macoya Block and a crude oil business in the Guarico Oriental Block. In addition, the agreement period of both agreements was extended to 2026 as a result of
the change to joint venture agreements.
Copa Macoya andGuarico Oriental Blocks

Gas plant

Contract area
(block)Project status
Venture company(production on the basis of all(established)fields and average rate of FY2014)

Copa Macoya

In production
Crude oil: 1 Mbbld
Guarico Oriental Natural gas: 52 MMcf/d

Georgetown

Interest owned(*Operator)

Teikoku Oil and Gas Venezuela*
Teikoku Oil and
70% PDVSA Gas 30%
Gas Venezuela,
C.A. (June 7, 2006) Teikoku Oil and Gas Venezuela 30%
PDVSA CVP* 70%

CaracasBogotaVENEZUELAGUYANA

COLOMBIA

4
Project Overview

4 Brazil (Frade Block, Other)
Frade Japão Petróleo Limitada (FJPL), a
joint venture established by INPEX andSojitz Corporation, acquired an interestin the Frade Block in Brazil’s offshore
Northern Campos basin in July 1999.
Commercial production started inJune 2009. Production was temporarilysuspended in March 2012 due to thepresence of a small oil sheen but safely
resumed at the end of April 2013.

Vitoria

In addition, INPEX is engaging in
joint exploration activities with various
entities including Petróleo Brasileiro
S.A., which serves as project operator, at
the BM-ES-23 concession in the Espírito
Santo Basin offshore Brazil. As a result of

appraisal well drilling conducted from2014 and over 2015, quality oil deposits were discovered at shallower anddeeper depths. Plans are in place toconsider the potential for commercial
production.

BM-ES-23

BRAZIL
Atlantic Ocean

CamposFrade Project

Macae

Oil field

FPSO vessel in the Frade BlockContract
area (block)

Project status
Venture company(production on the basis of all fields and average rate of FY2014) (established)

Frade
Project

In production

BM-ES-23

Under exploration (Oil/gas reservoirs conﬁrmed)

Crude oil: 27 Mbbld
Natural gas: 3 MMcf/dInterest owned(*Operator)

Frade Japão Petróleo
Limitada (FJPL) (July 5, 1999)

Frade Japão Petróleo 18.2609%
Chevron* 51.7391% Petrobras 30.0000%

INPEX Petróleo Santos Ltda. (January 19, 2007)

INPEX Petróleo Santos 15%
Petrobras* 65% PTTEP 20%

INPEX CORPORATION Annual Report 2015035

JapanINPEX is active in the Minami-Nagaoka Gas Field in Niigata Prefecture, one of the largest of its kind in Japan, and participates in other oil and natural gas projects. In addition, the Company operates a domestic trunk pipeline network of approximately 1,400
km. INPEX also commenced operation at Naoetsu LNG Terminal in December 2013.

Yabase Oil Field
Akita Mining Site

Akita Prefecture

Naoetsu
LNG Terminal

Sekihara Gas Field(underground storage)
Niigatat CityyNiigata Marketing
OfficeToyama Line (Under construction)

T y ma
Toya
Citty
C

Minami-Aga Oil Field

Kashiwazaki
Cityy
Ci

ItoigawagCityy

Minami-Kuwayama Oil Field
Naga
ga
aok
oka Ci
City

Joe
Joet
oet
ettsu
uC
City
ity
y

ToyamaPrefecture

Shin Oumi Line

Domestic
Natural Gas

Niigata
Prefecture

Tokyo Line

Gunma Prefecture

Fujioka BS*

Shin Tokyo Line
Karu
Ka
ru
uiz
izaw
zawa
To
Town

NaganoPrefecture

Chino
Chin
oC
Ciity
ty

Kofu Line

ShizuokaPrefecture

Second Suruga Trunk Line
Sodeshi LNG Terminal[Shizuoka Gas]San
no City
City
Kono
onosu
n
Cityy

Iruma Line

Show
Sho
S
how
ho
wa
Town
Town
ow
w
Ome
Om
e Cityityty

Shizuoka Line

Fuji Cit
Ci y

Oil and gas fields

SaitamaPrefecture

Regasified
LNG

Technical Research Center

Chiba
Prefecture

Natural gas
pipeline network

Head Office(Akasaka, Minato-ku)* BS・・・Booster station

Chiba Ciity(Kitakarasuyama, Setagaya-ku)
S
Samm
Sam
Sa
uC
City

Itazuma Power Control Center

Other projectO

Adachi-ku,
u, Tokyo
T kyo

Metropolitan
Tokyo(INPEX, Shizuoka Gas, Tokyo Gas)

Tochigi
Prefecture

Ryomo Line

H oC
Honj
Hon
Cityy

Gotemb
Gotemba
Got
Gote
mba
ba
City
t

Minamifuji Line

Isesaki Power Control CenterTomiTom oka
a
City
Cit
C
ity

Yamanashi
PrefectureShizSh
h zuokaok Cittyoka(Minami-Nagaoka Gas Field, etc.)

Tomi BS*

Mats
M
ats
t umot
ts
umo
um
u
mo
moto Ciity

Matsumoto Line

Natural Gas Businessin JapanDomestic Natural Gas /Regasified LNG

Nagan
Nagan
Naga
no
o Cityy

Major office or mining site

Naruto Gas Field
Chiba Mining Site

0

100 kmNatural Gas Business in Japan
In its natural gas business in Japan, thenatural gas produced from the Company-held Minami-Nagaoka Gas Field(Niigata Prefecture) as well as the LNG
and other products received at the
Naoetsu LNG Terminal (Niigata Prefec-

036

INPEX CORPORATION Annual Report 2015ture), which commenced operations in
December 2013, are transported througha trunk pipeline network of approximately 1,400 km stretching across the
Kanto and Koshinetsu regions, and soldto customers including city gas compa-

nies and large-scale plants along the
aforementioned network.
INPEX has experienced steady
growth in sales of natural gas volume due
to sharp rises in the prices of competing
fuels, as well as the highly environmentallyfriendly attributes of natural gas. In addition to its role as a fuel for thermal energy,
natural gas is expected to be used for awide variety of applications, such as afuel for onsite power generation andco-generation, as well as a raw material
for chemical products. INPEX targets
annual sales of 2.5 billion m3 by the early2020s and as much as 3.0 billion m3 overthe long term.
To achieve these targets, INPEX
is advancing construction work on the
Toyama Line (extending from Itoigawa
City, Niigata Prefecture, to Toyama City,
Toyama Prefecture) with a view to completion in mid-2016. In the lead-up to
the full deregulation of electric power
retail sales in April 2016, the Company
has at the same time commenced steps
to consider new initiatives with respect toelectric power business activities with theaim of collaborating with various parties

including city gas companies along its
network.
At the Naruto Gas Field in Chiba
Prefecture, natural gas is being produced from water-soluble gas ﬁelds.
After extracting natural gas from underground water (brine water), the brinewater is used to produce iodine, whichis exported to Europe, the United Statesand elsewhere.

MitsukeCity

Echigo Line

Sekihara Gas Field(underground(underground storage)
storage)
Sea ofJapan

Shinetsu
HonsenNagaokaCity

JoetsuShinkansen
Line

Kashiwazaki City

Minami-Nagaoka
Gas Field
Gas ﬁeld

Ojiya City

Joetsu Line

Natural Gas Sales Volume in Japan(100 million Nm3/year) Note: 41.86MJ per 1m3

17.2

17.6

17.5

18.0

17.9

2011/3

2012/3

2013/3

2014/3

2015/3Natural gas pipeline that crosses a river(Shibumi River, Niigata Prefecture)

Renewable Energy and Other Initiatives
Power Generation Business in Japan

Geothermal Development
Geothermal power is the generationof electricity with turbines poweredby steam produced from the thermalenergy of magma underground.
Since 2011, INPEX and Idemitsu
Kosan Co., Ltd., have been jointly conducting geothermal surveys in the
Amemasudake region of Hokkaido Prefecture and the Oyasu region of Akita

Prefecture. The two companies werejoined by Mitsui Oil Exploration Co., Ltd.,in 2012, and drilling of one survey wellin the Amemasudake region and two
survey wells in the Oyasu region commenced during 2013. In 2014, the drilling of three survey wells was undertaken
across the two regions. We plan to continue conducting geothermal resource
surveys by drilling survey wells of a similar scale in both of these regions going
forward. In addition, INPEX is a member of the geothermal resource survey
group in Fukushima Prefecture and has
been conducting land surveys in areas
surrounding Mt. Bandaisan since September 2013.
Moreover, INPEX took steps to participate in the Sarulla Geothermal Independent Power Producer (IPP) Projectin Indonesia from June 2015. The project involves constructing a geothermal
power plant with a maximum capacityof 330 MW in the Sarulla Geothermal
Field located in North Sumatra Province, and providing generated power toIndonesia’s government-owned electricity company over a period of 30 years.
Construction of the power generation
plant began in 2014. Energies are being
channeled toward the progressive startof commercial operations from 2016.

4
Project Overview

In March 2013, the Company began generating electricity at INPEX Mega Solar
Joetsu, a solar power plant with a maximum output of 2 MW, located on the former site of an oil reﬁnery that it shut down
in Joetsu City, Niigata Prefecture. In 2014,
steps were taken to construct a new solar
power plant with output of 2 MW next tothis site. Power generation began from
July 2015. We estimate that these twosolar power plants will generate around
5,330,000 kWh annually, enough electricity to power 1,600 homes.
In addition, INPEX constructed ahigh-efﬁciency gas turbine combined
cycle thermal power plant with output of
about 55,000 kW next to its Koshijihara
plant in Niigata Prefecture, and has been
supplying electricity on a wholesalebasis to power producers and suppliers(PPS) since May 2007.

Sarulla Geothermal Independent Power Producer (IPP) Project

Research of Methane Hydrate
Resource in Japan

A type of unconventional natural gas,methane hydrate is a solid crystal structure with methane trapped inside.
Deposits of methane hydrate have been
conﬁrmed along the coastline of Japan,
but its extraction is technologically challenging. Experts have said that moretime is needed to develop economically
viable technologies.
INPEX participates in research andsurvey activities as do related committees led by the national government.
Leveraging its technologies accumulated
in upstream operations, INPEX has been
contributing to solving the technological challenges for extracting methane
hydrate, especially in the ﬁeld of subsea
production equipment.

INPEX CORPORATION Annual Report 2015037

Sustainability

Sustainability
INPEX aims to further enhance its reputation as a company essential
to society by contributing to economic growth and social development through its business operations. Fulﬁlling our corporate social
responsibility (CSR) is a vital plank in the platform that supports ourexistence and business. Each year, we take steps to evaluate theprogress of our CSR activities and to push forward all appropriate
measures from a medium- to long-term perspective.

Material CSR Issue

Compliance

Comply with laws and social
norms (including human rights)

1. Material CSR Issues
As a global energy company that aims
to constantly expand its upstream operations, in April 2012 the Company identiﬁed material CSR issues that it would
tackle on a priority basis in a bid togain the trust of all stakeholders. INPEX
revised its existing material CSR issues
and added corporate governance tobring the total number of issues to six
for the year ended March 31, 2015.
From the year ending March 31, 2016,

2. CSR Activity Road Map

For the continuous enhancement of CSR
activities, we have established a medium-term action plan called the CSR road
map. Phase 3 of the CSR road map cov-

the Company will work to enhance its
CSR management in line with its revisedmaterial CSR issues.
In this section of the annual report
2015, we provide details of the Material
CSR issues and the progress of these forthe year ended March 31, 2015, as well
as explain our plans from the year ending March 31, 2016. Please refer to theCompany’s Sustainability Report 2015
for details of speciﬁc initiatives by issue.

ers the period that coincides with thestart of production at the Ichthys LNG
Project. It is during this phase that weplan to engage in CSR on a global scale.

HSE Initiatives

Practice safety management andenvironmental protection withrespect to operations

Community
Contribution

Build trust and contribute to local
communities (including education)

Establish the Foundation of
the CSR Promotion System

Launch organizations to promote CSR,
revise the CSR Policy, set out the material
CSR issues and participate ininternational initiatives(UNGC and EITI)

Promote CSR on a Global Scale
Deepen CSR Initiatives
with PDCA

Ensure that the PDCA cycle is ﬁrmly entrenchedthroughout the Group, promote activities that are uniqueto the Group, engage in global-level reporting andenhance corporate value through these and other initiatives

Greenhouse Gas
Countermeasures
Address climate change

Formulate the CSR Action Plan, work out the business activities ofeach department and enhance initiatives (establish a PDCA cycle)

About the Sustainability Report 2015
INPEX publishes its Sustainability Report annually to keep its stakeholders informed of its CSR initiatives and activities. To help our stakeholders efﬁciently and effectively understand the value that our Company
creates, we have prepared different types of reports in 2015 (a digest
edition, a full edition and a Web edition) responding to various needs,
based on the material CSR issues speciﬁed in 2012 as our guide.
Readers can access and order each of these reports via the Company’s CSR Web site.
} www.inpex.co.jp/english/csr/

038

INPEX CORPORATION Annual Report 2015

Employee Development
Develop and utilize humanresources as a global company

An overview of the material CSR issues, vision, results for the year ended March 31, 2015,
and plans for the year ending March 31, 2016, are presented brieﬂy as follows.

Overview of the Key CSR Issues• Observe international and social norms
that include laws, regulations and otherrules related to human rights

Put in place a Reconciliation Action Plan (RAP) asa part of efforts to promote cooperation with
the indigenous people of Australia (June 2015)• Reduce the environmental impact ofdaily operations, take steps to mitigate
environmental risks and engage in activities that help to conserve biodiversity• Ensure safety across every facet of business activities

Ichthys HSE CEO forum•Strive to communicate with governments,
local residents, NGOs and other public
stakeholders•Approach all stakeholders after fully
grasping the needs of local communities
and taking into consideration the impact
of business activities; take all appropriate
measures (including efforts to provide
local residents with relevant education)

Vision• Go beyond simply complying withlaws and regulations to being properly attentive to various social norms
including those of where we operate• Ensure that directors and employees
take the initiative and engage in activities that reﬂect high ethical standards
to win the trust of society• Ensure the safety of all employees andrelated parties including contractors,
and conduct operations without allowing major accidents• Make every effort to minimize environmental impact beyond legal andregulatory requirements, and conduct operations while being attentive
to environmental risks such as those
posed by leakages and biodiversity• Conduct business in a manner that
contributes to the societal growthof the communities within which theCompany operates while respecting
local cultures and customs, etc.

Social contribution in local communities

5• Engage in operations while taking into
consideration the impact on climatechange• Develop and supply a diverse range
of energies that help to combat climate change while promoting further
advances in technologies

Sustainability & Governance• Promote research, development andpractical application of renewable energy
and fossil fuel technologies (including
technologies that separate, capture andstore CO2 (CCS), as well as technologies
to generate methane); promote the CO2
offset program (including forest protection and the planting of trees)
GHG Management working group• Employ talented people, treat them withrespect and assign them to positions towhich they are suited without discrimination on the basis of culture, national origin,
creed, race, gender or age• Actively develop and utilize humanresources suited to the conduct ofoperations globally• Achieve a proper balance between
business growth and employee satisfaction

Diversity workshop in Australia

INPEX CORPORATION Annual Report 2015039

Sustainability

Material CSR Issues (Continued)
Major Activity Fields Results for the Year Ended March 2015

040

•Strengthen Compliance;
Respect Human Rights, etc.

•Published and distributed the Code of Conduct Guidance;
held brieﬁngs for personnel in charge of promoting compliance•Put in place and enforced Anti-bribery and Anti-corruption (ABC) Guidelines; conducted in-house training•Introduced the ABC due diligence program covering contract and purchasing processes in Australia•Conducted ABC training for all employees in Australia•Put in place and enforced an ABC Policy; conducted training for employees in Indonesia•Participation in CSR training (e-learning) including human rights by 94% of employees in Japan•Run Global Compact Japan network working group meetings as the managing company•Participated in IPIECA working group meetings•Disclosed payment information to EITI member countries•Strengthen Environmental
Management; Maintain Safety
and Protect Biodiversity•Took steps to secure third-party veriﬁcation of environmental performance data in Japan(GHG emissions, energy use, water consumption and wastewater discharged)•Implemented various environmental management plans for the Ichthys LNG Project•Completed HSE audits at subsidiaries in Malaysia, Venezuela, and Suriname•Revised HSE Risk Management Guidelines; took steps to promote and explain to operating organizations•Achieved the ﬁscal 2014 incidence index targets: LTIF: 0.15; TRIR: 1.24
•Conducted HSE forums between contractors with respect to the Ichthys LNG Project•Participated in the Biodiversity and Eco System Working Group run jointly by IOGP/IPIECA•Conducted an environmental monitoring program for the Ichthys LNG Project•Conducted an ocean environmental impact study for the Naoetsu LNG Terminal•Conducted a ﬁeld survey for the Abadi LNG Project•Reduce the Impact of Operations
on Local Communities;
Participate in Community Eventsand Contribute to Society•Put in place a Social Impact Management Plan (SIMP) andperiodically reported the status of implementation to the Australian government•Obtained an environmental permit for the Abadi LNG Project•Implemented environmental management and monitoring plans as stipulated under environmental
approvals; submitted implementation reports to local authorities for the Abadi LNG Project•Conducted environmental and social baseline surveys based on international guidelines such as
IFC Performance Standards for the Abadi LNG Project•Provided update information for stakeholders with respect to the Ichthys LNG Project (over 100 times)•Achieved a 60% local recruitment rate for the onshore facility construction workforce for the Ichthys LNG Project•Supported over 50 community programs in Australia•Accepted 13 student interns; provided post-graduate endowments; provided student support•Address Climate Change•Established the GHG Management Working Group within the Corporate HSE Committee•Promoted Companywide activities, conducted GHG emission forecasts
and determined annual GHG-related risk management process through activities undertakenby the GHG Management Working Group•Newly constructed INPEX Mega Solar Joetsu, a solar power generation facility•Concluded a participation agreement in the geothermal power generation business in Sarulla, Indonesia•Undertook investments of ¥870 million relating to strengthening renewable energy initiatives and R&D for
new technology•Recruit and Train a Global
Workforce; Promote Diversity•Put in place the INPEX Values; conducted brieﬁngs at business sites•Established the Global HR / Diversity & Inclusion Group within the Company’s head ofﬁce•Put into effect the Global Mobility Guidelines; applied persons hired in Australia at business sites in other countries(track record: 4 assignments)•Conducted various training programs under the Company’s training structure and systems (group training
for newly recruited employees, training for general staff, management training, and specialized skills training)•Results for training of young and mid-level engineering personnel: cumulative total of 7 persons trained at
project sites in Japan and 20 persons trained at overseas ofﬁces and project sites•Hired 3 foreign new graduates; hired 8 foreign mid-career employees; hired 5 foreign contract employees;
percentage of persons with disabilities to total employees: 2.05%•Conducted equal employment opportunity (EEO) and cross-cultural awareness training in Australia•Took steps to reﬂect the results of the employee engagement survey to improve the workplace environment

INPEX CORPORATION Annual Report 2015

Plans for the Year Ending March 2016

Aboriginal Cultural Awareness Training in Australia

Coral monitoring at Darwin Harbour

Sponsored course at
the Hitotsubashi University Graduate School•Promote global compliance (put in place and support compliance systems at each overseas ofﬁces);
strengthen collaboration between the head ofﬁce and overseas ofﬁces•Continue to provide ABC training•Strengthen ABC due diligence processes in Australia•Continue to conduct ABC training in Australia•Put in place detailed administration and management rules regarding
ABC Policies and ensure widespread awareness within the workplace in Indonesia•Continue to participate in the Global Compact, EITI and IPIECA•Expand the boundaries and scope of third-party verification of HSE performance data
•Continue to monitor the impact of construction work on environment at the Ichthys LNG Project•Achieve a compliance rate of 90% or higher with respect to the requirements
stipulated under the Corporate HSE Procedures; reinforce HSE audits in order tofirmly entrench HSEMS administration and management•Draw up emergency response plans on the basis of the worst-case scenarios fora variety of emergencies and crises•Promote HSE activities with contractors to eliminate incidents acrossthe Company as a whole (targets: LTIF: 0.20; TRIR: less than 0.85)•Undertake a cross-organizational HSE support project; lift the level of HSE leadership•Continue to participate in the Biodiversity and Eco System Working Group jointly run
by IOGP/IPIECA•Continue biodiversity conservation monitoring•Commence drawing up impact assessment and action plans for the Abadi LNG Project•Monitor the status of SIMP implementation•Commence drawing up the environmental and social impact assessment (ESIA) andenvironmental and social action plans (ESAPs) based on international guidelines
such as the IFC Performance Standards•Continue to provide information to stakeholders on the Ichthys LNG Project•Continue to support local businesses and employment through the Ichthys LNG Project•Continue to support community programs•Continue to offer summer internships to undergraduates andpost-graduates majoring in the sciences•Continue to provide post-graduate endowments

5
Sustainability & Governance•Introduce a series of processes for management climate change risk of the entire Group•Continue to promote the commercialization of renewable and other energies• Work toward realizing commercial viability of the geothermal power generation projectin Sarulla, Indonesia•Continue to engage in business investments to strengthen renewable energy initiatives
INPEX Mega Solar Joetsu

Diversity workshop in Australia•Build a globally common human resource platform•Ensure the widespread penetration and entrenched use of the INPEX Values;
foster shared values among employees•Promote personnel transfers between bases in Japan and overseas•Continue to conduct various training programs under the Company’s training structureand systems•Continue to improve awareness toward technological capability andstrengthen training initiatives•Continue to promote diversity (promote the employment of women, non-Japanese citizens, and the disabled)•Continue training aimed at promoting diversity•Continue to conduct employee engagement surveys to build a better workplace

INPEX CORPORATION Annual Report 2015041

GovernanceCorporate Governance(As of July 1, 2015)

INPEX works to enhance its corporate governance in order to raise its corporate value;
continue to exist as a corporation that is trusted by our shareholders, other stakeholders and all of society.

Overview of the Corporate Governance Structure

Overview of the Corporate
Governance Structure

INPEX has adopted an Audit & Supervisory Board Member structure, under which Audit& Supervisory Board members audit the execution of operations, which are in turn carried out by directors well versed in their ﬁeld. In addition, the Company has introduced
an Executive Ofﬁcer System to pursue the management with agility and efﬁciency. INPEX
frequently engages in negotiations with the governments of oil-producing countries andoverseas oil companies. This necessarily requires internal directors and executive ofﬁcers
that have both a sound knowledge of the Company and their particular ﬁeld of expertise.
Internal directors in principle hold the concurrent position of executive ofﬁcers. By adopting this concurrent organizational structure, the Company’s Board of Directors is better
placed to execute operations in an efﬁcient manner. At the same time, this structure helps
to ensure effective operating oversight.
In addition to enhancing the transparency of management and bolstering the abilityof the Board of Directors to carry out its supervisory function, INPEX has appointed ﬁveof its 15-member Board of Directors from outside the Company. Through this initiative,
steps have been taken to ensure that management issues are considered and deliberated with a greater degree of objectivity. Moreover, four of the Company’s ﬁve Audit &Supervisory Board members are also appointed from external sources. In addition to putting in place a Audit & Supervisory Board, INPEX has set up the Secretariat of Audit &Supervisory Board Member and deployed dedicated Secretariat staff and is reinforcing
collaboration between Audit & Supervisory Board members and the Audit Unit, as well as
independent auditors.

Organizational structure ....................................................
Company with Audit & Supervisory Board Member
Directors
Number of directors as stipulated by
the Articles of Incorporation ............................ up to 16
Number of directors(number of outside directors) ................................15 (5)Term of ofﬁce .............................................................. 1 year
Audit & Supervisory Board members
Number of Audit & Supervisory Board members
as stipulated by the Articles ofIncorporation ...................................................up to 5
Number of Audit & Supervisory Board members(number of outside Audit & Supervisory
Board members) ................................................ 5 (4)Term of ofﬁce.................................................. 4 years
Number of independent directors and auditors ...9(5 outside directors,
4 outside Audit & Supervisory Board members)
Rights plan and other measures to protect
against a takeover ............................................ None
Other ........................ Issuance of a Class A Stock to
the Minister of Economy, Trade and Industry

Corporate Governance Framework(Diagram)

General Meeting of Shareholders
Appoint/Dismiss
Compensation limit setup

Proposal/Advice/
ReportAppoint/Dismiss
Compensation limit setup
Coordinate

Audit

Audit &
Supervisory Board

Board of Directors

Appoint/
Dismiss

Independent
Auditors（Member）

ReportAdvisory
Committee

Compliance
Committee

Business Operation
SystemReportAccounting
audit

ReportCoordinate

Executive
Committee
CSR Committee
Corporate HSE
Committee
Information Security
Committee

Secretariat ofAudit & Supervisory
Board Member

Appoint/
Dismiss/
Supervise

President & CEO

INPEX Value Assurance
System Committee

Appoint/
Dismiss/
Supervise

ReportAudit Unit

Accounting
audit

Executive Officers
Divisions and Subsidiaries

042

INPEX CORPORATION Annual Report 2015

Coordinate

Internal audit

[1] Directors and the Board of Directors

The Company’s Board of Directors comprises 15 members,
ﬁve of whom are outside directors. In addition to a monthly
meeting, the Board of Directors meets as necessary in order
to discuss and determine the execution of important matters.
The Board also supervises the execution of duties by directors.
In addition, the term of ofﬁce for directors was set at one year
from June 2012. This initiative helps to enhance the ability of
directors to respond to changes in the Company’s operating
environment in a timely manner and to further clarify management responsibilities.

[4] Director Compensation

In the business of developing oil and natural gas, a considerable
amount of time is required between the launch of a businessventure and any investment recovery. Accordingly, INPEX does
not consider it appropriate to reﬂect short-term performance indirectors’ compensation. Compensation for directors consistsof monthly compensation (basic compensation), which is paid
based on the duties of each director, and a bonus based on the
Company’s performance. Compensation is determined by the
Board of Directors. Compensation paid to Audit & Supervisory
Board members consists solely of a ﬁxed monthly compensation, which is determined through consultation between the
Audit & Supervisory Board members.
The table below shows the amount of compensation paid
to directors and Audit & Supervisory Board members for theyear ended March 31, 2015. From the year ended March 31,
2014, the bonus component paid to outside directors and Audit& Supervisory Board members has been abolished. Outside
directors and Audit & Supervisory Board members are now paid
a consolidated ﬁxed compensation amount only. This takes into
account efforts to further bolster corporate governance.
Compensation Paid to Directors andAudit & Supervisory Board Members (Year ended March 31, 2015)

9th Ordinary General Meeting of Shareholders held on June 24, 2015[2] Executive Committee andExecutive Ofﬁcer System[3] Class A Stock

According to the stipulations of the Articles of Incorporation,
INPEX issues a Class A Stock to the Minister of Economy, Tradeand Industry. The Class A Stock does not possess voting rights
at shareholders’ meetings. However, it is possible for the holderof the Class A Stock to exercise veto rights for certain major
corporate decisions. We think the holding of Class A Stockby the Minister of Economy, Trade and Industry is an effective
countermeasure to prevent a speculative acquisition or an
attempt at management controlled by foreign capital, while
not unreasonably impeding the efﬁciency of management forthe stable supply of energy as a core company for Japan’s oil& gas E&P. Furthermore, we expect positive results in terms ofexternal negotiation and credits as a national ﬂagship company
efﬁciently contributing to the stable supply of energy in Japan.
} See pp. 90­91 for Business Risks (8. Class A Stock)(persons)

Directors (excluding
outside directors)

460

392

68

11

Audit & Supervisory Board
Members (excluding
outside Audit & Supervisory
Board members)

27

27

-

1

Outside Directors andOutside Audit & Supervisory
Board members

96

96

-

9

Notes: 1. The Company does not adopt a stock option plan.
2. The Company does not maintain an accrued retirement beneﬁts plan.
3. The total amount of compensation paid includes a provision to accrued bonuses todirectors for the year ended March 31, 2015.

5[5] Accounting Audit andAuditor Compensation

Sustainability & Governance

From the perspective of increasing the speed of decision making related to the execution of business, we have establishedan Executive Committee. The meetings are held weekly and asnecessary. At the Executive Committee, ﬂexible decision making is conducted for resolutions not afﬁliated with the Boardof Directors, and deliberation is held to contribute to decision
making by the Board of Directors.
We implemented an Executive Ofﬁcer System in order to
respond accurately and quickly to a rapidly changing management environment and the expansion of our business activities.
The term of ofﬁce for executive ofﬁcers is set to one year, thesame as for directors.

Director classification

Number of
Total amount of
directors
compensation paid by
Total
and Audit &type of compensation
amount ofSupervisory(¥
million)compensation
Board members
paideligible for basic
Basic(¥ million)
Bonus compensationcompensation

In accordance with the Companies Act and the Financial Instruments and Exchange Act, we accept accounting audits from
Ernst & Young ShinNihon LLC. The amount of auditor compensation is determined in total based on the audit plan and thenumber of auditing dates, after obtaining approval from the
Audit & Supervisory Board.
Compensation Paid to the CPAs and Related Parties(Year ended March 31, 2015)

Name of the CPA ﬁrm
Names of the CPAs

Ernst & Young ShinNihon LLC

Kazuhiko Umemura, Satoshi Takahashi

Accounting audit members 13 CPAs and 27 others
Compensation forauditing services¥235 million (INPEX: ¥158 million;

Compensation for
non-auditing services¥31 million (INPEX: ¥15 million;
Consolidated subsidiaries: ¥16 million)

Consolidated subsidiaries: ¥77 million)

INPEX CORPORATION Annual Report 2015043

GovernanceMonitoring of Management by Outside Directors
and Audit & Supervisory Board Members[1] Outside Directors

Regarding the appointment of outside directors, we believe that
it is important to comprehensively consider a variety of factors.
These factors include the validity of business decisions and consideration of their efﬁcacy, professionalism and objectiveness in theoversight function in addition to the perspective of independence.
Our Company’s ﬁve outside directors possess broad knowledge and many years of experience as managers in such ﬁelds as
the resource/energy industry, ﬁnance and legal matters. Also, fourof the outside directors are shareholders of the Company andserve as directors or advisors of companies that conduct businessin the same ﬁeld. Therefore, we recognize the importance of paying special attention to the possibility of competition and otherconﬂicts of interest. In response, we collect written pledges fromoutside directors in order to ensure conformance with the Companies Act when taking a proper response toward noncompetition, the prevention of information leakage and the implementation of appropriate measures toward transactions with a conﬂict ofinterest. These written pledges are the same as those submitted
by internal appointees.

[2] Outside Audit &Supervisory Board Members

When appointing outside Audit & Supervisory Board members,
we believe that it is important to comprehensively consider factors such as independence, efﬁcacy in the oversight function andprofessionalism.
Four of the ﬁve Audit & Supervisory Board members areoutside Audit & Supervisory Board members who possess richknowledge and experience in our Company’s business, as wellas in ﬁelds such as ﬁnance and accounting, and utilize thesequalities when performing auditing activities for our Company.
One of the outside Audit & Supervisory Board members also
holds the position of executive ofﬁcer at Japan Petroleum Exploration Co., Ltd. (JAPEX), a company that engages in the same
type of business as the Company.

[3] Independence of Outside Directors
and Audit & Supervisory Board Members

INPEX does not have its own requirements regarding indepen-

dence when appointing outside directors and outside Audit &Supervisory Board members, however, it refers to the requirements* of independent directors/auditors as deﬁned in Article
436, Item 2, Sub-Item 1, of the Securities Listings Regulations for
the Tokyo Stock Exchange. The Company reports on its relationships with independent directors/auditors, sets minimal criteriawith respect to transactions and has submitted notiﬁcations that
all nine of its outside directors (5) and Audit & Supervisory Board
members (4) are independent directors/auditors.

*It has been conﬁrmed that the outside directors/Audit & Supervisory Board members
do not fall under the conditions stipulated in the Ordinance for Enforcement of the
Securities Listings Regulations, Article 211, Item 4, Sub-Item 5, and Article 226, Item
4, Sub-Item 5. Furthermore, it has been conﬁrmed that there is no risk of a conﬂict ofinterest with ordinary shareholders.

[4] Audit & Supervisory Board and Audit &Supervisory Board Members
INPEX has adopted an Audit & Supervisory Board Members
system. The Audit & Supervisory Board is composed of ﬁve
Audit & Supervisory Board members, four of which come fromoutside.
In addition to attending meetings of the Board of Directors
and the Executive Committee, the Audit & Supervisory Board
members review the execution of business duties by directors
and executive ofﬁcers through reports given by and hearings
for related departments. Furthermore, the Audit & Supervisory
Board members meet on regular and as needed bases with
the Independent Auditors, and receive reports from the Independent Auditors regarding audits. They also conduct regularmeetings with the internal audit department (Audit Unit) toreceive reports regarding internal audits and the evaluation ofinternal controls.
To strengthen the auditing function and ensure viable corporate governance, steps have been taken to set up the Secretariat of Audit & Supervisory Board Member and to deploy dedicated Secretariat staff. In this manner, efforts are being madeto promote collaboration along the aforementioned terms
between Audit & Supervisory Board members, the Audit Unit
and Independent Auditors. Moreover, we have constructed asystem to strengthen the monitoring function through periodic
meetings with representative directors and directors.

Outside Directors/Outside Audit & Supervisory Board Members: Concurrently Held Positions and Reason for Appointment
Name

Outside directors

Hiroshi Sato
Yoshiyuki
KagawaSeiji Kato
Hiroji Adachi

Outside Audit & Supervisory
Board members

Yasuhiko
Okada

044

Independent
Signiﬁcant concurrently
directors/auditors held positions

Advisor for Japan Petroleum
Exploration Co., Ltd., a major
shareholder in our company
Senior Advisor of Mitsui Oil
Exploration Co., Ltd., a major
shareholder in our company
Corporate Advisor of Mitsubishi
Corporation, a shareholder in ourcompany
Director, Senior Vice President of JX
Holdings, Inc., a major shareholder inour company
Partner of Kitahama Partners

Hideyuki
Toyama―Koji Sumiya―

MichiroYamashita

Executive Ofﬁcer, in charge of Finance& Accounting Dept. of Japan Petroleum Exploration Co., Ltd., a major
shareholder in our company

Masaru Funai―

INPEX CORPORATION Annual Report 2015

Reason for appointment

Attendance at board meetings forthe year ended March 31, 2015

To utilize in our company’s management his rich experience andbroad knowledge in the oil development industry

Board of Directors meetings 13/15
Audit & Supervisory Board meetings 12/12

To utilize in our company’s management his rich experience andbroad knowledge as a business executive

Board of Directors meetings 15/15

To utilize in our company’s management his rich experience andbroad knowledge in the resources/energy industry

Board of Directors meetings 15/15

To utilize in our company’s management his rich experience andbroad knowledge in the resources/energy industry-

Possesses extensive experience and knowledge in finance, as
well as professional knowledge and experience as an attorney, in
addition to management experience in financial institutions

Board of Directors meetings 15/15

Possesses extensive experience and knowledge in finance, as wellas professional knowledge and experience as an attorney-

Possesses extensive experience and knowledge in financial
matters

Board of Directors meetings 15/15
Audit & Supervisory Board meetings 12/12

To utilize in our company’s auditing procedures his rich experiencein the oil development industry, as well as his knowledge in financial
and accounting matters, in addition to accounting experience-

To utilize in our company’s auditing procedures his rich experiencein the energy industry, as well as his knowledge in financial andaccounting matters, in addition to accounting experience

Board of Directors meetings 15/15
Audit & Supervisory Board meetings 12/12

Internal Committees
To further enhance the efﬁcacy of the corporate governance function, INPEX has
set up 1 the Advisory Committee, 2 theCompliance Committee and 3 the CSR
Committee. In addition, the Company
maintains 4 the Corporate HSE Committee, 5 the Information Security Committee and 6 the INPEX Value Assurance System Committee to appropriately manage
risks associated with business operations.

3 CSR Committee

In April 2012, INPEX Group established
the CSR Committee with the aims of better
fulﬁlling its corporate social responsibility
and promoting activities that contribute to
the sustainable development of society.
The committee puts in place fundamental
policies and formulates important measures designed to promote CSR.

4 Corporate HSE

Committee

In accordance with the HSE Management
System, the Corporate HSE Committee
was established in October 2007 to promote health, safety and environment initiatives. In addition to formulating corporate
HSE policies and priority targets for eachperiod, the committee advances HSE activities across the organization.

1 Advisory Committee
Board of Directors

Executive Committee

5 Information Security

Committee

The Advisory Committee was establishedin October 2012 with the aim of enhancing corporate value and the corporate
governance function. Comprised of external experts in a broad spectrum of ﬁelds,
the committee provides the Board of
Directors with multifaceted and objective
advice and recommendations across awide range of areas. Areas of discussion
and advice include international politicaland economic conditions, an outlook ofenergy conditions and ways in which tobolster corporate governance.

The Information Security Committee wasestablished in November 2007 to consider and determine all appropriate measures necessary to maintain, manage andstrengthen information security. The committee also takes steps to address any incident relating to information security andto put in place preventive measures.

6 INPEX Value Assurance

System Committee

The INPEX Value Assurance System Committee was established in May 2014 to contribute to the Company’s decision-making
process with respect to conﬁrmation of thestatus of preparations in connection with
important milestones of those oil and natural gas upstream business projects in which
INPEX participates, and the improvement
and promotion of project value.

The Advisory Committee deliberating on an important matter

2 Compliance Committee

The Compliance Committee was established in April 2006 with the aim of promoting compliance initiatives across theentire Group. The committee formulates
fundamental compliance policies applicable to the Group, deliberates on importantmatters and manages the manner in which
compliance is practiced.

Information Disclosure and Activities for
the Beneﬁt of Shareholders and Investors

5

biannual meetings on its ﬁnancial results for analysts and institutional investors. Video archives of these ﬁnancial results presentations are provided on the Company’s IR Web site together with asimultaneous interpretation in English. In general, INPEX undertakes overseas IR road shows covering such regions as Europe,
North America and Asia. Furthermore, INPEX strives to participate
in conferences attended by domestic and overseas investors
while engaging in one-on-one meetings.
The Company’s Web site (IR section: www.inpex.co.jp/
english/ir/) features a host of IR tools including ﬁnancial reports,ﬁnancial results presentations and annual reports. Together withrecent news releases, every
effort is made to disclose
pertinent information on the
Company’s
performanceand ﬁnancial position, as wellas trends in crude oil prices,foreign currency exchange
rates, the Company’s shareprice and stock information. Toshiaki Kitamura, President & CEO, at an IR presentation

Sustainability & Governance

INPEX undertakes the early delivery of convocation notices for its
general meeting of shareholders in an effort to ensure that shareholders have sufﬁcient time to consider agenda items tabled
for resolution at each Ordinary General Meeting of Shareholders. The Convocation Notice for INPEX’s 9th Ordinary General
Meeting of Shareholders held in June 2015 was posted on the
Company’s Web site more than three weeks prior to the meetingon May 29, 2015. The Convocation Notice itself was dispatchedon June 2, 2015. To facilitate the exercise of voting rights, INPEX
implemented the exercise of voting rights via the Internet. The
Company also adopted a platform for the electronic use of voting
rights while posting copies of the convocation notice and otherrelated documents, both in Japanese and English, on its Web site
and TDnet (Timely Disclosure network).
Turning to the Company’s IR activities, INPEX participates in
events such as IR fairs for individual investors and meetings in avariety of venues including the branch ofﬁces of securities ﬁrms.
More than 10 information meetings for individual investors are
generally held each year. Video archives of certain meetings arealso made available on the Company’s Web site. INPEX holds

meeting for individual investors in March 2015

INPEX CORPORATION Annual Report 2015045

Board of Directors(As of June 24, 2015)

Naoki Kuroda Chairman

Toshiaki Kitamura President & CEO

April 1963

April 1972

Years of service as Director: 9 years, Number of shares owned: 32,700 shares

Years of service as Director: 5 years, Number of shares owned: 22,400 shares

Joined Ministry of International Trade and Industry (currently Ministry of
Economy, Trade and Industry)
June 1992
Director-General for the Agency of Natural Resources and Energy
August 1993
Advisor to Bank of Tokyo Ltd. / Advisor to Mitsui Marine Insurance, Ltd.
(currently Bank of Tokyo-Mitsubishi UFJ, Ltd. / Mitsui Sumitomo InsuranceCo., Ltd.)
August 1995
Advisor to Sumitomo Corporation
June 1996
Managing Executive Director of Sumitomo Corporation
June 1999
Director of Indonesia Petroleum, Ltd. (INPEX Corporation)
April 2001
Representative Director, Executive Vice President of Sumitomo Corporation
August 2004
Senior Advisor to Sumitomo Corporation
September 2004 Representative Director, Executive Senior Vice
President of INPEX Corporation
June 2005
Representative Director, President of INPEX Corporation
April 2006
Representative Director, President of INPEX Holdings Inc. (currently theCompany)
June 2010
Representative Director, Chairman of the Company (incumbent)

Joined Ministry of International Trade and Industry (currently Ministry of
Economy, Trade and Industry)
Director-General for Trade and Economic Cooperation Bureau, Ministryof Economy, Trade and Industry
July 2003
Director-General for Manufacturing Industries Bureau, Ministry of Economy, Trade and Industry
June 2004
Director-General for Trade Policy Bureau, Ministry of Economy, Trade andIndustry
July 2006
Vice-Minister for International Affairs, Ministry of Economy, Trade andIndustry
November 2007 Adviser to Tokio Marine & Nichido Fire Insurance Co., Ltd.
April 2008
Visiting Professor of Waseda University Graduate School
August 2009
Senior Executive Vice President of the Company
June 2010
Representative Director, President & CEO of the Company (incumbent)
July 2002

Directors and Audit & Supervisory Board Members
A C
A C

ChairmanNaoki Kuroda
President & CEO Toshiaki Kitamura(1)

A C C H I

Director

Seiji Yui

(1)

Masaharu Sano(1)

C C H I VA Director
C H

Director

Shunichiro Sugaya

(1)

C I

Director

Masahiro Murayama

(1)

C H

Director

Seiya Ito

(1)

C C H I

Director

Wataru Tanaka

(1)

C H

Director

Takahiko Ikeda

(1)

C H I

Director

Yoshikazu Kurasawa(1)

Director (Outside)

Hiroshi Sato*

Director (Outside)

Seiji Kato

Director (Outside)

Yoshiyuki Kagawa

Director (Outside)

Hiroji Adachi*

Director (Outside)

Audit & Supervisory Board Member

Audit & Supervisory Board Member (Outside)(2) (4)(2) (4)(2) (4)

Yasuhiko Okada(2) (4)

Hideyuki Toyama*(3) (4)

Kazuo Yamamoto*

Audit & Supervisory Board Member (Outside)

Koji Sumiya

Audit & Supervisory Board Member (Outside)

Masaru Funai

Audit & Supervisory Board Member (Outside)(2) (4)

Michiro Yamashita*(3) (4)(3) (4)(3) (4)

Executive Officers
A C

President & CEO Toshiaki Kitamura

A C C H I

Senior Executive
Vice President

Senior Executive
C C H I VA Vice President

C H
C I
C H
C C H I
C H
C H I
C H
C H
C H
C
C
C H
C I

Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer
Managing
Executive Ofﬁcer

Seiji Yui
Masaharu Sano
Shunichiro Sugaya

Executive Ofﬁcer Hajime Kawai
Executive Ofﬁcer Atsushi Sakamoto
Executive Ofﬁcer Arihiro Kezuka

Senior Vice President, Masela Project
Senior Vice President,

Masahiro Murayama Finance & Accounting
Seiya Ito

Senior Vice President, Ichthys Project

Wataru Tanaka

Senior Vice President,
General Administration

Executive Ofﬁcer Nobuharu Sase
VA

Executive Ofﬁcer Tetsuro Tochikawa
Executive Ofﬁcer Yoshiro Ishii

VA

Executive Ofﬁcer Toshiya Oshita

Takahiko Ikeda

Senior Vice President,
Gas Supply & Infrastructure

Yoshikazu Kurasawa

Senior Vice President, New Ventures

Shuhei Miyamoto

Senior Vice President,
the Americas & Africa

Kenji Kawano

Senior Vice President, Asia & Australasia

Executive Ofﬁcer Hiroshi Nakamura

Yasuhisa Kanehara

Senior Vice President,
Eurasia & Middle East

Executive Ofﬁcer Tsuyoshi Watanabe

Hiroshi Fujii

Vice President, Eurasia & Middle East

Shigeharu Yajima

Senior Vice President, Oil & Gas Business
Senior Vice President,

Yoshinori Yamamoto Domestic Oil & Gas Business
Kimiya Hirayama

Senior Vice President, Domestic Project

Takashi Kubo

Senior Vice President, Logistics & IMT

Executive Officer Noboru Himata

046

Executive Officer Hirohisa Ota

Senior Vice President,
Corporate Strategy & Planning In chargeof Compliance of the Company
Senior Vice President,
Technical Headquarters In charge of HSEof the Company

INPEX CORPORATION Annual Report 2015

Vice President,
Finance & Accounting
General Manager, Finance Unit

Executive Ofﬁcer Kimihisa Kittaka
Executive Ofﬁcer Hideki Iwashita
VA

Executive Ofﬁcer Tetsuo Yonezawa

Vice President, Masela Project
General Manager, Technical Unit
Vice President, Masela ProjectVice President Commercial, Jakarta Ofﬁce
Vice President, Ichthys Project
Director, Onshore Project, Perth Ofﬁce
Vice President, Ichthys Project
General Manager, Technical Unit
Vice President, Oil & Gas Business
General Manager, Oil Marketing Unit
Vice President, Technical Headquarters
General Manager, Technical Planning & Coordination
Vice President, Corporate Strategy & Planning
General Manager, New Business Planning Unit
Vice President, Technical Headquarters
General Manager, Technical Resources Unit
Vice President, Corporate Strategy & Planning
General Manager of Corporate Strategy & Planning Unit
General Manager, Corporate Communications Unit
Vice President, Ichthys Project
Director, Commercial Coordination, Perth Ofﬁce
General Manager, HSE Unit
Vice President, General Administration
General Manager, Human Resources Unit
Vice President, General Administration
General Manager, General Administration Unit

* Newly appointed directors and Audit & Supervisory
Board members(1) Concurrently hold the position of executive ofﬁcer(2) Outside directors as deﬁned in Article 2, Item 15,of the Companies Act(3) Outside Audit & Supervisory Board members as
deﬁned in Article 2, Item 16, of the Companies Act(4) Independent directors/auditors as deﬁned in
Article 436, Item 2, Sub-Item 1, of the Securities
Listings Regulations for the Tokyo Stock Exchange

Member of Internal Committees

A Advisory Committee
C Compliance Committee

C CSR Committee

H Corporate HSE Committee

I Information Security Committee

VA INPEX Value Assurance System
Committee

Seiji Yui

Masaharu Sano

Shunichiro Sugaya

Masahiro Murayama

Years of service as Director: 9 years,
Number of shares owned: 19,000 shares

Years of service as Director: 9 years,
Number of shares owned: 20,000 shares

Years of service as Director: 6 years,
Number of shares owned: 16,000 shares

Years of service as Director: 6 years,
Number of shares owned: 16,200 shares

Director, Senior Executive Vice President

Director, Senior Executive Vice President

Director, Managing Executive Ofﬁcer

Director, Managing Executive Ofﬁcer

Seiya Ito

Wataru Tanaka

Takahiko Ikeda

Yoshikazu Kurasawa

Years of service as Director: 9 years,
Number of shares owned: 15,400 shares

Years of service as Director: 6 years,
Number of shares owned: 26,300 shares

Years of service as Director: 6 years,
Number of shares owned: 22,500 shares

Years of service as Director: 3 years,
Number of shares owned: 11,600 shares

Director, Managing Executive Ofﬁcer

Director, Managing Executive Ofﬁcer

Seiji Yui

Masaharu Sano
April 1974
April 2000

March 2001
March 2001
March 2002
March 2005
April 2006
October 2008
June 2012
June 2015

Joined Teikoku Oil Co., Ltd.
General Manager of Technical Planning Departmentof Teikoku Oil Co., Ltd.
Senior General Manager of Teikoku Oil Co., Ltd.
General Manager of New Ventures Department,International Projects Division of Teikoku Oil Co., Ltd.
Director, General Manager of New Ventures Department, International Projects Division of Teikoku Oil Co.,Ltd.
Managing Director, President of International Projects
Division / Domestic Offshore Division of Teikoku OilCo., Ltd.
Director, Deputy Senior General Manager of Corporate Strategy & Planning Division / Technology Division of INPEX Holdings Inc. (currently the Company)
Director, Senior Managing Executive Ofﬁcer, SeniorVice President of The Americas & Africa Project
Division of the Company
Director, Senior Managing Executive Ofﬁcer, SeniorVice President
Director, Senior Executive Vice President, Senior Vice
President of Technical Headquarters, in charge of HSEof the Company (incumbent)

Shunichiro Sugaya
April 1976
April 1997

June 2001
June 2002

Joined Indonesia Petroleum, Ltd. (INPEX Corporation)
General Manager of Development Department of
INPEX Corporation
Director, General Manager of Development
Department of INPEX Corporation
Director, Coordinator in charge of Development
Department of INPEX Corporation

September 2005 Director, Senior General Manager of Asia Project
Division, Assistant Senior General Manager ofTechnology and HSE Division and Coordinator in
charge of Asia region / technology and HSE of INPEXCorporation
June 2007
Managing Director, Senior General Manager of Asia
Project Division of INPEX Corporation
October 2008 Director, Managing Executive Ofﬁcer, Senior Vice
President of Masela Project of the Company (incumbent)

Masahiro Murayama
April 1976

Joined The Industrial Bank of Japan, Ltd.
(currently Mizuho Bank, Ltd., etc.)
General Manager of Financial Institutions Banking
Division No. 2 of The Industrial Bank of Japan, Ltd.
June 2001
General Manager of Corporate Banking Department
No. 2 of The Industrial Bank of Japan, Ltd.
April 2002
General Manager of Corporate Banking Division
No. 9 of Head Ofﬁce of Mizuho Corporate Bank, Ltd.
(currently Mizuho Bank, Ltd.)
December 2002 General Manager of Syndicated Finance Structuring
Division No. 1 of Mizuho Bank, Ltd.
October 2003 General Manager of Syndicated Finance Distribution
Division No. 1 of Mizuho Bank, Ltd.
April 2004
Executive Ofﬁcer, General Manager of SyndicatedFinance Distribution Division No. 1 of Mizuho Bank, Ltd.
October 2004 Executive Ofﬁcer, General Manager of Loan Trading
Division of Mizuho Bank, Ltd.
April 2005
Managing Executive Ofﬁcer, in charge of corporatebanking of Mizuho Bank, Ltd.
April 2008
Director, Deputy President of Mizuho Securities Co.,Ltd.
April 2009
Council of Mizuho Securities Co., Ltd.
May 2009
Advisor to the Company
June 2009
Director, Managing Executive Ofﬁcer, Senior Vice
President of Finance & Accounting of the Company(incumbent)
June 1999

Seiya Ito
April 1977
April 2002

Joined Indonesia Petroleum, Ltd. (INPEX Corporation)
General Manager of Corporate Planning &Management Department of INPEX Corporation
June 2003
Director, General Manager of Corporate Planning &Management Department of INPEX Corporation
November 2004 Director, General Manager of Corporate Planning &Management Department and Public Affairs
Department of INPEX Corporation
September 2005 Director, Assistant Senior General Manager ofCorporate Strategy & Administration Division, General
Manager of Corporate Strategy & Planning Unit andPublic Affairs Unit of INPEX Corporation
April 2006
Director, Assistant Senior General Manager ofCorporate Strategy & Administration Division, General
Manager of Corporate Strategy & Planning Unit of
INPEX Corporation
April 2006
Director, Assistant Senior General Manager of Corporate Strategy & Planning Division of INPEX Holdings
Inc. (currently the Company)
July 2006
Director, Deputy Senior General Manager of Oceania& America Project Division of INPEX Corporation
October 2008 Director, Managing Executive Ofﬁcer, Senior Vice
President of Ichthys Project of the Company (incumbent)

Wataru Tanaka
April 1977
June 2000

Joined Indonesia Petroleum, Ltd. (INPEX Corporation)
General Manager of Planning & New Ventures
Department of INPEX Corporation

Director, Managing Executive Ofﬁcer

June 2003
June 2004
October 2004
February 2007
April 2007
October 2008
June 2009
June 2011

Director, General Manager of Planning & New Ventures Department of INPEX Corporation
Director, Coordinator in charge of the Middle East andCaspian Sea regions of INPEX Corporation
Director, Deputy General Manager of Tehran Ofﬁce of
INPEX Corporation
Director, Coordinator in charge of Middle East projects of INPEX Corporation
Director, Assistant Senior General Manager of General
Administration and Corporate Planning Division of
INPEX Corporation
Managing Executive Ofﬁcer, Deputy Senior General
Manager of General Administration Division of theCompany
Director, Managing Executive Ofﬁcer, Senior Vice
President of General Administration Division of theCompany
Director, Managing Executive Ofﬁcer, Senior Vice
President of General Administration Division(incumbent) and Corporate Strategy & Planning
Division of the Company

Takahiko Ikeda
April 1978
March 2002
March 2004
March 2005
April 2006

June 2007
October 2008
June 2014

Joined Teikoku Oil Co., Ltd.
General Manager of Production Department, Domestic Operating Division of Teikoku Oil Co., Ltd.
Senior General Manager of Teikoku Oil Co., Ltd.
Director of Teikoku Oil Co., Ltd.
General Manager of Domestic Project Planning and
Administration Unit, Corporate Strategy &Administration Division of INPEX Holdings Inc.
(currently the Company)
Managing Director, President of Domestic Operation
Division and General Manager of Niigata District
Department of Teikoku Oil Co., Ltd.
Director, Managing Executive Ofﬁcer, Senior Vice
President of Domestic Projects of the Company
Director, Managing Executive Ofﬁcer, Senior Vice President of Gas Supply & Infrastructure of the Company(incumbent)

5
Sustainability & Governance

April 1975
Joined Indonesia Petroleum, Ltd. (INPEX Corporation)
September 1999 General Manager of Jakarta Ofﬁce of INPEXCorporation
June 2000
Director, General Manager of Jakarta Ofﬁce of INPEXCorporation
March 2003
Director, Coordinator of Exploration Department 1
and Exploration Department 2 of INPEX Corporation
June 2003
Managing Director of INPEX Corporation
April 2004
Managing Director of Japan Oil Development Co.,Ltd.
March 2006
Representative Director, Managing Director of JapanOil Development Co., Ltd.
April 2006
Director, Deputy Senior General Manager of Corporate Strategy & Planning Division and Technology Division of INPEX Holdings Inc. (currently the Company)
March 2007
Managing Director, Senior General Manager ofTechnology and HSE Division, in charge of Oceania &America projects of INPEX Corporation
June 2007
Managing Director, Senior General Manager ofTechnology and HSE Division and Oceania & America
Project Division of INPEX Corporation
October 2008 Director, Senior Managing Executive Ofﬁcer, SeniorVice President of Asia & Australasia of the Company
June 2012
Director, Senior Managing Executive Ofﬁcer, SeniorVice President of Corporate Strategy & Planning
Division of the Company
June 2014
Director, Senior Executive Vice President, Senior Vice
President of Corporate Strategy & Planning Division of
the Company (incumbent)
June 2015
Director, Senior Executive Vice President, Senior Vice
President of Corporate Strategy & Planning, in chargeof Compliance of the Company (incumbent)

Director, Managing Executive Ofﬁcer

Yoshikazu Kurasawa
April 1982
February 2004

Joined Japan National Oil Corporation
Deputy General Manager of Planning & New Ventures
Department of INPEX Corporation
April 2005
General Manager of Planning & New Ventures
Department of INPEX Corporation
September 2005 General Manager of Business Development and Legal
Unit, General Administration & Corporate
Planning Division of INPEX Corporation
April 2006
General Manager of Overseas Project Planning and
Administration Unit, Corporate Strategy &Administration Division of INPEX Holdings Inc.
(currently the Company)
June 2007
Executive Ofﬁcer, General Manager of Business
Development and Legal Unit, General Administration& Corporate Planning Division of INPEX Corporation
October 2008 Executive Ofﬁcer, Assistant Senior General Manager
of Corporate Strategy & Planning, General Manager
of Business Development and Legal Unit of theCompany
June 2011
Managing Executive Ofﬁcer, Vice President ofCorporate Strategy & Planning of the Company
June 2012
Director, Managing Executive Ofﬁcer, Senior Vice President of New Ventures of the Company (incumbent)

INPEX CORPORATION Annual Report 2015047

Hiroshi Sato

Yoshiyuki Kagawa

Seiji Kato

Hiroji Adachi

Years of service as Director: - years**(Years of service as Audit & Supervisory Board
Member: 9 years)
Number of shares owned: - shares

Years of service as Director: 8 years,
Number of shares owned: - shares

Years of service as Director: 5 years,
Number of shares owned: - shares

Years of service as Director: - years**,
Number of shares owned: - shares

Director (Outside)

Hiroshi Sato
April 1970
June 1999
June 2002
June 2005
April 2006
June 2006
June 2007
June 2010
June 2014
June 2015

Director (Outside)

June 2007
Joined Japan Petroleum Exploration Co., Ltd. (JAPEX)
General Manager of Finance and Accounting
Department of JAPEX
Director, General Manager of Finance and Accounting
Department of JAPEXManaging Executive Ofﬁcer of JAPEX
Audit & Supervisory Board Member (part-time) of INPEX
Holdings Inc. (currently the Company) (incumbent)
Managing Director & Executive Ofﬁcer of JAPEX
Senior Managing Director & Executive Ofﬁcer of JAPEX
Executive Vice President & Executive Ofﬁcer of JAPEX
Advisor of JAPEX (incumbent)
Director of the Company (incumbent)

April 1970
Joined Mitsui & Co., Ltd.
September 2001 Director of Mitsui Oil Exploration Co., Ltd.
October 2001 Chief Operating Ofﬁcer of Energy Business Unit,
Energy Group of Mitsui & Co., Ltd.
April 2002
Managing Ofﬁcer, Chief Operating Ofﬁcer of Energy
Business Unit, Energy Group of Mitsui & Co., Ltd.
April 2003
Executive Managing Ofﬁcer, Chief Operating
Ofﬁcer of Energy Business Unit of Mitsui & Co., Ltd.
April 2005
Representative Director, Executive Vice President of
Mitsui Oil Exploration Co., Ltd.
June 2005
Representative Director, President, CEO of Mitsui Oil
Exploration Co., Ltd.
June 2006
Representative Director, President, CEO and CCO of
Mitsui Oil Exploration Co., Ltd.

Kazuo Yamamoto

Audit & Supervisory Board Member

Years of service as Audit & Supervisory Board
Member: - years**,
Number of shares owned: 8,900 shares

Seiji Kato
April 1971
July 1997

Joined Mitsubishi Corporation
General Manager of LNG Business Department of
Mitsubishi Corporation
Senior Vice President, Division COO of Natural Gas
Business Division of Mitsubishi Corporation
Senior Vice President, Division COO of Natural Gas
Business Division B of Mitsubishi Corporation
Executive Vice President, Group COO of
Energy Business Group of Mitsubishi Corporation
Executive Vice President, Group CEO of
Energy Business Group of Mitsubishi Corporation
Director of the Company (incumbent)
Corporate Adviser of Mitsubishi Corporation(incumbent)

April 2003
April 2006
April 2007

June 2010
June 2011

Hiroji Adachi
April 1982
July 2004
April 2008

Yasuhiko Okada

Director (Outside)

Director of INPEX Holdings Inc.
(currently the Company) (incumbent)
Senior Advisor of Mitsui Oil Exploration Co., Ltd.
(incumbent)

June 2012

April 2008

Yoshiyuki Kagawa

Joined Nippon Oil Co., Ltd.
General Manager of Technical & Engineering Service
Department, Reﬁning Technology & Engineering
Division of Nippon Oil Corporation
Executive Ofﬁcer, General Manager of Technical &Engineering Service Department, Reﬁning Technology& Engineering Division of Nippon Oil Corporation

July 2010

June 2012
June 2014
June 2015
June 2015

Director (Outside)

Years of service as Director: 3 years,
Number of shares owned: - shares

Executive Ofﬁcer, General Manager of Technical &Engineering Service Department, Reﬁning Technology& Engineering Division of JX Nippon Oil & Energy
Corporation
Senior Vice President and Executive Ofﬁcer, General
Manager of Mizushima Reﬁnery of JX Nippon Oil &Energy Corporation
Senior Vice President and Executive Ofﬁcer, General
Manager of Corporate Planning Dept. I of JX Holdings,
Inc.
Director, Senior Vice President, in charge of Corporate
Planning Dept. I & Corporate Planning Dept. II of JX
Holdings, Inc. (incumbent)
Director of the Company (incumbent)

Yasuhiko Okada
April 1966
July 1994
May 1995
July 1999
June 2003
January 2012
June 2012

Joined Ministry of FinanceDirector-General for the Tokyo Regional Taxation
BureauSecretary-General of Executive Bureau, Securities andExchange Surveillance Commission
Administrative Vice-Minister of Environment Agency(currently Ministry of the Environment)
President of National Association of Labour Banks;
President of The Rokinren Bank
Attorney at Law admitted to practice in Japan; Partnerof Kitahama Partners (Tokyo Ofﬁce) (incumbent)
Director of the Company (incumbent)

Hideyuki Toyama

Koji Sumiya

Michiro Yamashita

Masaru Funai

Years of service as Audit & Supervisory
Board Member: - years**,
Number of shares owned: - shares

Years of service as Audit & Supervisory
Board Member: 5 years,
Number of shares owned: 7,600 shares

Years of service as Audit & Supervisory
Board Member: - years**,
Number of shares owned: - shares

Years of service as Audit & Supervisory
Board Member: 5 years,
Number of shares owned: - shares

Audit & Supervisory
Board Member (Outside)

Kazuo Yamamoto
April 1978
March 2002

Joined Teikoku Oil Co., Ltd.
General Manager of Petroleum Products Marketing
Department, Marketing Division of Teikoku Oil Co., Ltd.
August 2003
General Manager of Petroleum Products Marketing
Department and Power Business Department, Marketing Division of Teikoku Oil Co., Ltd.
March 2004
Senior General Manager, General Manager of Petroleum
Products Marketing Department and Power Business
Department, Marketing Division of Teikoku Oil Co., Ltd.
March 2005
Director, General Manager of Technical Planning
Department and Deputy General Manager of LNG
Planning Ofﬁce of Teikoku Oil Co., Ltd.
April 2006
General Manager of Technology Planning Unit,
Technology Division of INPEX Holdings Inc. (currently
the Company)
October 2008 Executive Ofﬁcer, Assistant to General Manager ofTechnical Division, General Manager of Technical
Planning Unit of the Company
November 2010 Executive Ofﬁcer, Assistant to General Manager ofTechnical Division, General Manager of Technical
Infrastructure Unit of the Company
June 2011
Managing Executive Ofﬁcer, General Manager of
Logistics & IMT Division of the Company
June 2015
Audit & Supervisory Board Member of the Company(incumbent)

Hideyuki Toyama
April 1975
July 2001

Joined Ministry of FinanceDirector-General of Sapporo Regional Taxation Bureau,
National Tax Agency (NTA)
July 2003
Executive Secretary of the Administration Ofﬁce of the
Director-General, Cabinet Legislation Bureau (CLB)
July 2005
Director-General of the Fourth Department, CLB
October 2006 Director-General of the Third Department, CLB
November 2012 Advisor, Aioi Nissay Dowa Insurance Co., Ltd.
January 2013
Registered as attorney-at-law (incumbent)
April 2013
Visiting Professor, Graduate School of Public Policy,
University of Tokyo (incumbent)
June 2015
Audit & Supervisory Board Member of the Company(incumbent)

048

Director (Outside)

INPEX CORPORATION Annual Report 2015

Audit & Supervisory
Board Member (Outside)

Koji Sumiya
April 1976
April 2001
April 2002
October 2005
October 2007
October 2008
May 2010
June 2010

Audit & Supervisory
Board Member (Outside)

Joined The Export-Import Bank of Japan (currently
Japan Bank for International Cooperation)
Director General, International Finance Department I
of Japan Bank for International Cooperation (Currently
Japan Bank for International Cooperation)
Director General, Policy Planning and Coordination
Department of Japan Bank for International Cooperation
Resident Executive Director, Osaka Branch of Japan
Bank for International Cooperation
Senior Executive Director of Japan Bank for International Cooperation
Managing Executive Ofﬁcer of Japan Bank forInternational Cooperation, Japan Finance Corporation(Currently Japan Bank for International Cooperation)
Retired from Japan Bank for International Cooperation,
Japan Finance Corporation
Audit & Supervisory Board Member of the Company(incumbent)

Masaru Funai
April 1972
April 1998
April 2000
April 2001
April 2002
April 2003
April 2005

June 2005

April 2007

Michiro Yamashita
April 1982
June 2005
April 2010
June 2011
July 2012
June 2013
June 2015

Joined Japan Petroleum Exploration Co., Ltd. (JAPEX)
General Manager of Corporate Strategy Department of
JAPEX
Vice President of Environment and Innovative Technology Projects Division of JAPEX
Vice President of Environment and Innovative Technology Projects Division of JAPEX
Senior Advisor, Assistant to Executive Ofﬁcer in chargeof Finance & Accounting Department of JAPEX
Executive Ofﬁcer in charge of Finance & Accounting
Department of JAPEX (incumbent)
Audit & Supervisory Board Member (part-time) of theCompany (incumbent)

April 2009

April 2010
June 2010
April 2011

Audit & Supervisory
Board Member (Outside)

Joined Marubeni Corporation
General Manager, Corporate Planning & Coordination
Department of Marubeni Corporation
Executive Vice President and CFO of Marubeni America
Corporation
Executive Vice President, CFO and CAO of Marubeni
America Corporation
General Manager, Risk Management Department ofMarubeni Corporation
Corporate Vice President, General Manager, Corporate
Planning & Coordination Department of Marubeni
Corporation
Corporate Senior Vice President, CIO, Executive
Corporate Ofﬁcer, Human Resources Department,
Information Strategy Department and Risk Management Department of Marubeni Corporation
Corporate Senior Vice President, Member of the Board,
CIO, Executive Corporate Ofﬁcer, Human Resources
Department, Information Strategy Department and Risk
Management Department of Marubeni Corporation
Corporate Executive Vice President, Member of theBoard, Executive Corporate Ofﬁcer, General Affairs
Department, Human Resources Department, Risk
Management Department and Legal Department ofMarubeni Corporation
Senior Executive Vice President, Member of the Board,
CIO, Chief Operating Ofﬁcer, Information Strategy
Department, Corporate Accounting Department,
Business Accounting Department-I, Business Accounting Department-II, Business Accounting Department-III
and Finance Department, Senior Operating Ofﬁcer,
Audit Department, Chief Operating Ofﬁcer, Investor
Relations of Marubeni Corporation
Senior Executive Vice President, Member of theBoard, Senior Operating Ofﬁcer, Audit Department ofMarubeni Corporation
Audit & Supervisory Board Member (part-time) of theCompany (incumbent)
Senior Consultant of Marubeni Corporation** Appointed in June 2015

Financial &Corporate Information
9-Year Financial Information

050

Message from the Senior Vice President,
Finance & Accounting

052

Background Information: Oil and Gas
Accounting Policies and Treatment

053

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

056

Consolidated Financial Statements/
Notes to Consolidated Financial Statements

062

Independent Auditor’s Report

081

Subsidiaries and Afﬁliates

082

Business Risks

084

Oil and Gas Reserves and Production Volume092

Corporate Information095

9-Year Financial Information
INPEX CORPORATION and Consolidated Subsidiaries

The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a mat ter ofarithmetic computation only, at ¥120.27=US$1.00, the approximate exchange rate in effect as of March 31, 2015.
Millions of yen

2007/3

2008/3

2009/3

2010/3

2011/3

2012/3

Net sales¥   969,713¥ 1,202,965¥ 1,076,165¥   840,427¥   943,080¥ 1,186,732

Cost of sales    343,795    390, 554    319,038    298,168    334,833    395,443

Gross profit    625,918    812,411    757,127    542,259    608,247    791,289

Operating income    559,077    714,211    663,267    461,668    529,743    709,358

Income before income taxes andminority interests    586,263    685,800    616,167    442,027    508,587    767,039

Net income¥   165,092¥   173,246¥   145,063¥   107,210¥   128,699¥   194,001

Current assets¥   474,124¥   565,111¥   411,110¥   492,855¥   492,932¥    908,702

Tangible fixed assets    219,227    254,481    297,636    358,094    379,862    383,698

Intangible assets    265,822    265,481    253,681    239,205    249,111    233,318

Investments and other assets    648,934    722,828    805,618    923,624  1,558,475  1,540,680

Total assets  1,608,107  1,807,901  1,768,045  2,013,778  2,680,380  3,066,398

Current liabilities    266,248    325,286    206,059    227,905    254,729    367,844

Long-term liabilities    261,843    243,802    199,925    295,270    328,268    384,361

Net assets¥ 1,080,016¥ 1,238,813¥ 1,362,061¥ 1,490,603¥ 2,097,383¥ 2,314,193¥   231,982¥   363,995¥   230,352¥   241,373¥   274,094¥   320,692(209,243)(261,767)(240,168)(251,812)(844,511)(280,864)

13,794(45,228)(46,090)

68,937    548,057     29,294¥   189,417¥   222,270¥   162,845¥   216,395¥   182,025¥   249,233¥1,091.17*¥1,227.92*¥1,350.25*¥1,473.87*¥1,367.40*¥1,492.27*

Cash dividends per share (Yen)

17.50*

18.75*

20.00*    13.75*    15.00*    17.50*

Earnings per share (EPS) (Yen)¥  176.06*¥  183.78*¥  154.00*¥  113.88*¥  102.08*¥  132.84*(Results of operations)(Financial position)(Cash flows)
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents at endof the period(Per share data)
Net assets per share (Yen)* Retroactively adjusted for a stock split at a ratio of 1:400 of common stock on October 1, 2013.

(Financial indicators)

050

Net debt / Net total capital
employed (%)(18.6)%(36.1)%(31.2)%(30.6)%(48.9)%(60.7)%

Equity ratio (%)

64.0

64.0

71.9

68.9

74.5

71.1

D/E ratio (%)

24.2%

16.8%

12.9%

17.3%

13.7%

14.6%

INPEX CORPORATION Annual Report 2015

Thousands of
U.S. dollars

Millions of yen

2014/3

2015/3

2015/3¥ 1,216,533¥ 1,334,626¥ 1,171,227$ 9,738,314    426,326    490,417    525,444  4,368,870    790,207    844,209    645,783  5,369,444    693,448    733,610    534,886  4,447,377    718,146    750,078    540,023  4,490,089¥   182,962¥   183,691¥    77,820$   647,044¥ 1,106,504¥ 1,140,204¥ 1,342,410$11,161,636    584,541    951,779  1,497,622

12,452,166    380,156    439,179    458,770  3,814,501  1,544,958  1,506,977  1,200,352  9,980,477  3,616,159  4,038,139  4,499,154

37,408,780    414,977    375,670    365,212  3,036,601    530,198    666,432    845,238  7,027,837¥ 2,670,984¥ 2,996,037¥ 3,288,704$27,344,342¥   252,347¥   213,514¥   216,749$ 1,802,187(489,870)(395,555)(81,087)(674,208)    137,069     48,961(4,178)(34,739)¥   199,859¥   117,531¥   260,978$ 2,169,934¥1,699.10*¥1,911.25*¥  2,099.95$     17.46    17.50*    18.00*

      18.00

       0.15¥  125.29*¥  125.78*¥     53.29$      0.44

(43.9)%(31.9)%(16.8)%(16.8)%

68.6

69.1

68.2

68.2

19.2%

20.9%

22.1%

22.1%

Notes
*	EBIDAX = Net income + Minority interests + Deferred tax + (1– Tax rate) × (Interest expense – Interest income) + Foreignexchange gain and loss + Depreciation and amortization +Amortization of goodwill + Recovery of recoverable accounts under
production sharing (capital expenditures) + Exploration expenses +Provision for exploration projects + Provision for allowance forrecoverable accounts under production sharing + Impairment loss*	Net assets excluding minority interests = Net assets – Minority
interests*	Equity ratio = Net assets excluding minority interests / Total assets
Net debt = Interest-bearing debt – Cash and cash equivalents*	– Time deposits – Certificate of deposits – Public bonds and cor­porate bonds and other debt securities with determinable value– Long-term time deposits*	Net debt / Net total capital employed = Net debt / (Net assets +Net debt)*	D/E ratio = Interest-bearing debt / (Net assets – Minority interests)
ROE = Net income / Average of net assets excluding minority*	interests at the beginning and end of the year*	
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 year*	The reserves cover most of INPEX group projects including theequity-method affiliates. The reserves from March 31, 2007 to
March 31 2010 were evaluated by DeGolyer & MacNaughton, andfrom March 31, 2011, the reserves of projects which are expected
to be invested a large amount and affect the Group’s future resultmaterially are evaluated by DeGolyer & MacNaughton, and theothers are done internally.
	The proved reserves are evaluated in accordance with SEC
regulations.
	The probable reserves are sum of proved reserves and probablereserves evaluated in accordance with SPE/WPC/AAPG/SPEE
guideline Petroleum Resources Management System 2007(PRMS)
approved in March 2007 after deduction of proved reserves evalu­
ated in accordance with SEC regulations. Probable reserves as ofMarch 31, 2007 are evaluated in accordance with the guideline
established by SPE and WPC (1997 SPE/WPC).
	Possible reserves are evaluated in accordance with PRMS.
*	Production volumes are calculated in accordance with SEC regu­
lations and include the equity-method affiliates. The production
	volume of crude oil and natural gas under the production sharing
contracts entered into by the Group corresponds to the net eco­nomic take of the Group.
	Calculation of the conversion factor from gas to oil equivalent wasaltered from the year ended March 31, 2012.

6

Notes: In consolidated financial statements, amounts are basicallyrounded to the nearest million.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

2013/3051

Message from the Senior Vice President,
Finance & Accounting

I would like to take this opportunity to provide
an overview of the Group’s business results highlights
as well as details of its investment plans and funding.
billion, up¥292.7 billion compared with the balance asof March 31, 2014. This included an increase in translation adjustments of ¥241.3 billion attributable to theweak yen. Accounting for each of these factors, theequity ratio stood at 68.2% as of March 31, 2015, withnet debt to net total capital employed coming in atnegative 16.8%. Looking ahead, the Group will undertake essential investments while working to maintain arobust ﬁnancial position.

Investment Plans and Funding

Masahiro Murayama

Director, Senior Vice President, Finance & Accounting

Business Results Highlights for
the Year Ended March 31, 2015

Consolidated net sales for the year ended March 31,
2015, amounted to ¥1,171.2 billion, a decrease of
12.2% compared with the previous period. From a
proﬁt perspective, consolidated net income fell 57.6%
year on year to ¥77.8 billion. Despite the positive
ﬂow-on effect attributable to the weak yen (year-onyear depreciation of 9.6%), revenue declined owing
mainly to the drop in crude oil prices (year-on-year
decrease of 19.5%), which substantially drove down
sales by ¥227.5 billion. While this downturn in revenue
contributed to a lower tax burden, the Group reported
a decline in earnings after posting a one-off impairment loss.
Turning to the Group ’s financial position, consolidated total assets as of March 31, 2015, stood at¥4,499.2 billion, up ¥461.0 billion compared withthe previous period-end. This largely reflected theincrease in tangible ﬁxed assets of ¥545.8 billion. Total
off-balance-sheet assets on a 100% basis of the Ichthys
LNG Project downstream operating company, in which
the Group holds a 62.245% equity share, amounted
to ¥2,256.6 billion as of March 31, 2015. The balanceof net assets as of March 31, 2015 came in at ¥3,288.7

052

INPEX CORPORATION Annual Report 2015

The Group will continue to undertake exploration anddevelopment investments aimed at future growth inline with its investment plan covering the ﬁve-year
period from the year ended March 31, 2013 to theyear ending March 31, 2017, put in place in May 2012.
In procuring the necessary funds to undertake theseinvestments, the Group will look to procure U.S. dollar
funds through external loans including project ﬁnance,
operating cash ﬂows also in U.S. dollars, and available
cash on hand. The vast majority of cash on hand available for use totaling ¥1,263.2 billion as of March 31,
2015 was denominated in U.S. dollars. Accordingly, theGroup does not expect its funding burden to increase
as a result of a decline in the value of the yen.

Investment Plan (Results / Forecasts)(¥ billion)■Development* ■Exploration ■Other Capital Expenditures**

961.2

938.1

903.0

• Cash available
on hand787.7（¥1,263.2 billion）

568.0
853.2

846.4

824.0

489.0

70.9

66.2

37.1

2013

2014

25.5

2015

(Pre-exploration
investment)• External loans

695.4

65.0
27.3

•Yearly operating
cash flow

47.0
32.0

64.0
15.0

2016

2017

(Project ﬁnance, etc.,
signed in December
2012 for the Ichthys
LNG Project)*Ichthys downstream business included in development expenditures**Investments mainly in the Naoetsu LNG Terminal and pipeline-related facilities in Japan

Background Information
Oil and Gas Accounting Policies and Treatment
ACCOUNTING METHODS FOR TYPES OF AGREEMENTS
The oil and gas business generates the bulk of consolidated net

after the first two portions have been allocated. It is allocatedsales revenues for INPEX CORPORATION and its consolidated

between the host country’s government and the contractors

subsidiaries (the “Group”). Two types of agreements govern

based on agreed percentages.

the Group’s oil and gas operations. One is production sharing
contracts (the “PSCs”) and the other is concession agreements.

The calculation of items in the income statement basedon the above PSC-related considerations is as follows:

The latter category also includes domestic mining rights, as well
as overseas permits, licenses and lease agreements.

• The Group records as net sales its share of total sales
relating to the oil and gas production that is allocated to

1. Production sharing contracts

contractors under the PSCs.
• The Group books as cost of sales the portion of “Recoverable

Production sharing contract is an agreement by which one

accounts under produc tion sharing” that is recoveredor sever al oil and gas development companies ser ve as

through the allocation of its share of the “cost recovery

contractors that undertake at their own expense exploration andportion.”development work on behalf of the governments of oil-producing
countries or national oil companies and receive production fromthe projects as cost recovery and compensation.

Cost recovery and production sharing
The PSCs determine the allocation of oil and gas production
among the host country’s government (or related entity) and thecontractors such as the Group. The allocation formula generally
dif fers according to the terms of the individual PSC. The
overview below is specific to one type of PSC typical of many oil
and gas projects in Indonesia, a country with which the Grouphas concluded numerous PSCs.
Under this type of arrangement, the total production in any
given year or other accounting period is allocated at the end of
the period between three portions.

(1) “First tranche petroleum”: This is a prescribed portionof total production allocated between the host country’s
g ove r n m e nt a n d t he co nt r ac to r s i n li ne w i t h ag re e dpercentages.

(3) “Equity portion”: This is any residual production that is left

Exploration costs
The share of recoverable exploration costs incurred by theGroup under the terms of the relevant PSC is capitalized within“Recoverable accounts under production sharing.”
Development costs
The share of all development costs incurred by the Group thatis recoverable under the terms of the relevant PSC is recorded
within “Recoverable accounts under production sharing.”
Production costs
Any operating costs incurred during the production phase thatare recoverable under the relevant PSC are initially recorded
within “Recoverable accounts under production sharing.”
Administrative expenses
Any administrative expenses that are recoverable under the
relevant PSC are recorded within “Recoverable accounts under
production sharing.”
As discussed above, in “Cost recover y and produc tion
sharing,” these costs are recovered either as capital or operating
expenditures.

Non-recoverable costs under the PSCs
Acquisition costs
Costs relating to the acquisition of rights (recorded as intangible
assets under “Exploration and development rights”) for any
projects governed by the PSCs that are entirely in the exploration
phase are expensed as incurred and amortized. Expenditures
or costs relating to the acquisition of rights to projects alreadyin the development or production phase are capitalized within“Exploration and development rights” and amortized based on
the unit-of-production method. These amortization costs arerecorded within “Depreciation and amortization.” Cost recovery
provisions in the PSCs do not generally cover these expenditures.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information(2) “Cost recovery portion”: This is the oil and gas equivalentof a) non-capital production-related expenditures incurred inthat period, plus b) the scheduled depreciation expenses inthat period for capital expenditures, as calculated under the
PSC. The equivalents are determined based on the current
unit prices of crude oil and natural gas and allocated between
the contractors alone. The quantity of oil and gas in the “costrecovery portion” decreases as unit prices increase, whereasthat of the “equity portion” (explained below) rises.
If the actual production for the period is insufficient tocover the quantity of oil and gas equivalent calculated forthe cost recover y por tion, the latter is capped at actual
production and any surplus amount is carried forward to thefollowing period, as stipulated in the PSC.

Recoverable costs under the PSCs

053

2. Concession agreements

Exploration costs
The Group’s share of exploration costs is expensed as incurred.

Conces sion agreement is an agreement or authorization

Development costs
The Group’s s hare of any develop ment cos t s related tomining facilities is capitalized within tangible fixed assets. The
depreciation of tangible fixed assets that are governed byconcession agreements is computed primarily using the unitof-production method for mining assets located outside Japanand the straight-line method for domestic facilities. These
depreciation expenses are recorded within the cost of sales.

(including mining rights awarded in Japan, as well as overseas
permits, licenses and lease agreements) by which a government
entity or a national oil company of the country directly awards
mining rights to an oil company. The oil company makes its own
investment in exploration and development and has the right ofdisposition of the oil and gas it extracts. Revenues are returnedto the host country in the form of royalties, taxes, etc., on sales.

Acquisition costs
Costs relating to the acquisition of rights (recorded as intangible
as s et s under “Mining r ight s”) for projec t s gover ne d byconcession agreements are treated in the same way as projects
governed by the PSCs, as described above.

Production sharing contracts
Costs

Exploration
costs

Production costs(Operating costs)

Concession agreements
Statement of
IncomeCosts

Assets on
Balance Sheet

Statement of
IncomeProject under
exploration phase

Provision for allowance
for recoverable
accounts under
production sharing

Explorationcosts

All exploration costs
are expensed
as incurred

Exploration
expenses

Project underdevelopment andproduction phase
Recoverable
accounts under
production sharing
Project underdevelopment andproduction phase

Acquisition
costs

Administrative expenses
The Group’s share of administrative expenses is expensed as
incurred.

Assets on
Balance Sheet

Recoverable
accounts under
production sharing
Development
costs

Production costs
The Group’s share of operating costs that are incurred during the
production phase is recorded within the cost of sales.

Exploration anddevelopment
rightsCost of sales(Recovery of recoverable
accounts under
production sharing(capital expenditures))

Tangible fixed

Production costs(Operating costs)

All production costs
are expensed
as incurred

Cost of sales(Operating expenses)

Acquisition
costs

Mining rights

Cost of sales(Depreciation andamortization)

Cost of sales(Recovery of recoverable
accounts under
production sharing(operating expenditures))

Selling, general andadministrative expenses(Depreciation andamortization)

Cost of sales(Depreciation andamortization)

Development
costs

assetsCRITICAL ACCOUNTING POLICIES AND ESTIMATESThe Group’s consolidated financial statements are preparedrational changes to such estimates could exert a material impact

in conformity with Japanese GAAP. The preparation of theseon the financial condition or operating results. Critical accounting

financial statements requires the application of estimates,

policies and estimates relating to the financial presentation are

judgments and assumptions that affect the reported values ofoutlined below.

assets and liabilities at the date of the financial statements, asreporting period. Actual results may differ from the previously— Allowance for recoverable accounts under
production sharing

estimated or assumed values.

Any expenditures made during the exploration, development

well as the reported amounts of revenues and expenses for the054

Accounting estimates pursuant to the preparation of theand production phases of projects governed by the PSCs areconsolidated financial statements are deemed critical if thecapitalized within “Recoverable accounts under production

degree of uncertainty associated with such estimates is high, or if

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

INPEX CORPORATION Annual Report 2015

reserve equal to exploration costs is recorded within “Allowance

expenditures of consolidated subsidiaries at the exploration

for recoverable accounts under production sharing” to provide

stage based on a schedule of investments in exploration.

for potential losses from unsuccessful exploration. This reserve

Although the Group believes that assessments relating to thetypically remains unchanged on the balance sheet until it exceeds

schedule of investments are reasonable, changes to the schedulethe residual balance of exploration costs that previously had

could significantly affect future operating results.

been capitalized within “Recoverable accounts under production
sharing” during the exploration phase. Reflecting the uncertainty— Provision for loss on businessassociated with oil and gas projects, a reserve is recorded within

A provision for loss on business is provided for future potential“Allowance for recoverable accounts under production sharing”

loss on crude oil and natural gas development, production andto provide for probable losses on development activities, assales business individually estimated for each project. Although

individually estimated for each project. Although assessments

assessments and accounting estimates are made on a reasonable

and accounting estimates are made on a reasonable basis, actual

basis, actual operating results can change depending on theoperating results can change depending on the project status.

business status.

— Unit-of-production method— Deferred tax assets

Overseas mining facilities, mining rights and exploration andDeferred tax assets reflect temporary differences (including net

development rights that are acquired during the development

operating loss carry-forwards) arising mainly from the write-

and production phase are mainly depreciated or amortized

down of exploration expenditures, foreign taxes payable andbased on the unit-of-production method. This approach requires

excess of tax allowable depreciation. Valuation allowances are

the estimation of reserves. Although the Group believes thatprovided once it is judged that the non-realization of deferred

the assessment of reserves is done in an appropriate manner,

tax assets has become the more probable outcome. The effectany changes in these estimates could significantly affect futureof foreign tax credits is taken into account in the calculation ofoperating results.

such valuation allowances. The realization of deferred tax assets— Asset retirement obligations

income, based on the available information. Adjustments tois principally dependent on the generation of sufficient taxable
Asset retirement obligations are recorded by a reasonable

deferred tax assets could be required if future taxable income

estimate of the present value of  retirement costs incurred upon

was lower than expected due to market conditions, foreign

termination of the operation and production with respect to oil

exchange rate fluctuations or poor operating performance.

and gas production facilities, based on the oil and gas contracts
or laws and regulations within the countries in which the Group— Retirement benefits to employees

operates or has working interests. Although the Group believes

Retirement benefit obligation to employees are recognized atthat such estimates of the present value of retirement costs

the net present value of future obligations as of the end of theare reasonable, changes to estimates of the present value ofaccounting period, taking into account any periodic benefit costs

retirement costs, which caused by the factors such as changes

that have arisen during the period. The calculation of retirement

to retirement plans, escalating prices of drilling equipment andbenefit obligations and retirement benefit expenses is basedmaterials and others, could significantly affect future operating

on various actuarial assumptions, including the discount rate,

results.

employee turnover and retirement rates, remuneration growth
rates, and the long-term expected return on plan assets. Future— Allowance for investments in exploration companies

operating results could be significantly affected by deviation

A reser ve is recorded to provide for probable los ses on

between the base assumptions and actual results or the revision

investments made by the Group in entities engaged in oil andof such assumptions which were to generate actuarial gains or

gas activities, as estimated based on the net assets of suchlosses.

entities. Although the Group believes that the assessments and— Goodwillin actual production volumes, prices or foreign exchange rates

The excess cost over underlying net assets excluding minority

could significantly affect future operating results.

interests as fair value as of their dates of acquisition is accounted— Provision for exploration projects

method.

for as goodwill and amortized over 20 years on a straight-line
A provision for exploration projec ts is provided for future

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

estimates relating to such investments are reasonable, changes

055

Management’s Discussion and Analysis of Financial
Condition and Results of Operations
BUSINESS ENVIRONMENT
During the year ended March 31, 2015, the Japanese economy
continued on a path of gradual recovery, owing to improvements
in corporate earnings and the employment rate as a result of
economic policies implemented by the Japanese government
and monetary easing by the Bank of Japan. However, certain
aspects of the recovery in consumer spending remained weakfollowing the consumption tax hike.
Under such business environment, Brent crude oil price,a common benchmark of international crude oil prices whichsignificantly influence the Group's per formance, star ted at
US$105.62 per barrel on April 1, 2014, and reached a high of
US$115.06 per barrel in mid-June due to factors including thedecrease of crude oil production in Libya.
However, Brent crude oil fell thereafter as a result of adownward revision in crude oil demand forecasts for 2015 by
IEA and OPEC, and, spurred by OPEC's deferment of crude
oil production cutbacks announced on November 27 amid
intensifying awareness of a crude oil oversupply, ultimatelyplunged about 60% in a period of six months, having dropped
to a low of US$46.59 per barrel in January for the first time in five
years and nine months.
Brent crude oil then bounced back and finished at US$55.11
per barrel on March 31, 2015, owing to a perceived slowdown
in U.S. shale oil production growth combined with instability in
Libya.
Meanwhile, in the Japanese domestic market, crude oil andpetroleum product prices shifted in correlation with international
oil prices. The Group's average sales price for crude oil forthe year ended March 31, 2015 reflected this shift, recording
US$84.00 per barrel, down US$23.78 from the year ended March

31, 2014.
The foreign exchange market, another important factor
that affects the business of the Group, began to trade at the¥103 level to the U.S. dollar. From April to July, the exchange
rate remained at a narrow range of ¥101 to ¥103 level to the
U.S. dollar without significant changes on the Japanese and U.S.
monetary policies. However, the suggestion by the FRB (Federal
Reser ve Board) in late-August, which showed a possibility
to move the rise in interest-rate for ward, brought the yen
depreciation against the U.S. dollar to the ¥110 level.
Afterward, the yen depreciated sharply against the U.S.
dollar when the Bank of Japan's unexpected additional monetaryeasing and the change of the operating asset allocation targetof GPIF (Government Pension Investment Fund) were announced
in late-October. Furthermore, the yen depreciated against the
U.S. dollar to the late ¥121 level while the U.S. employment rate
which announced in early-December went beyond the market
expectations.
Although the yen temporarily appreciated to the U.S.
dollar following to the probable movement to reduce short yen
positions against the U.S. dollar, the appreciation of the U.S.
dollar against many other currencies weakened the movement ofyen buying from the beginning of 2015, owing to the monetaryeasing policies in countries except the U.S. and TTM closed at¥120.27 to the U.S. dollar which turned out to be ¥17.35 lower
than that on March 31, 2014.
Reflecting these situations, the average sales exchange rate
for the Group for the year ended March 31, 2015, was ¥107.93 to
the U.S. dollar, which is ¥7.73 lower than that for the year ended
March 31, 2014.

PERFORMANCE OVERVIEW
Net sales
Consolidated net sales for the year ended March 31, 2015,
decreased by ¥163.4 billion, or 12.2%, to ¥1,171.2 billion from
¥1,334.6 billion for the year ended March 31, 2014, due to adecrease in sales price of crude oil and overseas natural gas.
Compared with the year ended March 31, 2014, net sales ofcrude oil decreased by ¥128.3 billion, or 14.9%, to ¥730.4 billion
from ¥858.8 billion, and net sales of natural gas decreased by¥33.6 billion, or 7.4%, to ¥421.9 billion from ¥455.4 billion.
Crude oil sales volume increased by 1,387 thousand barrels,
or 1.8%, to 80,558 thousand barrels compared with the year ended
March 31, 2014. The sales volume of natural gas decreased by
18 billion cubic feet (Bcf), or 5.4%, to 309 Bcf compared with theyear ended March 31, 2014. Of this, the sales volume of overseas
natural gas decreased by 17 Bcf, or 6.6%, to 243 Bcf comparedwith the year ended March 31, 2014. The sales volume of domestic
natural gas decreased by 11 million m3, or 0.6%, to 1,787 million

056

INPEX CORPORATION Annual Report 2015

m3 (equivalent to 67 Bcf) compared with the year ended March 31,
2014. The average sales price of overseas crude oil was US$84.00
per barrel, a decrease of US$23.78, or 22.1%, compared with theyear ended March 31, 2014. The average sales price of overseas
natural gas was US$11.36 per thousand cubic feet (Mcf), a decreaseof US$1.73, or 13.2%, compared with the year ended March 31,
2014. The average sales price of domestic natural gas was ¥57.56
per m3, an increase of ¥7.25 per m3, or 14.4%, compared with theyear ended March 31, 2014.
The decrease of ¥163.4 billion in net sales was mainly derived
from the following factors: regarding net sales of crude oil andnatural gas, decreases in sales volume and unit sales price pushingsales down of ¥8.9 billion and ¥227.5 billion, respectively, andthe depreciation of the Japanese yen against the U.S. dollar
contributing ¥74.6 billion to the increase, in addition, a decrease in
net sales excluding crude oil and natural gas of ¥1.5 billion.

(Millions of yen, %)

2014

2015

ChangeRatio¥1,334,626
858,754455,414
20,458490,417844,20928,20657,34525,048733,61050,735
17,462
9,228
10,320798—
12,92734,267
2,335
5,054
8,028
1,165
4,280
72
—
13,333750,078
563,137
186,941
3,250¥  183,691¥1,171,227
730,422421,860
18,945525,444645,783
23,23963,13924,519534,886
101,764
11,227
6,670
18,14627,52019,562
18,63996,627
2,947
13,444
19,449835—
6,258
35,132
18,562
540,023
464,426
75,597(2,223)¥    77,820¥(163,399)(128,332)(33,554)(1,513)35,027(198,426)(4,967)
5,794(529)(198,724)
51,029(6,235)(2,558)
7,826
26,722
19,562
5,712
62,360612
8,390
11,421(330)(4,280)6,186
35,132
5,229(210,055)(98,711)(111,344)(5,473)¥(105,871)(12.2)%(14.9)
(7.4)
(7.4)
7.1
(23.5)(17.6)
10.1(2.1)(27.1)
100.6(35.7)(27.7)
75.8
—
—
44.2
182.0
26.2
166.0
142.3
(28.3)(100.0)——39.2(28.0)(17.5)(59.6)—(57.6)%

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
Gain on sales of marketable securities
Gain on transfer of mining rights
Foreign exchange gain
Other
Other expenses
Interest expense
Equity in losses of affiliates
Provision for allowance for recoverable accounts under production sharing
Provision for exploration projects
Foreign exchange loss
Loss on disposal of fixed assets
Impairment loss
Other
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests
Net income

Cost of sales

Other income

Cost of sales for the year ended March 31, 2015, increased by¥35.0 billion, or 7.1%, to ¥525.4 billion from ¥490.4 billion forthe year ended March 31, 2014. This was mainly due to thedepreciation of the Japanese yen against the U.S. dollar.

Other income for the year ended March 31, 2015, increased by¥51.0 billion, or 100.6%, to ¥101.8 billion from ¥50.7 billion forthe year ended March 31, 2014. This was mainly due to increases
in gain on transfer of mining rights and foreign exchange gain.

Exploration expenses

Other expenses

Exploration expenses for the year ended March 31, 2015,
decreased by ¥5.0 billion, or 17.6%, to ¥23.2 billion from ¥28.2
billion for the year ended March 31, 2014. This was mainly due toa decrease in exploration activities in the Middle East and Africa
region.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended
March 31, 2015, increased by ¥5.8 billion, or 10.1%, to ¥63.1
billion from ¥57.3 billion for the year ended March 31, 2014. Thiswas mainly due to an increase in personnel expenses.

Depreciation and amortization

Operating income

As a result of the above, operating income for the year ended
March 31, 2015, decreased by ¥198.7 billion, or 27.1%, to ¥534.9
billion from ¥733.6 billion for the year ended March 31, 2014.

Income taxes

Total current income taxes and deferred income taxes for theyear ended March 31, 2015, decreased by ¥98.7 billion, or 17.5%,
to ¥464.4 billion from ¥563.1 billion for the year ended March 31,
2014. The Group pays the majority of its taxes outside Japan. In
addition to the high corporate tax rates imposed in a numberof regions, the Group is generally unable to deduct expenses
incurred in Japan for such taxes. Despite the positive effects
attributable to the application of the foreign tax credit system,
this situation resulted in a high effective income tax rate of 86.0%
for the year ended March 31, 2015.

6

Minority interests

Minority interests for the year ended March 31, 2015, decreasedby ¥5.5 billion to ¥(2.2) billion from ¥3.3 billion for the year ended
March 31, 2014.

Net income

As a result of the above, net income for the year ended March 31,
2015, decreased by ¥105.9 billion, or 57.6%, to ¥77.8 billion from
¥183.7 billion for the year ended March 31, 2014.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Depreciation and amortization for the year ended March 31,
2015, decreased by ¥0.5 billion, or 2.1%, to ¥24.5 billion from¥25.0 billion for the year ended March 31, 2014. This was
mainly due to a decrease in the depreciation of exploration anddevelopment rights for the ACG Oil Fields. The Group records
depreciation costs for production facilities that are covered byconcession agreements as cost of sales. In addition, under its
accounting treatment of the PSCs, the Group records capital
expenditures as “Recoverable accounts under produc tion
sharing” instead of capitalizing these costs within tangible fixed
assets and depreciating them. Costs that are recovered in any
given year based on the terms of the PSCs are included in thecost of sales.

Other expenses for the year ended March 31, 2015, increased by¥62.4 billion, or 182.0%, to ¥96.6 billion from ¥34.3 billion for theyear ended March 31, 2014. This was mainly due to the following
factors: posting impairment loss for certain projects due to adrop in oil prices and increases in provision for allowance forrecoverable accounts under production sharing and equity inlosses of affiliates.

057

FINANCIAL POSITION
Total assets as of March 31, 2015, increased by ¥461.0 billion,or 11.4%, to ¥4,499.2 billion from ¥4,038.1 billion as of March
31, 2014. Current assets increased by ¥202.2 billion, or 17.7%,
to ¥1,342.4 billion from ¥1,140.2 billion due to an increase in
cash and cash equivalents and others. Fixed assets increased by¥258.8 billion, or 8.9%, to ¥3,156.7 billion from ¥2,897.9 billion asof March 31, 2014, due to an increase in construction in progressand others.
Meanwhile, total liabilities increased by ¥168.3 billion, or
16.2%, to ¥1,210.5 billion from ¥1,042.1 billion as of March 31,
2014. Current liabilities decreased by ¥10.5 billion, or 2.8%,
to ¥365.2 billion from ¥375.7 billion as of March 31, 2014, due

to a decrease in income taxes payable and others. Long-term
liabilities increased by ¥178.8 billion, or 26.8%, to ¥845.2 billion
from ¥666.4 billion as of March 31, 2014, due to an increase inlong-term debt and others.
Net as s et s inc reas e d by ¥292.7 billio n, or 9.8%, to¥3,288.7 billion from ¥2,996.0 billion as of March 31, 2014. Total
shareholders’ equity increased by ¥51.8 billion, or 2.1%, to¥2,549.5 billion from ¥2,497.7 billion as of March 31, 2014. Total
accumulated other comprehensive income increased by ¥223.8
billion, or 76.3%, to ¥517.2 billion from ¥293.4 billion as of March
31, 2014, and minority interests increased by ¥17.1 billion, or 8.3%,
to ¥222.0 billion from ¥204.9 billion as of March 31, 2014.

INVESTMENT AND FUNDING— Investments in upstream oil and gas projects
Continuous exploration for new reserves of crude oil and natural
gas is essential for stable earnings of the Group. The informationin this section on upstream oil and gas investments is based on
the data reported by project operators relating to exploration
ex penditures, development ex penditures and oper ating
expenses. The Group’s expenditure categories are defined asfollows:• Exploration expenditures include the costs of exploratory
drilling and any geological or geophysical studies. The
costs of local personnel and office operations and related
administrative expenses are also included in this category if
a project (or contract area) is in the exploration phase.
• Development expenditures include the costs ofdevelopment drilling and any production facilities.
• Operating expenses include the costs of well operations,maintenance and the supervision of production activities.
This category also includes the administrative expenses forthe project (or contract area) if it contains a field in active
production and/or development.
• Discrepancies exist between the standards stipulated in

U.S. FASB Accounting Standards Codification Topic 932,
“Extractive Industries—Oil and Gas (Topic 932),” and boththe Group’s definitions of exploration and development
expenditures and the standards used in preparing thefollowing tables. The following is a par tial list of thediscrepancies between the Group’s accounting policies andTopic 932.
- Group expenditures relating to the PSC-governed joint
ventures where the Group is not the operator are disclosed
on a cash basis rather than an accrual basis as required by
Topic 932.
- The tables below have been prepared based on the costdefinitions used by operators in their reporting, which may
not be consistent with Topic 932.
- Topic 932 requires that administrative costs not directly
related to exploration and development ac tivities be
excluded from exploration and development expenditures,
whereas such administrative costs are not necessarily
excluded from those expenditures under the Group’s
accounting policies.

The table below shows the Group’s exploration and development costs and other expenditures (excluding capitalized interest costs
and asset retirement costs corresponding to asset retirement obligations capitalized under fixed assets) by segment for the years
ended March 31, 2014 and 2015.
(Millions of yen)

Year ended March 31, 2014

Japan

INPEX CORPORATION and Consolidated Subsidiaries
Exploration¥ 3,384
Development
1,071
Subtotal* 1
4,455
Equity-method Affiliates
Exploration—
Development—
Subtotal—
Other capital expenditures* 2
37,036¥41,491
Total* 3

Asia & Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericasTotal¥ 36,689
338,123
374,812¥    107
58,80458,911¥16,590
50,041
66,631¥14,232
18,601
32,833¥ 71,002
466,640
537,642

—
1,517
1,517
388,271¥764,600

194
—
194
—
¥59,105

105
11,791
11,896—¥78,527

—
1,198
1,198
—
¥34,031299
14,506
14,805425,307¥977,754*1 Figures include an equity-method affiliate of Japan Oil Development Co., Ltd. (JODCO).
*2 Other capital expenditures include the construction costs of domestic gas infrastructure and the Groupʼs share of investment in the Ichthys downstream entity(Ichthys LNG Pty Ltd, an equity-method affiliate).
*3 The amount capitalized for the asset retirement costs corresponding to asset retirement obligations for the year ended March 31, 2014, was ¥10,651 million.

058

INPEX CORPORATION Annual Report 2015

(Millions of yen)

Year ended March 31, 2015

Japan

INPEX CORPORATION and Consolidated Subsidiaries
Exploration¥    519
Development
2,851
Subtotal* 1
3,370
Equity-method Affiliates
Exploration—
Development—
Subtotal—
Other capital expenditures* 2
27,016¥30,386
Total* 3

Asia & Oceania

Eurasia(Europe & NIS)

Middle East &AfricaAmericasTotal¥ 47,681
436,119
483,800¥ 2,839
45,65748,496¥ 1,982
74,38676,368¥19,628
22,912
42,540¥    72,649
581,925
654,574—963
963
348,112¥832,875

445
—
445
—
¥48,941

7
13,094
13,101—¥89,469

—
835
835
—
¥43,375

452
14,892
15,344375,128¥1,045,046*1 Figures include an equity-method affiliate of Japan Oil Development Co., Ltd. (JODCO).
*2 Other capital expenditures include the construction costs of domestic gas infrastructure, the Groupʼs share of investment in the Ichthys downstream entity(Ichthys LNG Pty Ltd, an equity-method affiliate) and others.
*3 The amount capitalized for the asset retirement costs corresponding to asset retirement obligations for the year ended March 31, 2015, was ¥60,888 million.

Total investments for the year ended March 31, 2015, increased by ¥67.3 billion, or 6.9%, to ¥1,045.0 billion (including ¥15.3 billion for
exploration and development by equity-method affiliates) from ¥977.8 billion for the year ended March 31, 2014. This was mainly due to anincrease in development expenditures for the Ichthys Project (including the downstream business) in the Asia & Oceania region.
The table below shows the Group’s operating expenses by segment for the years ended March 31, 2014 and 2015.
(Millions of yen, %)Years ended March 31,

2015

2014

INPEX CORPORATION and Consolidated SubsidiariesJapan¥ 10,286
Asia & Oceania
82,719Eurasia (Europe & NIS)
9,521
Middle East & Africa
31,921
Americas
1,916   Subtotal
136,363
Equity-method Affiliates
Asia & Oceania
1,224—
Eurasia (Europe & NIS)
Middle East & Africa
7,156
Americas2,199
   Subtotal
10,579Total¥146,942

7.5%
60.7
7.0
23.4
1.4
100.0

¥ 11,075
104,938
13,38439,927
3,229
172,553

6.4%
60.8
7.8
23.1
1.9
100.0

11.6
—
67.6
20.8
100.0
—%

1,034
—
8,290
2,321
11,645¥184,198

8.9
—
71.2
19.9
100.0
—%

— Expenditures for acquisitions of upstream oil and gas projects

The table below shows the Group’s expenditures for acquisitions of upstream oil and gas projects by segment for the years ended
March 31, 2014 and 2015. Expenditures in this category include the costs of acquiring mining rights, exploration and development
rights, signing bonuses and any tangible fixed assets or recoverable accounts under production sharing gained through the acquisitionof interest in upstream oil and gas projects.
(Millions of yen, %)Years ended March 31,

2015
36.9%
2.1
—
61.0
100.0
—
—
—
—
—
—%

¥

—
—
—
18,424
18,424

—%
—
—
100.0
100.0

—
—
—
—
—
¥18,424

—
—
—
—
—
—%

Total expenditures on acquisitions of upstream oil and gas projects for the year ended March 31, 2015, decreased by ¥25.2 billion to¥18.4 billion from ¥43.6 billion for the year ended March 31, 2014, mainly due to decreases in the Asia & Oceania and Americas regions.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

INPEX CORPORATION and Consolidated Subsidiaries
Asia & Oceania¥16,091
913
Eurasia (Europe & NIS)
Middle East & Africa—
Americas26,643
   Subtotal
43,647
Equity-method Affiliates
Asia & Oceania—
Eurasia (Europe & NIS)—
Middle East & Africa—
Americas—   Subtotal—
Total¥43,647

2014059

— Analysis of recoverable accounts under production sharing
For upstream projects governed by the PSCs, the Group’s share of costs arising during the exploration, development and production
phases is capitalized under “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, 2014 and 2015.
(Millions of yen)

Years ended March 31,

Balance at beginning of the year
Add: Exploration costs
Development costs
Operating expenses
Other
Less: Cost recovery—capital expenditures
Cost recovery—operating expenditures
Other
Balance at end of the year
Allowance for recoverable accounts under production sharing at end of the year2014
¥ 590,566
42,086172,234
73,1799,386(67,073)(129,671)(4,717)685,990¥(123,484)

2015¥ 685,990
41,237
131,985
98,2507,332(75,586)(146,930)(38,987)
703,291¥(121,707)

The amount posted as “Cost recovery—operating expenditures”

increased compared with the year ended March 31, 2014. Thisin recoverable accounts under production sharing is greater

was mainly due to an increase in operating expenses in thethan that posted as operating expenses. Along with operating

Offshore Mahakam Block and the South Natuna Sea Block B.

expenses, this is because a por tion of the exploration andCost recovery for the year ended March 31, 2015, increased

development cos t s, which are incur red and recover ablecompared with the year ended March 31, 2014. This was mainly

within the year, is included in the “Cost recovery—operating

due to an increase in cost recovery in the Offshore Mahakam

expenditures” account.

Block and the ACG Oil Fields.

E xploration cost s for the year ended March 31, 2015,

In addition, other deduction was mainly due to the decrease

decreased compared with the year ended March 31, 2014. Thisin recoverable accounts under production sharing related to thewas mainly due to a decrease in exploration expenditures in thebusiness withdrawal from certain exploration blocks.

Asia & Oceania region.

The allowance for recoverable accounts under production

Development costs for the year ended March 31, 2015,

sharing as of March 31, 2015, decreased compared with Marchdecreased compared with the year ended March 31, 2014. This31, 2014. This was mainly due to the business withdrawal fromwas mainly due to a decrease in development expenditures incer tain exploration blocks, despite additional provision for

the South Natuna Sea Block B.

allowance in connection with exploration expenditures.

Operating expenses for the year ended March 31, 2015,— Funding sources and liquidity
Oil and gas exploration and development projects, as well as the

The Ichthys downstream entity (Ichthys LNG Pty Ltd, anconstruction of gas infrastructure, require significant funding.

equity-method affiliate), as the borrower, has utilized external

The Group relies on cash flow derived from internal reserves,loans from export credit agencies and commercial banks for

together with external sources, to procure funds. The Group’s

project financing throughout the year ended March 31, 2015.

basic policy is to utilize internal cash flow and external equity

The Group’s basic liquidity policy is to maintain sufficientfinancing to fund exploration projects and to utilize internal cash

cash on hand at all times to fund expenditures for existing andflow and external loans to fund development projects and thenew oil and gas projects in a timely manner, while also keeping a

construction of gas infrastructure. The Group currently receives

cushion of liquidity to provide for steep falls in oil and gas prices.

loans from the Japan Bank for International Cooperation,

In line with this policy, excess cash reserves are invested in low-

Japanese commercial banks and others. The Japan Oil, Gas

risk, highly liquid financial instruments. The Group’s strategy is toand Metals National Corporation (JOGMEC) guarantee system

improve capital efficiency over the long term through businesscovers these loans. In addition, the Development Bank of Japan

expansion while continuing to maintain a sound financial positionand various Japanese commercial banks provide loans for thewith sufficient liquidity.

construction of domestic gas infrastructure.

060

INPEX CORPORATION Annual Report 2015

— Maturities of long-term debt
The aggregate annual maturities of long-term debt subsequent to March 31, 2015, are summarized as follows:(Millions of U.S. dollars and Millions of yen)
Long-term debt denominated inYears ending March 31,

U.S. dollars

Yen

Total yen equivalent

2016
2017
2018
2019
2020
2021 and thereafter
Total$   154.6
258.6
258.6
458.6
658.6
2,940.5$4,729.5¥   7,847
34,11910,245
9,818
25,46914,069¥101,567¥ 26,443
65,222
41,34964,976
104,681
367,723¥670,394— Cash flows
Cash flows for the years ended March 31, 2014 and 2015, are summarized as follows:(Millions of yen)

Years ended March 31,

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of the year2014
¥213,514(395,555)
48,961¥117,531

2015¥216,749(81,087)(4,178)¥260,978Net cash provided by operating activities

Net cash provided by (used in) financing activities

Net cash provided by operating activities for the year ended
March 31, 2015, was ¥216.7 billion, an increase of ¥3.2 billion
from ¥213.5 billion for the year ended March 31, 2014. This was
mainly due to decreases in income taxes paid and accounts
receivable-other, despite a decrease in income before income
taxes and minority interests.

Net cash used in financing activities for the year ended March
31, 2015, was ¥4.2 billion. This was mainly due to a decrease inproceeds from long-term debt. Meanwhile, net cash provided byfinancing activities for the year ended March 31, 2014, was ¥49.0
billion.

Net cash used in investing activities
Net cash used in investing activities for the year ended March 31,
2015, was ¥81.1 billion, a decrease of ¥314.5 billion from ¥395.6
billion for the year ended March 31, 2014. This was mainly due
to an increase in proceeds from time deposits and a decreasein payments for long-term time deposits, despite an increase inpayments for purchases of tangible fixed assets.

CONSOLIDATED FINANCIAL FORECAST FOR THE YEAR ENDING
MARCH 31, 2016 (Announced on August 7, 2015)
and net income attributable to owners of parent for the year
ending March 31, 2016 are expected to decrease, while thenegative effect of decline of oil prices on the existing projects
is forecasted to exceed the positive contribution from the newly
acquired project to these incomes.
The aforementioned forecasts are based on an average oil
price of US$60.9 per barrel for Brent crude oil and an averageexchange rate of ¥120.4 to the U.S. dollar for the year ending
March 31, 2016.
*Effective from the beginning of the year ending March 31, 2016,
the Company will apply the “Revised Accounting Standard forBusiness Combinations” and other standards (see p. 68) andrename “Income before income taxes and minority interests”
to “Income before income taxes”, and “Net income” to “Net
income attributable to owners of parent”, respectively.
INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Consolidated net sales for the year ending March 31, 2016, areexpected to increase by ¥9.8 billion, or 0.8%, to ¥1,181.0 billion
compared with the year ended March 31, 2015. Operating
income for the year ending March 31, 2016, is expected todecrease by ¥63.9 billion, or 11.9%, to ¥471.0 billion comparedwith the year ended March 31, 2015. Income before income
taxes* is expected to decrease by ¥61.0 billion, or 11.3%, to¥479.0 billion compared with the year ended March 31, 2015.
Net income attributable to owners of parent* is expected todecrease by ¥7.8 billion, or 10.0%, to ¥70.0 billion compared withthe year ended March 31, 2015.
Net sales for the year ending March 31, 2016 are expected
to increase due to the forecasted increase in sales volumeof crude oil and others contributed from the newly acquired
project, despite a decrease in the forecasted decline in the
crude oil price compared with the year ended March 31, 2015.
Meanwhile, operating income, income before income taxes,

061

Consolidated Balance Sheet
INPEX CORPORATION and Consolidated Subsidiaries
March 31, 2015

Thousands of
U.S. dollars(Note 3)

Millions of yen

ASSETS
Current assets
Cash and cash equivalents
Time deposits (Note 13)
Accounts receivable—trade (Note 4)
Marketable securities (Notes 4 and 5)
Inventories
Deferred tax assets (Note 7)
Accounts receivable—other (Note 4)
OtherLess allowance for doubtful accounts
Total current assets
Tangible fixed assets
Buildings and structures (Note 6)
Wells (Note 6)
Machinery, equipment and vehicles (Note 6)Land
Construction in progress
Other
Less accumulated depreciation and amortization
Total tangible fixed assets
Intangible assets
Goodwill (Note 18)
Exploration and development rights
Mining rights
Other
Total intangible assets
Investments and other assets
Recoverable accounts under production sharing
Less allowance for recoverable accounts
under production sharing
Investment securities (Notes 4, 5 and 6)
Long-term loans receivable
Long-term time deposits (Note 13)
Deferred tax assets (Note 7)
Other investments (Note 6)
Less allowance for doubtful accounts
Less allowance for investments in exploration
Total investments and other assets
Total fixed assets
Total assets
See accompanying notes to consolidated financial statements.

062

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥ 117,531¥ 260,978$ 2,169,934

555,948661,706

5,501,838

110,396

77,209641,964

177,709

162,289

1,349,372

25,48531,652

263,175

7,745

4,956

41,207

121,121110,315917,228

41,913

46,211

384,227(17,644)(12,906)(107,309)

1,140,204

1,342,410

11,161,636

294,621300,484

2,498,412

264,439

291,524

2,423,913

356,157

366,4223,046,662

19,737

19,870165,211626,520

1,173,409

9,756,456

29,05029,143242,313

1,590,524

2,180,852

18,132,967(638,745)(683,230)(5,680,801)

951,779

1,497,622

12,452,166

81,08074,319617,935

125,622

134,810

1,120,895

221,411238,316

1,981,508

11,066

11,325

94,163439,179

458,770

3,814,501

685,990

703,291

5,847,601(123,484)(121,707)(1,011,948)

562,506

581,584

4,835,653

476,407284,090

2,362,102

33,092

126,517

1,051,941

364,103120,270

1,000,000

13,822

22,849189,981

61,15976,168633,308(885)(8,399)(69,834)(3,227)(2,727)(22,674)

1,506,977

1,200,352

9,980,477

2,897,935

3,156,744

26,247,144¥4,038,139¥4,499,154$37,408,780

Thousands of
U.S. dollars(Note 3)

Millions of yen

LIABILITIES AND NET ASSETS

2014

2015

¥

¥

2015

Current liabilities
Accounts payable—trade
Short-term borrowings and current portion of
long-term debt (Notes 4, 6 and 13)
Income taxes payable (Note 7)

46,811
21,95453,474$444,616

33,206

276,096

91,19860,185500,416

Accounts payable—other (Note 6)

131,905

113,568

944,275

Provision for exploration projects

9,817

9,492

78,922

111

70

582

Accrued bonuses to officers
Asset retirement obligations (Note 17)

2,353

1,094

9,096

Other (Note 7)

71,521

94,123

782,598

375,670

365,2123,036,601

Long-term debt (Notes 4, 6, 12 and 13)

561,674

643,951

5,354,211

Deferred tax liabilities (Note 7)

54,96077,918647,859

Provision for loss on business

6,978

9,080

75,497

Total current liabilities

Long-term liabilities

Accrued special repair and maintenance

234

228

1,896

Liability for retirement benefits (Note 16)

7,793

6,700

55,708Asset retirement obligations (Note 17)25,954105,234

874,981

Other (Note 6)

8,839

2,127

17,685

Total long-term liabilities

666,432

845,238

7,027,837

1,042,102

1,210,450

10,064,438

Common stock
Authorized: 2014 — 3,600,000,001 shares2015 — 3,600,000,001 shares
Issued:2014 — 1,462,323,601 shares2015 — 1,462,323,601 shares
Capital surplus

290,810

290,8102,417,976

679,288679,288

5,648,025

Retained earnings
Less: Treasury stock 2014 — 1,966,400 shares2015 — 1,966,400 shares
Total shareholders’ equity

1,532,876

1,584,645

13,175,730(5,248)(5,248)(43,635)

2,497,726

2,549,495

21,198,096

44,73746,049382,880

Total liabilities

Net assets (Note 10)

Unrealized holding gain on securities(17,579)(36,423)(302,843)

Translation adjustments

266,225

507,560

4,220,171

Total accumulated other comprehensive income

293,383

517,186

4,300,208

Minority interests

204,928

222,023

1,846,038

2,996,037

3,288,704

27,344,342¥4,038,139¥4,499,154$37,408,780

Total net assets
Contingent liabilities (Note 20)
Total liabilities and net assets

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Unrealized gain (loss) from hedging instruments (Note 12)063

Consolidated Statement of Income and Consolidated Statement ofComprehensive Income
Consolidated Statement of Income
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015

Thousands of
U.S. dollars(Note 3)

Millions of yen

Net sales
Cost of sales
Gross profit
Exploration expenses
Selling, general and administrative expenses (Notes 14, 16 and 18)
Depreciation and amortization
Operating income
Other income
Interest income
Dividend income
Gain on sales of marketable securities
Gain on transfer of mining rights
Foreign exchange gain
Other
Total other income
Other expenses
Interest expense
Equity in losses of affiliates
Provision for allowance for recoverable
accounts under production sharing
Provision for exploration projects
Foreign exchange loss
Loss on disposal of fixed assets
Impairment loss (Note 15)
Other
Total other expenses
Income before income taxes and minority interests
Income taxes (Note 7)
Current
Deferred
Total income taxes
Income before minority interests
Minority interests
Net income

2014

2015

2015

¥1,334,626
490,417844,20928,20657,34525,048733,610¥1,171,227
525,444645,783
23,23963,13924,519534,886$9,738,314
4,368,870
5,369,444
193,224
524,977
203,866
4,447,377

17,462
9,228
10,320798—
12,92750,735

11,227
6,670
18,14627,52019,562
18,639101,764

93,34855,459150,877
228,818
162,651
154,976
846,129

2,335
5,054

2,947
13,44424,503
111,782

8,028

19,449161,711

1,165
4,280
72
—
13,33334,267750,078

835
—
6,258
35,132
18,562
96,627
540,023

6,943—
52,033292,109154,336
803,417
4,490,089

514,016
49,121
563,137
186,941
3,250¥  183,691

448,659
15,767464,426
75,597(2,223)¥    77,820

3,730,431
131,097
3,861,528
628,561(18,483)$  647,044

Consolidated Statement of Comprehensive Income
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of
U.S. dollars(Note 3)

Millions of yen

Income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Unrealized gain (loss) from hedging instruments
Translation adjustments
Share of other comprehensive income of affiliates accounted for by
the equity-method
Total other comprehensive income (Note 8)
Comprehensive income (Note 8)
Total comprehensive income attributable to:Shareholders of INPEX CORPORATION
Minority interests
See accompanying notes to consolidated financial statements.

064

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥186,941¥ 75,597$  628,561

9,982(20,888)
176,3111,315—
244,018

10,933—
2,028,918(6,674)(13,951)(115,997)

158,731345,672

231,382306,979

1,923,854
2,552,415

335,737¥   9,935

301,622¥   5,357

2,507,874$    44,541

Consolidated Statement of Changes in Net Assets
INPEX CORPORATION and Consolidated Subsidiaries

For the year ended March 31, 2014
Balance as of April 1, 2013
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2014

For the year ended March 31, 2014
Balance as of April 1, 2013
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2014

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

Treasury stock¥(5,248)

Total shareholders’ equity¥2,339,957

Common stock¥290,810

Capital surplus¥679,288

290,810679,288

1,375,107(25,922)
183,691(5,248)2,339,957(25,922)
183,691—¥290,810—¥679,288

157,769¥1,532,876—¥(5,248)

157,769¥2,497,726——

Millions of yen
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income¥34,742¥ 16,244¥ 90,350¥141,336¥189,691

Total net assets¥2,670,984—

34,742

16,24490,350141,336

189,691

2,670,984(25,922)
183,691

9,995(33,823)

175,875

152,047

15,237167,284

9,995¥44,737(33,823)¥(17,579)

175,875¥266,225

152,047¥293,383

15,237¥204,928

325,053¥2,996,037

Millions of yen
Shareholders’ equity
Retained earnings¥1,532,876

Treasury stock¥(5,248)

Total shareholders’ equity¥2,497,726

Common stock¥290,810

Capital surplus¥679,288

290,810679,288

1,533,112(26,287)
77,820(5,248)2,497,962(26,287)
77,820—¥290,810—¥679,288

51,533¥1,584,645—¥(5,248)

51,533¥2,549,495

236

236

Millions of yen
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income¥44,737¥(17,579)¥266,225¥293,383¥204,928

Total net assets¥2,996,037
236

44,737(17,579)

266,225

293,383

204,928

2,996,273(26,287)
77,8201,312(18,844)

241,335

223,803

17,095

240,898

1,312¥46,049(18,844)¥(36,423)

241,335¥507,560

223,803¥517,186

17,095¥222,023

292,431¥3,288,704

Common stock$2,417,976

Thousands of U.S. dollars (Note 3)
Shareholders’ equity
Capital surplus
Retained earnings
Treasury stock$5,648,025$12,745,290$(43,635)

Total shareholders’ equity$20,767,656

1,962

1,962

2,417,976

5,648,025

12,747,252(218,566)
647,044(43,635)

20,769,618(218,566)
647,044—$2,417,976—$5,648,025

428,478$13,175,730—$(43,635)

428,478$21,198,096

Thousands of U.S. dollars (Note 3)
Accumulated other comprehensive income
Unrealized holding Unrealized gain (loss) fromTranslation
Total accumulated other
Minority interests
gain on securities
hedging instruments
adjustments
comprehensive income$371,971$(146,162)$2,213,561$2,439,370$1,703,899

6

Total net assets$24,910,925
1,962

371,971(146,162)

2,213,561

2,439,370

1,703,899

24,912,887(218,566)
647,044

10,909(156,681)

2,006,610

1,860,838

142,139

2,002,977

10,909$382,880(156,681)$(302,843)

2,006,610$4,220,171

1,860,838$4,300,208

142,139$1,846,038

2,431,455$27,344,342

Financial &Corporate Information

For the year ended March 31, 2015
Balance as of April 1, 2014
Cumulative effects of changes inaccounting policies
Restated balance
Cash dividends paid
Net income
Net changes in items other than thosein shareholders' equity
Total changes during the period
Balance as of March 31, 2015

Millions of yen
Shareholders’ equity
Retained earnings¥1,375,107

See accompanying notes to consolidated financial statements.

INPEX CORPORATION Annual Report 2015065

Consolidated Statement of Cash Flows
INPEX CORPORATION and Consolidated Subsidiaries
For the year ended March 31, 2015

Millions of yen

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss
Amortization of goodwill
Provision for allowance for recoverable accounts under
production sharing
Provision for exploration projects
Other provisions
Liability for retirement benefits
Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in (earnings) losses of affiliates
Gain on transfer of mining rights
Loss (Gain) on sales of marketable securities
Recovery of recoverable accounts under production sharing(capital expenditures)
Recoverable accounts under production sharing(operating expenditures)
Accounts receivable—trade
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
Payments for time deposits
Proceeds from time deposits
Payments for long-term time deposits
Proceeds from long-term time deposits
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for purchases of intangible assets
Proceeds from sales and redemptions of marketable securities
Payments for purchases of investment securities
Proceeds from sales and redemptions 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 in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from minority interests for additional shares
Cash dividends paid
Dividends paid to minority shareholders
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
See accompanying notes to consolidated financial statements.

066

INPEX CORPORATION Annual Report 2015

Thousands of
U.S. dollars(Note 3)

2014

2015

2015

¥ 750,078
50,917—6,761¥ 540,023
52,52035,132
6,761$ 4,490,089
436,684
292,10956,215

14,883

20,307

168,845(17,318)
5,024
(777)
(26,691)
2,335
14,105
5,053(798)(10,335)

(600)
3,419
(873)
(17,896)
2,947
3,973
13,444(27,520)(18,146)(4,989)28,428(7,259)(148,798)
24,50333,034
111,782(228,818)(150,877)

67,07375,586

628,469(60,491)(60,764)(505,230)

6,277(10,014)
5,413(35,288)(18,142)
2,168
5,886
756,119
26,932(2,381)(567,156)
213,514

25,202(797)
6,310(1,440)(11,247)(126)
23,580669,795
28,194(2,376)(478,864)
216,749

209,545(6,627)52,465(11,973)(93,514)(1,047)
196,059
5,569,095
234,423(19,756)(3,981,575)
1,802,187(211,332)
276,248(484,081)
130,757(323,651)
677(6,171)
285,452(24,637)
62,433(326,026)
698,139(112,181)—(448,381)
245(15,446)
214,527(26,767)
68,938(2,710,784)
5,804,764(932,743)—(3,728,120)
2,037(128,428)
1,783,712(222,558)
573,194(104,073)(70,430)(585,599)(4,187)(37,158)
75,464(42,734)
797
10,641(395,555)(3,825)(111,388)260(18,424)
59,406
10,266(81,087)(31,804)(926,149)
2,162(153,189)
493,939
85,358(674,208)

2,691
74,742(7,760)10,289(25,935)(4,992)(74)
48,96150,752(82,328)
199,859¥ 117,531

1,490
27,713(18,684)
16,730(26,288)(4,992)(147)(4,178)
11,963
143,447
117,531¥ 260,97812,389230,423(155,351)
139,104(218,575)(41,507)(1,222)(34,739)
99,468
1,192,708
977,226$ 2,169,934

Notes to Consolidated Financial Statements
INPEX CORPORATION and Consolidated Subsidiaries

1. BASIS OF PRESENTATIONINPEX CORPORATION (the “Company“) is primarily engaged in the
research, exploration, development and production of crude oil andnatural gas.
The Company and its domestic subsidiaries maintain theiraccounting records and prepare their financial statements inaccordance with accounting principles generally accepted in Japan.
The accompanying consolidated financial statements have been
prepared by using the accounts of foreign consolidated subsidiaries
prepared in accordance with International Financial ReportingStandards, or IFRS or the accounting principles generally accepted in

the United States, or U.S. GAAP as adjusted for certain items.
The accompanying consolidated financial statements havebeen prepared in accordance with accounting principles generally
accepted in Japan, which may differ in certain material respects fromIFRS or U.S. GAAP, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
The Company has made certain reclassifications of the previous
years' consolidated financial statements to conform to thepresentation used for the year ended March 31, 2015.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation and accounting forinvestments in affiliates

The accompanying consolidated financial statements include theaccounts of the Company and companies controlled directly or
indirectly by the Company. Companies over which the Company
exercises significant influence in terms of their operating and financial
policies are included in the consolidated financial statements on an
equity basis. All significant intercompany balances and transactions
are eliminated in consolidation. Further, certain companies that do
not have significant impact on the consolidated financial statements,
are not consolidated or accounted for by the equity-method.
For the 49 companies for which the closing date differed from theconsolidated closing date, including but not limited to, INPEX Sahul,Ltd. and INPEX Masela, Ltd., the financial statements for the year
ended December 31 were used. However, the necessary adjustments
have been made to the financial statements of those companies toreflect any significant transactions made between the Company's
closing date and that of the consolidated subsidiaries. For the 10companies, including but not limited to, Japan Oil Development,
Co., Ltd., INPEX Southwest Caspian Sea, Ltd., INPEX North CaspianSea, Ltd., INPEX Holdings Australia Pty Ltd, and INPEX Ichthys Pty
Ltd, the financial statements for the year ended on the consolidated
closing date were used, even though their closing date is December
31.
The excess of cost over underlying net assets excluding minority
interests at fair value as of the date of acquisition is accounted for as
goodwill and amortized over 20 years on a straight-line method.

(b) Cash equivalents

All highly liquid investments with a maturity of three months or lesswhen purchased are considered cash equivalents, including shortterm time deposits with original maturities of three months or less.

(c) Foreign currency translation(d) Securities

In general, securities are classified into three categories: trading,held-to-maturity or other securities. Securities held by the Company
and its subsidiaries are all classified as other securities. Other
securities with a determinable market value are mainly stated at fair(e) Derivatives

Derivatives are stated at fair value.

(f) Inventories

Overseas inventories are carried mainly at cost, determined by theaverage cost method (balance sheet value is carried at the lowerof cost or market). Domestic inventories are carried mainly at cost,
determined by the moving-average method (balance sheet value iscarried at the lower of cost or market).

(g) Allowance for doubtful accounts

The allowance for doubtful accounts is provided at an amountdetermined based on the historical experience of bad debt withrespect to ordinary receivables, plus an estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers experiencing financial difficulties.

(h) Recoverable accounts under production
sharing and related allowance

Cash investments made by the Company during an exploration,
development and production project under a production sharing
contract are recorded as “Recoverable accounts under production
sharing“ so long as they are recoverable under the terms of therelevant contract. When the Company receives crude oil andnatural gas in accordance with the relevant contract, an amountcorresponding to the purchase costs of the products (i.e., a cost
recovery portion of the investments) is released from this account.
Because these investments are recoverable only where commercial
oil or gas is discovered, an allowance for recoverable accounts
under production sharing is provided for probable losses oninvestments made during the exploration stage under production
sharing contracts arising from the failure to discover commercial oil
and gas. In light of this uncertainty, an allowance for recoverable
accounts under production sharing is provided for probable losses ondevelopment investment individually estimated for each project.

(i) Allowance for investments in exploration

The allowance for investments in exploration is provided for future
potential losses on investments in exploration companies at an
estimated amount based on the net assets of the investees.

(j) Tangible fixed assets (except leased assets)

Depreciation of overseas mining facilities is mainly computed by theunit-of-production method.
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.

(k) Intangible assets (except leased assets)

Exploration and development rights at the exploration stage are

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Monetary assets and liabilities denominated in foreign currencies aretranslated into yen at the exchange rates prevailing at the balance
sheet date. All revenues and expenses associated with foreign
currencies are translated at the rates of exchange prevailing whensuch transactions were made. The resulting exchange gain or loss iscredited or charged to income.
The assets and liability accounts of overseas subsidiaries aretranslated into yen at the exchange rates prevailing at the balance
sheet date. The revenue and expense accounts of the overseas
subsidiaries are translated into yen at the average rates of exchange
during the period. The components of net assets excluding minority
interests are translated at their historical exchange rates. The
differences arising from the translation are presented as translation
adjustments and minority interests in the accompanying consolidated
financial statements.

value with any changes in unrealized holding gain or loss, net ofthe applicable income taxes, included directly in net assets. Other
securities without a determinable market value are stated at cost.
Cost of securities sold is determined by the moving average method.

067

fully amortized in the year such rights are acquired, and those at the
production stage are amortized by the unit-of-production method.
Mining rights are amortized mainly by the unit-of-production
method.
Other intangible assets are amortized by the straight-line method.
Capitalized computer software costs are amortized by the straightline method over a period of 5 years.

(l) Leased assets

Leased assets are amortized by the straight-line method over thelease period assuming no residual value.

(m) Provision for exploration projects

Provision for exploration projects is provided for future expendituresof consolidated subsidiaries at the exploration stage based on aschedule of investments in exploration.

(n) Accrued bonuses to officers

Accrued bonuses to officers are provided at the expected payment
amount for the fiscal year.

(o) Provision for loss on business

Provision for loss on business is provided for future potential
losses on oil and gas development, production and sales businessindividually estimated for each project.

(p) Accrued special repair and maintenanceAccrued special repair and maintenance are provided for planned
major repair and maintenance activities on tanks in certain
subsidiaries at amounts accumulated through the next activity.

(q) Accounting for retirement benefits(Method of attributing expected retirement benefits to proper
periods)
When calculating retirement benefit obligations, the benefit formula
method is used for attributing expected retirement benefits toperiods through March 31, 2015. Because certain subsidiaries areclassified as small enterprises, a simplified method (the amountwhich would be required to be paid if all active employees voluntarily
terminated their employment as of the balance sheet date) is applied
for the calculation of the retirement benefit obligation for thosesubsidiaries.
(Method of recognizing for actuarial differences)
Actuarial gains and losses are charged or credited to income as
incurred.

(r) Asset retirement obligations

Asset retirement obligations are recorded by a reasonable estimateof the present value of retirement costs incurred upon termination of
the operation and production with respect to oil and gas production
facilities, based on the oil and gas contracts or laws and regulations
within the countries in which the Company operates or has working
interests.

(s) Hedge accounting

The special treatment is applied to the interest rate swaps that meetcertain criteria. For certain equity-method affiliates, the deferredhedge accounting method is adopted.
In addition, derivative transactions are limited to the scope of
actual demand, and the Company does not engage in speculative
derivative transactions.

(t) Research and development expenses

Research and development expenses are charged to income as
incurred.

(u) Income taxes

Deferred tax assets and liabilities are determined based on the

differences between financial reporting and the tax bases of theassets and liabilities and are measured using the enacted tax rates
and laws which will be in effect when the differences are expected toreverse.

(v) Adoption of new accounting standard

Effective the year ended March 31, 2015, the Company has
applied provisions described in the main clause of Section 35 of
the “Accounting Standard for Retirement Benefits“ (AccountingStandards Board of Japan Statement No.26, issued on May 17, 2012)
and the main clause of Section 67 of the “Guidance on AccountingStandard for Retirement Benefits“ (ASBJ Guidance No.25, issued
on March 26, 2015) and has changed the calculation methods for
retirement benefit obligations and service costs. The method of
attributing expected retirement benefits to periods has been revised
from the straight-line method to the benefit formula method, andthe method of determining the discount rate has been revised froma method based on an approximation of the employees' averageremaining service period to a method of using a single weighted
average discount rate reflecting the estimated payment period andthe amount for each estimated payment period of the retirement
benefit.
In accordance with transitional accounting treatments as stated in
Section 37 of the Accounting Standard, the impact of the changes
in calculation methods for retirement benefit obligations and service
costs has been recognized as an adjustment to retained earnings at
the beginning of the year ended March 31, 2015.
As a result, liability for retirement benefits decreased by ¥246
million ($2,045 thousand) while retained earnings increased by¥236 million ($1,962 thousand) as of April 1, 2014. The impact on
operating income and income before income taxes and minority
interests for the year ended March 31, 2015 was immaterial.
The impact on amounts per share was immaterial.

(w) Standards issued but not effective• “Revised Accounting Standard for Business Combinations“ (ASBJ
Statement No.21, issued on September 13, 2013)• “Revised Accounting Standard for Consolidated Financial
Statements“ (ASBJ Statement No.22, issued on September 13,
2013)• “Revised Accounting Standard for Business Divestitures“ (ASBJ
Statement No.7, issued on September 13, 2013)• “Revised Accounting Standard for Earnings Per Share“ (ASBJ
Statement No.2, issued on September 13, 2013)• “Revised Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures“(ASBJ Guidance No.10, issued on September 13, 2013)• “Revised Guidance on Accounting Standard for Earnings Per Share“(ASBJ Guidance No.4, issued on September 13, 2013)(Overview)
Revisions of these accounting standards mainly apply to (i) the
accounting treatment of any changes in a parent’s ownership interestin a subsidiary when the parent retains control over the subsidiary, (ii)the accounting for acquisition-related costs, (iii) the presentation of
net income, the change of name from “minority interests“ to “noncontrolling interests“ and (iv) the transitional treatments for theseaccounting standards.
(Scheduled Effective Date)
The revised accounting standards and guidance are scheduled totake effect from the beginning of the year ending March 31, 2016.
The transitional treatment will be applied to business combinations
executed at or after the beginning of the year ending March 31,
2016.
(The impact of the adoption of the revised accounting standards andguidance)
The impact of the adoption of revised accounting standards andguidance on consolidated financial statements are now underevaluation.

3. U.S. DOLLAR AMOUNTS
The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at¥120.27=US$1.00, the approximate exchange rate in effect as of March 31, 2015. This translation should not be construed as a representationthat yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any other rate.

068

INPEX CORPORATION Annual Report 2015

4. STATUS OF FINANCIAL INSTRUMENTS(a) Policy regarding financial instruments

The Company raises funds for oil and gas development andproduction, construction or expansion of gas infrastructure
primarily from cash flow on hand and from bank loans. Oil and gas
development projects are primarily funded from long-term loansthat the Company has secured from the Japan Bank for International
Cooperation, Japanese commercial banks and others. Japan Oil,Gas and Metals National Corporation has provided guarantees forthe principal on certain outstanding amounts of the Company's
long-term loans. The Development Bank of Japan and Japanesecommercial banks have provided long-term loans for the construction
or expansion of domestic gas infrastructure. The Company generally
borrows loans with variable interest rates, while some loans are with afixed interest rate depending on the nature of each project.
Regarding the financing policy, the Company manages funds
mainly from deposits and government bonds, which are considered
to be of low-risk and high-liquidity. The Company limits the use ofderivative transactions for managing risks of forecasted transactions
and portfolio assets, and does not engage in speculative derivativetransactions.

(b) Details of financial instruments,
associated risks and risk management(Credit risk related to trade receivables)

Trade receivables such as accounts receivable-trade and accounts
receivable-other are comprised mainly from sales of crude oil andnatural gas. Main trading partners are national oil companies, major
oil companies and others. In line with the criteria for trading andcredit exposure management, the Company properly analyzes thestatus of trading partners for early detection and reduction of default
risks.

(Market price fluctuation risk related to securities)

For marketable securities and investment securities exposed tomarket price fluctuation risk, analysis of market values is regularly
reported to the Executive Committee. For shares of stock, theCompany mainly holds shares of trading partners and others
to establish close and smooth relationships for the purpose ofmaintaining a medium- to long-term stable business. A part ofthese shares are held for the purpose of investment. As for bonds,
the Company mainly holds bonds with short-term maturities byconsidering medium- to long-term cash outflow forecast and market
price fluctuation risk.

(Interest rate fluctuation risk related to short-term loans andlong-term debt)

Loans are mainly used to fund oil and natural gas development
projects and construction or expansion of domestic gas infrastructure
and others. The borrowing period is determined considering thefinancial prospects of the project and useful lives of the facilities.
Loans with variable interest rates are exposed to interest rate
fluctuation risk, however, the Company analyzes the impact of interest
rate fluctuation at the time of borrowing and on an annual basis, andleverages fixed-rate-loans or interest rate swaps as necessary.

(Exchange rates fluctuation risk related to assets and liabilities
in foreign currencies)

As most of the Company’s business is conducted overseas, theCompany is exposed to exchange rate fluctuation risk due to a large
portion of monetary assets and liabilities held in foreign currencies
such as cash and deposits, accounts receivables and loans requiredin overseas projects. As a result of fiscal year-end conversion,
yen appreciation causes a foreign exchange loss on assets and aforeign exchange gain on liabilities while yen depreciation causes
a foreign exchange gain on assets and a foreign exchange loss
on liabilities. For this reason, the Company endeavors to reduce
exchange rate fluctuation risk by maintaining the position between
assets and liabilities in foreign currencies. In addition to planned
expenditures in foreign currencies on the Ichthys Project and others,
the Company manages exchange rate fluctuation risk throughderivative transactions such as foreign exchange forwards and others
as necessary.

(Management of derivative transactions)

For the above derivative transactions, the Company follows
its derivative transactions management outline. For derivativetransactions exposed to market price fluctuation, market values ofthese derivatives are regularly reported to the Executive Committee,
and the Company only transacts with financial institutions with highcredit ratings to reduce counterparty risks for the use of derivatives.

(Management of liquidity risk related to financing)

The finance and accounting division controls cash management
based on a monthly financing plan prepared by each project divisionand secures sufficient liquidity on hand to prepare for liquidity risk.

5. SECURITIES(a) Information regarding other securities as of March 31, 2014 and 2015 is as follows:
Millions of yen
March 31, 2014

Acquisition cost

Carrying value

Securities with carrying values exceeding their acquisition costs¥ 16,699¥ 29,652
Stock
Bonds:
166,875
167,554
Public bonds
70,31670,353
Corporate bonds
25,09931,444
Other debt securities
139,524
169,346
Other
418,513468,349
Subtotal
Securities with acquisition costs exceeding their carrying values
35,69032,324Stock
Bonds:
2,025
2,025
Public bonds
37,71534,349Subtotal¥456,228¥502,698
Total

Unrealized gain
(loss)¥12,953
679
37
6,345
29,822
49,836(3,366)(0)(3,366)¥46,470

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015069

Millions of yen
March 31, 2015

Acquisition cost

Carrying value

Thousands of U.S. dollars
Unrealized gain
Carrying value(loss)

Unrealized gain
(loss)

Acquisition cost

¥17,458$  287,886$  433,042$145,156

65
13
5,694
33,24256,472259,233
326,765
104,340
611,092
1,589,316

259,774
326,873
151,684
887,486
2,058,859

541
108
47,344
276,394
469,543(2,390)147,709

127,837(19,872)(2)(2,392)¥54,080

146,338
294,047$1,883,363

146,321274,158$2,333,017(17)(19,889)$449,654

Securities with carrying values exceeding their acquisition costs¥ 34,624¥ 52,082
Stock
Bonds:
31,17831,243Public bonds
39,30039,313
Corporate bonds
12,54918,243
Other debt securities
73,496
106,738
Other
191,147
247,619
Subtotal
Securities with acquisition costs exceeding their carrying values
17,765
15,375Stock
Bonds:
17,60017,598
Corporate bonds
35,36532,973
Subtotal¥226,512¥280,592
Total(b) Information regarding sales of securities classified as other securities for the years ended March 31, 2014 and 2015 is as follows:Year ended March 31, 2014

Proceeds
from sales

Millions of yen
Gain on
sales

Bonds
Public bonds
Other
Total

¥ 72,563
76,307¥148,870¥   182
10,307¥10,489

Year ended March 31, 2015

Proceeds
from sales

Millions of yen
Gain on
sales

Bonds
Public bonds
Other
Total

¥ 91,741
84,072¥175,813¥   358
18,053¥18,411

Loss on
sales

¥—
—
¥—

Proceeds
from sales

Thousands of U.S. dollars
Gain onsales$  762,792
699,027$1,461,819$   2,977
150,104$153,081

Loss on
sales

¥9
—
¥9

Loss on
sales

$75
—
$75

(c) Components of securities for which it is extremely difficult to determine fair value as of March 31, 2014 and 2015 are summarized as follows:
Millions of yen
March 31,

Other securities
Unlisted securities
Preferred securities
Stocks of subsidiaries and affiliates
Total

Thousands of U.S. dollars

2014

2015

2015

¥ 33,842
5,000
112,576¥151,418¥ 33,410—
132,377¥165,787$  277,792—
1,100,665$1,378,457

These securities are not included in (a) as they have no quoted market prices and it is extremely difficult to determine their fair value. For sharesof exploration companies among unlisted securities and stocks of subsidiaries and affiliates, an allowance for investments in exploration isprovided at an estimated amount based on the financial position of the investees.
(d) Redemption schedule for securities with maturity dates classified as other securities as of March 31, 2015 is as follows:
Millions of yen
March 31, 2015

Bonds
Public bonds
Corporate bonds
Other debt securities
Other
Total

070

1 year or lessMore than 1
year but lessthan 5 years¥ 17,000
35,80018,04166,096¥136,937¥14,000
21,100——¥35,100

INPEX CORPORATION Annual Report 2015

Thousands of U.S. dollars

More than 5More than 10
years but less
1 year or lessyears
than 10 years

¥—
—
—
—
¥—

¥—
—
—
—
¥—

$  141,349
297,664
150,004
549,563$1,138,580

More than 1
year but lessthan 5 years$116,405
175,438——$291,843

More than 5More than 10
years but lessyears
than 10 years

$—
—
—
—
$—

$—
—
—
—
$—

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT(a) Short-term borrowings as of March 31, 2014 and 2015 are as follows:
Millions of yen
March 31,

Short-term borrowings from banks and others(Interest rates ranging from 0.839% to 1.963% and from0.600% to 19.000% at March 31, 2014 and 2015)

Thousands of U.S. dollars

2014

2015

2015

¥4,327¥6,763$56,232(b) Long-term debt as of March 31, 2014 and 2015 is as follows:
Millions of yen
March 31,

Loans from banks and others, due through 2028
(Interest rates ranging from 0.366% to 2.500% and from
0.362% to 2.500% at March 31, 2014 and 2015)
Less: Current portion

Thousands of U.S. dollars

2014

2015

2015

¥579,301¥670,394$5,574,075

17,627¥561,674

26,443¥643,951

219,864$5,354,211(c) Assets pledged as of March 31, 2014 and 2015 are as follows:
Millions of yen
March 31,

Buildings and structures
Wells
Machinery, equipment and vehicles
Other (tangible fixed assets)
Investment securities
Other (investments and other assets)
Total

Thousands of U.S. dollars

2015

2014

¥ 1,975
49
6,969
12
1,020
217
¥10,242¥ 2,082
181
8,027
—
790
222
¥11,3022015$16,421407
57,945
100
8,481
1,804
$85,158(d) The above assets were pledged against the following liabilities:
Millions of yen
March 31,

Short-term borrowings
Accounts payable—other
Long-term debt
Other
Total

Thousands of U.S. dollars

2015

2014

¥  491509
117¥1,018¥  946385
492
17¥1,8402015$4,0834,232
8
141$8,464(e) In addition, assets pledged as collateral for the Ichthys LNG Project Finance and the BTC Pipeline Project Finance are as follows:(Ichthys LNG Project Finance)
Millions of yen
March 31,

Cash and cash equivalents
Inventories
Other (Current assets)
Land
Construction in progress
Long-term loans receivable
Total

2014

¥   7,835
—
5,430
146
382,224
27,309¥422,944

Thousands of U.S. dollars

2015¥   3,875
4,729
2,462
161
752,019
9,681¥772,927

2015$    32,219
39,32020,4701,339
6,252,756
80,494$6,426,598(BTC Pipeline Project Finance)
Millions of yen
March 31,

Investment securities

Thousands of U.S. dollars

2015

2014

¥7,294¥6,378

2015$60,647(f) The aggregate annual maturities of long-term debt subsequent to March 31, 2015 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

2016
2017
2018
2019
2020
2021 and thereafter
Total¥ 26,443
65,222
41,34964,976
104,681
367,723¥670,394$  219,864
542,297
343,801
540,251
870,383
3,057,479$5,574,075

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Years ending March 31,

071

7. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to income taxes which, in the aggregate, resulted in a statutory tax rate of
approximately 33.3% and 30.8% for the years ended March 31, 2014 and 2015, respectively.
(a) ‌The effective tax rates reflected in the consolidated statement of income for the years ended March 31, 2014 and 2015 differ from thestatutory tax rate for the following reasons:Years ended March 31,

Statutory tax rate
Effect of:Permanently non-taxable expenses such as entertainment expenses
Permanently non-taxable income such as dividends income
Valuation allowance
Foreign taxes
Foreign tax credits
Adjustment of deducted amounts of foreign taxes
Amortization of goodwill
Differences of effective tax rates applied to tax effect accounting
Other
Effective tax rates

2014

2015

33.3%

30.8%

0.6
(0.7)
0.6
73.5
(15.1)(15.7)
0.3
(2.0)
0.3
75.1%

0.2
(0.3)
11.0
79.1
(17.2)(18.4)
0.4
1.0
(0.6)
86.0%

(b) The significant components of deferred tax assets and liabilities as of March 31, 2014 and 2015 are as follows:
Thousands of U.S.
dollars

Millions of yen
March 31,

Deferred tax assets
Exploration expenditures
Loss on valuation of investment securities
Recoverable accounts under production sharing (foreign taxes)
Allowance for investments in exploration
Foreign taxes payable
Net operating loss carry forward
Accumulated depreciation
Liability for retirement benefits
Provision for loss on businessTranslation differences of assets and liabilities denominated in foreign
currencies
Asset retirement obligations
Allowance for doubtful accounts
Impairment loss
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Foreign taxes
Translation differences of assets and liabilities denominated in foreign
currencies
Reserve for overseas investment loss
Translation differences due to an application of purchase accounting
methodReserve for exploration
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

072

INPEX CORPORATION Annual Report 2015

2014

2015

2015

¥  94,419
3,196
10,0401,054
32,221
62,175
11,6492,369
2,148¥  86,644
3,640
10,432783
39,929106,328
16,443
1,857
2,619$   720,413
30,26586,7386,510
331,995
884,078
136,717
15,44021,776

8,385

27,467228,378

10,8293,901—
18,788261,174(188,518)
72,65622,8584,150
10,814
23,625357,589(276,397)
81,192

190,056
34,506
89,914
196,433
2,973,219(2,298,138)
675,081(84,960)(112,046)(931,621)

(955)

(329)

(2,735)(4,671)(4,099)(34,082)(1,795)(2,382)(19,805)(11,218)(1,807)(4,821)(110,227)¥ (37,571)(8,415)(2,541)(8,464)(138,276)¥ (57,084)(69,968)(21,127)(70,375)(1,149,713)$   (474,632)

8. COMPREHENSIVE INCOME
Amount of reclassification adjustments and income tax effects allocated to each component of other comprehensive income for the years ended
March 31, 2014 and 2015 are as follows:

2014

Years ended March 31,

Unrealized holding gain on securities
Amount recognized during the period
Amount of reclassification adjustments
Before income tax effect adjustment
Amount of income tax effectUnrealized gain (loss) from hedging instruments
Amount recognized during the period
Amount of income tax effectTranslation adjustments
Amount recognized during the period
Share of other comprehensive income of affiliates accounted for by the equity-method
Amount recognized during the period
Amount of reclassification adjustments
Adjustment for acquisition cost of assets
Total other comprehensive income

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥ 20,843(10,473)
10,370(388)
9,982¥ 26,405(24,356)
2,049
(734)
1,315

$  219,547(202,511)
17,036(6,103)
10,933(31,329)
10,441(20,888)

—
—
—

—
—
—

176,311

244,018

2,028,918(14,316)—
7,642(6,674)¥158,731(28,436)
2,238
12,247(13,951)¥231,382(236,434)
18,608101,829(115,997)$1,923,854

9. SIGNIFICANT NON-CASH TRANSACTIONS
Significant non-cash transactions for the years ended March 31, 2014 and 2015 are as follows:
For the year ended March 31, 2014
None
For the year ended March 31, 2015
Significant asset retirement obligations newly recorded were ¥69,254 million ($575,821 thousand).

10. NET ASSETS
The total number of the Company's shares issued consisted of
1,462,323,600 shares of common stock and 1 Class A stock as ofMarch 31, 2015.
Class A stock has no voting rights at the common shareholders'meeting, but the ownership of Class A stock gives its holder a rightof veto over certain important matters described below. However,requirements stipulated in the Articles of Incorporation need to be
met in cases involving the exercise of the veto over the appointment
or removal of directors, the disposition of material assets or businessintegration;• Appointment and removal of directors• Disposition of material assets• Amendments to the Article of Incorporation with respect to (i) the
purpose of the Company's business and (ii) the granting of voting
rights to the Company's shares other than common stock• Business integration• Capital reduction• Dissolution
Class A stock shareholder may request the Company to acquireClass A stock. Besides, the Company may also acquire Class A stockby a resolution of the meeting of the Board of Directors in case where
Class A stock is transferred to a non-public entity.
The Company conducted a stock split at a ratio of 1:400 ofcommon stock with October 1, 2013 as the effective date, but
for Class A stock, no stock split was conducted. The Articles ofIncorporation specifies that dividends of Class A stock are equivalent
to dividends of a common stock prior to the stock split. The cash
dividends of Class A stock for the year ended March 31, 2015
amounted to ¥7,200.
Under the Companies Act of Japan, 10% of the amount to be
distributed as dividends from capital surplus (other than capitalreserve) and retained earnings (other than legal reserve) should betransferred to capital reserve and legal reserve, respectively, up to
the point where total amount of capital reserve and legal reserve
equals 25% of the common stock account.
Distributions can be made at any time by a resolution of themeeting of shareholders, or the Board of Directors if certain
conditions are met, but neither capital reserve nor legal reserve isavailable for distributions.

11. AMOUNTS PER SHARE
Amounts per share as of March 31, 2014 and 2015 are as follows:
Years ended March 31,¥1,911.25
18.00¥  125.78

Yen

2015

¥2,099.95
18.00¥    53.29

U.S. dollars

2015$17.460.15$ 0.44

Diluted net income per share is not presented because there are no dilutive potential of shares of common stock.
Net assets per share are computed based on the net assets excluding minority interests and the number of common stock outstanding at theyear end.
Cash dividends per share represent the cash dividends proposed by the Board of Directors together with the interim cash dividends paid.
Net income per share is computed based on the net income available for distribution to shareholders of common stock and the average
number of shares of common stock outstanding during the year.
The Company conducted a stock split at a ratio of 1:400 of common stock with October 1, 2013 as the effective date. Net assets per share,
cash dividends per share and net income per share are calculated based on the assumption that the stock split was conducted on April 1, 2013.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

Net assets per share
Cash dividends per share
Net income per share

2014

073

12. DERIVATIVE TRANSACTIONS(a) Derivatives not subject to hedge accounting

There is no derivative not subject to hedge accounting as of March 31, 2014.
Contract amounts, fair value and valuation gain (loss) regarding derivatives subject to hedge accounting as of March 31, 2015 is as follows:
Millions of yen
March 31, 2015

Foreign exchange forwards*
Sell (CAD)
Buy (USD)

Contract amounts

Due after one year

¥35,264

Fair value¥—

Valuation gain (loss)

¥180

¥180

Thousands of U.S. dollars
March 31, 2015

Foreign exchange forwards*
Sell (CAD)
Buy (USD)

Contract amounts

Due after one year

$293,207

Fair value$—

Valuation gain (loss)$1,497$1,497* Fair value is the price obtained from the counterpar ty financial institutions.

(b) Derivatives subject to hedge accounting

Contract amounts, fair value and valuation gain (loss) regarding derivatives subject to hedge accounting as of March 31, 2014 and 2015 are as
follows:
Millions of yen
March 31, 2014

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Long-term debt

Due after one year

¥4,760Fair value¥4,760*Millions of yen
March 31, 2015

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Due after one year

¥4,760Long-term debt

Fair value¥4,760*Thousands of U.S. dollars
March 31, 2015

Interest rate swaps
Payment fixed, receipt fluctuated (Special treatment)

Principal items hedged

Contract amounts

Due after one year

Long-term debt

$39,578$39,578

Fair value** ‌Fair value of derivatives for which special treatment of interest rate swaps is applied is included in the estimated fair value of the longterm debt as disclosed in Note 13. (a) since the interest rate swap is treated together with long-term debt subject to hedging.

13. OTHER FINANCIAL INSTRUMENTS(a) The carrying value and estimated fair value of financial instruments excluding marketable securities and investment securities which aredisclosed in Note 5.(a) and derivatives which are disclosed in Note 12 as of March 31, 2014 and 2015 are as shown below. The following
summary also excludes cash and cash equivalents, and accounts receivable-trade for which fair values approximate their carrying amounts.
Millions of yen
March 31, 2014

Carrying value

Estimated fair value

Time deposits¥555,948¥560,455

Long-term time deposits

364,103367,841

Short-term borrowings and current portion of long-term debt
Long-term debt

21,954

21,744¥561,674¥551,721

Millions of yen

Thousands of U.S. dollars

March 31, 2015

Carrying value

Estimated fair value

Carrying value

Estimated fair value

Time deposits¥661,706¥667,326$5,501,838$5,548,566

33,20632,938276,096

273,867¥643,951¥633,604$5,354,211$5,268,180

Short-term borrowings andcurrent portion of long-term debt
Long-term debt(b) For other financial instruments, computation methods of estimated fair value are as shown below.

(Time deposits)

The fair value of current portion of long-term time deposits included in time deposits is calculated by the same method as long-term time
deposits. For the other time deposits, the relevant carrying value is used since the item is settled in a short period of time and its market
value is almost the same as the carrying value.

(Long-term time deposits)

The fair value of long-term time deposits is calculated by applying a discount rate to the total of principal and interest. The discount rate isbased on the assumed interest rate if a similar new deposit is entered into.

074

INPEX CORPORATION Annual Report 2015

(Short-term borrowings and current portion of long-term debt)

The estimated fair value of current portion of long-term debt is calculated by the same method as long-term debt. For short-termborrowings, the relevant carrying value is used since these items are settled in a short periods of time and its fair value is almost the same as
the carrying value.

(Long-term debt)

The estimated fair value of long-term debt is calculated by applying a discount rate to the total of principal and interest. The discount rate isbased on the assumed interest rate if a similar new loan is entered into.

14. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses included in general and administrative expenses and cost of sales amounted to ¥40 million and ¥86
million ($715 thousand) for the years ended March 31, 2014 and 2015, respectively.

15. IMPAIRMENT LOSSThe Company groups mining area and other assets as a basic unit that generates cash inflows independently of other groups of assets. Due toimpact from deteriorating business environments based on such factors as the drop in oil prices, the Company reduced the respective carrying
amounts of the assets listed below to recoverable amounts, posting the reductions as impairment loss.
For the year ended March 31, 2015
Use

Assets related to Joslyn
Oil Sands Lease Block

Assets related to
JPDA06-105
Block (Kitan Oil Field)

Location

Alberta, Canada

Timor Sea Joint Petroleum
Development Area (JPDA),
the Commonwealth ofAustralia / the Democratic
Republic of Timor-Leste

Impairment loss

Classification

Millions of yen

Thousands of U.S. dollars

Other (Tangible fixed assets)¥13,359$111,075

Mining rights

14,232

118,334

Subtotal

27,591

229,409Wells    348    2,893

Machinery, equipment and vehicles    630    5,238

Construction in progress   6,111   50,811

Other (Investments and other assets)    452    3,758

Subtotal   7,541   62,700¥35,132$292,109

Total

The recoverable amount of the assets related to JPDA06-105 Block (Kitan Oil Field) is reasonably estimated by discounting the future cash flows
at a rate of 7%.
The recoverable amount of the assets related to Joslyn Oil Sands Lease Block is estimated at zero.

16. RETIREMENT BENEFITS
Retirement benefits for the years ended March 31, 2014 and 2015 are as follows:(a) Defined benefit plans (excluding plans included in (b))(Reconciliation of beginning and ending balances of the retirement benefit obligations)
Millions of yen

Balance at beginning of the period
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial loss (gain)
Retirement benefits paid
Balance at end of the period

Thousands of U.S. dollars

2014

2015

2015

¥18,743—
18,743
948
185
25
(456)
¥19,445¥19,445(246)
19,199
1,014
198
176
(608)
¥19,979$161,678(2,045)
159,633
8,431
1,646
1,463
(5,055)$166,118

6(Reconciliation of beginning and ending balances of plan assets at fair value)

Balance at beginning of the period
Expected return on plan assets
Actuarial gain (loss)
Contributions to the plans
Retirement benefits paid
Balance at end of the period

Thousands of U.S. dollars

2014

2015

2015

¥10,611
265
1,024
541
(320)
¥12,121¥12,121
303
1,305
544
(333)
¥13,940$100,782
2,519
10,851
4,523(2,769)$115,906

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Millions of yen

075

(Reconciliation between retirement benefit obligations and plan assets at fair value and liability for retirement benefits and asset for retirement
benefits on the consolidated balance sheet)
Millions of yen

Thousands of U.S. dollars

2014

2015

2015

Retirement benefit obligations (funded plans)
Plan assets at fair value
Net liability (asset) on consolidated balance sheet¥19,445(12,121)7,324¥19,979(13,940)
6,039$166,118(115,906)
50,212

Liability for retirement benefits
Net liability (asset) on consolidated balance sheet

7,324¥ 7,324

6,039¥ 6,039

50,212$ 50,212(Details of retirement benefit expenses)
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Retirement benefit expenses for defined benefit plans

Thousands of U.S. dollars

2015

2014
¥ 948
185
(265)
(999)
¥(131)¥1,014
197(303)(1,128)¥ (220)2015$ 8,431
1,638(2,519)(9,379)$(1,829)(Plan assets)
Components of plan assets

2014

2015

Stock
General accounts
Bonds
Other
Total

40%
44%
15%
   1%
100%

43%
40%
17%
   0%
100%

(Basis of measurement for long-term expected return rate on plan assets)
The expected long-term return rate on plan assets is determined based on the current and expected future distribution of plan assets and thecurrent and expected future long-tern return rate on various assets of which plan assets are composed.
(Basis of the actuarial assumptions)

Discount rateLong-term expected return rate on plan assets

2014

2015

1.0%
2.5%

1.0%
2.5%

(b) Defined benefit plans applying simplified methods(Reconciliation of beginning and ending balances of liability for retirement benefits)
Millions of yen

Balance at beginning of the period
Retirement benefit expenses
Retirement benefits paid
Contributions to the plans
Other
Balance at end of the period

Thousands of U.S. dollars

2015

2014
¥448
100
(57)
(35)
13
¥469

¥469
257
(71)
(20)
26
¥661

2015
$3,899
2,137
(590)
(166)
216
$5,496(Reconciliation between retirement benefit obligations and plan assets at fair value and liability for retirement benefits and asset for retirement
benefits on the consolidated balance sheet)
Millions of yen

Thousands of U.S. dollars

2015

2014

2015

Retirement benefit obligations (unfunded plans)
Net liability (asset) on consolidated balance sheet

¥278
(216)
62
407
469

¥297
(234)
63
598
661

$2,470(1,946)
524
4,972
5,496

Liability for retirement benefits
Net liability (asset) on consolidated balance sheet

469
¥469

661
¥661

5,496
$5,496Retirement benefit obligations (funded plans)
Plan assets at fair value(Retirement benefit expenses)
Millions of yen

2014
Retirement benefit expenses under simplified methods

076

INPEX CORPORATION Annual Report 2015

¥100

Thousands of U.S. dollars

2015
¥257

2015
$2,137

(c) Defined contribution plans
The Group’s contributions for defined contribution plans amounted to ¥957 million and ¥1,442 million ($11,990 thousand) for the years ended
March 31, 2014 and 2015, respectively.

17. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

2014

2015

2015

Balance at beginning of the period¥17,395
6,209
782¥ 28,307
58,342
1,329$235,362
485,092
11,050New obligations
Accretion expenses
Obligations settled
Change in estimates *1
Other *2
Balance at end of the period

(198)

(389)

(3,235)

2,275
1,844
¥28,307

14,9193,820¥106,328

124,046
31,762$884,077*1 “Change in estimates“ for the year ended March 31, 2015 mainly reflects increasing site restoration and decommissioning costs whichbecame evident and revised rate of discount of certain subsidiaries in the year ended March 31, 2015.
*2 “Other“ mainly includes the change due to foreign exchange rates fluctuation.

18. GOODWILL
The changes in the carrying amount of goodwill for the years ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

2014

2015

2015

Balance at beginning of the period
Goodwill acquired during the period
Amortization of goodwill
Balance at end of the period¥87,841—(6,761)¥81,080¥81,080—(6,761)¥74,319$674,150—(56,215)$617,935

19. LEASES
Future minimum lease payments subsequent to March 31, 2015 for operating lease transactions are summarized as follows:(a) As lessee
20162017 and thereafter
Total

Millions of yen

Thousands of U.S. dollars¥ 6,688
11,663¥18,351$ 55,608
96,974$152,582

Millions of yen

Thousands of U.S dollars(b) As lessor
20162017 and thereafter
Total

¥112
204
¥316

$  931
1,696$2,627

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015077

20. CONTINGENT LIABILITIESAs of March 31, 2015, the Company and its consolidated subsidiaries were contingently liable as guarantors of indebtedness of affiliates in theaggregate amount of ¥25,969 million ($215,923 thousand).
In addition, the Company guarantees for derivative transactions utilized to hedge exchange rate fluctuation risk regarding payments ofdevelopment costs for the Ichthys LNG Project. The relevant loss on valuation as of March 31, 2015 was ¥36,433 million ($302,927 thousand).
In connection with the Ichthys LNG Project Finance, the Company and other project participants provide lenders with a guarantee of liabilities
during the construction phase based on each participating interest. The portion guaranteed by the Company as of March 31, 2015, was¥958,503 million ($7,969,593 thousand).

21. SEGMENT INFORMATION
Segment information for the years ended March 31, 2014 and 2015(a) Overview of reportable segments
The reportable segments for the Group’s oil and gas development activities are composed of individual mining area and others for which
separate financial information is available in order for the Board of Directors to make Group management decisions. Since the Group operates
oil and gas businesses globally, the Group’s reportable segments are the mining areas and others by geographical region, categorized in “Japan“,“Asia & Oceania“ (mainly Indonesia, Australia and East Timor), “Eurasia (Europe & NIS)“ (mainly Azerbaijan), “Middle East & Africa“ (mainly
UAE) and “Americas.“
The Company produces oil and gas in each segment. In addition, the Company conducts marketing activities for petroleum products andothers in “Japan“ segment.

(b) Basis of measurement for sales, income (loss), assets and other items by reportable segment
Accounting policies for the reportable segments are substantially the same as those described in “Note 2. SUMMARY OF SIGNIFICANTACCOUNTING POLICIES“.

(c) Information on sales and income (loss), assets and other items by reportable segment
Millions of yen
Year ended March 31, 2014
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assetsEurasia
Middle East &Asia & Oceania(Europe & NIS)
AfricaAmericas¥120,268
120,268
22,771
286,414¥  485,069
485,069
264,849
1,038,265¥ 96,341
96,34142,601
535,046¥621,513
621,513421,184
288,601¥ 11,435 ¥1,334,626
11,435
1,334,626(7,646)
743,759
265,348
2,413,674

18,838

8,822

10,417

6,772

4,672

49,521

1,396

50,917

—

—

—

—

(192)

(192)

6,953

6,761

2,000

39,124—65,184

2,015

108,323—

108,323¥ 42,404¥  285,903¥   4,073¥ 35,195¥ 51,583¥  419,158¥      417¥  419,575

Japan

Asia & Oceania¥129,522
129,522
16,693292,961¥  409,776
409,776
178,225
1,677,806¥ 94,050
94,05032,228557,564¥524,528
524,528
333,213
253,120

20,651

6,367

9,900

9,901

4,335

51,154

1,366

52,520

—

—

—

—

(192)

(192)

6,953

6,761

1,597

61,160—54,096

1,197

118,050—

118,050¥ 26,986¥  405,231¥ 12,412¥ 46,378¥ 46,491¥  537,498¥      419¥  537,917

Japan

Total

Adjustments *1 Consolidated *2¥       — ¥1,334,626—
1,334,626(10,149)
733,610
1,624,465
4,038,139

Millions of yen
Year ended March 31, 2015
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assets078

INPEX CORPORATION Annual Report 2015

Eurasia
Middle East &(Europe & NIS)
AfricaAmericasTotal¥ 13,351 ¥1,171,227
13,351
1,171,227(15,303)545,056
305,996
3,087,447

Adjustments *1 Consolidated *2¥        — ¥1,171,227        —1,171,227(10,170)
534,886
1,411,707
4,499,154

Thousands of U.S. dollars
Year ended March 31, 2015
Sales to third parties
Total sales
Segment income (loss)
Segment assets
Other items
Depreciation andamortization
Amortization of goodwill
Investment to affiliates
accounted for by theequity-method
Increase of tangible fixed
assets and intangible
assetsEurasia
Middle East &Asia & Oceania(Europe & NIS)
AfricaAmericas$1,076,927
1,076,927
138,796
2,435,861$ 3,407,134
3,407,134
1,481,874
13,950,328$  781,990
781,990
267,964
4,635,936$4,361,254
4,361,254
2,770,541
2,104,598$  111,009 $ 9,738,314
111,0099,738,314(127,239)
4,531,936
2,544,242
25,670,965

171,705

52,93982,31582,32336,044425,326

11,358436,684

—

—

—

—

(1,596)(1,596)57,811

56,215

13,278508,523—

449,788

9,953

981,542—

981,542$  224,378$ 3,369,344$  103,201$  385,616$  386,555$ 4,469,094$      3,484$ 4,472,578

Japan

Total

Adjustments *1 Consolidated *2$         — $ 9,738,314—
9,738,314(84,559)
4,447,377
11,737,815
37,408,780*1 Adjustments include elimination of inter-segment transactions and corporate incomes, expenses and assets that are not allocated to areportable segment.
*2 Segment income is reconciled with operating income on the consolidated statement of income.

(d) Products and service information(Sales to third parties)

Millions of yen

Crude oil
Natural gas (excluding LPG)
LPG
Other
Total

Thousands of U.S. dollars

2014

2015

2015

¥  858,754
431,187
24,227
20,458¥1,334,626¥  730,422
401,338
20,522
18,945¥1,171,227$6,073,185
3,336,975
170,633
157,521$9,738,314

Years ended March 31,(e) Geographical information(Sales)Millions of yen

Japan
Asia & Oceania
Other
Total

Thousands of U.S. dollars

2014

2015

2015

¥  682,353
620,339
31,934¥1,334,626¥  627,068
514,864
29,295¥1,171,227$5,213,836
4,280,901
243,577$9,738,314

Years ended March 31,(Tangible fixed assets)

Millions of yen

March 31,

2014

Japan
Australia
Other
Total

¥248,247
520,976
182,556¥951,779

Thousands of U.S. dollars

2015

2015

¥  252,747
985,771259,104¥1,497,622$ 2,101,497
8,196,316
2,154,353$12,452,166(f) Information by major customer(Sales to major customers)

Millions of yen

Thousands of U.S. dollars

Years ended March 31,

2014

2015

2015

PERTAMINA
Idemitsu Kosan Co., Ltd.

¥217,519¥156,151¥160,370¥135,590$1,333,416$1,127,380

Segment
Asia & Oceania
Middle East & Africa

6
Financial &Corporate Information

INPEX CORPORATION Annual Report 2015079

22. RELATED PARTY TRANSACTIONSThere are the following related party transactions for the years ended March 31, 2014 and 2015.

(a) Affiliated company
Year ended March 31, 2014
Location

Ichthys
LNG Pty
Ltd

Transportation,
Serve theliquefaction andofficersales of oil andWestern$482,700
Indirectly
concurrently,
natural gas throughAustralia,
66.07%
thousandcapitalpipeline in WA-50-L
Australia
subscription
block in offshore
Western Australia

Capitalinvestment

Nature ofoperations

Votinginterest

Amounts

Descriptionof thebusinessrelationship

Name ofrelatedparty

Transaction
detailMillions of yen

Amounts
Title of accountMillions of yen

Current assets:other (accrued¥   7,976 revenue)
Long-term loans
receivable

Interest
income*Debt guarantee¥ 2,133
27,309—¥600,030—¥

Year ended March 31, 2015
Descriptionof thebusinessrelationshipAmounts

Name ofrelatedparty

Location

Ichthys
LNG Pty
Ltd

Transportation,
Loans ofliquefaction andServe the funds
sales of oil andofficer Collection
Western$482,700
Indirectly
natural gas throughconcurrently, of loans*
Australia,
62.25%
thousandpipeline in WA-50-L
capitalAustralia
block in offshore
subscription Debt
Western Australia
guarantee

Capitalinvestment

Nature ofoperations

Votinginterest

Transaction
detailAmounts
Title of
Millions of Thousands of account Millions of Thousands ofyen
U.S. dollars
yen
U.S. dollars¥110,363

Long$  917,627 term loans
receivable¥120,042$998,104¥958,503$7,969,593

¥

$

—

—

—

* The Company determines the interest rate on loans of funds based on market interest rates in a reasonable and appropriate manner.

(b) Note related to the parent company or significant affiliated companies
The significant affiliated company for the years ended March 31, 2014 and 2015 is Ichthys LNG Pty Ltd. The summary of its financial information
is as follows:
Millions of yen

2014

2015

2015

Total current assets¥    47,238¥    42,670$   354,785

Total fixed assets

1,262,541

2,213,893

18,407,691

Total current liabilities

57,265110,247

916,662

Total long-term liabilities

1,229,360

2,137,499

17,772,504

23,154

8,817

73,310———Total net assets
Net sales
Net loss before income taxes
Net income (loss)

080

Thousands of U.S. dollars

Years ended March 31,

INPEX CORPORATION Annual Report 2015

(3,367)(2,902)(24,129)¥    (2,018)¥      873$      7,259

Independent Auditor’s Report

Independent Auditor’s Report
The Board of Directors
INPEX CORPORATION
We have audited the accompanying consolidated financial statements of INPEX CORPORATION and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2015, and theconsolidated statements of income, comprehensive income, changes in net assets, and cash flows for theyear then ended and a summary of significant accounting policies and other explanatory information, allexpressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designing andoperating such internal control as management determines is necessary to enable the preparation and fairpresentation of the consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to
express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fairpresentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of INPEX CORPORATION and its consolidated subsidiaries
as at March 31, 2015, and their consolidated financial performance and cash flows for the year thenended in conformity with accounting principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented
for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements
have been properly translated on the basis described in Note 3.

6
Financial &Corporate Information

June 24, 2015
Tokyo, JapanINPEX CORPORATION Annual Report 2015081

Subsidiaries and Afﬁliates
As of March 31, 2015

Consolidated Subsidiaries
Company name

Voting rights
held by us (%)

Main business

INPEX Natuna, Ltd.

5,000

100.00%Exploration, development, production and sales ofoil and natural gas in the South Natuna Sea Block B,
Indonesia

INPEX Sahul, Ltd.

4,600

100.00%Exploration, development, production and sales ofoil and natural gas in the JPDA03-12 Block and BayuUndan Gas-Condensate Field in the Timor Sea JPDA,
Australia and East Timor

INPEX Alpha, Ltd.

8,014

100.00%Exploration, development, production and sales ofoil and natural gas in the WA-35-L Block and others,
Australia

INPEX Tengah, Ltd.

1,020

100.00%Exploration, development, production and sales of oil
and natural gas in the Tengah Block in Offshore East
Kalimantan, Indonesia

INPEX Browse, Ltd.

421,690

100.00%Financing for oil and natur al gas explor ation anddevelopment in the WA-285-P Block and others, Australia

INPEX Ichthys Pty Ltd(Thousands of
U.S. dollars)

100.00%Exploration and development of oil and natural gas in
the Ichthys Gas-Condensate Field (WA-50-L), Australia

INPEX Browse E&P Pty Ltd(Thousands of
U.S. dollars)

100.00%Exploration of oil and natural gas in the WA-494-P
Block and others, Australia

INPEX Masela, Ltd.

43,43651.93%

Exploration and development of oil and natural gas in
the Masela Block in the Arafura Sea, Indonesia

INPEX South Makassar, Ltd.

1,097

100.00%Exploration, development, production and sales of oil
and natural gas in the Sebuku Block in the Makassar
Strait, Indonesia

INPEX Timor Sea, Ltd.

6,712

100.00%Exploration, development, production and sales of oil
and natural gas in the JPDA06-105 Block in the Timor
Sea JPDA, Australia and East Timor(Thousands of
U.S. dollars)

100.00%Exploration and development of oil and natural gas in
the Prelude Gas Field (WA-44-L) and others, Australia

INPEX Babar Selaru, Ltd.

1,426

51.01%

Exploration of oil and natural gas in the Babar Selaru
Block, Offshore Indonesia

INPEX Offshore North West Sabah, Ltd.

2,647

77.24%

Exploration of oil and natural gas in the deepwater
Block S located offshore Sabah, Malaysia

INPEX Southwest Caspian Sea, Ltd.

53,59451.00%

Exploration, development, production and sales of oilin the ACG Oil Fields, Azerbaijan

INPEX North Caspian Sea, Ltd.

50,68045.00%

Exploration and development of oil in the Offshore
North Caspian Sea Block, Kazakhstan

Japan Oil Development Co., Ltd.

18,800100.00%Exploration, development, production and sales ofoil in the ADMA Block in Offshore Abu Dhabi, United
Arab Emirates

INPEX ABK, Ltd.

2,500

100.00%Exploration, development, production and sales of oilin the Abu Al Bukhoosh Block in Offshore Abu Dhabi,
United Arab Emirates

10100.00%Exploration, development, production and sales of oilin the Offshore D.R. Congo Block100.00%Inves t ment in oil ex plor ation, develop ment,
production and sales in Block 14, Offshore Angola

100.00%Investment in exploration, development, production
and sale of natural gas in the Copa Macoya Block andexploration, development, production and sale of oil in the
Guarico Oriental Block, Bolivarian Republic of Venezuela

INPEX Oil & Gas Australia Pty Ltd

Teikoku Oil (D.R. Congo) Co., Ltd.
INPEX Angola Block 14 Ltd.

082

Issued capital*(Millions of yen)

802,688
331,186

400,000

475,600(Thousands of
U.S. dollars)

1,620

Teikoku Oil and Gas Venezuela, C.A.

(Thousands ofbolivars)

Teikoku Oil (North America) Co., Ltd.

(Thousands of
U.S. dollars)

100.00%Exploration, development, production and sales of oil
and natural gas in the Lucius Oil Field and others, inthe U.S. Gulf of Mexico

INPEX Canada, Ltd.

21,325100.00%Exploration and development of oil including oil sandsin the Joslyn project, Canada

Teikoku Oil (Suriname) Co., Ltd.

7,257

56.78%

Exploration of oil in the Offshore Block 31, Suriname

INPEX CORPORATION Annual Report 2015

19,793

Company name

INPEX Gas British Columbia Ltd.

Issued capital*(Millions of yen)

1,043,488(Thousands ofCanadian dollars)

Teiseki Pipeline Co., Ltd.

100
86,135INPEX DLNGPL Pty Ltd(Thousands of
AUS dollars)

INPEX BTC Pipeline, Ltd.

(Thousands of
U.S. dollars)

63,800

Voting rights
held by us (%)

Main business45.09%

Exploration, development, production and sales ofnatural gas in the shale gas blocks of the Horn River,
Cordova and Liard basins in British Columbia, Canada

100.00%Natural gas transportation, pipeline operation,
maintenance and management

100.00%Investment in Darwin LNG Pty Ltd, which constructs
and operates the undersea pipeline and LNG plantconnecting the Bayu Undan Gas-Condensate Field
and Darwin (Australia)

100.00%Investment in the pipeline construction andmanagement business that connects Baku (Azerbaijan),
Tbilisi (Georgia) and Ceyhan (Turkey)

INPEX Trading, Ltd.

50

100.00%

Sales, agency and brokerage of crude oil and market
research and sales planning in connection with oil andnatural gas sales

Saitama Gas Co., Ltd.

60

62.67%

City gas sales

36 other subsidiaries

Equity-Method Affiliates
Voting rights
held by us (%)

Main business44.00%

Exploration, development, production and sales ofnatural gas in the Berau Block and the Tangguh LNG
Project, West Papua province, Indonesia(Thousands of
U.S. dollars)

62.25%Engaged in laying the undersea pipeline from theIchthys Gas-Condensate Field to the Darwin Onshore
LNG Plant and building the LNG plant, Australia

Angola Japan Oil Co., Ltd.

8,000

19.60%

Exploration, development, production and sales of oilin the Offshore 3/05 Block, Angola

INPEX Offshore North Campos, Ltd.

6,852

37.50%

Financing for oil and natural gas exploration,
development, production and sales in the Frade Blockin Offshore North Campos, Brazil

49.99%

Exploration, development, production and sales of oilin Block 14, Offshore Angola

Company name

MI Berau B.V.
Ichthys LNG Pty Ltd

Angola Block 14 B.V.

Issued capital*(Millions of yen)

888,601(Thousands of
U.S. dollars)

482,700

18(Thousands ofeuros)

14 other equity-method affiliates

Subsidiaries of Equity-Method Affiliates
Issued capital*

Frade Japão Petróleo Limitada(Thousands ofreais)

103,051

Main business

0.00%

Exploration, development, production and sales of oil
and natural gas in the Frade Block in Offshore North
Campos, Brazil

2 other subsidiaries of equity-method affiliates*Rounding off fractions less than the unit.

INPEX CORPORATION Annual Report 2015

Financial &Corporate Information

Company name6

Voting rights
held by us (%)

083

Business Risks

The following is a discussion on key items that can be considered potential risk factors relating to the business of INPEXCORPORATION, its subsidiaries and affiliates (the “Group”). From the standpoint of information disclosure to investors andshareholders, we proactively disclose matters that are not necessarily the business risks but that can be considered to have important
effects on the investment decisions of investors. The following discussion does not completely cover all business risks relating to theGroup’s businesses.
Unless stated otherwise, forward-looking statements in the discussion are the judgment of the Group as of June 25, 2015 and are
subject to change after such date due to various factors, including changes in social and economic circumstances.

1. CHARACTERISTICS OF AND RISKS ASSOCIATED WITH THE
OIL AND NATURAL GAS DEVELOPMENT BUSINESS(1) Risk of failure in exploration, development or
production
Payment of compensation is ordinarily necessary to acquireparticipating interests. Also, surveying and exploratory drilling
expenses (exploration expenses) become necessar y at thetime of exploration activities for the purpose of discoveringresources. When resources are discovered, it is necessary tofurther invest in substantial development expenses according tovarious conditions, including the size of the recoverable reserves,development costs and details of agreements with oil-producing
countries (including gas-producing countries; hereinafter thesame shall apply).
There is, however, no guarantee of discovering resources
on a scale that makes development and production feasible.
The probability of such discoveries is considerably low despite
various technological advances in recent years, and even whenresources are discovered the scale of the reserves does notnecessarily make commercial produc tion feasible. For thisreason, the Group conservatively recognizes expenses related to
exploration investment in our consolidated financial statements.
The Group maintains financial soundness by booking 100% as
expenses in the case of concession agreements (including mining
rights awarded in Japan as well as permits, licenses and leases
awarded overseas) and by booking 100% of exploration project
investment as allowances in the case of production sharing
agreements. In addition, if there are impossibilities of recovery
of investment in a development project, we also book thecorresponding amount of investment in the development projectas allowances while considering the recovery possibility of eachproject.
To increase recoverable reserve and production volumes,
the Group plans to always t ake an interes t in promisingproperties and plans to continue exploration investment. At thesame time, we plan to invest in development projects, including
the acquisition of interests in discovered undeveloped fields andproducing fields, so as to maintain an overall balance between
assets at the exploration, development, and production stages.
A l t h o u g h e x p l o r a t i o n a n d d e ve l o p m e n t ( i n c l u d i n g
the acquisition of interes t s) are neces sar y to secure thereserves essential to the Group’s future sustainable businessdevelopment, each type of investment involves technologicaland economic risks, and failed exploration or development could
have an adverse effect on the results of the Group’s operations.

(2) Crude oil, condensate, LPG and natural gas reserves
1) Proved reserves
INPE X CO R P O R AT I O N (t h e “C o m p a ny ”) c o m mi s s io n e d

084

INPEX CORPORATION Annual Report 2015

DeGolyer and MacNaughton, an independent petroleum
engineering consultant in the United States, to assess the main
proved reserves of the Group of which projects with a significant
amount of future development investment might materiallyaffect future performance. An assessment of other projects wasundertaken by the Company. The definition of proved reserves isbased on the U.S. Securities and Exchange Commission’s (SEC)
Regulation S-X, Rule 4-10(a), which is widely known among U.S.
investors. Regardless of whether the deterministic approachor probabilistic approach is used in evaluation, proved oil
and gas reserves are estimated quantities that geological andengineering data demonstrate with reasonable certainty to be
recoverable from known reservoirs under existing economic
and operating conditions, from the date of evaluation throughto the expiration date of the agreement granting operatingrights (or in the event of evidence with a reasonable certainty ofagreement, extension through to the expiration of the projected
extension period). For definition as “proved reserves,” operators
must have a reasonable degree of certainty that the recovery ofhydrocarbons has commenced or that the project will commence
within an acceptable period of time. This definition is widely
regarded as being conservative. Nevertheless, the strictness ofthe definition does not imply any guarantee of the production of
total reserves during a future production period. In this context,
when probabilistic methods are employed, there should be atleast a 90% probability that the quantities actually recovered will
equal or exceed the sum of estimated proved reserves.
For f ur ther det ails on proved reser ves of cr ude oil,condensate, LPG and natural gas held by the Group, including
affiliates accounted for under the equity method, please see
the section “Oil and Gas Reserves and Production Volume” on
P. 92.
2) Probable reserves and possible reserves
In addition to the assessment of proved reserves based on
the SEC standards, the Company commissioned DeGolyer
and MacNaughton to assess its probable reser ves and thepossible reserves of which projects with a significant amountof future development investment might materially affect the
future performance, similar to proved reserves. An assessmentof other projects was undertaken by the Company, based on
the Petroleum Resources Management System 2007 (PRMS)
published by four organizations: the Society of Petroleum
Engineers (SPE), the World Petroleum Congress (WPC), theAmerican Association of Petroleum Geologists (AAPG), andthe Society of Petroleum Evaluation Engineers (SPEE). Probablereserves, as defined by PRMS guidelines established by thefour organizations, are reserves of oil and gas volumes outside
proved reserves that are less likely to be recovered than proved
reserves but more certain to be recovered than possible reserves
based on analyses of geological and engineering data. In thiscontext, when probabilistic methods are employed, there
should be at least a 50% probability that the quantities actually
recovered will equal or exceed the sum of estimated proved
and probable reserves. In addition, possible reserves are also
defined in accordance with PRMS guidelines as reserves of oil
and gas volumes which are not categorized as proved reserves
or probable reserves and which are less likely to be recovered
than probable reserves based on analyses of geological andengineering data. In this case, it is unlikely that the actual
quantity of oil and gas recovered will exceed the sum of proved
reserves, probable reserves and possible reserves. Furthermore,when probabilistic methods are employed to calculate possible
reserves, there should be at least a 10% probability that thequantities recovered will equal or exceed the sum of proved
reserves, probable reserves and possible reserves. Probablereserves and possible reserves can be upgraded to proved
reser ves af ter the addition of new technical data or when
uncertainty has been reduced due to clarification of economic
conditions or operational conditions. Nevertheless, probablereserves and possible reserves do not offer a guarantee of the
production of total reserves during a future production periodwith the same certainty as proved reserves.
For fur ther details on probable reser ves and possible
reserves of crude oil, condensate, LPG and natural gas held by
the Group, including affiliates accounted for under the equity
method, please see the section “Oil and Gas Reserves andProduction Volume” on P. 92.
3) Possibility of changes in reserves
A reserve evaluation depends on the available geological andengineering data from oil and gas reservoirs, the maturity ofdevelopment plans and a considerable number of assumptions,factors and variables including economic conditions as of thedate such an estimate is made. Reserves may be revised in the
future on the basis of geological and engineering data as well
as development plans and information relating to changes in
economic and other conditions made newly available throughprogress in production and operations. As a result, there is apossibility that reserves will be restated upwards or downwards.
As to the reserves under a PSC, not only production, but also
oil and gas prices, investments, recovery of investments due
to contractual conditions and remuneration fees may affectthe economic entitlement. This may cause reserves to increaseor decrease. In this way, the assessed value of reserves could
fluctuate because of various data, assumptions and changes ofdefinition.

Considerable time and expense is required for explorationac tivities. Even when promising resources are discovered
through exploration, substantial expenses including production
facility construction costs, and an extended period of time, arenecessary at the development stage leading up to production.

(4) Operatorship
In the oil and natural gas development business, companies
frequently form business partnerships for the purpose of thedispersion of risk and financial burden. In such partnerships,
one of the companies becomes the operator, which performs
the actual work and bears the responsibility for operations onbehalf of the partners. The companies other than the operator,
as non-operators, participate in the business by providing apredetermined amount of funds and either carefully examining
the exploration and development plan devised and implemented
by the operator, or participating in some operations.
The integration of INPEX CORPORATION and Teikoku OilCo., Ltd., was completed on October 1, 2008. The resultant
company possesses abundant operational capabilities thanks
to the integration of the former two companies’ know-how basedon extensive operation experience in exploration, development
and production both within Japan and overseas as well as theirhigh level proprietary technologies.
The Group intends to actively pursue operator projects
focusing on the two large-scale LNG Ichthys and Abadi projects
taking into consideration the effective application of businessresources as well as the balance between operator and nonoperator projects, based on the Group’s technical capability,
which has been considerably enhanced by the above-statedbusiness integration. Although the Company lacks operator
experience in LNG development projects, it has significant
expertise as an operator in the development and productionof crude oil and natural gas both in Japan and overseas as well
as a wealth of know-how and knowledge accumulated overmany years as a participant in LNG and other projects in suchcountries as Indonesia and Australia. In addition, we believe thatby utilizing the services of specialized subcontractors and highly
experienced external consultants, a practice similar to foreign
oil companies including the majors, it will be possible to executebusiness appropriately as an operator including LNG projects.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information(3) In the oil and natural gas development business theperiod from exploration to sales is highly capital intensive
and funds cannot be recovered for a long time

For this reason, a long period of 10 years or more is required
from the time of exploration and development investment until
the recovery of funds through production and sales. In particular,
the development of the Ichthys and the Abadi, large-scale
LNG projects, being pursued by the Company requires a verylarge amount of investment, and the financing of these projects
could be impacted by changes in the economic and financial
environment. Following the discovery of resources, a delay inthe development schedule or the loss of the economic viabilityof the properties during the development process leading up
to production and the commencement of sales could have an
adverse effect on the Group’s operational results. Such delays
or losses may occur due to changes in the business environment
including a delay in the acquisition or modification of government
approvals, the occurrence of unanticipated problems related
to geological conditions, fluctuations in the price of oil or gas,fluctuations in foreign exchange rates, or escalating prices ofequipment and materials. In the case of LNG projects, suchdelays or losses may occur due to an inability to complete suchprocedural requirements as FID owing to the lack of any longterm contractual agreement with prospective purchasers withrespect to production.

085

Engaging in projec t coordination as an operator willcontribute to the expansion of oppor tunities of block anda c r eag e a c q ui s i t io n t h r o u g h e n ha n c e m e nt of te c h nic alcapabilities and greater presence in oil-producing countries
and the industry. At the same time, there exist risks such as
constraints on the recruitment of personnel who have specialized
operational skills and an increase in financial burden. Inability toadequately cope with such risks could have an adverse effect on
the Group’s results of operations.

(5) Project partners
In the oil and natural gas development business, as previously
mentioned, several companies often engage in joint businessfor the purpose of dispersion of risk and financial burden. In
such cases, the partners generally enter into a joint operating
agreement among themselves to decide on the decision-making
procedure for execution of the joint business, or to decide on
an operator that conducts business on their behalf. A company
that is a partner in one property in which the Group is engaged
in joint business may become a competitor in the acquisition ofother participating interests, even though the relationship withthe partner may be good.
In undertaking the joint business, participants in principle
bear a financial burden in proportion to their interest share. Any
inability by a joint business partner to fulfill this financial burden
may adversely affect the project.

(6) Disaster and accident risks
Oil and natural gas development entails the risk that operational
accidents and disasters may occur in the process of exploration,
development, production and transportation. Should such an
accident, disaster or other such incident occur, there is the riskthat costs will be incurred, excluding compensation covered byinsurance, due to facility damage, as well as the risk of a major
accident or disaster involving loss of life. In addition, a costburden for recovery or opportunity loss from the interruption ofoperations could occur. For the domestic natural gas business,
the Company has continued to procure as source gas natural gas
regasified from imported LNG since January 2010. Furthermore,
the Company has procured impor ted LNG as source gas inconnection with its Naoetsu LNG Terminal from August 2013. An
inability to procure natural gas regasified from imported LNG
and other imported gas as source gas due to troubles concerning
suppliers or the Company’s Naoetsu LNG Terminal may interferewith the Company’s ability to supply to its customers. This couldin turn have an adverse effect on the Company’s domestic
natural gas business.
W i t h re g ar d to e nv iro n m e nt al p ro b l e m s, t he re is apossibility of soil contamination, air pollution, and freshwaterand seawater pollution. The Group has established a “Health,
Safety and Environment Policy,” and as a matter of course
abides by the environmental laws, regulations, and standards ofthe countries in which we operate and give due consideration
to the environment in the conduct of business, based on our
independent guidelines. In the event of an operating accident ordisaster which impacts the environment, there is the possibilityof incurring a response or cost burden for recovery from thatincident, of incurring obligation of payment for procedural

086

INPEX CORPORATION Annual Report 2015

costs, compensation or other cost related to the start of civil,
criminal or government procedures, or of incurring loss from theinterruption of operations. Furthermore, in the event of changes
to or the strengthening of the environmental laws, regulations,and standards (including support measures for the promotion ofnew, renewable energies) of the countries in which we operate, it
may be necessary for the Group to devise additional measures,
and an associated cost burden could occur.
Although the Group maintains accident insurance in thenatural conduct of its operations, should such an accident ordisaster be attributable to willful misconduct or negligence on
the part of the Group, the occurrence of a cost burden could
have an adverse effect on financial results. Also, such accident
or trouble would result in receiving administrative punishment or
result in damage to the Group’s credibility and reputation as anoil and natural gas development company, and could therefore
have an adverse effect on future business activities.
In 2011 and 2012, an oil seep emanated in the vicinity of the
Frade oil field, in which an approximate 18.3% interest is held bya subsidiary of one of INPEX CORPORATION’s equity method
affiliated companies. The Federal Prosecution Service of Brazil
filed lawsuits against Chevron Brasil Upstream Frade Ltda., theFrade oil field operator, and others, and these lawsuits have beensubsequently concluded.
In September 2013, crude oil production was commenced
at the Kashagan oil field within the Offshore North CaspianSea Block in the Republic of Kazakhstan, in which INPE X
CORPORATION’s 45% owned consolidated subsidiary, INPEXNor th Caspian Sea, Ltd., holds a 7.56% interest. However,shor tly af ter crude oil produc tion had begun, a leak fromthe gas pipeline was discovered and the produc tion has
been suspended. In response to the gas leak, North CaspianO p e r at i n g C o m p a ny, t h e o p e r ato r, a n d Ag i p KCO, t h ecompany responsible for operations management (together,
the “Operators”), flared the gas remaining in the gas pipelineat the production facilities and emitted it. In relation to thisactivity, the Ministry of Environmental Protection of the Republicof Kazakhstan issued to the Operators a notice for a monetaryclaim, on the alleged grounds that the Operators had violated
environmental laws. Subsequently, these disputes in relation to
the Kashagan oil field have been concluded through settlement
among the related parties.

(7) Risk in Relation to Mine Abandonment
The Group books in it s account s, as an asset retirement
obligation, the estimated present value of costs related tomine abandonment that will become necessary after finishing
operation and production in oil and gas production facilities andthe like in accordance with agreements with the authorities ofoil-producing countries, applicable laws and regulations and thelike. If it is later found that the estimated present value of thosecosts falls short due to a change in the procedures used formine abandonment, a rise in expenses for procuring drillingmaterials and equipment or any other reason, the Group will
be required to increase the amount of that asset retirement
obligation, which could adversely affect the financial condition
and results of operations of the Group.

2. EFFECTS OF FLUCTUATIONS IN CRUDE OIL PRICES, NATURALGAS PRICES, FOREIGN EXCHANGE AND INTEREST RATES ON
FINANCIAL RESULTS(1) Effects of fluctuations in crude oil prices and natural
gas prices on financial results(2) The effect of fluctuations in exchange rates on
financial results

A large percentage of crude oil prices and natural gas prices
in overseas businesses are determined by international market
conditions. In addition, those prices fluctuate significantly inresponse to the influence of a variety of factors including global
or local supply and demand as well as trends and conditionsin the global economy and financial markets. The vast majorityof these factors are beyond the control of the Company. In
this regard, INPEX is not in a position to accurately predict
movements in future crude oil and natural gas prices. The
Group’s sales and profits are subject to the effects of such pricefluctuations. Such effects are highly complex and are caused by
the following factors.
1) Although a majority of natural gas selling prices in overseas
businesses are linked to crude oil prices, they are not in direct
proportion to crude oil prices.
2) Because sales and profits are determined on the basis of
crude oil prices and natural gas prices at the time sales arebooked, actual crude oil transaction prices and the averageoil price during the accounting period do not necessarily
correspond.
For the domestic natural gas businesses, the Company
has continued to purchase as source gas natural gas regasified
from imported LNG as a raw material in addition to natural
gas produced in Japan since January 2010. The price of theCompany’s natural gas sold in Japan is comprised of a fixed priceportion as well as a portion that reflects fluctuations in the priceof imported LNG. In addition to the direct impact of trends inthe market prices of LNG and competing energy sources on that
portion that reflects fluctuations in the price of imported LNG,
contract negotiations held each fiscal year with end purchasers
could have an indirect effect on the fixed price portion.

As most of the Group’s business consists of E&P conducted
overseas, associated revenues (sales) and expenditures (costs) aredenominated in foreign currencies (primarily in U.S. dollars), andprofit and loss is subject to the effects of the foreign exchange
market. In the event of appreciation in the value of the yen, yendenominated sales and profits decrease. Conversely, in the eventof depreciation in the value of the yen, yen-denominated sales
and profits increase.
On the other hand, when borrowing necessar y funds,
the Company borrows in foreign currencies. In the event ofappreciation in the value of the yen, a foreign exchange gain on
foreign-currency denominated borrowings is recorded as a resultof fiscal year-end conversion; in the event of depreciation in thevalue of the yen, a foreign exchange loss is incurred. For thisreason, the exchange risk associated with the above businessis diminished and the impact of fluctuations in exchange rates
on profit and loss tends to be mitigated. Moreover, although
the Company is taking measures to reduce a portion of the risks
associated with movements in foreign currency exchange rates,
these measures by no means cover all possible risks. As a result,the impact of fluctuations in foreign currency exchange rates
cannot be completely eliminated.

(3) The effect of fluctuations in interest rates on
financial results
The Group raises some of the funds necessary for explorationand development operations through borrowing. Much ofthese borrowings are with variable-rates, long term borrowings
based on the U.S. dollar six-month LIBOR rate. Accordingly, theCompany’s profits are subject to the influence of fluctuations
in U.S. dollar interest rates. Furthermore, although the Grouphas devised methods to reduce a portion of interest rate risk,these methods do not cover all risks of interest rate fluctuation
incurred by our Group and do not entirely remove the effect offluctuations in interest rates.

3. OVERSEAS BUSINESS ACTIVITIES AND COUNTRY RISKof OPEC production ceilings in OPEC member countries andchanges in the legal system and taxation system of thosecountries (including the establishment or abolition of laws or
regulations and changes in their interpretation or enforcement)
could have a significant impact on the Group’s business or results
unless the impact is compensated by insurance.
Additionally, against the background of rising development
costs and other changes in the business environment, theprogress of oil and gas projects, and the need to addressenvironment al is sues, the gover nment s of oil- producing
countries may seek to renegotiate the fiscal conditions including
conditions of existing oil contracts related to par ticipatinginterests. In the event that the fiscal conditions of contracts were
to be renegotiated, this could have an adverse effect on theGroup’s business performance.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

The Group engages in a large number of oil and natural gas
development projects overseas. Because the Group’s businessactivities, including the acquisition of participating interests,
are conducted on the basis of contracts with the governmentsof oil-producing countries and other entities, steps taken byoil-producing countries to further tighten controls applicable
to home country natural resources, suspension of operation
due to conflicts and other factors, and other such changes
in the political, economic, and social circumstances in such
oil-producing countries or neighboring countries (including
government involvement, stage of economic development,
economic growth rate, capital reinvestment, resource allocation,
res tr ic tion of economic ac tivities by global communit y,government control of foreign exchange or foreign remittances,and the balance of international payments), the application

087

4. DEPENDENCE ON SPECIFIC GEOGRAPHICAL AREAS OR
PROPERTIES(1) Production volume
The Group engages in stable production of crude oil and natural
gas in the Offshore Mahakam Block (Indonesia), the ADMA
Block (United Arab Emirates), the Minami Nagaoka Gas Field(Japan) and so on. Through a process of business integration,
the Group had established a wide ranging, diversified yetbalanced portfolio that encompassed the Asia-Oceania regions(particularly Japan, Indonesia, and Australia), the Middle East
and Africa, Eurasia including Caspian Sea area and the Americas.
For the year ended March 31, 2015 however, the Middle East
and Africa regions accounted for about 41% and the Asiaand Oceania regions accounted for about 41% of the Group’s
production volume, making up the vast majority of the Group’s
operations.
Looking ahead, the Group will endeavor to further enhance
the balance of its asset portfolio on a regional basis. However,the Group currently relies heavily on specific geographical areasand properties for its production volume, and the occurrence inthese properties of an operational problem or difficulty could
have an adverse effect on the Group’s operational results.

(2) Contract expiration dates in principal business areas
Expiration dates are customarily stipulated in the agreements
related to participating interests, which are prerequisites for theGroup’s overseas business activities. Although March 30, 1997
was the initial contract expiration date in the production sharing
contract for the Offshore Mahakam Block of Indonesia, theGroup’s principal geographical business area, an extension wasapproved in 1991, and the current expiration date is December
31, 2017. On the basis of the concession agreement for the
ADMA Block, the concession expiration date is March 8, 2018.
(However, the expiration date for the Upper Zakum Oil Field
has been extended to December 31, 2041.) Although the Groupplans to make efforts together with partners to further extend
these agreements, inability to re-extend the agreements or
unfavorable contract terms and conditions at the time of reextension could have an adverse effect on the Group’s results.

Even should the agreements be re-extended, we anticipate
that remaining recoverable reserves may decrease at the timeof re-extension. Although the Group is striving to acquireinterests that can substitute these properties, failure to acquireparticipating interests in oil and gas fields to fully substitute forthese properties could have an adverse effect on the Group’s
results. In addition, the period for exploration in oil and gas fields
currently under exploration is fixed by contracts, and in the caseof fields where oil and/or gas reserves are found that are deemed
to be commercialized, and the Company is unable to decideon the transition to the development stage by the expiration of
the current contract, efforts will be made through negotiations
with the government of the oil- or gas-producing country inquestion to have the periods extended. However, there remains
the possibility that such negotiations may not be successfully
concluded, in which event the Company would be forced towithdraw from operations in the oil or gas field concerned. 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 havethe right to cancel the agreement before the expiration date.
The agreements for properties in these principal geographicalbusiness areas contain similar provisions. The Group has neverexperienced early cancellation of an agreement due to breachof contract, and we do not anticipate such an occurrence in the
future. Nevertheless, a major breach of contract on the partof a party to an agreement could result in cancellation of anagreement before the expiration date.
A n d i n t h e ove r s e a s n a t u r a l g a s d eve l o p m e n t a n d
production activities, in many cases we are selling and supplying
gas based on long-term sales and supply contracts in which
expiration dates are stipulated. We plan to make efforts withpartners to extend or re-extend the expiration date before thedeadline stipulated in these contracts. Nevertheless, inability
to extend the contracts, or the occurrence of cases in which
extension is made but sales and supply volumes are reduced,
could have an adverse effect on the Group’s business or results.

5. PRODUCTION SHARING contracts(1) Details of production sharing contracts
The Group has entered into produc tion sharing contrac ts
with countries including Indonesia and Caspian Sea area, andtherefore holds numerous par ticipating interests in thoseregions.
Production sharing contracts are agreements by which one
or several oil and natural gas development companies serve ascontractors that undertake at their own expense explorationand development work on behalf of the governments of oilproducing countries or national oil companies and receive
production from the projects as cost recovery and compensation.
That is to say, when exploration and development work results inthe production of oil or natural gas, the contractors recover the
exploration and development costs they incurred by means ofa share in the production. The remaining production (crude oiland gas) is shared among the oil-producing country or nationaloil company and the contractors according to fixed allocation
ratios. (The contactors’ share of production after cost recovery
is called “profit oil and gas.” In the case of natural gas, sales
are conducted by Indonesia and the contractors receive cost
recovery and profit gas in the form of cash.) On the other hand,in cases when exploration fails and expected production is not

088

INPEX CORPORATION Annual Report 2015

realized, the contractors are not to recover their invested funds.

(2) Accounting treatment of production sharing
contracts
When a company in the Group owns participating interests under
production sharing contracts, as mentioned above, in the role ofcontractor it invests technology and funds in the exploration anddevelopment of the property, recovers the invested costs fromthe production produced, and receives a share of the remaining
production after recovery of invested costs as compensation.
Costs invested on the basis of production sharing contracts
are recorded on the balance sheet as assets for which future
recovery is anticipated under the item “Recoverable accounts
under produc tion sharing.” Af ter the star t of produc tion,
recovered costs on the basis of those agreements are deductedfrom this balance sheet item.
As production received under production sharing contracts
is divided into the cost recovery portion and the compensationp or tion, t he met ho d of c alc ulating cos t of s ales is als odistinctive. That is to say, the full amount of production received
is temporarily charged to cost of sales as the cost of received
production, and subsequently the amount of the compensation
portion is calculated and this amount is booked as an adjustment

item to cost of sales (“Free of charge production allocated”).
Consequently, only the cost recovery portion of production after

deduction of the compensation portion is booked as cost of
sales.

6. RELATIONSHIP WITH THE JAPANESE GOVERNMENT(1) The Company’s relationship with the Japanese
government
Although the government of Japan (the Minister of Economy,
Trade and Industry) holds 18.94% of the Company’s commonshares issued and a Class A Stock as of June 25, 2015, theCompany autonomously exercises business judgment as a
private corporation. There is no relationship of control, such as
through the dispatch of officers or other means between the
Company and the Japanese government. Moreover, we believethat no such relationship will develop in the future. Furthermore,
there is no concurrent posting or secondment to the Company ofofficers or employees from the Japanese government.

(2) Ownership and sale of the Company’s shares by theJapanese government (the Minister of Economy, Tradeand Industry)
The Ministry of Economy, Trade and Industry (METI) holds 18.94%
of the Company’s common shares issued. METI succeeded tothe shares that had been held by Japan National Oil Corporation(JNOC) following the dissolution of JNOC on April 1, 2005.
With regard to the liquidation and disposition of the oil andgas upstream assets owned by JNOC, the Policy Regarding
the Disposal of Oil and Gas Development-Related Assets Heldby Japan National Oil Corporation (hereinafter, the “Report”)
was announced on March 18, 2003 by the Japan National Oil
Corporation Asset Evaluation and Liquidation Deliberation
Subcommit tee of the Advisor y Commit tee on Energy andNatural Resources, an advisory body of the Ministry of Economy,
Trade and Industry. The Report describes the importance ofappropriate timing in selling the shares on the market, taking into
consideration enterprise value growth. In addition, METI may, in
accordance with the Supplementary Provision Article 13 (1) 2 of
the “Special Measures Act for Reconstruction Finance Keeping
After the Great East Japan Earthquake” (“the Reconstruction
Finance Keeping Act“ (provisional translation, the same shallapply hereinaf ter)) enacted December 2, 2011, sell of f theCompany’s shares in Japan or overseas after examining thepossibility of disposal of the said shares based on a review of theholdings from the perspective of energy policy. This could havean impact on the market price of the Company’s shares.
METI also holds one share of the Company’s Class A Stock.
As the holder of a Class A Stock, METI possesses veto rights
over certain resolutions of the Company’s general shareholders’meetings and meetings of the Board of Directors. For details on
the Class A Stock, please refer to “8. CLASS A STOCK” below.

7. TREATMENT OF SHARES OF THE GROUP’S PROJECT COMPANYOWNED BY JAPANESE GOVERNMENT AND JOGMEC(1) Treatment of shares of the Group’s projectcompany previously owned by Japan National Oil
Corporation (JNOC)

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

In the aforementioned Report, INPEX CORPORATION (prior to
the integration with Teikoku Oil; reorganized on October 1, 2008)
was identified as a company that should comprise part of a corecompany, and is expected to play a role in efficient realizationof a stable supply of energy for Japan through the involvement
by a national flagship company. In response to the Report, theCompany (also, the Group since our acquirement of Teikoku Oil
on October 1, 2008) has sought to promote efficient realizationof a stable supply of energy for Japan while taking advantage
of synergy with the efforts of active resource diplomacy on thepart of the Japanese government, and has aimed to maximize
shareholder value by engaging in highly transparent and efficientbusiness operations.
As a result, with regard to the integration by means oftransfer of shares held by JNOC proposed in the Report, INPEXCORPORATION and JNOC concluded the Basic Agreement
Concerning the Integration of Assets Held by JNOC into INPEXCORPORATION of February 5, 2004 (hereinafter the “Basic
Agreement”) and a memorandum of understanding related
to Basic Agreement (hereinafter “MOU”). On March 29, 2004,
INPEX CORPORATION and JNOC entered into related contracts
including the Basic Contract Concerning the Integration ofAssets Held by JNOC into INPEX CORPORATION (hereinafter
the “Basic Contract”), achieving the agreement on the details
including the treatment of the project companies subject to theintegration and shareholding ratios.
I n 2 0 0 4 I N P E X C O R P O R AT I O N a c c o m p l i s h e d t h e

integration of Japan Oil Development Co., Ltd. (JODCO), INPEXJava Ltd. (disposal was completed on September 30, 2010) and
INPEX ABK, Ltd. which are three of four companies covered by
the Basic Agreement. Although INPEX Southwest Caspian Sea
Ltd. (hereinafter “INPEX Southwest Caspian”) would become awholly owned subsidiary of INPEX CORPORATION by means of ashare exchange and the procedures were undertaken, the shareexchange contract was invalidated owing to failure to accomplish
the terms and conditions of the share exchange contract and theplanned share exchange was cancelled. Following the dissolutionof JNOC on April 1, 2005, the Minister of Economy, Trade andIndustry succeeded to the INPEX Southwest Caspian shares
held by JNOC. The Company continues to study the possibility
to acquire the shares. However, the METI’s future treatmentof these shares is undecided and, depending on the result ofreview in accordance with the Reconstruction Finance Keeping
Act, acquisition of INPEX Southwest Caspian shares could be
unavailable.
The treatment of Sakhalin Oil and Gas Development Co.,
Ltd. (hereinafter “SODECO”), INPEX Offshore North Campos,
Ltd., INPEX Nor th Makassar, Ltd. (liquidation proceedings
completed on December 19, 2008), INPEX Masela, Ltd., and
INPEX North Caspian Sea, Ltd. was agreed between INPEXCORPORATION and JNOC in the MOU of February 5, 2004.
Regarding the treatment of shares of SODECO, refer to thesection “(2) Treatment of the shares of Sakhalin Oil and Gas
Development (SODECO) owned by the Japanese government”
below. With regard to the transfer to INPEX CORPORATION of
the shares in the above project companies other than SODECO,
it was decided that the shares are to be transferred for cash089

compensation as soon as prerequisites such as the consent of
the oil-producing country and joint venture partners and thepossibility of appropriate asset evaluations are in place. However,
the transfer of shares held by JNOC in the above companies has
not been decided and the shares in the above project companies
were succeeded to by the Japan Oil Gas and Metals National
Corporation (hereinafter “JOGMEC”) on the dissolution of JNOC
on April 1, 2005, except shares related to INPEX North Makassar,
Ltd., to which the Minister of Economy, Trade and Industr y
succeeded. JOGMEC states in its “medium-term objective” and“medium-term plan” that the shares succeeded to from JNOC
will be disposed of at an appropriate time and in an appropriatemanner, but the timing and manner of the disposal for the shares
held by JOGMEC have not been decided, and it is possible that
the Company will be unable to acquire the shares.

(2) Treatment of the shares of Sakhalin Oil and Gas
Development (SODECO) owned by the Japanese
government
The Japanese government (the Minister of Economy, Tradeand Industry) owns 50% of the shares of SODECO. SODECO
was established in 1995 to engage in an oil and natural gas
exploration and development project located on the northeast
continental shelf off Sakhalin Island. SODECO owns a 30.0%
interest in the Sakhalin-1 Project, of which ExxonMobil of theUnited States is the operator. In October 2005, Phase 1 ofthis project started with the goal of advanced production ofoil and natural gas. Furthermore, there is a plan for additional
development operations (Phase 2) for the purpose of the fullscale production of natural gas. The Company holds 6.08% of
SODECO shares issued and outstanding.
In the previously mentioned Report, SODECO, along withINPEX CORPORATION and JODCO, has been identified as acompany that should comprise part of a core company in Japan’s
oil and natural gas upstream industry in the future.
In accordance with the Report, it is assumed that privatesec tor shareholders, including INPEX CORPOR ATION, will
acquire shares of SODECO issued and outstanding to which the
Minister of Economy, Trade and Industry succeeded and thatwere previously held by JNOC (50.0%). The Company plans tohold a maximum of 33% of the SODECO shares to become its
largest shareholder. In the event that the consent of SODECO’s
joint-venture par tner s, the relevant Rus sian gover nment
entity, or other parties is necessary for the acquisition of theshares, obtaining the consent is a prerequisite for acquisition.
In addition, it will be necessary to reach agreement on theshareholder composition for SODECO, the share transfer price,and other matters.
In the event that the additional acquisition of the SODECO
shares is realized, the Group will hold a substantial ownershipinterest in oil and natural gas assets in Russia, as well as in Asiaand Oceania, the Middle East, Caspian Sea area, and otherregions, and we expect the acquisition to contribute to theachievement of a more balanced overseas asset portfolio for theGroup.
However, at this time it is undecided whether agreement
concerning acquisition of the shares with the Minister of
Economy, Trade and Industry will be reached as anticipated andwill be realized. Also, even in the event that the acquisition isrealized, the conditions and time of acquisition are undecided
and, depending on the result of review in accordance with theReconstruction Finance Keeping Act, the acquisition by theCompany could be unavailable.

8. CLASS A STOCK(1) Overview of the classified share

1) Reason for the introduction
The Company was established as the holding company througha stock transfer between INPEX CORPORATION and Teikoku
Oil Co., Ltd. on April 3, 2006. Along with this, a classified shareoriginally issued by INPEX CORPORATION (prior to the merger)
was transferred and at the same time the Company issued aclassified share with the same effect (hereinafter the “Class A
Stock”) to the Minister of Economy, Trade and Industry. The
classified share originally issued by INPEX CORPORATION
was the minimally required and a highly transparent measure
to eliminate the possibility of management control by foreign
capital while not unreasonably impeding the efficiency andflexibility of management based on the concept in the Reportdiscussed in the above section 7. “TREATMENT OF SHARES OF
THE GROUP’S PROJECT COMPANY OWNED BY JAPANESEGOVERNMENT AND JOGMEC.” INPEX CORPOR ATION is
identified as a company that should comprise part of a corecompany for Japan’s oil and gas upstream industr y and is
expected to play a role in efficient realization of a stable supplyof energy for Japan as a national flagship company. On thebasis of the concept of the Repor t, following a speculativeacquisition or an attempt at management controlled by foreign
capital, Class A Stock is designed and issued to be highly
transparent while not unreasonably impeding the efficiency andflexibility of management and to keep the effects of any such
speculative acquisition to the necessary minimum. At the same

090

INPEX CORPORATION Annual Report 2015

time, Class A Stock maintains the Company’s role in the efficient
implementation of a stable supply of energy for Japan as acore business, so that management is not conducted in a way
contradictory to that role and no negative impact is felt.
2) Shareholders’ meeting resolutions, dividends, distributionof residual assets, and redemption
Unless otherwise provided by laws or ordinances, the Class A
Stock does not have any voting rights at the Company’s generalshareholders’ meetings. With regard to cash dividends paid
and the distribution of residual assets, the Company concluded
a stock split at a ratio of 1:400 of common stock with October
1, 2013, as the effective date. For Class A Stock (unlisted) nostock split was conducted. The Articles of Incorporation specify
that dividends of Class A Stock are equivalent to dividends ofa common stock prior to the stock split. The Class A Stock will
be redeemed by resolution of the Board of Directors of theCompany if the holder of the Class A Stock requests redemption
or if the Class A Stock is transferred to a party other than thegovernment of Japan or an independent administrative bodythat is fully funded by the government of Japan.
3) Veto rights in the Articles of Incorporation
The Articles of Incorporation of the Company provide that an
approval resolution of the meeting of the holder of the Class A
Stock is necessary in addition to resolutions of the Company’s
general shareholders’ meetings and resolutions of meetings ofthe Board of Directors for the decisions on certain important
mat ters such as the appointment or removal of Direc tors,

disposition of material asset s, changes to the Ar ticles ofIncorporation, business integration, capital reduction or company
dissolution in connection with the business of the Company.
Accordingly, the Minister of Economy, Trade and Industry, as theholder of the Class A Stock, has veto rights over these importantmatters.
4) Criteria for the exercise of veto rights provided in the criteria
for the exercise of the Class A Stock holder’s voting rights
Criteria concerning the exercise of the veto rights have been
established in a Ministry of Economy, Trade and Industry Notice(No. 220, 2008) (hereinafter the “Notice”). The criteria stipulate
the exercise of veto rights only in the following specific cases.
• When resolutions pertaining to appointment or removal of
Directors and integration are not voted down and it is judgedthat the probability is high that the Company will engage inmanagement inconsistent with the role that a core company
should perform for efficient realization of a stable supply ofenergy to Japan.
• With regard to decisions related to the disposal of all or partof significant assets, when resolutions pertaining to dispositionof material assets are not voted down and the objects ofdisposition are oil and natural gas exploration or production
rights or rights similar thereto or shares or ownership interestin the Company’s subsidiary whose principal assets are said
rights and it is judged that the probability is high that theCompany will engage in management inconsistent withthe role that a core company should perform for efficient
realization of a stable supply of energy to Japan.
• When resolutions pertaining to amendments to the Company’s
Articles of Incorporation relating to changes in the Company’sbusiness objectives, reduction in the amount of capital, or
dissolution are not voted down and it is judged that theprobability is high that the Company will engage in managementinconsistent with the role that a core company should perform
for efficient realization of a stable supply of energy to Japan.
• When resolutions pertaining to amendments to the Articles ofIncorporation granting voting rights to any shares other than thecommon shares of the Company are not voted down and could
have an effect on the exercise of the voting rights of the Class A
Stock.
It is provided that the above criteria shall not be limited in theevent that the Notice is changed in the light of energy policy.

(2) Risk in connection with the Class A Stock
Following a speculative acquisition or an attempt at management
controlled by foreign capital, Class A Stock is designed andissued to be highly transparent while not unreasonably impeding
the efficiency and flexibility of management and to keep theeffects of any such speculative acquisition to the necessary
minimum. At the same time, Class A Stock maintains theCompany’s role in the efficient implementation of a stable supplyof energy for Japan as a core business, so that management
is not conducted in a way contradictory to that role and no
negative impact is felt. Nevertheless, the anticipated risks inconnection with the Class A Stock include the following.
1) Possibility of conflict of interest between national policy
and the Company and its common shareholders
It is conceivable that the Minister of Economy, Trade andIndustry could exercise the veto rights in accordance with theabove criteria provided in the Notice. As the said criteria havebeen provided from the standpoint of efficient realization of astable supply of energy to Japan, it is possible that the exerciseof the veto rights by the Minister of Economy, Trade and Industry
could conflict with the interest of other shareholders who holdthe Company’s common shares. Also, it is possible that the said
criteria could be changed in the light of energy policy.
2) Impact of the exercise of veto rights on the price ofshares of common stock
As mentioned above, as the holder of the Class A Stock has theveto rights over certain important matters in connection with thebusiness of the Company, the actual exercise of the veto rights
over a certain matter could have an impact on the price of theCompany’s shares of common stock.
3) Impact on the Company’s degree of freedom in businessand business judgment
As the Minister of Economy, Trade and Industry holds the Class
A Stock with the previously mentioned veto rights, the Company
needs a resolution of the meeting of the holder of the Class
A Stock concerning the above matters. For this reason, theCompany’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 resolutionof the meeting of the holder of the Class A Stock concerning theabove matters, a certain period of time is required for procedures
such as the convening and holding of meetings and resolutions
and for the processing of formal objections, if necessary.

9. CONCURRENTLY SERVING OUTSIDE DIRECTORSAt 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 particularattention to corporate governance to avoid conflicts of interest inconnection with competition and other matters.
To this end, all Company direc tors, including the four
outside directors described above, 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 ofsuch matters as their obligations in connection with noncompetitive
practices under the Japanese Companies Act, the proper mannerfor dealing with conflict of interest, and confidentiality.

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

The Board of Directors of the Company is composed of 15
members, five 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 thisreason, they were asked to join the Board of Direc tors tocontribute to the development of the Company’s business.
The four outside directors concurrently serve as director
or advisors of Japan Petroleum Exploration Co., Ltd., Mitsubishi
Corporation, Mitsui Oil Exploration Co., Ltd. and JX Holdings,
Inc. (hereinafter “shareholder corporations”), respectively.

091

Oil and Gas Reserves and Production Volume
1. Oil and Gas Reserves
Proved reserves
The following tables list the proved reser ves of crude oil,condensate, LPG and natural gas of INPEX CORPORATION,
its consolidated subsidiaries and equity-method affiliates (the“Group”) on main projects. Disclosure contents for proved
reser ves are determined in accordance with the rules andregulations of the U.S. Financial Accounting Standards Board (theJapan
Crude oil(MMbbl)Gas(Bcf)

Proved developed and undeveloped reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 2013
15
609
Extensions and discoveries
7261
Acquisitions and sales——
Revisions of previous estimates(0)(8)
Interim production(1)(46)
As of March 31, 201421816
Equity-method affiliates
As of March 31, 2013——
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates——Interim production——
As of March 31, 2014——
Proved developed and undeveloped reserves
As of March 31, 2014
21816
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 2014
21
816
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates(0)(9)
Interim production(1)(42)
As of March 31, 201519765
Equity-method affiliates
As of March 31, 2014——
Extensions and discoveries——
Acquisitions and sales——
Revisions of previous estimates——Interim production——
As of March 31, 2015——
Proved developed and undeveloped reserves
As of March 31, 2015
19
765
Proved developed reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 201513513
Equity-method affiliates——
As of March 31, 2015
Proved undeveloped reserves
INPEX CORPORATION and Consolidated Subsidiaries
As of March 31, 20156
252
Equity-method affiliates
As of March 31, 2015——

Asia & Oceania“FASB”), and are presented in accordance with the AccountingStandards Codification Topic 932 “Extractive Activities —Oiland Gas” (“Topic 932”). The Group’s proved reserves as of March
31, 2015 were 1,213.27 million barrels for crude oil, condensate
and LPG, and 6,560.6 billion cubic feet for natural gas, for a totalof 2,434.37 million boe.
Eurasia(Europe & NIS)

Middle East &AfricaAmericas

Total

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)Gas(Bcf)

Crude oil(MMbbl)

Gas
(Bcf)

208
—
—
8
(17)
199

5,507
3
—
12
(217)
5,306

183
—
—
13
(10)
186

42
—
—
(15)
—
27

363
408
—
2
(31)
742

—
—
—
—
—
—

9
—
—
(0)
(0)
9

296
22
—
7
(37)
288

779
414
—
23
(59)
1,157

6,454
286
—
(4)
(300)
6,437

3
—
—
(1)
(0)
2

314
—
—
(1)
(15)
298

—
—
—
—
—
—

—
—
—
—
—
—

142
—
—
3
(30)
115

—
—
—
—
—
—

6
—
—
(1)
(0)
5

0
—
—
0
(0)
1

151
—
—
1
(31)
121

315
—
—
(1)
(15)
298

201

5,603

186

27

857

—

13

289

1,278

6,735

199
18
(9)
12
(15)
204

5,306
182
(269)
121
(217)
5,123

186
13
—
3
(10)
192

27
—
—
0
—
27

742
—
—
(16)
(31)
695

—
—
—
—
—
—

9
3
1
(0)
(0)
13

288
63
1
29
(38)
343

1,157
34
(8)
(2)
(58)
1,123

6,437
245
(268)
140
(296)
6,258

2
0
—
(0)
(0)
2

298
20
—
9
(24)
302

—
—
—
—
—
—

—
—
—
—
—
—

115
5
—
(1)
(31)
87

—
—
—
—
—
—

5
—
—
(3)
(1)
1

1
—
—
(0)
(0)
0

121
5
—
(4)
(31)
90

298
20
—
8
(24)
302

206

5,425

192

27

783

—

13

343

1,213

6,561

22

442

46

—

520

—

10

192

611

1,146

1

166

—

—

73

—

1

0

75

167

182

4,681

146

27

175

—

3

151

512

5,112

1

136

—

—

15

—

—

—

15

136

Notes: 1. Based on SEC disclosure standards, the Group discloses proved reserves in each country containing 15% or more of its proved reserves. As of March 31, 2015, the Group held proved
reserves in Australia of approximately 181.07 million barrels for crude oil and approximately 4,554.9 billion cubic feet for natural gas, for a total of 1,032.08 million boe.
2. Proved reserves (as of March 31, 2015) of the following blocks and fields include the portion attributable to minority interests.
		 Eurasia (Europe & NIS): ACG (49%), Kashagan (55%), Americas: Copa Macoya (30%), Horn River Area (54.91%)
3. MMbbl: Million barrels
4. Bcf: Billion cubic feet
5. Crude oil includes condensate and LPG

Standardized measure of discounted future net cash flows and their changes relating to proved oil and gas reserves
for the year ended March 31, 2015
Disclosure contents for the standardized measure of discounted
future net cash flows and their changes relating to proved
reserves for the year ended March 31, 2015 are determined inaccordance with the rules and regulations of the FASB, and arepresented in accordance with Topic 932.
In calculating the standardized measure of discounted
future cash inflows, the arithmetic average of oil and gas prices
at the first day of each month during the current fiscal year

092

INPEX CORPORATION Annual Report 2015

is applied to the estimated annual future production fromproved reserves. Future development and production costs are
estimated based upon the assumptions of constant oil and gas
prices and the continuation of existing economic, operating andregulatory conditions. Future income tax expenses are calculated
by applying the year-end statutory tax rates to estimated future
pretax cash flows less the tax basis of the properties involved
based upon laws and regulations already legislated at year-end.

The discount is computed by applying a prescribed discount rateof 10% to the estimated future net cash flows.
The translation of U.S. dollar amounts into yen amounts iscomputed by applying the year-end exchange rates (TTM) of¥102.92 and ¥120.27 to the U.S. dollar as of March 31, 2014 and2015, respectively.
Since these figures are calculated in accordance with therules set forth by the FASB, which have the following aspects,
March 31, 2014
INPEX CORPORATION and 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

they do not represent the fair market value nor the Group’s
estimation for the present value of the cash flows of reserves ofcrude oil, condensate, LPG and natural gas.
• No economic value is attributed to potential reserves.
• A prescribed discount rate of 10% is applied.
• Oil and gas prices are subject to constant fluctuations despite
the assumptions of constant oil and gas prices of Topic 932.

Total

¥17,341,495(5,214,355)(7,756,030)
4,371,111(2,724,139)
1,646,972

Equity-method affiliates
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
Share of equity-method investees’ standardized measure of
discounted future net cash flows
Total consolidated and equity-method affiliates in standardized
measure of discounted future net cash flows

Millions of yen
Asia &
Eurasia
Middle East &Oceania(Europe & NIS)
AfricaJapan¥1,216,700 ¥ 6,010,999(232,106)(2,022,074)(390,578)(1,791,151)
594,016
2,197,774(353,477)(1,399,641)
240,539
798,133¥1,830,647 ¥ 8,114,992(475,798)(2,430,435)(294,204)(5,270,507)
1,060,645
414,050(638,328)(301,903)
422,316
112,146

Americas¥168,157(53,942)(9,589)104,627(30,790)
73,837

1,502,675(559,626)(807,541)
135,508(34,528)

—
—
—
—
—

172,531(100,520)(37,642)
34,369(18,128)

—
—
—
—
—

1,283,450(422,426)(768,867)
92,158(13,834)

46,694(36,681)(1,032)8,981(2,566)

100,980—

16,242—78,324

6,414¥ 1,747,952¥  240,539¥   814,375¥  422,316¥   190,471¥ 80,252

Millions of yen
Asia &
Eurasia
Middle East &Oceania(Europe & NIS)
AfricaAmericasNote: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

March 31, 2015
INPEX CORPORATION and 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
Equity-method affiliates
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
Share of equity-method investees’ standardized measure of
discounted future net cash flows
Total consolidated and equity-method affiliates in standardized
measure of discounted future net cash flows

Total

Japan

¥16,826,527(5,420,750)(6,619,499)
4,786,278(2,740,756)
2,045,522¥1,373,830(279,282)(379,336)
715,212(414,963)
300,249¥6,518,619(2,143,400)(1,792,785)
2,582,434(1,445,090)
1,137,344¥1,787,325(563,719)(235,731)
987,875(552,389)
435,486¥6,935,269(2,373,944)(4,200,930)
360,395(288,615)
71,780¥211,485(60,405)(10,718)
140,363(39,699)
100,663

1,283,858(578,892)(538,253)
166,713(82,534)

—
—
—
—
—

384,759(117,127)(128,356)
139,276(78,062)

—
—
—
—
—

890,520(453,308)(409,898)
27,315(4,453)8,579(8,457)—122(19)84,179—61,214—

22,862103¥ 2,129,701¥  300,249¥1,198,557¥  435,486¥    94,643¥100,766

Millions of yen
Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

Equity-method
affiliates

Note: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

Japan¥1,747,952¥240,539¥  798,133¥422,316¥112,146¥ 73,837¥100,980(933,684)(46,427)(265,325)(70,193)(267,861)(17,081)(266,797)(1,289,599)

12,487(409,334)(170,468)(591,895)(25,668)(104,722)

431,664(198,468)
210,367
213,577
1,503,911
153,338
290,644

1,822(7,012)(4,584)25,35437,521—
40,550318,607
20,083
94,716
112,742
179,852
153,338
134,532

24,570(38,914)
109,456
47,88039,546—
71,29253,866(54,786)(58,664)
13,732
850,306—
14,935

12,129(9,473)43,889
8,624
2,092
—
12,313

20,670(108,367)
25,554
5,245
394,593—
17,023¥2,129,701¥300,249¥1,137,344¥435,486¥ 71,780¥100,663¥ 84,179

Note: Reserves of the following blocks and fields include the portion attributable to minority interests.
Eurasia (Europe & NIS): ACG (49%), Kashagan (55%)/Americas: Copa Macoya (30%), Horn River Area (54.91%)

INPEX CORPORATION Annual Report 2015

6
Financial &Corporate Information

INPEX CORPORATION and Consolidated
Subsidiaries
Standardized measure at beginning of the period
As of April 1, 2014
Changes resulting from:
Sales and transfers of oil and gas produced, netof production costs
Net changes in oil and gas prices and production
costs
Development costs incurred
Changes in estimated future development costs
Revisions of previous quantity estimates
Accretion of discountNet change in income taxes
Extensions, discoveries and improved recoveries
OtherStandardized measure at end of the period
As of March 31, 2015

Total

Asia &
Oceania

093

Probable reserves and possible reserves
The following tables list the probable and possible reserves of crude oil, condensate, LPG and natural gas of the Group on main
projects. Our probable reserves as of March 31, 2015 were 714.62 million barrels for crude oil, condensate and LPG, and 4,986.6 billion
cubic feet for natural gas, for a total of 1,609.67 million boe. In addition, the Group’s possible reserves as of March 31, 2015 were 104.53
million barrels for crude oil, condensate and LPG, and 2,493.1 billion cubic feet for natural gas, for a total of 575.66 million boe.

March 31, 2015
Probable reserves
Crude oil, condensate and LPG(MMbbl)Natural gas (Bcf)

March 31, 2015
Possible reserves
Crude oil, condensate and LPG(MMbbl)Natural gas (Bcf)

Asia &
OceaniaJapan

Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

SubtotalInterest inreserves heldby equitymethod
affiliates

Total

2

138

351

198

2

691

24

715

74

4,724

91

—

63

4,952

35

4,987

Asia &
OceaniaJapan

Eurasia
Middle East &(Europe & NIS)
AfricaAmericas

SubtotalInterest inreserves heldby equitymethod
affiliates

Total

2

82

2

0

6

93

12

105

65

2,229

—

—

86

2,380

113

2,493

Notes: 1. MMbbl: Million barrels
2. Bcf: Billion cubic feet

2. Oil and Gas Production
The following tables list average daily production for crude oil, natural gas, and the total of crude oil and natural gas by region. The
proportional interests in production by the equity-method affiliates are not broken down by geographical regions.
The Group’s production for the year ended March 31, 2015 was 242.7 thousand barrels per day for crude oil, condensate and LPG,
and 880.0 million cubic feet per day for natural gas, for a total of 408.1 thousand boed. Our method for calculating the conversion ofnatural gas volumes to barrels of oil equivalent (boe) was changed effective the year ended March 31, 2012.

094

Years ended March 31,

2010

2011

2012

2013

2014

2015

Crude oil, condensate and LPG (Mbbld):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (MMbbl)

4.5
47.7
26.9
73.3
5.5
158.0
60.4
218.3
79.7

3.9
65.1
27.9
73.0
2.3
172.2
67.4
239.6
87.5

3.8
62.5
25.0
84.3
0.1
175.7
75.4
251.2
91.9

3.9
58.0
25.1
84.4
0.1
171.5
74.4
245.9
89.8

3.6
45.8
26.1
84.4
0.1
160.0
84.9
244.9
89.4

3.2
40.6
27.0
84.8
0.5
156.1
86.6
242.7
88.6

Natural gas (MMcf/d):
Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (Billions of cubic feet)

155.1
880.5
—
—
86.9
1,122.6—
1,122.6
409.7

128.7
836.0
—
—
81.1
1,045.9
56.6
1,102.5
402.4

127.6
665.0
—
—
72.4
865.0
62.7
927.7
339.5

133.7
586.4
—
—
90.9
811.0
52.4
863.4
315.1

125.5
602.8
—
—
107.4
835.7
40.7
876.4
319.9

113.9
596.5
—
—
103.2
813.7
66.4
880.0
321.2

Crude oil and natural gas (Mboed):Japan
Asia & Oceania
Eurasia (Europe & NIS)
Middle East & Africa
Americas
Subtotal
Proportional interests in production by equity-method affiliates
Total
Annual production (MMboe)

30.4
194.5
26.9
73.3
20.0
345.1
60.4
405.4
148.0

25.3
204.4
27.9
73.0
15.8
346.5
76.8
423.3
154.5

27.7
189.5
25.0
84.3
13.1
339.7
86.5
426.2
156.0

29.0
169.4
25.1
84.4
16.2
324.0
83.8
407.8
148.8

27.2
159.9
26.1
84.4
19.0
316.7
92.1
408.8
149.2

24.6
154.3
27.0
84.8
19.0
309.7
98.4
408.1
148.9

INPEX CORPORATION Annual Report 2015

Corporate Information(As of March 31, 2015)

Corporate Data
Company Name
INPEX CORPORATION
Established
April 3, 2006
Capital¥290,809,835,000
Company Headquarters
Akasaka Biz Tower, 5-3-1 Akasaka, Minato-ku,
Tokyo 107-6332, Japan

Number of Employees (Consolidated) 3,178
Main BusinessResearch, exploration, development, production and sales of oil, natural gas and othermineral resources, other related businesses
and investment and lending to the companies engaged in these activities, etc.

Organization Chart (As of July 1, 2015)
General Meeting of
Shareholders

Board of Directors

Audit & Supervisory
Board (Member)
Secretariat of Audit &Supervisory Board Member

Compliance Committee

President

CSR Committee

Executive
Committee

Audit Unit

Technical Division

Masela Project Division

HSE Unit

Oil & Gas Business Division 1

Ichthys Project Division

General Administration
Division

Oil & Gas Business Division 2

Domestic Project DivisionCorporate Strategy &Planning Division

Asia, Oceania & Offshore
Japan Project Division

Gas Supply &Infrastructure Division

INPEX Advisory
Committee

Corporate HSE
Committee
Information Security
Committee

New Ventures Division

America & Africa
Project Division

INPEX Value Assurance
System Committee

Finance & Accounting Division

Eurasia & Middle East
Project Division

Logistics & IMT Division

Stock Data

Total Number of Shares Authorized to be Issued:
3,600,000,000 common stocks
1 Class A Stock

Type and Total Number of Issued shares
Common Stocks:
40,190 shareholders / 1,462,323,600 sharesClass A Stock*: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 Class A Stock in addition to the approval of theshareholders’ meetings or Board of Directors.

Major Shareholders (Common Stocks)
Name

Percentage of
Number of total commonsharesshares* (%)

Minister of Economy, Trade and Industry

276,922,800

18.94

Japan Petroleum Exploration Co., Ltd.

106,893,200

7.31

Mitsui Oil Exploration Co., Ltd.

50,554,000

3.46Japan Trustee Services Bank, Ltd. (Trust Account) 46,364,200

3.17

JX Holdings, Inc.

43,810,800

3.00

The Master Trust Bank of Japan, Ltd.
(Trust Account)

40,454,300

2.77

CBNY-GOVERNMENT OF NORWAY

37,415,475

2.56

State Street Bank and Trust Company 505223

29,793,001

2.04

JP Morgan Chase Bank 385632

27,875,580

1.91

The Bank of New York Mellon SA/NV 10

20,992,737

1.44

Shareholding by Shareholder Type
Shareholder type

Number of Number ofshareholders
sharesPercentage of
total commonshares*1 (%)

Financial Institutions(Including Trust Accounts)

100

222,549,308

15.22

Securities Companies

59

13,438,854

0.92

Other Domestic Corporations

341

240,904,224

16.47

1

276,922,800

18.94

708

669,088,685

45.76

38,98037,453,329

2.56

1

1,966,400

0.13

Minister of Economy,
Trade and Industry*2
Foreign Corporations and Other
Individuals and Other
Treasury Shares*1 Percentage of total common shares are for total number of issued common shares.
*2 Excludes one Class A Stock* Percentage of total common shares are for total number of issued common shares.

Home Page

The Company’s Web site provides investors with the most up-todate IR information, including ﬁnancial statements.
} www.inpex.co.jp/english

Inquiries

For IR inquiries, as well as to offer comments and opinions about
this report, please contact below.
Corporate Strategy & Planning DivisionCorporate Communications Unit
Investor Relations Group
Phone: +81-3-5572-0234, Fax: +81-3-5572-0235
Web site: www.inpex.co.jp/en/ir/inquiries.html

This Report was printed using environmentally conscious
methods, vegetable oil-based ink.
Printed in Japan

Akasaka Biz Tower
5 -3-1 Akasaka, Minato-ku
Tokyo 107- 6332, Japan
Phone: +81-3-5572- 0200
www.inpex.co.jp/english