May 13, 2011
Note: The following report is an English translation of the Japanese-language original.

Company Name: Japan Petroleum Exploration Co., Ltd.
Listing: Tokyo Stock Exchange, First Section
Securities Code: 1662
President: Osamu Watanabe
Inquiries: Kazuyuki Yamatsu, Manager, Media and Shareholder Relations, Media and Investor Relations Department
TEL: +81-3-6268-7110

Notice of the Medium-Term Business Plan of the JAPEX Group
Japan Petroleum Exploration Co., Ltd. (hereinafter the “Company”), has formulated its new Medium-Term Business
Plan for the five-year period from fiscal 2012 to fiscal 2016.

To maintain and increase the proved reserve volume, which declines due to production and sales activities, and keep
pace with changes in business conditions surrounding the Company, the Company announced, in May 2008 its
Mid-Term Business Plan for the five-year period from fiscal 2009 to fiscal 2013, setting out three basic policies as key
management tasks: 1) Sustaining and increasing reserves through exploration and development, 2) Strengthening our
natural gas integrated operation system and 3) Pursuing technological R&D activities and initiatives to address global
environmental challenges. The Company is thus determined to enhance its corporate value with specific policies toachieve these key management tasks.

In the above Mid-Term Business Plan, specific quantitative targets were set to be achieved by fiscal 2013 for proved
reserves of oil and gas, natural gas sales volume and sales of domestically produced crude oil and natural gas. With
diverse initiatives taken during recent years, all these targets are estimated to be achieved during fiscal 2012. Given
these circumstances, the Company has newly formulated the new Medium-Term Business Plan covering five years
from fiscal 2012 to fiscal 2016.

The Company anticipates increasing global competition for resource development, unstable energy prices, intensifying
competition in the domestic natural gas business and the rising social consciousness of environmental issues. The E&P(the exploration, development and production of crude oil and natural gas) business, the domestic natural gas business,and the environment and innovative technology business will remain as basic policies to pursue for further expansion.
The Company aims to raise its profitability through new investment in these three basic policies and maximize thevalue of its existing assets in Japan and overseas under its new Medium-Term Business Plan. As the impact of theGreat East Japan Earthquake remains uncertain at this time, its effects are not taken into consideration in the new
Medium-Term Business Plan, except for the estimates for fiscal 2012.

1

In the E&P business, three stages of quantitative targets are set toward the realization of our growth story: 1) Shifting
businesses overseas in the period from fiscal 2012 through fiscal 2016, 2) Expanding consolidated daily production to70,000 barrels of crude oil equivalent by fiscal 2016 and 3) Expanding the consolidated proved reserves to 450 million
barrels of crude oil equivalent by fiscal 2021.

The JAPEX Group will strive to further reinforce its operating base and competitive edge with these initiatives. In
addition, the Group will pursue the consistent development as a corporate group and maximized shareholder value by
thoroughgoing management efficiency.

Appendix: New Medium-Term Business Plan (FY2012―FY2016)2

Note: The following report is an English translation of the Japanese-language original.

Medium-Term Business Plan
( FY2012 - FY2016 )May 16 , 2011

Japan Petroleum Exploration Co., Ltd.
copyright©2011 JAPAN PETROLEUM EXPLORATION Co.,LTD. All rights reserved.

About the New Medium-Term Business Plan Covering the Period from
FY2012 to FY2016

Ⅰ．The New Medium-Term Business Plan
Ⅱ．JAPEX’s Perception of the Business Environment
and Preconditions(assumptions regarding crude oil prices and exchange rates)

Ⅲ Corporate Vision andBasic Strategies for JAPEX Expansion
Ⅳ．Growth Initiatives
1. E&P business
2. Domestic natural gas business
3. Environment and innovative technology business

Ⅴ. Consolidated Profit and Loss / Investment Portfolio
Ⅵ ．Summary2

I-1. The Level of Achievement against Previously Established Targets Leading
into the New Medium- Business Plan

In working toward the overarching goal of business growth and expansion, JAPEX is projected to achieve its targets
for proved reserves, natural gas sales volume as well as sales of natural gas and domestically produced crude oil
established under the mid-term business plan announced in May 2008 by the fiscal year ending March 31, 2012.
Proved reserves

millionBOE

Target 1
Proved reserves

350 million BOE by FY2013

Target 2
Natural gas sales volume

2.0 billion m3 by FY2014(On a consolidated basis including satellite systems supply)

Target 3
Sales of natural gas and domestically produced crude oil¥110 billion by FY2013(On a consolidated basis including satellite systems supply)


Review of the forecast crude oil price （$80/bbl→$90/bbl）
Introduction of a feedstock cost adjustment systems formixed supplies

254
49

257
49

152

213

205

208

FY2009FY2010FY2011

Domestic

FY2012

Overseas

2.0
1.9
1.8
1.7
1.6
1.5

Growing demand for natural gas(Pipeline and satellite system supply)

1.71

1.72

FY2008FY20091.74

1.82

FY2010FY2011FY2012billion m3

Sales of natural gas



272
59

73

2.1

Natural gas sales
volume* FDP：Final Development Plan

225

FY2008billion m3

3

and domestically

Final investment decision (FID) regarding the Canada Oil
Sands Hangingstone Expansion Project (FY2012)
Note: Plan to bring the proved reserves (60 million BOE) of
the Garraf oilfield in Iraq to account following confirmation in
fiscal 2014

produced crude oil



400
350
300
250
200
150
100
50
0

120
110
100
90
80
70
60
50

91.4

FY200898.5

FY2009101
91.0

FY2010FY2011FY2012

I -2. Positioning of the New Medium-Term Business Plan


May
2009

Achievementof
ofnumericalnumericaltargets
targets(estimate)(estimate)
Achievement

May
2008

Drawing on the level of achievement against numerical targets established under the previous mid-term businessplan, took steps to draw up a new medium-term business plan (FY2012 to FY2016) with the aim of securing
further growth

May
2010
-- Reflects
Reflects businessbusiness circumstancecircumstancechangeschanges after
after MayMay 2009
2009⇒⇒ Follow-up
Follow-up-- Rapid
Rapid deterioration
deterioration in
in international
international
economic
economic conditions
conditions-Sharp-Sharp decline
decline inin crudecrude oiloil prices
prices⇒⇒ Partial
Partial revision
revision
Previous
Previous Mid-Term
Mid-Term BusinessBusiness Plan
Plan
（FY2009（FY2009 -- FY2013）
FY2013）

4

New
NewMedium-Term
Medium-TermBusiness
BusinessPlan
Plan（（FY2012
FY2012––FY2016
FY2016））Furtherbusiness
growthII-1. JAPEX’s Perception of the Business Environment and Preconditions
Perceptions of the Business Environment
An increasingly competitive
resource development environment

Intense competition in the domestic
natural gas business

Growing nationalism in oil and gas producing
countries
Sharp increase in the energy prices fueled bysuch factors as pro-democracy movements in the
Middle east and North Africa
A return to fossil fuels in the aftermath of theGreat East Japan Earthquake

Aggressive natural gas infrastructuredevelopment by competitive companies
Escalating difficulty in procuring supplies of LNG
in the aftermath of the Great East Japan
Earthquake
Deregulation in line with structural reforms in thegas business

Trends in energy prices

Growing social awareness toward
environmental issuesMarked increase in crude oil prices from 2004;
Record high in July 2008
A sharp drop after July 2008; indications of asteady recovery
Increased volatility in both crude oil and LNG
pricesCommonly held GHG（Greenhouse Gas) reduction
goal leading up to 2050
GHG reduction efforts triggering newopportunities for business growthThe direction of long-term GHG reduction
initiatives to remain unchanged following theGreat East Japan EarthquakeNote: Taking into consideration current uncertainty surrounding the effects of the Great East Japan Earthquake on the Company’sbusiness, JAPEX has not factored in any explicit impact for the duration of the plan from fiscal 2013 and beyond.

5II-2 JAPEX’s Perception of the Business Environment and Preconditions
assumptions regarding crude oil price and exchange rate
■Taking into consideration the current high level of crude oil price and the assumption thatprice would continue to hover at current levels for the foreseeable future, JAPEX has identified
the following crude oil price and exchange rate projections:■ Crude oil price ： Expected to plateau and remain steady at $90/bbl after FY2012■ Exchange rate ： Expected to maintain steady at ¥90/$ after FY2013

Preconditions of the New Medium-Term Business Plan
FY11 (a)FY12 (e)FY13 (e)FY14 (e)FY15 (e)Crude oil price ($/bbl）

82.69

90

90

90

90

Exchange rate (¥/$)

86.24

85

90

90

90

120

Crude oil price rose reflecting the
expectation of the global economic
recovery (including the U.S.)

Crude oil price jumped mainly
because of the influx of speculative
money in the market

100

Expected to plateau andremain steady at$90/bbl after FY2012

80
60
Pro-democracy movements
in North Africa and the
Middle East40
20

2004.01
2004.05
2004.09
2005.012005.05
2005.09
2006.012006.05
2006.09
2007.01
2007.05
2007.09
2008.01
2008.05
2008.09
2009.01
2009.05
2009.09
2010.01
2010.05
2010.09
2011.01$-denominated $/bbl[Crude oil price (JCC) ]140

6Impact on earnings attributable
to fluctuations in crude oil
price and exchange rate (FY2012)Increase of 1$/bbl in the price of
crude oil
 Increase in net income of¥200 millionImpact of a ¥5/$ depreciation in
the value of the yen Increase in net income¥800 million

Ⅲ-1. Corporate Vision and Basic Strategies for JAPEX Expansion
Three basic policies for JAPEX expansion


JAPEX’s overarching corporate vision and three basic policies remain unchanged
Corporate Vision

Three basic policies aimed at securingbusiness expansion
E&P
E&P
businessbusiness

Taking on the challenge of creating new value
from energy and increasing corporate value
 Contribute to the supply of energy through global
exploration and production (E&P) activities.

Sustaining andincreasing reserves
through explorationand development

Corporate
VisionDomestic
Domestic
naturalnaturalgas
gasbusinessbusiness

Environment
Environmentand
andinnovativetechnology
innovative technology
businessbusinessStrengthening our natural gas
integrated operation system

Contribute to coexistence between the planet andhumankind by promoting the use of environmentfriendly natural gas and taking on new businesschallenges.

Pursue sustainable growth and maximize
shareholder value by placing top priority on
maintaining mutual trust between society, customers,
shareholders and employees.

Pursuing technological R&D activities and initiatives toaddress global environmental challenges：Business targets identified at the time the previous mid-term business plan
(FY2009 to FY2013) was preparedNote2） E&P：Exploration and Production
Note1）

7

Ⅲ-2. Corporate Vision and Basic Strategies for JAPEX Expansion
Growth Story
While positioning E&P at the Company’s main activities, endeavor to increase business opportunities byshifting to E&P activities overseas and pursuing new investment in domestic natural gas as well as
environment and innovative technology as the means to help realize business expansion



E&P
E&P
businessbusiness
Maximize
Maximizethe
thevalue
valueofof
existing
existingoverseas
overseasassets
assetsMaximizethevalue
Maximizethe valueofof
existing
domestic
existing
domestic
assetsassetsIncrease
Increase
earnings
earningsopportunities
opportunities
throughthroughnewnewoverseas
overseas
investment
investment

PromotePromotelong-termlong-term
development
developmentthroughthroughoverseas
overseasexploration
exploration
investment
investment

Domestic
Domestic
naturalnaturalgas
gasbusinessbusiness
Cultivate natural gas

Cultivatenatural gas
demanddemandEngagein wideEngage in wideranging activities
ranging activities
including the upgrade
including the upgradeof infrastructureof infrastructure

The Garraf oilfield in Iraq andCanada Oil Sands Hangingstone
Expansion Project supporting toincrease production volume,
secure earnings and augment
proved reserves

Environment
Environment
andandinnovative
innovativetechnology
technology
businessbusiness
Acceleratelarge-scale

Accelerate(CCS, MH)large-scale
project(CCS,MH) project
activities
activities
Cultivate
new fields
Cultivate new fields
including renewable
including renewableenergyenergy→ Time8

Further business growth

Return→Growth scenario under the new medium-term business planⅣ-1．Growth Initiatives ① E&P Activities（1/2）


Focusing particularly on a shift overseas, organize E&P activities into three phases
over the next decade and establish clearly defined objectives for each phase
Overseas E&P activities under the new medium-term business plan
1st Phase

E&P Activity Objectives

Shift
Shiftinvestment
investmentoverseas
overseasLift the ratio of overseas E&P
investment

2nd Phase
Increase
Increaseproduction
productionvolume
volumeNorth America focusing
on Canada(Canada Oil Sands, etc.)
The Middle East
focusing on Iraq
(Garraf, etc.)

Ensure steady progress in the Garraf
oilfield in Iraq, Canada Oil Sands
Hangingstone Expansion Project andother new ventures

3rd PhaseSoutheast Asia focusing
on Indonesia(Kangean, etc.)

Augment
Augmentproved
provedreserves
reserves

Put in place a business promotion structure andsystems for each area in order to proactively pursue
overseas project development
9

Reinvest the cash flows generated by
the aforementioned production volumes

① E&P Activities（2/2）

Ⅳ-2．Growth Initiative

Objective 2: Increase production volumes
Ensure the shift to production and cash in fromdevelopment projects slated for between fiscal 2012
and fiscal 2016

Objective 1:
Shift investment overseas (FY2013 to FY2016)

Overseas900

Overseas

1,700

BOE/D

70,000

Production Volume

Lift overall overseas investment as a ratio of the E&P
investment portfolio from the approximate 30%
recorded over the past five year to around 60%

40,000FY2011

Domestic

FY07～FY11

1,100

FY12～FY16

270

280

billion yen

billion yen

FY2016

Objective
3: Augment
overseas
provedreserves
Objective
3: Increase
provedreserves
Further increases in proved reserves projected
through the reinvestment of cash flows generated
from overseas projects

Domestic

1,800

Additional by new investment

Proved Reserves

million
BOE

Note: Including investments through loans to equity-method
affiliates

450

Previous Target 350＋α

257
170

FY2007

Reduction by production

FY2011FY2012

FY2021Note) Above “ Production volume” and “Proved Reserves” areequivalent to JAPEX group’s interest.

10【Reference】 Development of the E&P business structure（Effective from June 24） or Restructuring of the E&P business organizationPlans are in place to implemented the following organizational structure as a part of efforts to expand
earnings through aggressive investment in overseas E&P businesses and the establishment of a robust
earnings platform

Basic concept: Development of E&P business structure
Current Organization（Excerpt recasting only)International Oil & Gas
Division
Iraq Project Division
Kangean Project Dept.

Function

Future Organization
Americas & Russia Project
Division
Asia & Oceania Project
DivisionMiddle East, Africa &Europe Project DivisionTo assume responsibility for the current division office function,business as well as corporate planning and work related toengineering operations



To upgrade and fine-tune technical evaluation standards
To assume responsibility for the systematic education andtraining of engineers and related technical personnel as well as
their flexible and effective allocation to business divisions

Domestic Project Division
Exploration Division
Technical Division

Development DivisionCorporate Planning
Dept.

Corporate Strategy Dept.
(New)
Project Solution Office11

To ensure a smooth decision-making process with respect tobusiness planning, promotion and management and to clarify all
appropriate responsibility structures and systems
To manage in an effective and appropriate manner the threemajor Canada Oil Sands, Kangean Block (Indonesia) and Garraf
oilfield (Iraq) development projects under a comprehensive
responsibility structure and system that includes the dispatch ofadditional designated engineers, and the discovery of new
projects



To strengthen the planning and investment assessment functionsof management strategies and policies
To consolidate the basic policy proposing functions currently
dispersed across an existing structure comprising the overseas,
exploration and development divisions

To assume responsibility for the Project Solution and Buildupfunctions relating to individual business division investment
project proposals

Ⅳ-3．Growth Initiatives
② Domestic Natural Gas BusinessContribute to the growing use of natural gas (amid, however, an uncertain business environment)

Domestic natural gas business under the new medium-term business plan
Domestic natural gas activities
FY2012
Expectations
Expectationsofofachieving
achievingaanatural
naturalgas
gas
sales
volumeof
2.0billionm3
sales volume of 2.0 billion m3
Changing factors in future

Uncertainties
Uncertaintiessurrounding
surroundingthe
thebusinessbusiness
environmentdue
largely
to
the
Great
environment due largely to the Great
East
EastJapan
JapanEarthquake
Earthquakeandandotherotherfactors
factors‘billion m3

Natural Gas Sales
Volume2.10

Decrease
DecreaseininHokkaido
Hokkaidonatural
naturalhashassalessales
volumefromfiscal2013
andbeyondvolume from fiscal 2013 and beyond

Steady growth trend from fiscal 2010 andbeyond (annual growth rate of around 7%)

2.00

Future initiatives

1.90
1.80

1.86

1.70
1.60
1.50

1.71

1.72

FY2008FY20091.74
FY2010FY2011FY2012

12

InInorderordertotocontributecontributetotothethegrowing
growinguse
useofofnaturalgas,
cultivate
demandandnatural gas, cultivate demand andfocus
focusononinfrastructure
infrastructureandandotherotherdevelopment
while
endeavoring
development while endeavoringtoto
optimally
optimallyadjust
adjustsales
salesprices
pricesⅣ-4．Growth Initiatives③ Environment and Innovative Technology Projects
Engage in full-fledged commercialization activities as one of the three basic policies that underpin JAPEX’s earnings
platform

Environment and innovative technology activities under the new medium-term business plan
Environment and innovative technology activity objectives

Methane hydrate Phase 2 Fiscal 2010 to Fiscal 2016

Existing activities

Plans in place to conduct two offshore production
tests in the Tobu Nankai trough Commissioned to serve as project operator,
JAPEX will drive business promotion forward Drawing on the results of phase 2, undertake acomprehensive evaluation from fiscal 2017


2010

2011

2012

2013

2014

2015

・・・・・

2018

Striving to reduce the environmental impact of our operations
Striving to reduce the environmental impact of our operations
and becoming proactively involved in tree-planting programs.
and becoming proactively involved in tree-planting programs.

Promoting technological R&D of CCS, methane hydrate, GTL
Promoting technological R&D of CCS, methane hydrate, GTL
and DME, etc.
and DME, etc.


2019



2020

Apr.2010
phase 2. Offshore production test

Established the Environment and Innovative Technology
Established the Environment and Innovative Technology
Projects Division
Projects DivisionStrengthen project promotions and the structure for uncoveringStrengthen project promotions and the structure for uncovering
opportunities
opportunities
phase 3.

CCS Demonstration ProjectJapan CCS Co., Ltd. established in 2008; Joint
private- and public-sector business promotion
 Preliminary surveys undertaken in threedomestic location including exploration wells off
the Tomakomai coastConsiderable emphasis placed on the early
implementation of CCS demonstration tests with aneye to commercialization from 2020 and beyond





2010

2011

2012

2013

2014

2015

・・・・・

2018

Future strategies


2019



Accelerate
Acceleratelarge-scalelarge-scaleproject-oriented
project-orientedactivities
activities
9 Methane hydrate phase 2
9 Methane hydrate phase 2
9 Pursue domestic CCS demonstration testing
9 Pursue domestic CCS demonstration testing
9 Participate in overseas CCS projects
9 Participate in overseas CCS projects

2020Survey

Cultivate
Cultivatenew
newfields
fieldsincluding
includingrenewable
renewableenergy
energy9 Target commercialization by fiscal 2016
9 Target commercialization by fiscal 2016

CCS demonstration test
Towardcommercialization

Note: The aforementioned schedule is based on projected scenarios by the Company
based on current conditions and events. There are no definitive plans currently in place.

13

V-1.

Consolidated Profit and Loss / Investment Portfolio
Consolidated Profit and Loss

Projected substantial recovery in the Company’s consolidated profit and loss
due to a variety of factors including the decrease in depreciation andamortization, adjustment to natural gas sales prices and contributions from the
Canada Oil Sands Hangingstone Expansion Project
Forecast consolidated profit and loss (net income)

Expectations ofcontributions to profit fromongoing progress in existing
projects (Kangean, Garraf
oilfield in Iraq, etc.) and theCanada Oil Sands
Hangingstone Expansion
ProjectOptimal adjustment to theprice of natural gas in linewith increases in crude oil
prices

Decrease in depreciation
and amortization

Factors contributing toincreased future earnings

11.5 billion yen
10.0 billion yen

FY2011（a）

FY2012（e）
14

FY2016

[Reference] Forecast Depreciation and Amortization

Depreciation and amortization on a consolidated basis expected to peak
(approximately ¥25.0 billion) leading up to fiscal 2011 and to decline thereafter

Due largely to the completion of a round of investment aimed at expanding
domestic production capacity

Forecast Depreciation and Amortization

depreciation and amortizationbilion yen

Actual30

EstimaDepreciation and amortization：Cost Recovery（Garraf(Iraq), Block A(Indonesia) ）

te

25
20
15
10
5
0
FY2010FY2011FY2012FY2013

FY2014FY2015

Note: Potential for the aforementioned figure to rise depending on future exploration investment performance
Besides depreciation and amortization, cost recovery will occur for the Garraf (Iraq) and Block A (Indonesia) when
production commencement. They will offset by receiving production income.

15

FY2016

V-2. Consolidated Profit and Loss / Investment Portfolio
Investment PortfolioProjected investment scale of approximately ¥280.0 billion taking into
consideration free cash flows between fiscal 2012 and fiscal 2016 together withexternal funds procured
The investment portfolio is presented as follows

Investment portfolio (Image)Overseas Exploration
around 20 billion yen

Domestic development investment
Domestic natural gas activities
around 80 billion yen
FY2012– FY2016

280
billion yen

Domestic Exploration
around 30 billion yen

Overseas development investment
Environment and innovativetechnology activities
around 150 billion yen

16Ⅵ ． Summary

Expectations that the objectives identified in the mid-term business planannounced in May 2008 will be achieved by fiscal 2012
Steps taken to draw up a medium-term business plan covering the period
from fiscal 2012 to fiscal 2016
Business expansion across the three core business pillars of E&P, domestic
natural gas and environment and innovative technology
Aiming for sustainable growth particularly in E&P activities, JAPEX will pursue
the following initiatives aimed at shifting business overseasLift the ratio of overseas E&P investment (approximately 60% over the next five
years)
 Increase production volume mainly overseas by ensuring steady progress in suchactivities as the Garraf oilfield in Iraq and the Canada Oil Sands Expansion Project
as well as the shift of production overseas (70,000 BOED by fiscal 2016)
 Further augment proved reserves by reinvesting generated cash flows in new
projects(450 million BOE by fiscal 2021)


Steadily implement domestic natural gas activities and pursue environment
and innovative technology commercialization in concert with E&P activities

17Cautionary statement
Any information contained herein with respect to JAPEX’s plans, estimates,
strategies and other statements that are not historical facts are forwardlooking statements about the future performance of JAPEX. Readers should
be aware that actual results and events may differ substantially from theseprojections due to various factors.
The provision of this document should not be construed as a solicitation forinvestment.

Copyright :All information contained herein is protected by copyright, and may not be copied or
reproduced without the prior consent of JAPEX.