Japan Petroleum Exploration Co., Ltd.

Integrated Report 2023
For the Year Ended March 31, 2023

Corporate Vision & Code of Ethics and Conduct

Essential Energies for Essential Needs

Corporate Vision

The JAPEX Group Code of Ethics and Conduct

Contribute to society through stable supply of

To realize our Corporate Vision and sustain as a company trusted

energy and address social issues towards

by society, we hereby establish the JAPEX Group Code of Ethics

Sustainable Development Goals.

and Conduct, which provides corporate ethics standards andprinciples of action to be adhered by all officers and employees.

● Explore, develop, produce and distribute crude oil and natural gas athome and abroad.

1. Comply with applicable laws and regulations, and respect international code of conduct.
2. Place top priority on HSE (health, safety, and environment).

● Further strengthen the natural gas supply chain, built on our domestic
infrastructures, by combining the electric power supply business.

3. Strive to maintain trust with stakeholders and to contribute to society.

● Contribute to resolving energy and climate change related challenges
towards a sustainable society through developing and commercializing
new technologies, drawing on our expertise.

5. Make efforts to create a good working environment.

● Achieve sustainable growth and maximize corporate value, while placing
top priority on maintaining trust with all stakeholders.

4. Respect the human rights of all people.
6. Engage in fair and free competition and maintain appropriate trading practices.
7. Maintain sound and transparent relationships with politicians, political parties, and government
officials/agencies.
8. Stand firmly and exclude relationship to any anti-social forces.
9. Pay careful attention to managing and protecting confidential information and personal/clients’ data.

JAPEX Integrated Report 2023 01

JAPEX’s History
JAPEX was founded in 1955 as a company engaged in the exploration, development, and production (E&P ) of oil and natural gas.
With stable energy supply as our mission, we aim to grow to a comprehensive energy company, while contributing to the development of the E&P of oil and natural gas in Japan.

Started as a national policy
concern to promote domestic
oil and gas exploration

Put its business on track by
successively discovering oil
fields in Japan

Expanded business regions
and promoted businessdiversification

E&P field

E&P field

Infrastructure/Utility field

E&P field

1955 Founded as a governmentowned company by the
Law of Japan Petroleum
Exploration Co., Ltd.
1956 Discovered the Biratori
Oil Field in Hokkaido, thefirst oil field discovered by
JAPEX (In production from1956 to 1961)

1972 Discovered the Aga-oki Oiland Gas Field in Niigata,the first ever offshore oilfield discovered since theestablishment of Japex
Offshore Ltd. in 1971 (Inproduction from 1976 to 1998)

1996 Commenced operation of
the Niigata-Sendai Gas
Pipeline

2007 Participated in the
Kangean Project inIndonesia
Carbon Neutral field
2008 Participated in funding
Japan CCS Co., Ltd., which
was established with theaim of creating practicalapplications for CCS
technologies in Japan

E&P field
2013 Commenced production of crude oil at the Garraf Project in Iraq
2014 Participated in the Seagull Project in the United Kingdom’s North Sea
2023 Decided on capital participation in a
subsidiary of U.K.-based Longboat
Energy PLC which promotes
exploration and development
businesses in offshore Norway
Infrastructure/Utility field
2018 Commenced operation of the Soma
LNG Terminal
2020 Commenced commercial operation of
the Fukushima Natural Gas Power Plant Fukushima Natural Gas Power Plant ofFukushima Gas Power Co., Ltd.

Niigata-Sendai Gas Pipeline

Transition of net sales*

Aim to grow as acomprehensive energy
company

Carbon Neutral field
2019 Achieved our target of injecting 300,000 tons of CO2 in the Tomakomai
CCS pilot test conducted through Japan CCS Co., Ltd.

Aga-oki Platform

Net sales

Net sales ¥336,492 million(Millions of yen)

450,000

Events which impacted the crude oil market

2022

400,000

2008

Changed the listing market on
Tokyo Stock Exchange(to the Prime Market)

Financial
Crisis2022
Invasion of Ukraine by Russia

350,000
300,000

1973 (to 1974)

2003

First oil crisis

250,000

1978 (to 1982)

2003

Second oil crisis

200,000
150,000

Outbreak of
the Iraq war

1990

1970

Invasion of
Kuwaitby Iraq

Reorganized as a private company
by separating from JPDC

100,000

Listed on theFirst Section of
the Tokyo Stock
Exchange

1967

Integrated into a newly establishedJapan Petroleum Development
Corporation (JPDC)

50,000
0

1955

1960

1970

* Non-consolidated net sales up to 2002, and consolidated net sales in 2003 and later

1980

1990

2000

2010

2020
JAPEX Integrated Report 2023 02

JAPEX’s Strengths
JAPEX’s three strengths comprise the JAPEX Group’s comprehensive technical capabilities related to oil and gas exploration, development, production (E&P), transportation and sales;
resilient domestic infrastructure that undergirds the stable supply of natural gas; and trusted relationships with stakeholders that serve as the foundation of our business.

Technical capabilities in the E&P field

Diverse gas supply network

 The JAPEX Group possesses comprehensive technicalcapabilities that fully cover the entire E&P field. P.29 

Application of technical capabilities in theCN* field centered on CCS

 We are working to create environmentally friendly businesses
that contribute to society’s decarbonization by leveraging thetechnologies and expertise cultivated in the E&P field.
*CN: Carbon Neutral P.34 

Operator capabilities in the entire oil andgas supply chain

 We possess operator capabilities that span the Group’s
entire supply chain, including the E&P field, oil and gas
transportation, regasification of imported LNG, and natural
gas power generation.

 We provide a stable supply of environmentally low-

The JAPEX Group’s
comprehensive
technical
capabilities

Resilientdomestic
infrastructure

JAPEX’sStrengths

Operator capabilities in the entire oil andgas supply chain

JGI, Inc.

 Well drilling

Production Borehole
surveys Reservoir

evaluation

 Facility

planning Production

Japan Petroleum Exploration Co., Ltd.

Exploration

surveys

GEOSYS,Inc.

exploration

GeophysicalSurveyingCo., Ltd.

SKENGINEERING
CO., LTD.

North Japan
Japex
Security Service
Offshore Ltd.
Co., Ltd.
JAPEX SKS
Corporationengineering
Japex
Pipeline Ltd.

and supply C onversion

into electricity

FGP*

Delivery T ransportation

Resilient system for stable operation of infrastructure In the Shiunji Gas Field in Niigata Prefecture, we are storing

domestic natural gas underground to help meet variable
demand and ensure a stable supply of gas for emergencies.
 We are building a system for stable operation of
infrastructure without major accidents and injuries. We
have been able to ensure safety during crises, such as theGreat East Japan Earthquake, achieving quick recovery andrestart of supply. P.32 Contributing to a stable supply of energy, which is Geological Geophysicalimpact LNG and natural gas through diverse means oftransportation, such as JAPEX’s own natural gas pipeline
network and tank trucks, coastal vessel.

Akita Natural
Shirone Gas
Gas PipelineCo., Ltd.
Co., Ltd.

*Fukushima Gas Power Co., Ltd.

Group

Relationshipsof trust withstakeholders

Thorough safety and quality management
Contribution to local communities
Environmental conservation initiatives
Attractive workplace of choice Since our founding, we have built relationships oftrust by contributing to local communities and holding
dialogue with various stakeholders. These relationships
have become the foundation of our business. P.58 

our mission, and the realization of a sustainable
society by leveraging our three strengths

 The operation and additional development of domestic oil and gas fields

are the source of solid cash flows. We aim to further grow the E&P field
by expanding our technical capabilities and experience in exploration,
development, and production overseas based on our comprehensive
technical capabilities cultivated over many years as the foundation of
JAPEX.
 We remain committed to a stable supply and promotion of utilizationof natural gas based on our resilient domestic infrastructure, including
pipelines and the Soma LNG Terminal, and by procurement of domestic
natural gas and overseas LNG.
Moreover, we seek for further growth of our power business by expanding
the renewable energy business, while ensuring the stable operation of the
Fukushima Natural Gas Power Plant.
 With regard to CCS/CCUS technologies which have drawn attention asa last resort for achieving carbon neutrality, we have internally developed
necessary technologies for storage work. We also have worked to measureand examine the storage potential and transportation in the BusinessFeasibility Study on Japanese Advanced CCS Project entrusted by JOGMEC,
and aim to launch the domestic CCS/CCUS business by 2030 based on thetrusted relationships with local communities we have nurtured for many years.
JAPEX Integrated Report 2023 03

INDEX

Foreword

Strategy

Initiatives to Support Value Creation

Corporate Vision & Code of Ethics and Conduct.. ..........................01

JAPEX Management Plan 2022–2030...........................................16

Sustainability Management. . .......................................................37

JAPEX’s History.........................................................................02

Message from the Officer in charge of Finance & Accounting Dept.....20

Integrity and Governance. . ..........................................................42

JAPEX’s Strengths......................................................................03

Digital Transformation (DX).........................................................22

Outside Directors’ Roundtable Discussion...............................42

Message from the Officer in Charge of Corporate Strategy Dept.....22

Stable and Sustainable Energy Supply.. .......................................53

JAPEX’s Vision

Human Resources Strategy.. .........................................................24

HSE as Our Culture.....................................................................56

Message from the Officer in charge of Human Resources Dept.....24

Being a Good Neighbor..............................................................58
The Employer of Choice..............................................................59

President’s Message...................................................................05
At a Glance................................................................................10
What We Do...............................................................................11

Value Creation Through Business

Financial and Other Information

The JAPEX Group’s Value Creation Process..................................12

E&P Field...................................................................................27

JAPEX2050................................................................................13

Infrastructure/Utility Field.. ..........................................................30

Financial Highlights....................................................................62

Carbon Neutral Field. . .................................................................33

Non-Financial Highlights. . ...........................................................63
External Evaluation. . ...................................................................64
Glossary....................................................................................65
Corporate Data...........................................................................66

Editorial Policy

Organizations Covered by This Report

This report, positioned as an important communication toolwith all our stakeholders including investors, is intended
to convey in an easy to understand way our initiatives tosustainably enhance our corporate value.
In doing so, this report highlights their connection to ourfinancial and non-financial data.
Integrated Report 2023 presents JAPEX’s views on
corporate value enhancement with the theme of innovation
on pages of President’s Message, Message from the Officer
in charge of Finance & Accounting Dept., and Outside
Directors’ Roundtable Discussion. Moreover, it provides the
progress of JAPEX’s DX and human resources strategies,
together with messages from the responsible officers as partof the material issues identified as current priority matters,in particular, that should be addressed for our sustainablegrowth and the strengthening of our business foundation.

This report covers Japan Petroleum Exploration Co.,
Ltd. (JAPEX), its 16 consolidated subsidiaries, and otherGroup companies.

Reference Guidelines
METI, Guidance for Collaborative Value Creation
The Value Reporting Foundation (VRF),
International Integrated Reporting Framework

Reporting Period
Fiscal 2022 started on April 1, 2022 and ended March
31, 2023.
Some statements include data before March 31, 2022
or after April 1, 2023.

Disclosure Systems
WebsiteIR

Business- andFinance-related
Data

Integrated Reporthttps://www.japex.co.jp/en/ir/
Annual Securities Reporthttps://www.japex.co.jp/en/ir/library/report/

Issuing Date
October 2023 (Next issue: October 2024)

Disclaimer
This Integrated Report includes past and current facts
about JAPEX and its subsidiaries and associates,
their plans and prospects as of the issuing date, as
well as forecasts based on their management plans
and corporate management policies. These forecasts
represent management’s assumptions or decisions
based on information currently available. Readers should
be aware that actual results may differ from these
forecasts due to changes in the business environment.

WebsiteNonfinancial
Data

https://www.japex.co.jp/en/
ir/library/integratedreport/

Sustainability

https://www.japex.co.jp/
en/sustainability/

JAPEX Integrated Report 2023 04

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

President’s Message

Transforming JAPEX toachieve both a stable andsustainable energy supply
and decarbonization
FUJITA Masahiro
Representative Director and President
Chief Executive Officer

JAPEX Integrated Report 2023 05

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

President’s Message

JAPEX’s Social Responsibilityenergy stable” and “establishment of carbon neutral (CN) business” as key business issues forour sustainable growth, and “promotion of human resources (HR) development and diversity”

Fiscal 2022 was a year that gave us a renewed appreciation for the importance of energy, due
to the situation in Ukraine as well as the LNG supply challenges faced by the United States andMalaysia, among other factors.
JAPEX recognizes contributing to society through a stable supply of energy as its mission
and helping to realize the Sustainable Development Goals by addressing social issues as its
Corporate Vision. In addition to oil and natural gas E&P (exploration, development, production) inJapan and abroad, we have also been engaged in strengthening the domestic gas supply chain
and developing and commercializing new technologies.
The realization of a carbon-neutral society by 2050 can be seen as a global responsibility
shared by all, but we believe that there are various ways to play a part in its realization by
utilizing our own individual strengths. Needless to say, the development of renewable energy
sources and the promotion of energy conservation are important contributions.
We recognize that oil and natural gas will continue to play a significant role as key energy
sources in the future. For our part, we hope to leverage our strengths and fulfill our corporatesocial responsibility (CSR) by decarbonizing the use of oil and natural gas to achieve both astable and sustainable energy supply and a carbon-neutral society by 2050.
JAPEX is a company that contributes to the stable and sustainable supply of energy in Japan
while flexibly evolving our role with the changing times. We will continue to achieve further
growth while doing our utmost to meet society’s expectations.

Four Major Challenges Identified as Material Issues for Sustainable Growthand “digital transformation (DX)” as key issues for our business foundation.
By making progress in addressing these four issues, we will be able to achieve theManagement Plan quickly and surely.

Supply Energy Stable
As oil and natural gas continue to be indispensable energy sources for our daily lives and industries,
it is our social responsibility to contribute to the stable and sustainable supply of energy. Realizingthat we are exposed to geopolitical risks as well, we are exist to continue providing and striving toprovide oil and natural gas, including those domestically produced, to those who need it.

Establishment of Carbon Neutral (CN) Business
In Japan, the Basic Policy for the Realization of GX (Green Transformation) was formulated tosimultaneously achieve the three goals of decarbonization, stable energy supply, and economic
growth. In May 2023, the GX Promotion Act and the GX Decarbonization Electricity Act wereenacted, and GX activities have been ramping up.
As the move toward decarbonization accelerates in Japan, companies that handle fossil
resources (which will still be necessary in 2050) are facing the question of how to achieve
decarbonized use of oil and natural gas and create an environment that enables stable use of
these resources.
In JAPEX 2050, which outlines our direction toward a carbon-neutral society by 2050, andin the Management Plan, we have identified CCS (Carbon dioxide Capture and Storage)/CCUS(Carbon dioxide Capture, Utilization and Storage) as one of the most effective ways to reduce
CO2 emissions without significantly affecting our lifestyles and economic activities when

We are committed to corporate management with a strong emphasis on CSR. To meet the
expectations and demands of our stakeholders and continue to grow as a highly trusted
company, we have established CSR themes collectively called “SHINE.”

decarbonizing our oil and natural gas use.
JAPEX is one of the few corporate groups with the technology and operational capabilities
to select sites appropriate for CO2 storage, drill wells for injection, and monitor the status of

We have identified material issues that link SHINE and the JAPEX Management Plan 2022–

injection and storage conditions. To realize a stable energy supply even in the future, we will2030 (the “Management Plan”). Specifically, from the SHINE themes, we have identified “supply

contribute to the carbon-neutral society by establishing CCS/CCUS as our business by 2030.
JAPEX Integrated Report 2023 06

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

President’s Message

Promotion of Human Resources (HR) Development and Diversity

through the strategic utilization of data and digital technologies and make continuous challenges

Our goal is to achieve both a stable and sustainable energy supply and decarbonization

for further increasing our corporate value.

simultaneously, but this is easier said than done. It is our employees who will take on the

As a first step toward DX, we are working to transform our work style through Businesschallenge of achieving this goal. Human resources are the source of value creation, and based on

Process Reengineering (BPR). To succeed in this endeavor, it is essential that each and every

this consideration, we will maximize the ability of each employee for value creation through human

employee take initiative. First, we will strengthen our efforts to integrate and streamline

resource development and strengthen the company-wide capabilities through diversity promotion.

operations and systems with the aim of being “DX-Ready” by 2025.

To promote human resource development and diversity, we intend to invest in skilling andAlthough there are generational differences in terms of knowledge about DX, it is importantreskilling and strengthen the employee training system, and we will continue to adopt goodthat all employees enthusiastically embrace DX. To this end, we started a DX basic training

ideas and actively work on them.

program in January 2023 to help employees improve their IT skills. In addition, we also provide

Until now, we have provided training programs for each job, but we have taken a step further

career- and work-related online courses to increase opportunities for learning. I am also

to establish an in-house “JAPEX UNIVERSITY” with two new faculties: Skilling and Reskilling.

continuing to learn to acquire new knowledge, and I hope that these efforts will be a force for

We offer a wide range of educational programs conducted by both internal and external

improving corporate value.

instructors as an opportunity for all employees to learn on their own initiative. In particular,
the Reskilling Faculty has created a new Carbon Neutral Department, Renewable Energy
Department, and DX Department to encourage employees to explore areas beyond E&P.
In terms of diversity, we actively recruit highly experienced mid-career hires and promote
them to management positions to ensure diverse perspectives and ideas. This initiative has
produced results that have exceeded our goals. On the other hand, to promote women’s
participation and career advancement, we disclose the ratios of women in new hires andwomen promoted to management positions, and increasing the number of women appointed
to management positions is a future challenge. In addition, five outside directors (including
two female directors) were elected out of 11 directors at the Ordinary General Meeting of
Shareholders in June 2022. The presence of outside directors with diverse backgrounds has
led to an increase in relevant questions and candid opinions, fostering more active discussions
within the Board of Directors.

Digital Transformation (DX)To get new businesses like CCS/CCUS on track, we cannot continue operating in the same way
we have until now. We need to realize the working environment for added-value businesses

Review of the Management Plan for Fiscal 2022 and Outlook for Fiscal 2023
Strong Start to the First Year of the Management Plan
Looking back at our operating results for fiscal 2022, the first year of the Management Plan, we
got off to a good start with a return on equity (ROE) of 16.9% and business profit of ¥69.0 billion(and profit attributable to owners of parent of ¥67.3 billion). However, we recognize that theseachievements are heavily influenced by the one-off factor of a surge in energy prices fueled
primarily by the situation in Ukraine.
As for fund allocation, we allocated ¥44.1 billion to growth investments and ¥13.8 billion toshareholder returns (share buyback, year-end dividend for fiscal 2021, and interim dividend forfiscal 2022).
In particular, we have revised our shareholder return policy from the previous policy of stabledividends to a consolidated payout ratio of 30% basically starting in fiscal 2022, resulting in a
dividend of ¥370 per share for fiscal 2022. This is an increase of ¥320 per share compared tofiscal 2021 and the highest amount since our listing.

JAPEX Integrated Report 2023 07

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

President’s Message

In March 2023, the Tokyo Stock Exchange called for “Action to Implement Management that

In fiscal 2022, there was also a profit contribution through LNG procurement. Our LNG

is Conscious of Cost of Capital and Stock Price.” Our price to book ratio (PBR) is 0.57x as ofprocurement strategy is to build a competitive LNG procurement portfolio with an appropriate

March 31, 2023 (based on the share price of ¥4,465). Despite achieving a record high ROE of

mix of term and spot contracts depending on market conditions, while diversifying risk to avoid

16.9%, our PBR is still below 1x.

bias in terms of region, timing, and price. We believe this strategy worked well in fiscal 2022,

To address this issue, we have already begun quantitative analysis and are making
comparisons not only with companies in the domestic energy sector, but also with international

and we will continue to promote competitiveness of LNG procurement under the supervision of
our Head Office and Singapore Office.

oil majors. The results have been reported to and discussed by the Board of Directors. We will

We believe that the non-E&P business, which is less easily influenced by energy pricecontinue to look for ways to address this issue while achieving the business goals set forth influctuations, will help stabilize our business, and we will aim to further expand our I/U businessthe Management Plan, and we will announce and implement appropriate countermeasures.

to build an ideal portfolio.

Progress in the E&P Field

Progress in the Carbon Neutral (CN) Field

In the E&P field, we have made progress in the tight oil

development project in the UnitedStates, which was the first case of acquiring new interests after establishing the Management
Plan. Its production volume has steadily expanded since the latter half of 2022 as planned,

In the CN field, we continue to conduct feasibility studies on CCS/CCUS projects in Japan andoverseas.
In Japan, we were commissioned by the Japan Organization for Metals and Energy Security

contributing to earnings. We have also worked on the additional development of the Katakai Gas(JOGMEC) in July and August 2023 to conduct CCS feasibility studies in Tomakomai and Higashi-

Field in Niigata Prefecture, the development of the Seagull Project in the UK North Sea, and the

Niigata areas, which we proposed jointly with other companies in response to JOGMEC’s

additional development of the Garraf Project in Iraq in a bid to reach 230,000 barrels per day.

request for proposals on “Business Feasibility Studies on Japanese Advanced CCS Projects.” InIn fiscal 2023, we plan to further expand growth investments. In May 2023, we decided tofiscal 2023, with support from the government, we will work with the joint proposal companies

further expand our investment in the tight oil development project in the United States and tooka stake in a local company that promotes exploration and development in the Norwegian offshore

to detail the specifics of the feasibility study.
Overseas, in Indonesia, we have begun discussions with partners to conduct a pilot test ofmining area. We will continue to aggressively pursue new acquisitions while appropriately

CCUS, and in Malaysia, we are continuing studies with a view to bringing CO2 from Japan andmanaging risk by diversifying the regions and timing of investments, as well as asset types.

storing it there.
Although the CN field does not currently contribute to profits, we believe that CCS/CCUS

Progress in the Infrastructure/Utility (I/U) Field

will become social capital that supports a carbon-neutral society in the medium to long term.

In the I/U field, we have made progress in biomass power generation projects, a renewable

Therefore, we will continue upfront investments for this purpose.

energy business. The Abashiri Biomass 2nd Power Plant started commercial operation in
October 2022, and the 3rd Power Plant in February of the following year. The Ozu, Chofu, andChallenges in Achieving the Management Plan

Tahara Biomass Power Plants are also currently under construction, with the aim of beginning

In the Management Plan, we aim for bold transformation of our business structure while

commercial operation in 2024 or 2025.

building a business foundation that can secure ROE of 8% or more, even assuming an oil

JAPEX Integrated Report 2023 08

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

President’s Message

price of $50 per barrel, as a strategy for sustainable growth in the context of accelerating
decarbonization.
Although we were able to finish fiscal 2022 with strong operating results thanks to the

To realize our vision for the future, we will establish a solid growth path by making timely andprompt investment decisions in E&P, I/U, and CN fields, in accordance with the ManagementPlan.

tailwind of soaring energy market prices, we are still in the process of building a robust
corporate structure that is resilient against low crude oil prices and creating a sustainablebusiness foundation, which is the goal of the Management Plan.
In particular, it is an important issue to invest in new potential flagship projects to replace thetwo Canadian projects that we withdrew from (Oil Sands Project and Shale Gas Project). While
taking into account the trend toward decarbonization, we believe that the acquisition of projects
that are competitive and expected to contribute to earnings in the medium to long term must be
given top priority and addressed promptly.

Conclusion
Since becoming President in October 2019, I have always been vocal about the need for JAPEX
to change. Currently, each industry is trying to transform itself to survive, and the energy
industry in particular is evolving rapidly. In this context, it is important to maintain our culture of“Safety First” while remaining sensitive to environmental changes and pursuing new ideas andendeavors.
My ideal vision for JAPEX is to become a company that surprises everyone with its innovative
approach. We aim to transform ourselves into a company that makes people think, “JAPEX does
all this?” I believe the key to our growth lies in allowing each employee to think freely and work
passionately. For this reason, I do take leadership as a pioneer in this field.
Every business in its fundamental has trust and support among people. In other words,
business is not an undertaking that can be accomplished alone, but only with the trust of our
stakeholders and cooperation of our colleagues. In doing so, what matters most, is direct faceto-face communication. While making effective use of the preexisting work-from-home system,
I would like to emphasize direct communication both inside and outside the workplace.
We value communication with our stakeholders and are committed to meeting their
expectations by not only achieving the goals of our Management Plan, but also by enhancing
our corporate value through the achievement of both a stable and sustainable energy supply anddecarbonization.

JAPEX Integrated Report 2023 09

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

At a Glance
Taking internal and external environment into account,
JAPEX aims to grow in the following three fields: E&P, Infrastructure/Utility (I/U), and Carbon Neutral (CN).

E&P Field

Infrastructure/Utility Field

Carbon Neutral Field

Overview

Overview

Overview

Since its founding, JAPEX has been involved in exploration,
development, and production of the upstream processesof the oil and natural gas industry. Today, we operate 10 oil
and natural gas fields in Japan, while pursuing additional
development at existing oil and gas fields and their surrounding
areas as well as exploration to discover new fields. Overseas,
we are engaged in exploration, development, and production
at 6 locations as well as participating in development projects
such as offshore or unconventional resources development,
through which accumulate knowledge. We have racked up
numerous accomplishments in Japan and overseas. The wide
range of technologies and expertise we have accumulated
over time have contributed to the stable supply of energy.

We utilize a combination of our supply infrastructure, suchas high-pressure gas pipelines and LNG terminals, andtransportation systems using tank trucks and coastal vessels,
thereby securing stable supply of domestic natural gas,
regasified LNG, and LNG in the broad areas including Hokkaido
and Tohoku regions. In addition, we will seek to transform ourbusiness structure to withstand market changes such as oil
price volatility through the natural gas-fired power generation
at the Fukushima Natural Gas Power Plant located at Soma
Port in Fukushima as well as the renewable energy business.

We have been working to establish and commercialize CO2
underground storage technology, which we have developed
utilizing our accumulated knowledge of oil and natural gas
development and production. In Japan, aiming for an earlylaunch of the CCS/CCUS model business where several
companies and business locations have participated, we areconducting feasibility studies in Hokkaido, Niigata, and otherlocations. In 2023, we were commissioned by JOGMEC to
conduct CCS feasibility studies in the Tomakomai and HigashiNiigata areas for the publicly solicited “Business Feasibility
Study on Japanese Advanced CCS Project” for 2023 (July andAugust). We have also participated in such feasibility studies
overseas in Indonesia and Malaysia.

Business foundation of the E&P

Business foundation of the Infrastructure/Utility

Business foundation of the Carbon Neutral

Contribute to early expansion of profit

Transform business structure to withstandAchieve CCS/CCUS that contributes to smoothscale and respond to low-carbonization

market changes and oil price volatility

transition to a carbon-neutral society in 2050

Continue to invest in acquisition of new

Expand the profit scale of renewable

Launch CCS/CCUS hub and cluster*2 model businessinterests and promote low-carbon operations

energy and other businesses

utilizing existing oil and gas fields and others

Business profit*1 target

Business profit target

Business profit target¥ 23.0 billion as of FY2026  ¥27.0 billion

as of FY2030¥ 12.0 billion as of FY2026  ¥27.0 billion

as of FY2030*1 The sum of operating profit and share of profit of entities accounted for using equity method (including profits to be distributed under limited partnership and silent partnership agreements)*2 CCS/CCUS network that connects multiple CO2 emitter and CO2 storage sites¥ 1.0 billion as of FY2026  ¥2.0 billion

as of FY2030

JAPEX Integrated Report 2023 10

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

What We Do
As indicated in JAPEX2050: Toward a carbon-neutral society, we have positioned the three fields—”E&P,” “Infrastructure/Utility (I/U),” and “Carbon Neutral (CN)”—
as areas of key importance as a comprehensive energy company that contributes to net-zero greenhouse gas (GHG

) emissions in 2050.

I/U field
Woodchip carrier
Natural gas-fired power plant
LNG vessel
Wind-power generation

Biomass power generation
LNG terminals
Natural gas pipeline
Solar power generation
LNG tanker truck
CCS/CCUS

CN field

Electricity

Onshore rig

Oil and natural gas
CO2City gas tanks
Onshore geophysical exploration
Production well
Offshore rig

Smart city

Crude oil tanks

E&P Field
Crude oil tanker

Offshore geophysical exploration

Deep-sea mineral resources survey
Methane Hydrate

JAPEX Integrated Report 2023 11

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

The JAPEX Group’s Value Creation Process
Realizing

By making the most of various resources possessed by the JAPEX Group, we will fulfill our corporate social responsibility (CSR) to achieve•each country• Rising demand for low-environmental-impact energy

Input
Financial capital

Increasing importance of ESG management• Rising calls from stakeholders for enhanced
disclosure and stronger responses

 Shareholders’ equity: ¥377.1 billion
 Interest-bearing debt: ¥10.4 billion
 Equity ratio: 74.9%

OutputProduction capital(FY2022 results)¥104.5 billion

P.30 

Niigata) High-pressure gas pipeline spanning a totalof over 800 km
 Power plant output:
		 Total output* from seven locations:
1,390 thousand kW
		 Of which, total renewable energy output
from six locations: 210 thousand kW
*Gross output
Transport by dedicated tanker trucks andcoastal vessels in addition to the above
P.27 

P.30 

 Development and operational capabilities of the

E&P Business: operation track record of 67 years
 Comprehensive technical capabilities of theGroup that fully augment the entire E&P
field and highly knowledgeable geologicaland reservoir technicians
 Operating results of the Infrastructure/Utility
Business:high-pressure gas pipeline operation of 62
years; LNG terminal operation of 20 years;
tanker truck transport of 40 years; coastal
vessel transport of 12 years

Human capital

P.24 

 ROE: 16.9%

P.59 

Securing stablesupply of oil andnatural gas

E&P field
P.27 The JAPEX Group’s comprehensive
technical capabilities

Resilient domestic
infrastructure

Relationships of trustwith stakeholders
Infrastructure/
Utility field
P.30 

Utilizing E&P
technologies
for CCS

Strengths
P.3 

and mid-career hires

 Skill acquiring education: advanced businessskill education

 Launch reskilling program (DX education, etc.)
 Increase in the educational budget

P.58 

 Relationships of trust with operating regions

P.33 

countries for over 40 years

Natural capital

P.27 

P.34 

 Proved reserves: 137 million boe Domestic oil and gas fields that can be used ROE to 8% or more in FY2030
 Set a basic policy to target a

consolidated dividend payout ratio of30%

Social and environmental value
P.27 

P.30 

28 thousand boe/day Domestic natural gas and LNG sales

volume: 1.08 million tons

 Electricity sales volume:

3.0 billion kWh

P.64 

 Maintain a stable energy supply
 Contribute to the realization of acarbon-neutral society throughtechnology like CCS/CCUS Reduce GHG emission intensity fromJAPEX operations

Three SDGs
we focus our efforts on

 Selected for the FTSE Blossom JapanIndex

 Selected for the FTSE Blossom Japan

Sector Relative Index Selected for the S&P/JPX Carbon

ESG performance

P.63 

 LTIF*1: 0.84 (target: 0.09)
 Percentage of female managers: 6.0%
 Percentage of employees taking

JAPEX Management Plan 2022–2030
P.16 

P.16 

P.37 

and clients

 Support of the Japanese government
 Continuous partnership with oil-producing

 Production volume:

Economic value

Efficient Index Selected for the MSCI Japan Empowering
Women Index
 Obtained A- rating in the CDP
Climate Change Questionnaire

Utilizing technologies inbusiness that contributes
to decarbonization

Materiality

Production andsupply of energy

External evaluation
CN fieldcentered on
CCS Increase in the number of new graduates

Social and relationship capital

P.62 

 Consolidated profit: ¥67.3 billion
 EBITDA: ¥85.3 billion
 Cash flows from operating activities:

 Three LNG terminals (Hokkaido, Fukushima,

Intellectual capital

Outcomes

Financial achievement

P.62 

P.13 

Enhancing Corporate ValueBusiness Model(FY2022 results)

JAPEX2050:

Toward a Carbon-Neutral Society

both a stable and sustainable energy supply and a carbon-neutral society while aiming for sustainable enhancement of our corporate value.
transition to a decarbonized society
Awareness of the External Environment RapidS trengthening climate change countermeasures in

Financial and Other Information

Core CSR Themes “SHINE”

P.38 

Corporate Vision

P.1 

childcare leave
Male: 58.9%
Female: 100%
P.55 
P.63 
 GHG emission
Scope 1+2: 0.251 million ton-CO22
Emission intensity* : 3.56 ton-CO2/TJ(reduced by 11% compared with FY2019)*1 Lost Time Injury Frequency: Calculated as thenumber of lost time injuries per 1,000,000
work hours.
*2 Emission intensity: Represents intensity
within the scope of GHG emission goals.

for CCS/CCUS and adjusting supply and demand

Capital Improvement
JAPEX Integrated Report 2023 12

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Towarda Carbon-Neutral Society

Background of JAPEX 2050 Formulation
Under the Long-term Vision 2030 formulated in 2018, JAPEX has targeted “Growth to
a comprehensive energy company utilizing oil and gas E&P and its supply basis.” We have beenworking to transform into a business structure that enables sustainable growth even when oil
prices are low and that can respond to the changing needs of society.

Recognition of Medium- to Long-term Risks and Policies for Addressing Such Risks
Business fields Medium- to long-term risks recognizedCompanywide
business
portfolio

Fluctuations in crude oiland natural gas prices
Rapid transition toa decarbonized society

Meanwhile, since the formulation of the long-term vision, the global trend toward
decarbonization has been gaining steam in response to the Paris Agreement. In line with thisE&P field

trend, in October 2020, the Japanese government announced its aim to realize carbon neutrality
by 2050. It made us aware of the need to evolve our current initiatives, and thus we updated
our medium- to long-term risk recognition.
As a result, we concluded that, in order to appropriately address identifies risks and achieve

Infrastructure/
Utility field

growth by taking advantage of opportunities, we need to clarify our responsibilities in the
carbon-neutral society in 2050 as well as the business fields to focus on. Accordingly, we haveneutral society.

CarbonNeutralfield Shift to a business portfolio that is resilient against
low crude oil prices(by making the renewable energy business profitable;
creating new businesses, such as CCS/CCUS; andexpanding such businesses) Pursue a low-carbon and decarbonized business portfolio(to reduce GHG emissions in line with JAPEX’s targetof achieving net-zero emissions in 2050)

Declining volume of oil
and gas reserves

 Develop remaining production potential in Japan Acquire new interests overseas

Rapid transition toa decarbonized society

 Shift the focus of the E&P field to natural gas
 Introduce CCS/CCUS in participating projects

Decline in domestic
natural gas production

 Procure LNG with competitivenessRapid transition toa decarbonized society Expand the renewable energy business Decarbonize power generation and gas businesses(by introducing carbon-neutral LNG ) Horizontally deploy various supply methods fornatural gas and LNG targeting overseas markets

Resolution of issues related
to CCS/CCUS operations
to achieve the earlycommercialization ofthese businesses in Japan Push ahead with both technological and marketing
endeavors, including securing CO2 storage capacities,
promoting cost reductions, and taking initiative in rulemakingformulated “JAPEX2050”: Toward a Carbon-Neutral Society and announced it in May 2021.
JAPEX2050 comprises GHG emission reduction targets and focused efforts to realize a carbon-

Risk mitigation policies

JAPEX Integrated Report 2023 13

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX2050
 GHG Emission Reduction Targets

Scope 1: Direct greenhouse gas (GHG) emissions by the reporting company itself, suchas fuel combustion and industrial process
Scope 2: Indirect emissions from the use of electricity, heat, or steam supplied by others
Scope 3: Other indirect emissions besides Scope 2(emissions by others related to the company’s activities that are further subdivided into 15 categories)

Scope 1+2

Scope 3

2030

2050

Contribute to establishing new

Reduce CO2 emission intensity

Achieve net-zeroemissions

technologies and energy supply withof JAPEX operations by 40%

low environmental impact, for achieving
net zero CO2 emissions by 2050

compared to FY2019

Scope 1+2*

Scope 3

1

We will reduce GHG emission intensity*2 of JAPEX operations by 40% in fiscal 2030 compared

JAPEX’s total Scope 1, 2, and 3 GHG emissions amounted to around 7.49 million tons of CO2

to fiscal 2019*3 and achieve net zero GHG emissions from JAPEX’s operating locations by 2050.

in fiscal 2022, and Scope 3 emissions accounted for the vast majority at about 97%. Because

To achieve these targets, we have set the following measures as priority action items.

Scope 3 category 11 (use of sold products) emissions were especially high at 86% of the total,
the reduction of these emissions is an important issue for JAPEX. We aim to reduce Scope 3

Scope 1 emissions reduction measure: Consider injection of CO2 emitted from domestic oil and gas fields
Scope 2 emissions reduction measure: Gradually shift to zero-emission electricity

emissions by promoting the efforts, focused on realizing a carbon-neutral society, which are
explained on the following pages.

To steadily achieve our GHG reduction targets, we set targets for every fiscal year in the CSR
action plans and manage their progress.

P.39  CSR Action Plan

*1 Based on the GHG Protocol’s operational control approach*2 CO2 emissions (ton-CO2) per 1 terajoule (TJ) of energy supplied by JAPEX*3 FY2019 intensity: 3.97 ton-CO2/TJ

JAPEX Integrated Report 2023 14

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX2050
 Focused Efforts to Realize a Carbon-Neutral Society
1. Turn Carbon Neutral into a profitable business based on CO2 injection
and storage technology• Aim to achieve the early implementation and commercialization of CCS/CCUS asa pioneer in Japan• Strive to collaborate and enter into carbon-neutral business areas, where synergies
with CCS and CCUS can be expected(focusing on BECCS

and natural gas-fired power plants with CCS, entering intobusiness area of carbon-recycling, etc.)

2. Expand participation in renewable energy projects

JAPEX2050 Roadmap
GHG emission
reduction targets• Aim to increase renewable energy projects in which JAPEX participates while utilizing
knowledge and experience in conventional businesses

worldwide, continue to meet the demand for them

• As a comprehensive energy company, aim to achieve a carbon-neutral society

CCS/CCUS

Other areas
contributing
towardnet-zerothrough a complete shift away from oil and natural gas
Stable supplyof oil andnatural gas

Also, for our specific initiatives to be taken by 2030, please refer to the JAPEXManagement Plan 2022–2030, which is explained on the following pages.

Commercialize CCS/CCUS in Japan

Conduct location surveys and implement examinationof CCS/CCUS in deep saline aquifers* in Japan
Consider and verify carbon-recycling projects

through the use of CCS/CCUS and other decarbonization technologies, rather thanFor more details on JAPEX2050, please visit our corporate website.

Achieve net-zero emissions by 2050

Consider to implement CCS/CCUS at JAPEX’s
domestic oil and gas fields

3. Stable supply of oil and natural gas• Recognizing that oil and natural gas will remain as one of the major energy sources

Reduce Scope 1+2 emission intensity by 40%
compared to FY2019

Commercialize carbon-recycling business(on our own and/or with cooperation on supplying raw material)

Increase renewable energy sources and supply

Focus on power plants with CCS(natural gas-fired and BECCS)

Stable electricity supply from the natural gas
power plant

Enhance natural gas and LNG utilization, including carbon-neutral LNG supply
Acquire new overseas interests with focus on natural gas and including CCUS andcontinue development and production aiming to meet demand
2021

2030

2040

2050

* Deep saline acquirers represent a sandstone layer deep underground that includes ancient seawater (saltwater) which is not suitable fordrinking. Its geographical distribution is broader compared to oil and natural gas reservoirs, and CO2 storage capacity is anticipated.

JAPEX Integrated Report 2023 15

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX Management Plan 2022–2030
Based on its basic policy of “improving profitability and building a business foundation for 2030 and beyond,” JAPEX Management

Management Goals

Plan 2022–2030 (“Management Plan”) aims to achieve a reasonable profit level considering capital costs and enhance shareholder• Quantitative targets: business profit, ROE, profit composition
FY2022
results

returns by strengthening efforts in three business fields of “E&P,” “Infrastructure/Utility (I/U),” and “Carbon Neutral (CN).”

Medium-term targets Long-term targets
by FY2026
by FY2030

Business profit

Achieve a Reasonable Profit Level Considering Capital Costs and Enhance Shareholder Returns

Breakdown  E&P field I/U field

Business Foundation

Transform business structure to withstandmarket changes such as oil price volatility

Contribute to smooth transition toa carbon-neutral society in 2050

Continue to invest in acquisitionof new interests and promote
low-carbon operations

Expand the profit scale ofrenewable energy andother businesses

Launch CCS/CCUS hub and cluster modelbusiness (an advanced CCS project) utilizing
existing oil and gas fields and others

Efforts to Strengthen Business Foundation
Enhancement of humancapital management

Organizational changes

Secure and develop human resources for DX

Promote DX based on business issues* Conducted on April 1, 2022.

Measures to promote DX (Digital Transformation)¥27.0 billion-¥5.4 billion-¥6.0 billion-¥6.0 billion

ROE

16.9%

Approx. 5%

Approx.

Profit composition ratio

7-to-36-to-45-to-5102.26

50.00

50.00

132.86110.00110.00

Other*2

Assumption of crude oil priceContribute to early expansion of profit
scale and respond to low-carbonization¥24.5 billion ¥12.0 billion¥2.0 billion(E&P-to-non-E&Ps*3)

Carbon Neutral field¥27.0 billion¥1.0 billion

Exchange rate assumption (JPY/USD)

Infrastructure/
Utility field¥49.9 billion ¥23.0 billion—(JCC : USD/bbl)

E&P field¥50.0 billion

 CN field

JAPEX Management Plan 2022–2030
Basic policy: Improve profitability and build a business foundation for 2030 and beyond¥30.0 billion(Operating profit + Share of profit of entities ¥69.0 billion
accounted for using equity method*1)

8%*1 Share of profit of entities accounted for using equity method includes profits tobe distributed under limited partnership and silent partnership agreements.
*2 Other revenue(contract service and oil products sales, etc.) less head officeadministrative expenses*3 Non-E&Ps refer to I/U and CN fields.

• Carbon neutral related targets
CS/CCUS hub and cluster model business (anCadvanced CCS project) utilizing existing domestic oil
and gas fields and others		Make a meaningful progress by 2026, aiming to launch
as a model business by fiscal 2030
eduction of GHG emission intensity of JAPEX operations
Rby 40% (compared to fiscal 2019)
		Start CO2 injection pilot trial at domestic oil and gas fields
by 2026, aiming to achieve the target in fiscal 2030

Four material issues identified
in 2023
We have identified material issues that link the core CSR
themes “SHINE” and the JAPEX Management Plan
2022–2030.
P.37 JAPEX Integrated Report 2023 16

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX Management Plan 2022–2030

Priority Items and Profit Targets of Each Business Field
Based on the belief that oil and natural gas will remain important sources of energy, we will continue to play a part in the stable supply of these energy sources, while promoting low-carbon operations.
At the same time, we aim to expand business in the Infrastructure/Utility field, including renewable energy, and to launch the CCS/CCUS model business toward achieving JAPEX2050.

Field

Domestic

Overseas

Business profit target: ¥23.0 billion as of FY2026  ¥27.0 billion as of FY2030
E&P field• Conduct stable production of oil and natural gas in existing oil and• Steadily promote existing projects• Pursue additional development at existing oil and gas fields and their• Acquire new interests

gas fields

surrounding areas (including offshore exploration)• Reduce GHG emissions at oil and gas production locations
Business profit target: ¥12.0 billion as of FY2026  ¥27.0 billion as of FY2030

Infrastructure/Utility fieldGas
supply• Maintain and expand gas supply volumes

Gas power
generation• Continue stable operations of Fukushima Natural Gas
Power Plant

Gas
supplyRenewableenergy• Participate in an LNG supply infrastructure development
project• Consider possible participation in renewable energy projects• Make steady progress in ongoing development projects ofRenewableenergyrenewable energy• Participate in additional projects
Business profit target: ¥1.0 billion as of FY2026  ¥2.0 billion as of FY2030

Carbon Neutral field• L aunch CCS/CCUS hub and cluster model business
CO2
storageOther(an advanced CCS project) utilizing existing oil and gas fields
and others• E xamine CO2 storage capacity in existing oil and gas fields,
etc.

CO2
storage• Participate in CCS projects in systematically advanced areas• Participate in feasibility studies on CCS/CCUS in emerging
countries• Consider next generation energy supply infrastructure, etc.
JAPEX Integrated Report 2023 17

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX Management Plan 2022–2030

Major FY2022 Results and FY2023 Outlook on Priority Items of Each Business Field
Field

FY2022 results

Pursuit ofdomestic potentials

FY2023 outlook
Pursuit of domestic
potentials• Started additional development work of the first well of Katakai Gas
Field in Niigata (Jul)

Promotedevelopment ofoverseas project• Additional development of Katakai Gas Field: Start production of thefirst well (second half of the year)/Start drilling of the second well (after mid-2023)• Seagull Project in U.K. North Sea: Start of crude oil and natural gas
production (expected in mid-2023)• Capital participation in a subsidiary of U.K.-based Longboat Energy

E&P field
Acquisition of new
overseas interests• Decided to expand our investment for tight oil businesses in U.S.

Acquisition of new
overseas interests(May) Development and production to start up incrementally, including
acquired in January 2022

PLC to promote exploration and development businesses in offshore
blocks of Norway (May)• Acquisition of additional well interests in a tight oil development in
the U.S. (May)+ Focus on acquisition of new overseas oil and gas interests

Ongoing

Maintain and expand
gas supply volumes

Infrastructure/
Utility field

Domestic renewableenergy development,etc.
Ongoing• Considering low-carbon measures for domestic operations• Ongoing overseas development project Garraf project in Iraq: additional development to 230,000 barrels per day• Conducted an LNG Bunkering Trial at Tomakomai Port (Sep)• Signed a basic agreement regarding LNG supply to MOL Group• Started providing natural gas based ESP service for Boehringer

ferries (Jan)Maintain and expand
gas supply volumes• Commenced commercial operation of Abashiri Biomass 2nd and3rd Power Plants at Hokkaido (Oct and Mar)Invested in a venture capital fund “ANRI-GREEN No. 1” (Dec)

Carbon Neutral
field+ Focus on participation in new renewable energy projects in Japanand overseas

Biomass Power Plant in Yamaguchi (2025).

• Overseas LNG midstream and downstream business development Vietnam LNG terminal construction project with ITECO: considering final investment decision•• Commissioned by JOGMEC to conduct CCS feasibility studies inwith Idemitsu Kosan and Hokkaido Electric Power Company (Jan)Completed the feasibility study on carbon recycling business
utilizing inter-industry collaboration in the Tomakomai area with
Deloitte Tohmatsu Consulting as a NEDO*-commissioned project(Mar)

Feasibility studies of
CN business in Japanthe Tomakomai and Higashi-Niigata areas for the publicly solicited“Business Feasibility Study on Japanese Advanced CCS Project” for2023 (Jul and Aug)
+ Continue to consider participation in new CN projects in Japan and overseas

Participating in joint study of CO -EGR at Higashi-Niigata Gas Field and Niigata area CO effective utilization project, etc. with Mitsubishi Gas Chemical Company,• Feasibility studies of CN business in Japan 
2Ongoing

P.32 

•(Under construction) Ozu Biomass Power Plant in Ehime (Commercial operation scheduled to start in 2024), Tahara Biomass Power Plant in Aichi (2025), Chofu• Domestic renewable energy development • Started the feasibility study of CCUS project in Tomakomai area
Feasibility studies of
CN business in Japan

Ingelheim Seiyaku’s Yamagata Plant (Apr)(Joint implementation with YAMAGATA GAS Co., Ltd.)

2

Inc.

Indonesia Sukowati Oil Field CO -EOR with Pertamina Group and Lemigas/Malaysia CCUS with PETRONAS, etc.
• Overseas CCS/CCUS feasibility study 2* New Energy and Industrial Technology Development Organization
JAPEX Integrated Report 2023 18

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

JAPEX Management Plan 2022–2030

Fund Allocation and Return to Shareholders

Adopt a dividend payout ratio to enhance shareholder returns

We anticipate that cash inflows (CF) by fiscal 2030 will amount to a total of ¥500.0 billion,• Basic Policy

consisting of ¥380.0 billion from cash flows from operating activities and ¥120.0 billion fromcash on hand and bank loans. Out of a total of ¥500.0 billion in cash inflows, we will allocate¥450.0 billion to growth investments and ¥50.0 billion to shareholder returns. Of the growthinvestments, ¥230.0 billion will be invested in the E&P field, ¥170.0 billion in the I/U field,and ¥50.0 billion in the CN field. As for return to shareholders, we will pay dividends totaling¥50.0 billion during the period covered by the Management Plan. In fiscal 2022, we madean investment of ¥44.1 billion and return to shareholders of ¥13.8 billion.

Pay dividends in line with business results for each fiscal year with a target consolidated
dividend payout ratio of 30% starting from fiscal 2022•
Strive to maintain an annual dividend of ¥50 per share even in the event of a temporary
downturn in business performance•

Annual dividends per share (Yen)
400
29.9%

300

Allocate cash inflows of ¥500.0 billion to growth investments andshareholder returns

Fundallocation

31.9%

30%

30%

100

Breakdown of growthinvestments

30

20

200

• Outlook for fund allocation (cumulative total of 9 years up to FY2030)
Cash
inflows

Dividend payout ratio (%)
40

—%
¥50

Business profit:¥30.0 billion
ROE: 5%Business profit: 10
50.0 billion
ROE: 8%2026(Outlook)

02030 (FY)(Outlook)

0
2021*

2022
(Results)

2023(Prospects)* Pay stable dividends over long-term with basis of ¥50 per year

E&P field¥230.0 billion
Operating CF¥380.0 billion

Japan – Additional development, etc.
................................ ¥30.0 billion

Efforts to Strengthen Business Foundation

Overseas – Acquisition of new interests, etc.
.............................. ¥200.0 billion

Enhancement of human capital management P.24 Promotion of DX P.22 Growthinvestments

Domestic gas supply¥450.0 billion(including existing facilities) ... ¥40.0 billion

Cash on hand+Bank loans Shareholder returns¥120.0 billion ¥50.0 billion

I/U field¥170.0 billion

Overseas LNG supply infrastructure development................................ ¥40.0 billion
Renewable energy development in and outside Japan................................ ¥90.0 billion

CN field¥50.0 billion

CN business development in and outside Japan................................ ¥50.0 billion

Organizational changes (Conducted on April 1, 2022)• Reorganize business divisions to promote the Management Plan•

Reorganize overseas business project divisions
Reflecting on our failure to make sufficient investments in growth during the period
covered by the Previous Medium-Term Plan, we have reorganized overseas businessproject divisions into the Overseas Business Division I (discovering new overseas projects)
and the Overseas Business Division II (promoting existing overseas projects).
Strengthen company-wide support for business deal execution and management
Establish the Deal Execution/PMI Support Dept.
By centralizing corporate divisions’ expertise, we push forward with new deal execution by eachbusiness division. To raise the achievability of profit targets, we provide support throughout theprocess up to investment value realization after the establishment of a new project.

JAPEX Integrated Report 2023 19

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Message from the Officer in charge of Finance & Accounting Dept.

Investment Strategy for Accelerating
Growth and Policy on Use of CashDirector, Senior Managing Executive Officer
In charge of Finance & Accounting Dept. and
Deal Execution/PMI Support Dept.

YAMASHITA Michiro

Financial Review of Fiscal 2022
Fiscal 2022 was a year marked by instability, with ongoing political and economic turmoil

billion year on year) and ordinary profit of ¥83.1 billion (up ¥39.4 billion year on year).

due to sanctions against Russia, a substantial increase in global commodity prices, andProfit attributable to owners of parent amounted to ¥67.3 billion, an improvement of ¥98.3

significant yen depreciation driven by widening interest rate differentials with overseas

billion from the previous fiscal year, mainly due to the absence of the extraordinary losses

currencies. Crude oil prices, which soared to nearly $120 per barrel against a backdrop of

posted in the previous fiscal year from the termination of the Canadian projects.

supply concerns, fell back down to around $80 per barrel in the second half of the fiscal
year due to fears of recession in the U.S. and China.
Looking back at our consolidated operating results for fiscal 2022, net sales increased

Regarding our consolidated financial position, total assets as of March 31, 2023
amounted to ¥568.1 billion, up ¥96.2 from the end of the previous fiscal year. Of
this amount, non-current assets amounted to ¥286.3 billion (up ¥41.3 billion) due to¥87.3 billion from the previous fiscal year to ¥336.4 billion due to higher selling prices

investments in the tight oil development project in the U.S., the Seagull Project in thefor the Group’s products in response to rising energy prices. The natural gas crisis in

U.K. North Sea, and other projects. Liabilities amounted to ¥111.0 billion (up ¥41.8 billion)

Europe elevated global LNG spot prices to unprecedented levels, which in turn raised

mainly due to a temporary increase in trade payables, and net assets amounted to ¥457.1

Japan Liquefied Natural Gas Cocktail (JLC) to a high level. This contributed to our revenue

billion (up ¥54.3 billion) as a result of an increase in retained earnings for the most part.

growth, mainly due to domestic sales of natural gas and electricity, whose selling prices

In terms of shareholder returns, we paid an annual dividend of ¥370 per share based on

are linked to JLC. Meanwhile, since our gas and electricity businesses are mainly sourced

the dividend policy we introduced in fiscal 2022, which aims for maintaining a consolidated

from domestic natural gas and imported LNG based on term contracts, the impact of

payout ratio of 30% basically, and also repurchased ¥4.2 billion of our own shares.

LNG spot price hikes on our procurement costs was limited. The relative cost advantage
of using the sources at a time of soaring market prices contributed to an increase inprofits for the current fiscal year, resulting in operating profit of ¥62.0 billion (up ¥42.2

JAPEX Integrated Report 2023 20

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Message from the Officer in charge of Finance & Accounting Dept.

Investment Results for Fiscal 2022
In fiscal 2022, the first year of the new Management Plan, we aggressively invested in boththe E&P and non-E&P fields to achieve the profit targets set forth in the Management Plan.
In the E&P field, we invested ¥24.6 billion in the development of the U.S. tight oil wellinterests acquired in January and May 2022, ¥6.3 billion in the development of oil and gas fields
in the Seagull Project in the U.K. North Sea, and ¥6.2 billion in the additional development of the
Katakai Gas Field in Niigata Prefecture. The tight oil development project in the U.S. has alreadystarted producing crude oil and natural gas and contributing to earnings in the current fiscal year,
and both the Seagull Project in the U.K. North Sea and the additional development of the Katakai
Gas Field are expected to start production in fiscal 2023.
In the non-E&P field, we invested ¥1.8 billion in renewable energy related business,
primarily in biomass power generation projects in Japan. Of the biomass power generation
projects, the Abashiri Biomass 2nd and 3rd Power Plants have both started commercial
operation during the period of fiscal 2022, and the remaining three plants in Ozu, Chofu,
and Tahara are scheduled to start operation sequentially between fiscal 2024 and fiscal
2025. Overseas, we invested for the final investment decision (FID ) of an LNG terminal
operation project in northern Vietnam, which we decided to enter into in December 2021.

Investment Plan for Fiscal 2023 and Beyond

In the I/U field, we will steadily proceed with the biomass power generation projects inJapan and the LNG terminal project overseas, which are currently underway, and continue
our efforts in Japan and overseas to acquire further projects.
In the CN field, two domestic CCS joint projects in which we are participating havebeen officially selected by JOGMEC for its 2023 “Business Feasibility Studies on JapaneseAdvanced CCS Projects,” and we will work to realize these projects in these regions by2030. Overseas, we will aim for early profit and knowledge acquisition in countries likethe U.K. and the U.S., which are ahead of Japan in the design and operation of the CCUS
system, and continue efforts toward future commercialization in Indonesia, Malaysia, andother countries with high storage potential.

Toward Enhancing Corporate Value
We recognize that our most important management issue is to achieve sustainable growthof the JAPEX Group and increase its corporate value through appropriate allocation ofmanagement resources.
Under this context, we understand that we should respond to the Tokyo Stock
Exchange’s call for “Action to Implement Management that is Conscious of Cost of Capitaland Stock Price,” or the so-called PBR problem, from the perspective of both the ROE issue
of increasing the equity spread and the PER issue of gaining the market’s trust in profit
sustainability. Meanwhile, we decided to terminate our two projects at Canada in 2021,

In the E&P field, we will continue our efforts to acquire projects mainly in North America andthe North Sea area. In North America, in addition to the acquisition of well interests in the firsthalf of 2022 (total investment of US$500 million), we already decided to acquire additional
interests (US$300 million) in May 2023, and profit levels for about the next three years can be
expected with a high degree of certainty. Our immediate task is to increase the sustainability ofprofits by further expanding our asset base.
Likewise, in the overseas E&P field, we made a decision in May 2023 to take a sharein an independent E&P company engaged in exploration and development projects in
Offshore Norway, and we made a commitment to invest up to US$150 million in thecompany. The new joint venture, in which we hold a 49.9% share, has been making
decisions in rapid succession to build up its business portfolio in the area, including thedecision to acquire production asset interests in July and start exploratory drilling in apromising exploration area in August.

which resulted in significant impairment of our business assets. The new Management
Plan announced in March 2022 set forth guidelines for fund allocation through fiscal 2030
to repair the balance sheet and build a solid business portfolio that can withstand futurechanges in the business environment.
At present, the business portfolio envisioned in the Management Plan is only partiallycomplete, so the ratio of cash and deposits (¥177.2 billion) to total assets (¥556.2 billion) at theend of the first quarter of fiscal 2023 remained high at 31.8%. By directing this liquidity on hand
and the cash flow generated from future business activities toward high-quality business assets,
we can raise profit levels and gain sustained trust to improve ROE and PER, respectively. Thisway, we will fulfill the commitments outlined in the Management Plan.

JAPEX Integrated Report 2023 21

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Digital Transformation (DX) Message from the Officer in charge of Corporate Strategy Dept.

Surviving the Transition Period

Director, Managing Executive Officer
In charge of Corporate Communication Office,Corporate Strategy Dept., and Information Technology Dept.

NAKAJIMA ToshiakiStrengthening of the Business Foundations with Digital Transformation
In 2021, we announced JAPEX2050, which outlines the responsibilities and challenges wePlan, we aim to be a “DX-Ready” corporate group, prepared to digitally transform our business.

need to address in order to achieve net-zero CO2 emissions by 2050. Following this, in 2022,

To achieve this, we are working to build an integrated database that consolidates key internal

we developed JAPEX Management Plan 2022–2030 (the “Management Plan”) for realizing

information and data. Additionally, we have also introduced an advanced digital human resource

this vision.

development program and digital workplace tools in order to promote sharing closed information

Furthermore, in 2023, we have identified four key material issues for implement ing theacross the company. Beyond being DX-Ready, we aim to leverage our digital assets toManagement Plan. Among these, we have singled out two elements as particularly important

accomplish ”Stable Energy Supply” and “Establishment of Carbon Neutral (CN) Business” suchfor strengthening our business foundations: “Digital Transformation (DX)” and “Promotion

as making our existing business smarter, creating new digital business opportunities.

of Human Resource (HR) Development and Diversity.” We believe that these material issues
contain eleme nts that are interrelated in the context of corporate transformation.
P.37 

Materiality for JAPEX

Whilst, the Corporate Strategy Dept. is responsible for digital strategy as of the beginningof 2023, once we transition to the system development phase, close collaboration with theInformation Technology Dept., a team of IT specialists, will be indispensable. As the officer
responsible for both departments, my primary role is to manage the organization in a way that

Digital Transformation

advances digital transformation without disrupting the operation of existing systems, as well as
to secure appropriate budgets, and to bridge between operational staff and the management
team. DX momentum is rapidly gaining ground, and we further accelerate this progress going

Establishing an optimal digital infrastructure to efficiently connect the entire company has been

forward.

a long-standing challenge for us.
Beginning in fiscal 2022, we initiated Business Process Reengineering (BPR) with a view
to improving operational efficiency, aggregating our informational assets, as well as exploringnew digital business opportunities. By the mid-2020s, the halfway point of the Management

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JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Digital Transformation: Major Initiatives

Toward the Realization of Data-Driven Management Enhancing Reservoir Simulation Models
Since most part of reservoir data is not available, particularly
for large reservoirs, it is essential to build numerical models(reservoir simulations) from limited subsurface information
to replicate and predict fluid behavior for the evaluation of oil
and gas field reserves and the formulation of development
plans. However, there exists considerable uncertainty in a vast
number of parameters and an infinite number of combinations.
Traditionally, predictions were made through the experienceand intuition of engineers, coupled with lengthy trial and error.
However, we are now advancing efforts to complete theprocess in a shorter time frame through the use of machinelearning. As a result, this has made it possible to quickly
formulate development plans and make decisions on acquiring
interests, etc.
 Building an Integrated Database
We aim to construct an integrated database by the mid-2020s
that can output management and operational data on demand.
Currently, we are working on streamlining business processes

Roadmap(1) Create reservoir models withvarious combinations of parameters2022

and calculate production rates, etc.

AI

Reservoir Models

Identifying surplus
resources

Advanced digital training

Repeat steps (1) and (2)to efficiently create moreaccurate reservoir models.

(2) The AI learns the discrepancy
between production
performance and the resultsof simulation calculations,and proposes a combinationof parameters that are moreconsistent with production
performance

Introducing a digital
workplaceand conceptualizing the system architecture.

 Introducing a Digital Workplace
We have implemented a digital workplace in anticipation of
fostering emergent communication across the company,
whereby information that may have historically been siloed

Ensuring widespread
adoption

Creating new
business in thedigital domain
Smarttransformationof existing
business

Increasing
digital talent

Fostering a culture of
information sharing

within individual departments is widely shared. We areconsidering various measures aimed at cultivating a cultureof information sharing, such as the formation of internal
communities and the placement of technological evangelists
throughout the company.

 Implementing Digital Talent Training

remote operational support services in our energy service business. These services would combine our operational expertise with digital technology.
By utilizing 3D equipment scanning technologies such as drones and Internet of Things (IoT) technologies like beacons, we aim to recreate the physicallocation of customer equipment and workers on-site in a digital space. This will enable us to conduct operation monitoring and training simulations from Japan.
Cyber Space

3D data equipment(static data)

Digitalization
Digital Integration

Real-time location
tracking of people
and vehicles
inside facilities
using IoT

Streamlining operations

Company-wide digital literacy training

In conjunction with the Northern Vietnam Liquefied Natural Gas (LNG) Terminal Project that we entered into in January 2022, we are considering offering

3D scanning oftarget equipment

Accumulating
informational assets

Analyzing the status quo

Remote Operational Support Utilizing Digital Technology

Physical Space

2026
Building an integrated
database

Location information(dynamic data)*JAPEX Conducts Feasibility Study of Energy Service Utilizing LNG to the Industrial Park in Northern Vietnam https://www.japex.co.jp/en/news/detail/20230810_02/

With a view to nurturing approximately 10% of all our employees
to have advanced digital literacy by the mid-2020s, we haveintroduced an educational program consisting of foundational
learning and hands-on training using our company data.
We aim to cultivate two types of talent: Business Architects
who plan and promote digital transformation projects bycombining business with digital technologies, and Data
Scientists with advanced skills in data collection and analysis.
Additionally, in order to transform all of our employees
into digital talent, we have implemented e-learning and areencouraging the acquisition of certifications such as “IT
Passport,” “Data Scientist Certification,” and “Deep Learning
for General” to enhance IT literacy.

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JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Human Resources Strategy Message from the Officer in charge of Human Resources Dept.

Strengthening Human Capital Management
to Achieve Business Transformation
Executive Officer
In charge of Internal Control, Administration & Legal Dept.,and Human Resources Dept.

FUNATSU Jiro

Forming a Diverse and Highly Engaged Talent Pool to Achieve Transformation
JAPEX Management Plan 2022–2030

Impact (strengthening human capital management)

Developing humanresources for new
business fields P.25 
Leveraging diverse talent
with a focus on improving
engagement
P.59 

An environment that
respects diversity
Creating an

P.59 

environment that
supports personaltransformation for adiverse range ofindividuals

Health management
P.60 

Good working environmentP.60 

A human resources system that encourages andrewards taking on challenges aimed at transformation

OutputForming a diverse
変革をand highly engaged
実現するtalent pool to 人材集団
achievetransformation

An organizational culture that encourages taking on transformational challenges

needed to achievebusiness strategies

Securing and assigning humanresources in consideration ofbusiness expansion P.25 

Establishing an information infrastructure to support transformation

Initiatives tosecure the talent

Human resources portfolio planning

While we have primarily focused on the E&P business, we are now aiming to grow into acomprehensive energy company in light of rapid changes in the business environment and thetrend toward decarbonization. We are actively working on expanding the infrastructure/utility
business, including renewable energy, as well as establishing the carbon-neutral business. To
achieve this transformation and improve our sustainable corporate value, we are focusing on“strengthening human capital management” and investing in our people.
Our goal is to cultivate a corporate culture where diverse individuals are flexible in adapting tochange, boldly take on challenges, and mutually encourage each other to drive transformation. To
achieve this in today’s rapidly changing environment, in which we have an aging population andgrowing job mobility while making maximum use of current human resources, it is importantto build a relationship whereby employees proactively pursue sustainable growth through selfimprovement, while the company provides appropriate opportunities and rewards for them.
To foster a culture in which employees are motivated and highly engaged in bringing abouttransformation, we are specifically focusing on the following measures. Firstly, to secure thetalent needed to achieve our business strategy, we will adopt diversity-focused hiring practices,support proactive career development and the nurturing of talent, as well as construct a talent
portfolio, while ensuring that the right people are placed in the right place. Additionally, to secure
diversity of talent for driving innovation, we will work on creating an internal environment thatvalues both work-style reform and the health and productivity management, focusing on open
and constructive discussions as well as attention to health. Furthermore, we will review ourhuman resources system, which can often favor seniority, to ensure that talent who take on thechallenges of transformation and improvement are rewarded appropriately.
Through these initiatives, we will pursue the creation of a workplace of choice both internallyand externally, thereby contributing to the realization of a carbon-neutral society and the stablesupply of energy.

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Human Resources Strategy: Major Initiatives

Initiatives to Increase Employee Engagement and Secure the Talent Needed to Achieve Business Strategies
Securing and assigning human resources in consideration

Resources Development Policy” and “Internal Environment

have also established a framework that leverages our talentof business expansion

Development Policy,” whereby both the Company and our

1 ).
management system to support career development (We are engaged in the strategic and methodical recruitment

employees fulfill their respective responsibilities, aiming

and placement of talent, identifying the quality and quantity offor mutual growth as a comprehensive energy company.

2 ), we arewith an eye toward future business expansion (personnel needed to achieve the Management Plan.

Additionally, for employees to continue to excel and adapt

enhancing various programs aimed at supporting employees’

In addition, under our policy of actively investing in talent

to rapid changes in the business, it is crucial for them to3 ).
career development through reskilling and upskilling ( Recruitment

proactively think about their careers and continuously

Furthermore, through our selective next-generation

We will continue to ensure diversity of talent within ourcultivate their expertise and strengths through ongoing self-

management personnel development program, we areworkforce. We are committed to recruiting new graduates withimprovement. To help employees think about their own careers,

committed to the systematic development of leaders who willhigh potential for growth and success within the Company,

we have identified three different types of career path. We

undertake and drive forward future business initiatives.

with a view to enhancing corporate value in the medium tolong term. At the same time, we will undertake mid-career
recruitment of immediate contributors who can support futurebusiness expansion. In fiscal 2023, we have also initiatedrole-specific recruitment for new graduates, aiming to secure
specialized talent in view of our business expansion. This allows
individuals to deepen their expertise according to their own
career aspirations. Furthermore, to invigorate the organizationand secure immediate contributors, we are strengthening our“alumni recruitment” program, which rehires individuals who
have previously left the Company for personal reasons or othercircumstances.

 Placement of Talent
As a fundamental principle, we promote the right person
for the right job while respecting the career aspirations of
our employees. Additionally, we provide ample informationand guidance to reassigned employees regarding their new

Various human resource development initiatives
1 Supporting career development


2 Expanding investment in talentpositions, taking care to ensure that the individuals cansmoothly and enthusiastically engage in their new roles.
Developing human resources for new business fields
To address changes in business structure and new business3 Reskilling and upskilling

We are committed to various initiatives that support employees inshaping their careers, enabling them to achieve self-fulfillment throughproactive career development.
 Publishing the career development guidelines, which serve as a guidefor individual career advancement Twice-yearly career development meetings with supervisors to confirm
career goals and take stock of the experience and skills needed toachieve them
 Recommending one-to-one meetings between supervisors and theirdirect reports
 Establishing a career consultation desk staffed by internal career
consultants
 Internal sharing of employees’ careers, job responsibilities, work
experience, and skills through the utilization of the talent management
system
 Implementing career design training tailored to each generation(Thousands of yen)
FY2021

Training expenses per employee

69

FY2022107

 JAPEX University
To achieve the Management Plan, we believe that self-growth throughproactive and autonomous learning by our employees is essential. With
this in mind, we have launched “JAPEX University,” which primarily
features video content delivered by in-house instructors. To facilitate
effective learning tailored to individual interests and career aspirations,
we leverage our talent management system by systematicallyproviding content related to reskilling in new business areas like digitaltransformation, as well as upskilling in existing business areas like E&P
and business skills.
 Other initiatives
As part of our efforts to develop DX talent, we are offering digital literacy
training through e-learning and providing subsidies for fees paid to obtain
IT-related certifications.
Additionally, we are implementing programs that systematically teachadvanced business skills in areas such as accounting, taxation, finance,and legal affairs. These programs aim to develop talent that will drive theexpansion of business areas toward achieving the Management Plan.
In addition to this, our Specialists and Senior Specialists provide“introductory courses by specialists,” covering basic knowledge and skillsin their respective fields, which are offered to all our employees. We also
provide various upskilling opportunities in line with employees’ desires
for learning and career aspirations, such as external MBA and doctoral
programs within Japan through open recruitment.

creation, we have outlined our approach in our “Human

JAPEX Integrated Report 2023 25

Value Creation
ThroughBusiness

INDEX
E&P Field.......................................................................................... 27
Infrastructure/Utility Field............................................................... 30
Carbon Neutral Field....................................................................... 33

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JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

E&P Field
Strengths
Status of blocks, leases, and projects in which the JAPEX Group participates	Comprehensive technical capabilities of theGroup that fully cover the entire E&P field	Relationships of trust with stakeholders, including
clients, local communities, and oil-producing countries

NorwayOffshore blocks of Norway
UK
North Sea  (under consideration for exploration/development)

Russia

Seagull Project(under development for crude oil and natural gas production)

 Garraf Project
Iraq(producing crude oil/under
additional development)

JAPEX’s Direction Toward JAPEX2050

 Sakhalin-1 Project

UnitedStates Tight Oil ProjectJapan(producing crude oil and natural gas)

Stable supply of oil and natural gas
	Interest acquisition and development
	Promotion of natural gas use	Promotion of low-carbon operations
JAPEX Management Plan 2022–2030

Indonesia

Profit targets and priority items Kangean
Project(producing natural gas)

Domestic oil and gas fields(producing crude oil and natural gas/
under additional development) Yufutsu Oil and Gas Field• Business profit target: ¥23.0 billion as of FY2026
 ¥27.0 billion as of FY2030• Business profit results: ¥49.9 billion as of FY2022• Priority items

Domestic: Conduct stable production of oil and natural gas
in existing oil and gas fields, pursue additional
development at existing oil and gas fields
and their surrounding areas, and reduce GHG
emissions at oil and gas production locations
Overseas: Steadily promote existing projects and acquire
new interests
Current state

Sarukawa Oil Field  Ayukawa Oil and Gas Field Yurihara Oil and Gas Field
 Amarume Oil Field

Iwafune-oki Oil and Gas Field Higashi-Niigata Gas Field  Shiunji Gas Field
Yoshii Gas Field   Katakai Gas Field

Net Production Volume and Net Proved Reserves
Net production volume (FY2022 results)
Total

28.4 thousand boe/d(Breakdown)

Japan

Total

137 million boe(Breakdown)

13.0 thousand boe/d

15.4 thousand boe/d
Crude oil
14.3 thousand boe/dNatural gas 14.1 thousand boe/dOverseas

Net proved reserves (as of March 31, 2023)

Japan

52 million boe

Overseas

85 million boe
89 million boe
48 million boe

Crude oil
Natural gas

Units boe/d: barrels of oil equivalent per day
boe: barrels of oil equivalent

JAPEX Integrated Report 2023 27

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

E&P Field
JAPEX will continue to contribute to early expansion of profit scale and reduce GHG emissions in our operations. We will
also seek to diversify business risks by continuously acquiring assets of a certain size and holding various types of assets.
Risks

Opportunities

	Decrease in demand and volatility in sales prices of oil	Pursuit of remaining production potential in oil andand natural gas due to the progress of decarbonization
	Increasing difficulties in acquisition of interests
	Rise in exploration and development costs as well ascarbon tax and other environmental response costs

gas fields in Japan	Acquisition of new projects in key overseas regions
Drilling work site at Katakai Gas Field in Niigata Prefecture

FY2022 Activity ResultsJapan	Adopted as an operator of the “Joint Study for Acid

Stimulation in Onnagawa Tight Oil Formation,” a publicly
solicited project by the Japan Organization for Metals
and Energy Security (JOGMEC) in April
	Began drilling for the additional development work of
Katakai Gas Field in Niigata in July
Overseas	Acquired additional interest in a tight oil development
project in the United States in May

In Japan, one of the largest drilling rigs in Japan owned by a

Net Sales and Operating Profit of the E&P Business

JAPEX Group company was put into operation to drill at great

Net Sales (Billions of yen)

depths for additional development of the Katakai Gas Field in

100.0

Niigata Prefecture. The production of natural gas will begin in the

80.0

latter half of 2023.

60.0

Operating profit (Billions of yen)
50.0

73.4
56.0

30.0

Overseas, we newly acquired part of well interests in a tight oil

40.0

20.0

development project in the Eagle Ford Formation in southern Texas

20.0

10.0

and the Woodford Formation in southern Oklahoma of the United0

States. Together with the interests already acquired in January2022, development work is progressing smoothly, and we havestarted production in phases.

2021

43.1

40.0

2022

Factors for Change
Decrease in sales volume due toending our participation in two
projects in Canada

(FY)

0

22.8

2021

2022

(FY)

Factors for Change
Upward swing in sales balance due
to rising crude oil and natural gas
prices△23

Issues to be Addressed and Policy on Initiatives to be Taken Going Forward Pursuit of Remaining Production Potential in Oil and Gas Fields in Japan

to contribute to carbon-neutrality through re-injection of associatedprojects. We expect to invest ¥200.0 billion by FY2030 for overseas

With the aim of supplementing our reserves and increasing production

CO2 generated from our oil and gas production and by launching CCS/

E&P.

volume in Japan, we will conduct additional development at existing

CCUS projects that utilize oil and gas fields.

oil and gas fields and their surrounding areas (including offshore Acquisition of New Projects in Key Overseas Regions

payback periods that can be expected to contribute to earnings

exploration). We expect to invest ¥30.0 billion by FY2030 in domestic

For overseas E&P, we will steadily promote projects that are currently

quickly. Over the medium to long term, we aim to ensure a stable

oil and gas fields.

In the short term, we will seek to acquire projects with shortin production or under development and pursue opportunities toenergy supply with a low environmental burden, with an eye toward

In addition to maintaining domestic production volume through theacquire and invest in new mining interests, mainly in North America

introducing CCS/CCUS to projects we participate in, as well as

additional development of existing oil and gas fields, we will also strive

and the North Sea, where we have already participated in some otherpreferentially considering the acquisition of new natural gas projects.
JAPEX Integrated Report 2023 28

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

E&P Field
JAPEX’s Comprehensive Technical Capabilities across the Entire E&P Business
Since JAPEX’s founding in 1955 as a specialized upstream oil and gas company, we have focused on oil and gas E&P. To transport and supply the oil and gas JAPEX has produced or procured, we havealso built up our own supply network in Japan. JAPEX’s strength lies in the Group’s ability to handle the entire E&P process of exploration, development, and production.

 Flow of Oil and Gas E&P Business

Exploration

Development

 Surface geological surveys: In areas targeted for exploration and Front End Engineering Design (FEED): Development plans including

their surrounding regions, we conduct surveys of their geologic structure,
strata, petrophysical properties, and geochemical characteristics.
 Geophysical exploration: We assess the geologic structure througha seismic survey using electromagnetic waves and artificial vibrations
underground.
 Drilling of exploration wells: Based on analyses of the geophysicalexploration and surface survey, we drill test wells at promising sites toconfirm the presence of oil and gas.
 Evaluation: If the test drilling is successful, to confirm the spread of
the oil and gas and the scale of the reserves, we drill exploratory andevaluation wells to conduct more detailed evaluations of the reserves.

drilling plans, production plans, and facility plans are formulated.
 Drilling of production wells: Production wells are drilled inaccordance with production plans.
 Construction of facilities: Facilities are constructed for processing,storing, and transporting oil and natural gas.

JAPEX’s Main Advanced E&P Technologies

Geologic Modeling Technology

Geomechanics

We create geologic models based on data gathered from exploration andother various surveys. We use such data as geologic structures, reservoir
rock characteristics, and oil and gas distribution to create three-dimensionalmodels on computers, estimate underground situations, and evaluate oiland gas reserves. In addition, we are now able to create more sophisticatedgeologic models by employing recent geostatistical methods. In part by
drilling wells, we gain underground data and create more detailed geologic
models, which are used to determine sites for drilling new production wells
as well as former wellheads.

Geomechanics is a discipline to predict and control mechanicaldeformation and failure of underground rock. We collect various data
during drilling and injection operations to evaluate the mechanical stateof underground rock and its changes over time based on geomechanics
and thereby ensure safe and efficient oil and gas development.

Reservoir Simulation Technology
The movement of oil and natural gas underground is visualized by simulations
based on geological models to create future predictions. By carefully
analyzing the best recovery methods for reservoirs, the technology formulates
efficient and effective development plans.

Well Production Technology

Production
 Production operations: Oil and natural gas produced fromproduction wells are processed at the plant, transported, and sold.
): We apply this to production wells
where production efficiency has declined with the age since the startof production.

 Enhanced Oil Recovery (EOR

 Additional development at the Katakai Gas Field in Niigata Prefecture
At the Katakai Gas Field, drilling operations are targeted at
depths of over 5,000 meters below the surface using the latest
evaluation techniques. We are carefully drilling using a 60-metertall drilling rig, the largest in Japan, and various materials andequipment that can withstand high pressure, high temperatures,and high hardness. This will allow us to identify the sites where
there is still a lot of gas remaining after this additional development,
and we plan to begin production in the latter half of 2023. We alsoplan to drill the second well after the middle of 2023.

This technology covers the phases from drilling wells to production in
the production engineering (PE) field, which aims to improve production
from each well for efficient oil and gas recovery.
JAPEX is currently applying the following PE mainly to thedevelopment and production of domestic oil and gas fields.
 Artificial lift: Producing crude oil using pumps and other machinery Well stimulation: Acidizing and fracturing
 Sand control: Application of gravel packs, etc.

The operation and additional development of domestic oil and gas fields are the source of solid cash flows. We aim to further grow the E&P field by expanding our technical capabilities
and experience in exploration, development, and production overseas based on our comprehensive technical capabilities cultivated over many years as the foundation of JAPEX.
* Please visit the following link to see the detailed information on other technologies.  https://www.japex.co.jp/en/technology/
JAPEX Integrated Report 2023 29

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Infrastructure/Utility Field
Strengths
Main Facilities Comprising the Energy Supply Chain• JAPEX’s own domestic natural gas supply chain connecting

Domestic Natural Gas Supply Network••High-pressure gas pipeline
 Total length of around 800 km•LNG terminals

Abashiri Biomass 2nd and 3rd Power Plants

 Soma LNG Terminal* Yufutsu LNG Receiving Terminal
 Niigata Terminal*, Nihonkai LNG Co., Ltd.
 Hokkaido Gas Co., Ltd. Ishikari LNG Base*

LNG received from overseas

JAPEX’s Direction Toward JAPEX2050

Hokkaido Gas Co., Ltd. Ishikari LNG Base
Kitahiroshima* Capable of receiving ocean-going vessels

ChitosePower Generation Facility Capacity

Tomakomai•Natural gas-fired power plant Total 1,180,000 kW
 Fukushima Natural Gas Power Plant (JAPEX’s stake: 33%)
Total output 1,180,000 kW

Solar power plants
Yufutsu LNG Receiving Terminal

Coastal vessel

Coastal vessel JAPEX Hokkaido District Office mega solar project (JAPEX’s stake: 100%)
Total output 1,800 kW Yufutsu Solar Power Plant (JAPEX’s stake: 20%)
Soma-Iwanuma Gas Pipeline
Yamagata Natural Gas Pipeline* Owned by associate TOHOKU NATURAL GAS Co., Inc.
Total output 13,000 kW•Biomass power plants Total 194,750 kW

Iwanuma Sendai Abashiri Biomass 2nd and 3rd Power Plants (JAPEX’s stake: 33.8%)
Yamagata
Soma LNG Terminal
Soma
Total output 19,800 kW
LNG received from overseas
Shiroishi
LNG received from overseas Tahara Biomass Power Plant (JAPEX’s stake: 39.9%)
Fukushima
Niigata
Terminal,
Nihonkai
LNG
Co.,
Ltd.
Fukushima Natural Gas Power Plant
Total output 50,000 kW
Koriyama Ozu Biomass Power Plant (JAPEX’s stake: 35%)
UonumaTotal output 50,000 kW
Niigata-Sendai Gas Pipeline Shiroishi-Koriyama Gas Pipeline Chofu Biomass Power Plant (JAPEX’s stake: 39.9%)
Total output 74,950 kW* Based on data on each power plant as of March 31, 2023

Ozu Biomass Power Plant(under construction)

Tahara Biomass Power Plant(under construction)

Promotion of natural gas and LNG use
Switching from other fossil fuels
Meeting diverse demand for LNG
Expand participation in renewable energy projects••

JAPEX Management Plan 2022–2030•Solar power plants Total 14,800 kW

Chofu Biomass Power Plant(under construction)•

gas fields in production and LNG terminals through a highpressure gas pipeline network
An infrastructure and operational framework that strives
to reduce risks related to major accidental and disastercaused damages
Domestic gas fields with underground storage capacity incase of supply-demand adjustments and emergencies

Profit targets and priority items• Business profit target: ¥12.0 billion as of FY2026
 ¥27.0 billion as of FY2030• Business profit results: ¥24.5 billion as of FY2022• Priority items

Domestic: Maintain and expand gas supply volumes,
continue stable operations of Fukushima
Natural Gas Power Plant,
make steady progress in ongoingdevelopment projects of renewable energy,
and participate in additional projects
Overseas: Participate in an LNG supply infrastructuredevelopment project and consider possible
participation in renewable energy projects
Current state

FY2022 results
Domestic natural gas and
LNG sales volume:

1.08 million tons

Electricity sales volume:

3.0 billion kWh
JAPEX Integrated Report 2023 30

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Infrastructure/Utility Field
In order to transform business structure to withstand market changes such as oil price volatility, we will work to diversify
our gas supply by switching fuels, add new renewable energy development projects, and discover LNG supply infrastructuredevelopment projects overseas.
Risks	Decreasing energy demand due to the declining

population in Japan and subsequent decreases insales volumes of natural gas and electricity
	Intensifying competition in the Japanese market due
to the liberalization of electricity and gas businesses

Opportunities

	Expanding sales of natural gas by switching fuels(introducing natural gas with the aim of GHG
emission reduction for industrial clients)
	Expanding the scope of services through contract
businesses that utilize existing infrastructure andsupply of energy with a low environmental impact

Abashiri Biomass 3rd Power Plant in Hokkaido

FY2022 Activity Results
Domestic Gas Supply
 Conducted an LNG bunkering trial at Tomakomai Port in
September Conducted third-party verification to enhance the reliabilityof carbon-neutral LNG sales and operations in September Signed a basic agreement to supply LNG fuel to two
new LNG-fueled ferries on the Oarai-Tomakomai route inJanuary

Renewable Energy
 Signed a green loan financing agreement for the Abashiri
Biomass 2nd and 3rd Power Plants Project in June
 Began construction of Chofu Biomass Power Plant in July
 Commenced commercial operation of Abashiri Biomass
2nd Power Plant in October Commenced commercial operation of Abashiri Biomass
3rd Power Plant in MarchNet Sales and Operating Profit of the Infrastructure/Utility Business
Operating profit (Billions of yen)

Net Sales (Billions of yen)
250

30.0

213.6

150

24.6

25.0

200

20.0

119.8

15.0

100

10.0

50

5.0

0

0

2021

2022

(FY)

Factors for Change
Higher domestic gas, LNG, andelectricity sales prices due to higher
JLC

3.5
2022

2021

(FY)

Factors for Change
Increase in gain on LNG procurement

Issues to be Addressed and Policy on Initiatives to be Taken Going Forward Expanding Sales of Natural Gas by Switching Fuels

 Carbon-neutral LNG Initiatives

Leveraging our expertise and experience in the domestic natural

Carbon-neutral LNG is an initiative to reduce emissions of Expanding the Supply of Energy with a Low Environmental Impact
Development of Renewable Energy Striving to expand thegas supply chain, we aim to increase the sales volume of gas

greenhouse gases generated in the process from extraction

supply of electricity with a low environment impact, we aim toby focusing on cultivating demand, such as by diversifying

to combustion of natural gas to zero by offsetting them withsteadily promote projects currently in progress and add new

supply methods for LNG and promoting the switch of fuels

credits from forest conservation and afforestation projects. For

projects, especially those for biomass power and offshore windfrom coal and fuel oil to natural gas. In addition, we will realize

projects, CO2 emission reductions and absorption are certified

power generation. As for biomass power generation, we will

a competitive energy supply by combining long-term and spot

and credited by a reliable inspection agency.

work to study feasibility and acquire new projects and continue

contracts for LNG and continue working to procure and supply

considering biomass power that realizes negative emissions

carbon-neutral LNG in order to meet client needs.

by combining with CCS/CCUS (as called BECCS).
JAPEX Integrated Report 2023 31

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Infrastructure/Utility Field
JAPEX’s Initiatives to Realize a Stable Energy Supply
With its mission to contribute to society through a stable supply of energy, JAPEX is working to assure the redundancy and earthquake-resistance of its facilities and upgrading its emergencyresponse systems to steadily provide clients with energy even amid crises. Going forward, we will continue to ensure a stable energy supply based on the Company’s strengths of a diverse gas
supply network and a resilient infrastructure and operation system, which we have built up with the technical capabilities and know-how cultivated through our many years of domestic operations.

Initiatives to Ensure a Secure, Safe, and Stable Energy Supply Ensuring Our Stability amid Demand Fluctuations Emergency Response System Safety Assurance Systems

and Crises
We supply gas through the pipeline from multiple sources,
including oil and gas fields located in the Sea of Japan;
the Niigata Terminal of Nihonkai LNG Co., Ltd., which weparticipate in; and our Soma LNG Terminal situated on the
Pacific coast. By utilizing these sources in a well-balanced
way, we enable flexible response to demand volatility andensure a supply system resilient to disasters, equipment
malfunctions, and other adverse events. In addition, at
our Shiunji Gas Field (Shibata City, Niigata Prefecture),
we bring in natural gas produced at other oil and gas
fields through the pipeline network and inject and store it
underground. This stored natural gas contributes to stablegas supply by being available for utilization during crises
and to respond to demand volatility.

We use a remote monitoring and control system toconduct 24-hour, 365-day monitoring that maintains theproper conditions and safety of the Company’s pipeline
network, supply-related equipment, LNG terminals,
and other facilities. In emergencies, we can shut off
gas remotely. In addition, we have installed emergency
shutoff valves to shut off gas remotely from a monitoring
center when there is an abnormality in major valve
stations or clients’ receiving facilities. At key locations
along the pipelines, we install vent towers to safely ventgas within the pipeline as necessary. In these and otherways, we have prepared our facilities to be able to safely
respond to unusual events.

To constantly assure safety, JAPEX’s patrol personnel
pay careful attention to daily pipeline patrols, safety
inspections of peripheral facilities, inspections for gas
leaks, the installation of safety signage and roadsidesigns, among other measures. We ensure that
immediate precautions are taken in necessary areas
when a disaster occurs, such as torrential rain, heavy
snow, and earthquakes. After assuring the safety at thesite, we promptly assess whether there is any damage
to facilities by conducting patrols along the pipeline andwork to restore services.
In addition, when construction work is conductedin areas surrounding pipelines, we work to prevent
accidents by visiting the construction sites to avoid
injuries caused by insufficient precautions.

 Provision of Natural Gas Based Energy Service to Boehringer Ingelheim Seiyaku Yamagata Plant
Kirsche Energy Service LLC. (KES), a special purpose company invested by JAPEX and YAMAGATA GAS Co., Ltd. started
providing the natural gas based energy service to Boehringer Ingelheim Seiyaku Co., Ltd. (BIS) Yamagata Plant on April 1,
2023, under the Energy Service Provider (ESP) contract.
KES has constructed an energy center fueled by LNG to provide the first ESP service using natural gas based cogeneration system in Yamagata Prefecture. Under this service, KES will not only provide electricity, steam, and cold water
but also procure LNG and operate the facilities. BIS Yamagata Plant will receive a comprehensive energy supply meeting theneeds of the plant, just paying a fee contracted with KES. KES, JAPEX, and YAMAGATA GAS Co., Ltd. will continue to provide
energy services with lower environmental impact.
Yamagata Prefecture ESP service energy center for BIS

We remain committed to a stable supply and promotion of utilization of natural gas based on our resilient domestic infrastructure, including pipelines and the Soma LNG Terminal,
and by procurement of domestic natural gas and overseas LNG.
Moreover, we seek for further growth of our power business by expanding the renewable energy business, while ensuring the stable operation of the Fukushima Natural Gas Power Plant.
JAPEX Integrated Report 2023 32

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Carbon Neutral Field
Toward a Carbon-Neutral Society

JAPEX will contribute to realizing a carbon-neutral
society based on its knowledge and experience gained
from many years in the oil development business.
	Comprehensive technical capabilities cultivatedin the E&P business	Establishing CO2 infrastructure using experiencein the transportation and supply of natural gas
and LNGJAPEX’s Direction Toward JAPEX2050

Recognizing that oil and natural gas will continue tobe major sources of energy in the future, JAPEX aims
to achieve both a stable supply of these resources
and the realization of a carbon-neutral society.
	CCS/CCUS
Practical application andcommercialization of CCS/CCUS	Renewable energy
Zero-emission electricity
Negative-emission electricity	Next-generation energy supply

CO2 separationand capture

JAPEX Management Plan 2022–2030
Profit targets and priority items• Business profit target: ¥1.0 billion as of FY2026
 ¥2.0 billion as of FY2030• Priority items
Domestic: Launch CCS/CCUS hub and clustermodel business (an advanced CCS
project) utilizing existing oil and gas
fields and others
Overseas: Participate in CCS projects insystematically advanced areas andparticipate in feasibility studies on
CCS/CCUS in emerging countries

CO2 injection
and storage

JAPEX Integrated Report 2023 33

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Carbon Neutral Field
JAPEX’s Strengths and New Possibilities in CCS/CCUS
In line with JAPEX2050, we will promote initiatives, including feasibility studies on CCS/CCUS as a future business, in and outside Japan in order to contribute to smooth transition to a carbon-neutral society in 2050.
CCS/CCUS technologies are expected to help realize carbonneutral. In Japan, they have been studied since the 2000s in
Strategic Energy Plans as an issue of the future. From the2010s, this idea took shape as the government’s CCS pilot
test project, which promotes technological development andverification toward practical application.
In the government’s pilot test for large-scale CO2 injection
under the seabed offshore Tomakomai in Hokkaido, Japan CCS
Co., Ltd. (JCCS), a project company funded by JAPEX and otherprivate-sector companies, was contracted by the government,
achieving 300,000 tons of CO2 injection in 2019. To practically

apply CCS/CCUS, it is necessary to establish technologies
and expertise to survey geological layers appropriate for CO2
injection, drill wells for injection, and stably store CO2 over the
long-term.
We can use all the technologies and expertise cultivated inoil and gas E&P as technologies used in CCS/CCUS, such as
assessing underground structures, estimating petrophysicalproperties, drilling injection wells, conducting production andfluid movement simulations, and underground monitoring(including seismic survey). JAPEX therefore has provided thistechnological know-how and dispatched key personnel to JCCS.

Selecting candidate sites for CCS/CCUS and injecting, storing,and monitoring CO2

Underground surveys from land and sea (geophysical exploration)• The Group’s technical capabilities that are essential technological elements for realizing CCS/CCUS, such as underground surveys,•

JAPEX’s strengths in CCS/CCUS commercialization are its
E&P-related technologies and personnel applicable to CCS/
CCUS, the Group’s ability to provide comprehensive services
from selecting appropriate sites to monitoring, and its multiple
oil and gas fields expected to be able to store a significant
amount of CO2 in Japan.
Besides participating in JCCS, by leveraging these strengths,
we have begun studies aimed at commercializing CCUS andcarbon recycling in Japan and overseas.

Well drilling from land to seabedWell management/monitoringdrilling, and monitoring
Utilizing data related to deep saline aquifers (layers where CO2 is expected to be stored) gained from exploration in Japan to date

Flow of CCS
and CCUS

CO2

Capturing CO2 before it is emitted into theatmosphere from power plants and factories

CO2 separation and capture

CO2

Necessary elements
Establishing CO2 separation plants

Transporting separated andcaptured CO2• Establishing CO2 transportation infrastructureusing experience in the transportation andsupply of natural gas and LNG

Including high-pressure gas pipelines and coastal vessel transportation

Transporting separated CO2 to storage sites
by pipelines and other methods

Injecting and storing CO2
from wells to undergroundCO2 transportation

CO2 injection and storage

Necessary elements
Establishing CO2 transportation pipelines

Collaborating on and entering
carbon-neutral business fields• Applying CCS/CCUS to natural gas and biomass power generation• Considering entering blue hydrogen and methanation-related
fieldsNecessary elements Selecting sites appropriate for CO2 storage
Drilling wells for injection/monitoring the status
of injection and storage

CO2 utilization
CO2

H2

Focusing on natural gas-fired andBlue hydrogenbiomass power plants, including
Producing hydrogen byfacilities owned by other companies, decomposing natural gas, andin addition to our own power business then capturing and storing CO2

MethaneMethanation
Producing methane (CH4) fromhydrogen (H2) and CO2

With regard to CCS/CCUS technologies which have drawn attention as a last resort for achieving carbon neutrality, we have internally developed necessary technologies for storage work.
We also have worked to measure and examine the storage potential and transportation in the Business Feasibility Study on Japanese Advanced CCS Project commissioned by JOGMEC,
and aim to launch the domestic CCS/CCUS business by 2030 based on the trusted relationships with local communities we have nurtured for many years.
JAPEX Integrated Report 2023 34

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Carbon Neutral Field

Highlights about CCS/CCUS
Domestic CCS/CCUS	Started a joint study for CCUS implementation in the Tomakomai area of Hokkaido with Idemitsu Kosan Co., Ltd. andHokkaido Electric Power Co., Inc. in January 2023

	Presented a carbon-recycling scenario utilizing sector-coupling in Tomakomai in July 2023
	Commissioned by JOGMEC to conduct CCS feasibility studies in the Tomakomai and Higashi-Niigata areas for the
publicly solicited “Business Feasibility Study on Japanese Advanced CCS Project” for July and August 2023

Overseas CCS/CCUS Agreed on joint evaluation with JFE Steel Corporation to establish CCS value

chain originated from Japan aligned with CCS study in Malaysia in June 2023

https://www.japex.co.jp/en/news/detail/20230619_01/

Tomakomai CCS Demonstration Center (Japan CCS Co., Ltd.) in Hokkaido

Advancement of CCS Technology in Japan and the First Domestic Commercialization Efforts
Advancement of CCS Technology in Japan and Its Importance in Energy Policies

First Domestic CCS Commercialization Efforts

In October 2020, the government set a carbon neutrality goal
to reduce greenhouse gas emissions to net zero by 2050,
and in April 2021, it declared its aim for a 46% reduction ingreenhouse gas emissions by 2030 compared to fiscal 2013.
In the Sixth Strategic Energy Plan (revised in 2021), CCS
is positioned as a technology for reducing greenhouse gas
emissions in fields where decarbonization of thermal power
plants, electrification, and hydrogenation are difficult toachieve and is considered an important tool for realizing both
decarbonization and industrial and energy policies.
In response to this, the Ministry of Economy, Trade andIndustry has established the CCS Long-Term Roadmap Study
Group and the CCS Business and Domestic Laws Study
Working Group to discuss technology and policy. In March
2023, the final summary of the CCS Long-Term Roadmap Study
Group was presented, laying an important foundation for thepractical application of CCS and the promotion of sustainableenergy policies.

In February 2023, the government adopted the Basic Policy for
the Realization of GX and is working to create an environment
in which CCS business can begin by 2030. More specifically,
JOGMEC is supporting the spread and expansion of CCS.
JOGMEC has selected seven project proposals as candidates
to conduct feasibility studies in FY2023 for projects to start
CO2 storage in Japan. The seven selected projects target a wide
range of industries, such as electric power, oil refinery, steel,chemicals, pulp and paper, and cement, and will capture CO2
emitted from industrial clusters in regions including Hokkaido,
Kanto, Chubu, Kinki, Setouchi, and Kyushu. The projects aim
to store approximately 13 Mtpa of CO2 in total. Out of theseprojects, five plan storage in Japan, and the remaining two planstorage in the Asia and Oceania regions.
JAPEX has been commissioned to conduct CCS feasibility
studies in the Tomakomai area of Hokkaido and the HigashiNiigata area of Niigata Prefecture to support the spread of CCS
technology and CO2 storage. In this way, we will contributeto achieving the government’s CO2 storage targets, promotea stable supply of resources and energy, and support carbon
neutrality.

CCS Long-Term Roadmap
Basic Principles
To implement CCS systematically and rationally to promote sounddevelopment of CCS business in Japan with minimal social costs,
thereby contributing to the development of Japan’s economy andindustry, as well as the securing of stable energy supply and achievingof carbon-neutrality.
Goals
The government will improve the business environment (cost reduction,
public understanding, overseas CCS promotion, and CCS businesslegislation) toward the start of CCS business by 2030 on the assumptionthat the rough estimate of annual CO2 storage capacity in 2050 is in
the range of 120 to 240 million tons, and the CCS business will be fully
developed after 2030.
Concrete Actions(1) Support from the government for CCS business(2) Efforts aimed to reduce CCS costs(3) Promotion of public understanding on CCS business(4) Promotion of overseas CCS business(5) Study of the legislation of the CCS Business Law (tentative name)(6) Formulation and review of the CCS Action Plan October 22, 2021 Ministry of Economy, Trade and Industry

Cabinet Decision on the Sixth Strategic Energy Plan

https://www.meti.go.jp/english/press/2021/1022_002.html
 February 10, 2023 Ministry of Economy, Trade and Industry

Cabinet Decision on the Basic Policy for the Realization of GX

https://www.meti.go.jp/english/press/2023/0210_003.html
 June 13, 2023 JOGMECFirst Step to Launch Japanese CCS Project - JOGMEC selected 7 projects, starting CO2 storage by FY2030 -https://www.jogmec.go.jp/english/news/release/news_10_00036.html

JAPEX Integrated Report 2023 35

Initiatives
to Support
Value Creation

INDEX
Sustainability Management............................................................ 37
Integrity and Governance............................................................... 42
Stable and Sustainable Energy Supply......................................... 53
HSE as Our Culture.......................................................................... 56
Being a Good Neighbor.................................................................. 58
The Employer of Choice.................................................................. 59

JAPEX Integrated Report 2023 36

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Sustainability Management —Materiality—
Basic Concept
With a mission to provide a stable supply of energy, JAPEX believes that our business activities themselves are a formof CSR. Under this recognition, we have been promoting sustainability activities to aim at both solving social issues
toward the realization of a sustainable society and enhancing our corporate value in the medium- to long-term.

Sustainability Management

https://www.japex.co.jp/en/sustainability/management/

Overview of Materiality
Under the basic concept of sustainability management, we have identified our material issues in 2023 as what connects core CSR themes “SHINE” and “JAPEX Management Plan 2022–2030,” whichwere established in 2014 and 2022, respectively. Among the core CSR themes, which are focused on building relationships of trust with stakeholders, challenges that should be particularly addressed
now to achieve JAPEX’s sustainable growth are identified as material issues.

Core CSR Themes “SHINE”

Stable energy supply

oil and natural gas development

Materiality
Contributing to society through our businessStableenergy supply

Establishmentof CN business

Strengthening of business foundation

Promotion of
HR development
and diversity

Process for
identifying
material issues• We consider that oil and natural gas will continue to be indispensable energy sources forsociety even in a carbon neutrality by 2050
• Based on this consideration, we will continue to work for stable energy supply through theJAPEXManagementPlan
2022–2030

Digitaltransformation(DX)

Establishment of
CN business
Promotion of HR
development anddiversity
Digital transformation(DX)• In order to realize a stable energy supply even in the future, we will contribute to the carbonneutral society by establishing CCS and others as our business• We consider that human resources (HR) are an origin of the value creation and an essential for therealization of our management plan
• Based on this consideration, we will enhance the ability of each employee for value creation throughHR development and strengthen the company-wide capabilities through diversity promotion• We will realize the working environment for add-valued businesses through the strategic
utilization of data and digital technologies and make continuous challenges for further
increasing our corporate value

STEP 1. Evaluating present status and identifying challenges

STEP 2. Holding discussions at the Sustainability Committee

STEP 3. Reviewing the items of CSR disclosure• R ecognize social issues and monitor JAPEX’s responses thereto• H old discussions based on the draft of material issues among
general managers and officers• Identify four material issues as challenges that should be• Describe the material issues in the Annual Securities Report••based on the external ESG evaluation results and various
guidelinesC onduct sustainability workshops and questionnaire surveys for
management officers
P repare a draft of material issues based on the above processes

particularly addressed now to achieve JAPEX’s sustainable growth•and summarize their relations with the core CSR themes“SHINE”
Summarize the correlation of specific action items with thematerial issues in the CSR Action Plan

JAPEX Integrated Report 2023 37

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Sustainability Management —Materiality—

Relations between Core CSR Themes “SHINE” and Materiality
In the core CSR themes “SHINE,” we identified five core themes and 12 individual challenges under the core themes. We review each individual challenge as needed based on changes in society and its demands.
The individual challenge of “Respecting employee diversity and developing human resources” was changed to “Promotion of HR development and diversity” in line with the corresponding material issue.
Correlation between Core CSR Themes “SHINE” and Materiality
Core CSR themes

S Stable and sustainable energy supply
H HSEI

as our culture

Integrity and governanceIndividual challenges
1 Stable energy supply
2 Development of new technologies
3 Climate change response4 Occupational health and safety
5 Pollution prevention and resource recycling
6 Preserving biodiversity and ecosystems

7 Governance
8 Crisis management
9 ComplianceN Being a good Neighbor

10 Growing together with stakeholders
E

11 Promotion of HR development and diversity
12 Creating a fair and good working environment

The Employer of choice

Materiality• Stable energy supply• Establishment of CN business• Digital transformation (DX)

ESG

E 
S


—

E 
S


—

G


—

S


• Promotion of HR development and diversity• Digital transformation (DX)S

1.
• “Stable energy supply” corresponds to matters related to development of oil and natural gas that are covered by the individual challenge 
2 and 3.
• “Establishment of CN business” corresponds to matters related to CCS/CCUS that are covered by the individual challenges 
11 and 
12 .
• “Promotion of HR development and diversity” corresponds to development of human resources, diversity and matters related thereto that are covered by the individual challenges 
1 and 12 with respect to specific stated goals.
• “Digital transformation (DX)” corresponds to all individual challenges of SHINE, but to the individual challenges of 

Sustainability Management Promotion System
The Sustainability Committee has been established todeliberate and discuss medium- to long-term business issues
and relevant sustainability matters that we should address toensure the Company’s sustainable growth.
The President serves as the Chair, the officer in charge of
the Corporate Strategy Dept. serves as the Vice Chair, andthe Corporate Strategy Dept. serves as the secretariat. The
Committee meets multiple times per year to deliberate anddiscuss the items listed on the right.
Matters deliberated by the Sustainability Committee arereported to the Board of Directors as needed, and importantmatters are resolved. Also, the status of activities related to
ESG is reported every year to the Board of Directors.
CSR action plans are established and reviewed every year on
a company-wide basis, and disclosed through the Sustainability
Committee in the Integrated Report and as the CSR Action
Plan. On this occasion, we place managers and personnel
responsible for sustainability in each department and discussand coordinate the formulation of the action plans and thedisclosure of information.

Primary Items to Be Deliberated by the Sustainable Committee
Establishment and review of a management plan
Basic policies related to sustainability, including the Codeof Ethics and Conduct
Important environmental, social, and governance (ESG)
issuesEstablishment and review of core CSR themes and CSR
action plans
Disclosure of sustainability information to outside theCompany, such as in the Integrated Report

•
•
•
•
•

JAPEX Integrated Report 2023 38

JAPEX’s Vision

Strategy

Sustainability Management —CSR Action Plan—

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

CSR Activities’ Action Plans, Targets, and Achievements

https://www.japex.co.jp/en/sustainability/management/materiality/
Main Targets and Achievements in Fiscal 2022
Core CSR themes

ESG

Individual challenges

Fiscal 2022 action plans and targets

Promote E&P businessStable andS

Sustainable
EnergySupply1 Stable EnergySupply2 Development of
new technologies
3 Climate change
response

4 Occupational

health and safety

HSE as

H Our
CultureIntegrity

I and
GovernanceBeing

N a Good

5 Pollution


prevention
and resource
recycling
6 Preserving

biodiversity andecosystems
7 Governance
8 Crisismanagement
9 Compliance

10 Growing together
Promote DX based on business challenges

Promote the study of CCS/CCUS
commercialization in Japan and overseas

Achieve our GHG emission intensity target(Scope 1 + 2) of 3.58 ton-CO2/TJ based on
the JAPEX 2050
Reduce domestic occupational injury
frequency rate (10% lower than the averagefor the last three years)• LTIF*1: 0.09
• TRIR*2: 0.88
Continue KEI’s efforts in Indonesia to earn
the Blue ranking in the Program for
Pollution Control, Evaluation and Rating(PROPER)*3
Continue efforts to create positive impacts
in protected areas
Strengthen our corporate governance system
Continue to strengthen the BusinessContinuity Plan (BCP)
Promote efforts to respect human rights

Make contributions to local communities
and engage in social activities in ourdomestic and overseas operating areas

with stakeholders

Neighbor

Promote supply chain management
Promote constructive dialogue withstakeholders

11 Promotion of HRThe

E Employer
of Choicedevelopment anddiversity
12 Creating a fairand good working
environment

Fiscal 2022 achievements

May 2022: Acquired the well interest in southern Texas (Eagle Ford Shale) and southern Oklahoma (Woodford Shale), USA; continued
measures toward achieving 230,000 barrels per day at Garraf Oil Field in Iraq; progressed a crude oil and natural development project inSeagull Block in the British North Sea; addressed energy demand in Eastern Java, Indonesia; implemented additional development
projects in Japan (Katakai Gas Field, etc.)
Analyzed the current status to identify major business issues across the company, including operations and implemented multiple
measures (implementation of a system necessary for operation and energy intensity management; introduction of predictive maintenanceusing AI in production facilities; implementation of 3D visualization tools at plants).
Overseas• Continued the implementation of feasibility studies for realization of CCS/CCUS projects in emerging countries.
Domestic• May 2022: Conducted a feasibility study for a hub and cluster type CCUS project at the Niigata East Port area.
• 
December 2022: Invested in a specialized venture capital fund, “ANRI-GREEN No. 1,” for the issues of climate change and environment.
• 
January 2023: Idemitsu Kosan, Hokkaido Electric Power Company, and JAPEX initiated a joint study for implementation of CCUS in
the Tomakomai area of Hokkaido.

SDGs

Stable energy supply
 stablishment of CN
Ebusiness• DX••

Result: 3.56 ton-CO2/TJ

LTIF: 0.84
TRIR: 1.39—

Maintained earning the Blue ranking by continuing environmental activities.

Continued monitoring of mangrove forests planted in 2019 for environmental protection around Pagerungan Island in Indonesia.
Conducted an evaluation of the effectiveness of the Board of Directors; linked part of officer compensation to company-wide climate change response objectives;promoted diversity in the Board of Directors: increased the number of outside directors (45), increased the number of female directors (12).
Awareness-raising and educational activities on disaster prevention: Company-wide lectures by external authorities on disaster prevention, disasterprevention education for general employees, and dissemination of disaster prevention information using the JAPEX’s IT platform.
Disclosed the UK Modern Slavery Act Statement; established the Human Rights Policy; conducted a human rights due diligence.
Conducted questionnaires on harassment (twice a year); the percentage of those who feel they have been harassed decreased compared to the previous year.
Overseas projects• 
Garraf: Constructed and repaired facilities at schools and educational facilities, conducted an education campaign in elementary
schools, distributed food items for local events, donated facilities and equipment to medical institutions.
• 
Kangean: Implemented projects as planned including measures related to COVID-19, donations of scholarship to high schools,
support for fisheries, agriculture and small and medium enterprises, and infrastructure improvements such as mosque renovations.
Domestic operating areas• 
Cleaned up streets around the business locations, participated in volunteer cleanups, sponsored advertisements, made donations, held on-site tours for
local parties concerned, participated in community events, ensured safety for children commuting to school, continued volunteering to stand guard, etc.
Established the CSR procurement policy and CSR procurement guidelines and disseminated them to existing suppliers; conducted a CSR
procurement survey to suppliers; ensured and created a fair trading and competitive environment.
Provided information to the Tokyo Stock Exchange and the press in timely and appropriate manner and produced and distributed publications; maintained
and created opportunities for dialogue, including IR site tours for securities analysts and institutional investors and IR briefings for individual investors;
selected as a “Company of Remarkable Improvement in Disclosure” of the “Selection for Excellence in Corporate Disclosure by Securities Analysts.”

Achieve targets based on the DE&I Policy• Percentage of female new-graduates hired:
30% or more

Percentage of female new-graduates hired: 33.3%

Strengthen human capital management

Started reskilling and skilling programs.

Implement human resource developmenttraining programs
Promote the creation of a good working
environment

Implemented measures to support career development (established a career consultation desk; implemented a talent management
system; expanded the number of departments applicable to internal open personnel recruitment).

Promote health management

Certified as one of the Health & Productivity Management Outstanding Organizations in 2023; certified as a Sports Yell Company 2023.

*1 Lost Time Injury Frequency: Calculated as the number of lost time injuries per 1,000,000 work hours.
*2 Total Recordable Injury Rate: Calculated as the number of total recordable injuries per 1,000,000 work hours.

Materiality

—

—

•

•

 romotion of HRP
development and diversity
DX

Rate of paid leave taken: 83.2% (up 1.7% year-on-year); started a personnel system reform and measures for employee engagement.

*3 P
 ROPER is a rating program by the Indonesian Ministry of Environment to evaluate companies’ environmental measures and environmental regulation compliance,from the highest rating of gold to green, blue, red, and black.

JAPEX Integrated Report 2023 39

JAPEX’s Vision

Strategy

Value Creation Through Business

Sustainability Management —CSR Action Plan—

Initiatives to Support Value Creation

Financial and Other Information

CSR Activities’ Action Plans, Targets, and Achievements

https://www.japex.co.jp/en/sustainability/management/materiality/
Targets in Fiscal 2023
Core CSR themes ESG

Individual challenges

Fiscal 2023 action plans and targets

Core CSR themes ESG

Individual challenges• Strengthen our corporate governance system• Promote the E&P Business toward stable supply of oil and natural gas
1 Stable energysupply• Promote the I/U Business toward stable supply of natural gas and7 Governanceelectricity

application of CCS/CCUS• Continue to develop technology for Onnagawa Formation in Ayukawa Oil

2 Development of

Stable andS

new technologies

Sustainable
Energyprotection• Continue to strengthen the Business Continuity Plan (BCP)

Integrity

I and
Governance•

8 Crisis

management

Field through joint research with JOGMEC. Expand into Akita tight oil
and other tight reservoir development projects in Japan• Continue measures toward commercialization of methane hydrate
9 ComplianceHorizon Ocean Research & Technology Co., Ltd.

• Promote CCS/CCUS commercialization studies in Japan and overseas• Achieve our GHG emission intensity target (Scope 1 + 2) of 3.42 ton-CO2/
TJ based on the JAPEX 2050

3 Climate change

response

Being aN Goodwith stakeholders

Neighbor

11 Promotion of HRdevelopment anddiversity
The

H

Culture5 Pollution


prevention andresource recycling

6 Preserving


biodiversity andecosystems• Promote efforts to reduce water consumption• Promote efforts to reduce waste• Continue KEI’s efforts in Indonesia to earn the Blue ranking in the

Program for Pollution Control, Evaluation and Rating (PROPER), a
performance-level evaluation program for corporate environmental
management• Continue efforts in creating positive impacts in protected areas• Continue efforts to reduce negative impacts at business locations andAchieve targets based on the DE&I policy• Percentage of female new-graduates hired: 30% or more
• Percentage of mid-career hires to total hires: 50% or more
• Number of female managers: 25 or more (by the end of FY2025)• 
Percentage of mid-career hires in management positions: Maintain 20%
or more (until the end of FY2025)•   Percentage of male employees taking childcare leave: 80% or more (bythe end of FY2025)• Strengthen human capital management

E Employer•

of Choicecompared to the base year (FY2000)

HSE as Our• Promote supply chain management• Promote diversity, equity, and inclusion (DE&I)• Promote initiatives based on the Medium-term HSE Plan

• Continue measures to maintain a 45% reduction in VOC emissions• Promote efforts to respect human rights• Promote constructive dialogue with stakeholders

the Japan Petroleum Development Association based on the Japan
Business Federation’s Carbon Neutrality Action Plan

• Contribute to a low-carbon society by promoting the use of natural gas

health and safety• Ensure thorough complianceour domestic and overseas operating areas

10 Growing together• Reduce emissions to achieve the GHG emission reduction target set by

Reduce domestic occupational injury frequency rate
• Lost Time Injury Frequency (LTIF): 0.00
•
Total Recordable Injury Rate (TRIR): 0.86 (10% lower than the averagefor the last three years)• Strengthen cyber security• Make contributions to local communities and engage in social activities in• Scale up the renewable energy business4 Occupational aintain and enhance disaster prevention capabilities (improvement andMenhancement of emergency response capabilities)• Continue overseas security response• Continue efforts to develop deep-sea mineral resources through new

Supply• Promote the Enterprise Risk Management (ERM) Framework• Strengthen information security and promote personal information• Promote DX based on business challenges• Promote the development of technologies to realize the early practical

Fiscal 2023 action plans and targets

 romote reskilling and skilling programs (promote DX education, makeP
use of the learning platform as JAPEX UNIVERSITY, etc.)• Promote the creation of a good working environment

12 Creating a fairand good working
environment• Promote health management• Make consideration on side jobs/second jobs
• Improve office environment

their surrounding areas

JAPEX Integrated Report 2023 40

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Sustainability Management —Participation in Initiatives—
 UN Global Compact

 Declaration of Partnership Building Global CCS Institute

JAPEX has participated in the UN Global
Compact (UNGC) since 2020 and has been

JAPEX announced the Declaration ofPartnership Building in fiscal 2021. We

In May 2022, JAPEX joined the
Global CCS Institute (GCCSI), an

taking measures related to 10 principles in fourareas of the UNGC covering human rights,
labour, environment, and anti-corruption. In fiscal 2022, weparticipated in 11 of the 14 subcommittees of the Global
Compact Network Japan (GCNJ), which mainly comprises
Japanese companies that have signed the UNGC. We havecollected information related to the latest trends and bestpractices on sustainability and enhanced the networks of
personnel in charge of promoting sustainability.

endorse the purpose of the Council on Promoting Partnership
Building for Cultivating the Future, whose members consist of
Chairman of the Japan Business Federation; Chairman of theJapan Chamber of Commerce and Industry; President of theJapanese Trade Union Confederation (RENGO), and relevant
Ministers (Cabinet Office; Ministry of Economy, Trade andIndustry; Ministry of Health, Labour and Welfare; Ministryof Agriculture, Forestry and Fisheries; and Ministry of Land,
Infrastructure, Transport and Tourism), and will collaborate, coexist, and co-prosper with our supply chain transaction partners.

international think tank whose
mission is to accelerate the deployment of carbon captureand storage (CCS) globally. GCCSI’s membership includes
governments, private companies, and research bodies. GCCSI
shares expertise and data regarding CCS. By utilizing insights
and membership networks obtained through GCCSI, we willfurther advance our efforts regarding CCS/CCUS.

UN Global Compact (UNGC)

https://www.unglobalcompact.org/

Portal Website for Declaration of Partnership Building

https://www.biz-partnership.jp/index.html
The Ten Principles in Four Areas of the UN Global Compact
Human Rights

Principle 1: Businesses should support and respect the protection ofinternationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.

LabourPrinciple 3: Businesses should uphold the freedom of association and theeffective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; andPrinciple 6: the elimination of discrimination in respect of employment and occupation.

Environment

Principle 7: Businesses should support a precautionary approach to environmental
challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendly
technologies.

Anti-corruption

Principle 10: Businesses should work against corruption in all its forms,
including extortion and bribery.

FY2022 Subcommittee Activity Results•Supply Chain Subcommittee•Environmental Management
Subcommittee•Human Rights Subcommittee•Human Rights Due Diligence(HRDD) Subcommittee•Anti-corruption Subcommittee•Disaster Risk Reduction (DRR)
Subcommittee•SDGs Subcommittee•ESG Subcommittee•WEPs Subcommittee•Reporting Research Subcommittee•Circular Economy Subcommittee

Global Compact Network Japan (GCNJ)

 GX League
The GX* League was established based on
the GX League Basic Concept announced
by the Ministry of Economy, Trade and Industry in February
2022 as a forum for companies actively engaged in green
transformation (GX) activities to work together with players
from government, academia (universities, etc.), and financial
institutions which are taking on challenges toward GX todiscuss, as a unit, the transformation of the entire economic
and social system, and to take the lead in the creation of newmarkets.
As the GX League’s objective is consistent with the
JAPEX2050, we have declared our participation in the GX
League in 2023, following the declaration of our endorsementin 2022. We will work to contribute to realizing a carbon-neutral
society in cooperation with the endorsing companies, thegovernment, and other institutions through the GX League.

GCCSI official website

https://www.globalccsinstitute.com/

 CCS+ Initiative
In June 2022, JAPEX joined CCS+ Initiative(CCS+), which is an international platform
aiming to scale-up CCS, CCU (carbon
dioxide capture and utilization), and CDR (carbon dioxide removal)
projects. By developing carbon accounting methodologies foreach phase of CO2 capture, transport, and storage, CCS+ aims
for the accurate and separate measurement of CO2 reduction
and removals in diverse CCS projects and the monetization ofsuch projects. Through the participation in CCS+, we will strive
to contribute to realizing a net zero society by establishingmethodologies to generate carbon credits from CCS, CCU and
CDR.
CCS+ Initiative official website

https://www.ccsplus.org/

GX League official website

https://gx-league.go.jp/* Green Transformation (GX): Transformation of the entire economic andsocial system to realize a carbon-neutral society

https://www.ungcjn.org/

JAPEX Integrated Report 2023 41

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance Outside Directors’ Roundtable Discussion

Outside Director

Outside Director

Outside Director

KAWASAKI
Hideichi

KITAI
KumikoSUGIYAMA
Yoshikuni

1 Commenting on the way the Board is run
May I ask for your comment on the way JAPEX’s Board is run?

Kawasaki: Since the appointment of a new director in 2022,
I’ve noticed a more open atmosphere in our board meetings
allowing for frank and constructive discussion. We appreciate
the detailed explanations and allowed to ask questions
concerning agenda items in advance of each meeting so that
we can sort out our thoughts beforehand.
However, given the volume of items on our agenda and theconstraints of time, it's challenging to delve into every topic
deeply. I believe it's crucial to allocate more dedicated time forsignificant matters. But the reality is that it’s difficult for outside
directors to have a thorough debate on each agenda item atthe level executive directors do. In this regard, we, as outside
directors, need to consider how to fulfill our management
supervisory function and engage in constructive discussions atboard meetings.
Sugiyama: The Board of Directors discusses matters thathave already been repeatedly deliberated in depth by executive
officers at the Executive Committee and other meetings. Thus,

the role we must play as outside directors is to evaluate at highlevel the reasonableness of investment and other management
issues from a unique, outside point of view. Because JAPEX
is a group of highly technically skilled professionals andmainly engaged in BtoB business, technical discussions andexplanations given at board meetings tend to be complex
and are sometimes hard to understand for outside directors.
We are always provided with various explanations in advanceof each meeting. However, going forward, technical issues
should be explained more clearly during deliberations to deepen
the debate for improvement to further enhance the Board
effectiveness.
Kitai: JAPEX’s Board of Directors consists of seven outside
directors, including five outside directors and two outside audit& supervisory board members, comprising almost half of theboard members. I feel this Board composition contributes tohaving a diverse and lively exchange of ideas at the meetings.
At the start of my appointment as an outside director, I felt
there were too many investment projects to be decided andapproved by the Board of Directors. However, the thresholdof amount for investment projects subject to the Board’s

deliberation was revised this fiscal year. This created time tohave more productive discussions on the priorities for JAPEX’s
corporate strategies, such as sustainability, human capital,
digital transformation (DX), and the issue of trading below 1x
PBR. I think it deserves high praise. Of course, this kind ofissues cannot be fully discussed in one meeting. In order tofacilitate in-depth discussions on important issues at board
meetings, it will be worth considering not only increasing theamount of time spent on such discussions, but also trying
other measures, such as creating a structure like a council ora meeting for all members to align vectors separate from theBoard of Directors, and having in-depth discussions on such
issues by the same board members.
Furthermore, I believe our discussions could be greatly
enriched by visiting our operatinal sites in Hokkaido, Akita,
Niigata, and Fukushima. Observing the ground realities willundoubtedly deepen our understanding. Of course, it may bedifficult to visit all these places at once, but I do hope we will begiven opprtunities to visit even some of them.
2 Developing a management practice conscious of the cost of capital and stock price

As already mentioned above, the Board of Directors has just started a
discussion on developing a management practice conscious of the costof capital and stock price to address the Tokyo Stock Exchange (TSE)’s
call for action. What is your view on this?

Kawasaki: In the past, many Japanese companies, including
JAPEX, had a long-term business perspective of 20 or 30 years,
supported by their sound capital bases. Also, it was consideredgood for them to return profits to many stakeholders in various
ways and continue stable business management even whenunexpected events occur. On the other hand, it’s also true thatthey accumulated internal reserves through that process anddid not provide sufficient shareholder returns. For instance,
JAPEX once consistently paid a fixed dividend of 50 yen per
share. Needless to say, companies should maintain an adequatelevel of capital, but there’s no need to build it up too much. In
this regard, I will listen to calls for sufficient shareholder return,and express my opinions from a comprehensive perspective.
In terms of improving PBR, I think it’s also very importantfor JAPEX to have a “dream” to be presented to investors.
Investors want companies to give a clear picture of how theygrow in the future and what kind of story they envision for the
future. They want to know what our vision is and what kind of
JAPEX Integrated Report 2023 42

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance Outside Directors’ Roundtable Discussion
future we envisage. In that sense, I believe JAPEX has a grave
responsibility to clearly present its “dream” and share it withinvestors.
Sugiyama: We must heed the call from TSE regarding action
to address trading below 1x PBR. At the same time, what I
want to particularly emphasize here is the social significance of
JAPEX. Looking back on the origin of JAPEX, it was originallyfounded under the clear national policy to aim at securing
energy sources and providing a stable supply of energy inJapan. Therefore, it is important to let investors know thatsuch missions are proclaimed even in JAPEX’s Articles ofIncorporation.
In order to fulfill these missions through its businessactivities, JAPEX needs to make more efforts to secure energy
sources through many investment projects. However, thecurrent competition among companies in this sector is very
intense, and they are also exposed to high business risks. In
this context, further consideration will be necessary to identify
the adequate levels of internal reserves and equity to hedge
these business risks.
Regarding the issue of trading below 1x PBR, I’d like tomake note that a company is valued by the market based
fundamentally on its “growth potential.” Therefore, it’s essential
to give investors a detailed “blueprint” that depicts JAPEX’s
growth potential to win their understanding and agreement thatJAPEX is further going to grow in the years ahead. I believe thiswill eventually be positively valued by investors.

Outside Director

SUGIYAMA
Yoshikuni

Outside Director

sustainable energy supply, which is one of the top national
priorities. In doing so, JAPEX should focus more on revising
its personnel and salary systems. Because JAPEX is a BtoB
company, it is challenging for students and other ordinary
people to understand what the company does, and this makes
difficult for JAPEX to listen to their voices. To solve this problem,
JAPEX should work out better ways of practicing public relations
and investor relations and actively work on such activities going
forward.

KAWASAKI
Hideichi
3 Assessing JAPEX’s initiatives to address material issues


JAPEX has identified four material issues in achieving its management
plan. So, what kind of initiatives will JAPEX have to take?

Kawasaki: Among the four material issues, “Stable energy
supply” and “Establishment of Carbon Neutral (CN) Business”
are exactly what JAPEX exists for and at the core of ourbusiness viability. It would be vital to present these visions in
a comprehensible form to people outside the company. I think
this can also facilitate the active participation of talented womenand lead to “Promotion of human resources (HR) development
and diversity” I’d like to also share my views on “DX” basedon my experience. JAPEX has just started its business process
reform in fiscal 2022, while reviewing systems that serve asa foundation for DX. It seems we are slightly lagging whencompared to other companies in DX, but it cannot achieve true
DX unless the foundation is in place. So, I believe diligently
developing the foundation for DX is an extremely importanttask. Meanwhile, digital technologies evolve at very fast speed.
Therefore, I hope JAPEX will lay the foundation for DX steadily
and speedily, while keeping a close watch on the evolution ofgenerative AI and other technologies.
Sugiyama: As to “Promotion of HR development anddiversity,” within the overall context of our material issues,
how a company acts depends on people who works for thecompany. Employees are the company’s human capital. In thissense, I’d like to stress that recruitment and other personnel
affairs are vital elements for companies.
In order for JAPEX to grow in a variety of aspects, itis necessary to bring together bright and talented humanresources with high aspirations to achieve a stable andOutside Director

KITAI
KumikoKitai: “Promotion of HR development and diversity” is thecore of human capital management, so it should be alignedwith corporate and business strategies. While making proactive
efforts of reskilling individuals is drawing growing attention,such individuals’ efforts won’t enhance a company’s collective
strength by themselves unless linked with the development
and securing of human resources the company wants. In
this respect, JAPEX has visualized each department’s work
description, desired human resources, and skills that can beobtained from work, and made them known to everyone in
the company under the initiative of the Human Resources
Dept. I think this is quite an admirable initiative, aside fromthe introduction of an internal job posting system and a career
consultation desk. However, when it comes to promoting
female employees to higher ranks, there's more work to be
done. JAPEX has many female employees with remarkableabilities and has come up with various measures to promote
their career development and active participation in workplaces.
So, hopefully, all that remains is to implement these measuresand notch up a run of achievements.
JAPEX Integrated Report 2023 43

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Corporate Governance—
Basic Concept
Corporate Governance

JAPEX recognizes contributing to society through a stable supply of energy as its mission and helping to realize the sustainable development goals by addressing social issues as its Corporate Vision. To achieve its Corporate Vision and maximize its
corporate value from both the medium- and long-term perspective, it is necessary to ensure efficient and transparent corporate
management and build the building of relationships of mutual trust with stakeholders, including shareholders, by fulfilling its
accountability. Therefore, sound corporate governance, which is foundational to JAPEX, is one of its most important challenges.

https://www.japex.co.jp/en/sustainability/governance/cg/
Corporate Governance Reporthttps://www.japex.co.jp/en/sustainability/uploads/pdf/JAPEX_CGreport_e.pdf

Initiatives to Strengthen Corporate Governance

2015

2016

2017

2018

Increased thenumber of
Outside Directors(1→2)

Increased thenumber of
Outside Directors(2→3)

Began evaluating
the effectivenessof the Board of
Directors

Reformed theexecutive officer
system2019• Established the Nomination andCompensation Committee•A mended the Code of Conduct toestablish the Code of Ethics and Conduct•C hanged the title and composition of
the Executive Committee

2020

2021

• Increased the number of Outside Directors (3→4)• R aised the ratio of Outside Directors to morethan one-third• S hortened the term of office of Directors fromtwo years to one year
• Introduced a performance-linked share-based
compensation plan2022

• Increased the number of female
Directors (1→2)• Increased the number of
Outside Directors (4→5)• Linked officers’ compensation
to responses to climate change

Established the Sustainability
Committee and the Risk
Management Committee

Governance Structure■ Overview of JAPEX’s Governance Structure•C ompany with an audit & supervisory board• Introduced an Executive Officer System to clarify the businessexecution system• T he ratio of Outside Directors is more than one-third, the ratio of
Outside Audit & Supervisory Board Members is more than half•H eld the Outside Officer Liaison Meeting as a place to provide
explanations to, provide information to, and exchange information
with outside officers in advance of the Board of Directors’ proposals•A ll Outside Directors and Audit & Supervisory Board Members who
fulfill independent officer qualifications are designated as independent
officers
1 Board of Directors (meetings held in FY2022: 14 times)
The Board of Directors discusses and makes decisions concerning importantbusiness execution as well as the exclusive prerogatives of the Board of
Directors. It is regularly held once a month.
• Chair: Representative Director and President, FUJITA Masahiro•C omposition: 11 Directors (including five Outside Directors, two of which
are female)
2 Executive Committee (meetings held in FY2022: 24 times)
From the standpoint of accelerating the speed of decision-making, we holdthe Executive Committee that is composed of Chairman, President and some
Executive Officers of JAPEX to make decisions on the matters not involvedby the decision-making standard of the Board of Directors and to makea discussion to assist the decision-making in the Board of Directors. The
Executive Committee is held twice a month in principle, with extraordinary
meetings held as needed.
• Chair: Representative Director and President, FUJITA Masahiro• Composition: Six Directors and six Executive Officers
3 Nomination and Compensation Committee (meetings held in FY2022:

2 times)
The Nomination and Compensation Committee discusses the procedures tomake decisions concerning the nomination and compensation of Directors.
It is organized under the Board of Directors, in order to further enhance thesupervisory function of the Board of Directors.
• Chair: Representative Director and President, FUJITA Masahiro• Composition: Five Directors (including three Outside Directors)

4 Audit & Supervisory Board (meetings held in FY2022: 12 times)
Four Audit & Supervisory Board Members, two of which are Outside Audit& Supervisory Board Members, attend the Board of Directors and Outside
Officer Liaison meetings. Full-time Audit & Supervisory Board Members
attend the Executive Committee and other important management meetingsto perform the supervisory function over Directors and Executive Officers
responsible for business execution.
•C hair: Full-time Audit & Supervisory Board Member, NAKAMURA Mitsuyoshi• Composition: Two full-time Audit & Supervisory Board Members and two
Outside Audit & Supervisory Board Members
5 Sustainability Committee (meetings held in FY2022: 11 times)
The Sustainability Committee deliberates the Management Plan and ESG
management.
• Chair: Representative Director and President, FUJITA Masahiro
6 Risk Management Committee (meetings held in FY2022: 4 times)
The Risk Management Committee evaluates and manages various
management risks from a cross-sectional perspective; monitors the progressof individual projects; formulates measures against challenges. Deliberationof issues related to internal control.
• Chair: Representative Director and President, FUJITA Masahiro

Corporate Governance Structure (As of June 27, 2023)
General Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal

Appointment/Dismissal

Management/Supervision

Audit

3 Nomination and

1 Directors/Board

4 Audit & Supervisory

Inside Directors: 2

Inside Directors: 6

Inside members: 2

Compensation
Committee

of Directors

Board Members/Audit &Supervisory Board

Accounting Auditor
Audit
Outside Directors: 3

Supervision

Outside Directors: 5

Selection/Dismissal

7 HSSE Committee (meetings held in FY2022: 3 times)
Deliberation of issues related to HSSE.
• Chair: Executive Officer, TAKAHASHI Toshihiro

Cooperation
Outside members: 2

Audit

Business Execution

8 Information Security Committee (meetings held in FY2022: 1 time)
Deliberation of issues related to Information Security.
• Chair: Director and Managing Executive Officer, NAKAJIMA Toshiaki

5 Sustainability Committee

9 Investment Evaluation Committee (meetings held in FY2022: 3 times)
Verification of risks and appropriateness of investments in important projects.
• Chair: Director and Senior Managing Executive Officer, YAMASHITA Michiro

7 HSSE Committee

6 Risk Management Committee

8 Information Security Committee
9 Investment Evaluation Committee

2 Executive Committee
Cooperation
Report/Pre-consultation

Representative Director and President (Chief Executive Officer)

Auditing Dept.
Internal audit

Internal control evaluation

Corporate divisions, business divisions, and Group companies

JAPEX Integrated Report 2023 44

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Corporate Governance—
Activities of Board of Directors and Nomination and

Evaluation of the Effectiveness of the Board of Directors

Compensation Committee

JAPEX analyzes and evaluates the effectiveness of the Board⃝ For discussion on investment projects, improve the operationof the Board of Directors so that the Board of Directors canBoard of Directorsof Directors once every year by understanding and improving

have discussions focusing on the perspective of portfolio

Pursuant to the provisions of the Companies Act, thefollowing matters were discussed: matters regarding theGeneral Meeting of Shareholders, matters regarding thesettlement of accounts, matters regarding officers, mattersregarding participation in specific projects and loans to relevant
subsidiaries, and so forth.
In addition to the foregoing, the Board of Directors
received reports of specific items for discussion, including theManagement Plan, sustainability, IR, HSE (health, safety, andenvironment), personnel strategies, DX (digital transformation),
health management, and the whistleblowing system, as well
as regular reports of the status of production and sale of gas
and other energies in Japan and the overseas business, andthen discussed matters such as the status of efforts.

the effectiveness of supervision of management by the Boardof Directors for the purpose of contributing to the maximizationof JAPEX’s medium- to long-term corporate value. In fiscal
2022, the evaluation was made as follows and its results wereconfirmed at the Board of Directors meeting held in May 2023.

optimization by visualizing the trends of all business fields, notonly specific ongoing projects.

Nomination and Compensation Committee
The committee discussed matters regarding officers(appointment of candidates for Directors and Audit &Supervisory Board Members to be proposed to the General
Meeting of Shareholders and appointment of Executive
Officers, compensation and bonuses for Directors, the skill
matrix, plans for provision of shares to officers, and so forth).

1. Evaluation Method
A survey created by the Board of Directors secretariat(evaluated the following items with respect to the Board of
Directors for the last one year as regular verification of theeffectiveness of the Board of Directors)
2. Evaluation items(1) Composition of the Board of Directors (the number of
Directors, diversity, knowledge, experience and skills)(2) Operation of the Board of Directors (operation of the Boardof Directors meetings, including the number of the Board of
Directors meetings and hours of discussion, the contents
and volume of the Board of Directors meeting materials,
and the number of proposals at the Board of Directors
meetings)⃝ Consider holding in-depth discussions on a succession planand officer compensation.
⃝ Consider further ensuring the diversity of the Board of
Directors and increasing the percentage of Outside Officers.
⃝ Consider activities beyond the framework of the Boardof Directors, including regular meetings in which Outside
Officers also participate, office visits, and workshops, so thatthe Board of Directors can have more active discussions.
4. Initiatives Going Forward
Based on the results of this evaluation, we will respond to theissues that were identified. Going forward, we will continue
working to further enhance the functionality of the Board of
Directors by periodically identifying issues through opinions
and surveys of attendees at Board of Directors meetings.

3. Evaluation Results(1) The effectiveness of the Board of Directors was evaluatedas being continuously improved and ensured overall.
(2) The following issues including medium-term efforts havebeen identified for further improving and revitalizing thefunction of the Board of Directors.
⃝ Improve the operation of the Board of Directors so thatthe Board of Directors can discuss important management
issues such as sustainability, human capital, and DX from a
broad perspective, not only making decisions on individual
specific matters of business execution.

JAPEX Integrated Report 2023 45

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Corporate Governance—
Compensation for Directors and other Officers
1. Compensation for Directors
Compensation for Directors is determined based on thepolicy for determining the compensation of directors set by
the Board of Directors after deliberation by the Nomination
and Compensation Committee. The policy for determining thecompensation of directors is outlined below.
Basic Policy⃝ Regarding the compensation of JAPEX’s Directors, thecompensation structure can function as an incentive tosustainably enhance corporate value. When deciding thecompensation for individual Directors, our basic policy is toset an appropriate level in consideration of the roles alignedwith their position.
⃝ Specifically, compensation for Directors (excluding Outside
Directors) comprises base compensation and performancelinked compensation (bonuses and share-based
compensation). Meanwhile, compensation for Outside
Directors is only base compensation, considering their dutyof supervising management.
Policy for base compensation (monetary compensation)⃝ Base compensation of JAPEX’s Directors is fixed monthly
monetary compensation and is decided in comprehensive
consideration of their position, balance with market standard
and employees’ salaries, number of years of service, and more.
Policy for performance-linked, or non-monetary compensation⃝ Of performance-linked compensation, bonuses are paid atcertain times every year based on consolidated net income
as an indicator measuring their contribution to results forthe corresponding fiscal year. Specifics are decided incomprehensive consideration of their position, dividends,
the level of employee bonuses, their contribution of
directors to corporate management in each fiscal year, past
results, payment record, and more. Individual Director’s
contribution to JAPEX’s management is measured based on
the achievement of previously set annual goals and businessplans (including GHG reduction target), human resource
management, leadership, and execution ability, in addition to
the aforementioned contribution to business performance.

⃝ Of performance-linked compensation, share-based
compensation is based on the Rules on Provision of Shares
to Officers approved by the Board of Directors within thelimit approved at the General Meeting of Shareholders.
JAPEX shares equivalent to the number of points provided
in line with their positions and performance (using a total
return ratio as a general rule as an indicator of performance
evaluation based on JAPEX’s recognition that returning
profits to shareholders is an important management issue)
and a monetary amount equivalent to the market price of
said shares is provided as a general rule to Directors uponretirement.
Note:・ The policy for provision of share-based compensation before fiscal 2022 was to use
annual dividend amounts as a general rule as an indicator of performance evaluation.
・ Pursuant to the Rules on Provision of Shares to Officers, JAPEX may forfeit part or
all of the points granted to any Director, etc. as resolved at a meeting of the Board of
Directors if such Director, etc. is dismissed or causes significant damage to JAPEX’s or
the Group’s business due to his/her execution of duties (malus).

Policy concerning the ratio of compensation⃝ We aim for the ratio of performance-linked compensation(bonuses and share-based compensation) to totalcompensation to be around 30% at standard amounts. To
ensure the compensation system can better function as anincentive to sustainably enhance corporate value, we willconsider revising the ratio as appropriate.
Matters on determination of compensation⃝ Regarding individual compensation, the Representative
Director and President is entrusted with the specific details
based on a resolution by the Board of Directors. Thatauthority enables the allocation of bonuses based on each
Director’s base compensation and the Directors’ contribution
to corporate management. It also enables the setting of thespecific timing of the payment.
⃝ Calculation methods for base compensation and bonuses
are deliberated in advance at the Nomination andCompensation Committee. The Representative Director
and President must decide the method with respect to theresults of the deliberations.
⃝ The provision of points in share-based compensation isreported in advance to the Nomination and Compensation
Committee.

2. Compensation for Audit & Supervisory Board Members
Compensation for Audit & Supervisory Board Members isdetermined after consulting with Audit & Supervisory Board
Members, and within the limit approved at a General Meetingof Shareholders.
3. Targets and Actual Figures of Indicators Used for
Performance-linked Compensation
Of performance-linked compensation, the specific target for
the indicator used for bonuses (consolidated profit) has not
currently been set, as our business performance is often
affected by external factors such as fluctuations of crude oiland natural gas prices as well as foreign exchange rates, andtherefore it is difficult to set an appropriate figure that works as
an incentive.
For fiscal 2022, JAPEX posted consolidated profit of ¥67,394
million. Of performance-linked compensation, the target for theindicator for fiscal 2022 used for share-based compensation
was annual dividend amount. The target was ¥50 per share,
and the actual amount paid was ¥370 per share.
Amount of Compensation for Directors and Audit & Supervisory Board Members (FY2022)

Position

Total amountof consolidated
compensation

Total amount of each typeof compensation(Millions of yen)

Base(Millions of yen)compensation

Performance-linked compensation
Bonus

Share-based
compensation

Number ofrecipients(Persons)(Outside Directors)

388
(52)

312
(52)

62
(—)

13
(—)

14
(6)

Audit & Supervisory Board Members(Outside Audit & Supervisory Board Members)

65
(22)

65
(22)

—

—

7
(4)

Total
(Outside Officers)

453
(74)

377
(74)

62
(—)

13
(—)

21
(10)

Directors

Note: The above number of recipients includes three Directors and three Audit & Supervisory
Board Members who retired upon the conclusion of the 52nd Ordinary General Meetingof Shareholders held on June 28, 2022.

JAPEX Integrated Report 2023 46

JAPEX’s Vision

Strategy

Value Creation Through Business

Integrity and Governance—Corporate Governance—

Initiatives to Support Value Creation

Financial and Other Information

Executives

https://www.japex.co.jp/en/company/organization/executives/

Directors, Audit & Supervisory Board Members, and Executive Officers (As of July 1, 2023)■ Directors (*1 Directors ITO Tetsuo, YAMASHITA Yukari, KAWASAKI Hideichi, KITAI Kumiko and SUGIYAMA Yoshikuni are Outside Directors as defined under Article 2, item 15 of the Companies Act.)
Director and Chairman

Representative Director and President, Chief Executive Officer

Representative Director, Executive Vice President

WATANABE Osamu

FUJITA Masahiro

ISHII Yoshitaka
Advisor to President, President of Power Business Division,in charge of Secretary Office, responsible for Carbon Neutral Related Business

Jun. 2007 Executive Vice President, JAPEX
Jun. 2008 President and CEO, JAPEX
Jun. 2016	Representative Director and Chairman,
JAPEX
Jun. 2023 Assumed his current position
Length of service: 16 years
Director, Senior Managing Executive Officer

Jun. 2019	Representative Director, Executive Vice
President, JAPEXOct. 2019 Assumed his current position

Apr. 1981
Jun. 2021

Joined JAPEX
Assumed his current position

Length of service: 5 years
Length of service: 4 years

Director, Managing Executive Officer

Director, Managing Executive Officer

YAMASHITA Michiro

NAKAJIMA Toshiaki

TEZUKA Kazuhiko

In charge of Finance & Accounting Dept. and
Deal Execution/PMI Support Dept.

In charge of Corporate Communication Office,Corporate Strategy Dept., and Information Technology Dept.

President of Technical Division

Apr. 1982
Apr. 2022

Apr. 1986
Jun. 2022

Dec. 1983
Jun. 2023

Joined JAPEX
Assumed his current position

Joined JAPEX
Assumed his current position

Joined JAPEX
Assumed his current position

Length of service: 5 years

Length of service: 1 year

Length of service: –Outside Director

Outside Director

Outside Director

ITO Tetsuo*1

YAMASHITA Yukari*1

KAWASAKI Hideichi*1

Jun. 2016 Assumed his current position
Significant positions concurrently held
Attorney at Sawayaka Law OfficeJun. 2019
Assumed her current position
Significant positions concurrently held
Managing Director, Charge of Energy Data andModelling Center at The Institute of Energy Economics, Japan

Length of service: 3 years

Length of service: 7 years

Jun. 2020

Assumed his current position

Length of service: 4 years

Outside Director

Outside Director*1

KITAI Kumiko

SUGIYAMA Yoshikuni*1

Jun. 2022 Assumed her current position
Significant positions concurrently held
Attorney at Kachidoki Law Office,Independent Auditor at OSAKI ELECTRIC CO., LTD.

Jun. 2022 Assumed his current position
Significant positions concurrently held
Director at The Yomiuri Shimbun Holdings, Representative Director,
Chairman at Nippon Television Holdings, Inc., andRepresentative Director, Chairman at NTV Network Corporation

Length of service: 1 year

Length of service: 1 year

JAPEX Integrated Report 2023 47

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Corporate Governance—■ Audit & Supervisory Board Members (*2 Audit & Supervisory Board Members KAWAKITA Chikara and MOTOYAMA Hiroshi are Outside Audit & Supervisory Board Members as defined under Article 2, item 16 of the Companies Act.)
Full-time Audit & Supervisory Board Member

Full-time Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

NAKAMURA Mitsuyoshi

MOTOYAMA Yoshihiko

KAWAKITA Chikara*2

Apr. 1982
Jun. 2021

Apr. 1983
Jun. 2022

Jun. 2022 Assumed his current position
Significant positions concurrently held
Chairman at The Salt Science Research Foundation,
Chairman at NOMURA INSTITUTE OF ESTATE PLANNING

Joined JAPEX
Assumed his current position

Length of service: 2 years

Joined JAPEX
Assumed his current position

Length of service: 1 year

Length of service: 1 year

Outside Audit & Supervisory Board Member

MOTOYAMA Hiroshi*2
Jun. 2022 Assumed his current position
Significant positions concurrently held
Executive Vice President at AKTIO HOLDINGS Corporation
Length of service: 1 year

Reasons for Appointment of Outside Directors and Outside Audit & Supervisory Board Members
Name

Reasons for Appointment

To use his extensive knowledge and experience as a legal
specialist in the Company’s management
To use her deep insight in energy economy and energy and
YAMASHITA environmental policies she acquired through research
activities at a research institute engaging in survey andYukariresearch in the Company’s management
To use his extensive knowledge on corporate management in
KAWASAKI
general that come from abundant managerial experience inglobal firms in telecommunications and other areas, in the
HideichiCompany’s management
To use her deep insight that comes from her extensive
administrative experience primarily in the areas of labor
KITAI Kumiko administration in government positions, etc., as well as
extensive knowledge of labor legislation and other laws in
the Company’s management
SUGIYAMA To use his deep insight and abundant corporate management
experience he has acquired through his career at a newspaper
Yoshikuni
company and others in the Company’s management
To use his deep insight he has acquired through his
Audit &KAWAKITA
experience in policy execution at the Ministry of Finance andSupervisory Chikara
as a professor at a graduate school in the Company’s
management
Board
Members
To use his extensive corporate management experience at
MOTOYAMA financial institutions and other organizations anddistinguished insights, as well as his considerable knowledge
Hiroshion finance, accounting, tax affairs, risk management andother areas in the Company’s management
Directors ITO Tetsuo■ Executive officers who do not concurrently serve as Directors and Fellows (Fellows support the management with high degree of expertise in specialized fields)
Senior Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

Managing Executive Officer

SUGA Tsuyoshi

ABE Satoshi

IKENO Tomonori

KASA Hirofumi

YAMADA Tomomi

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

NAKANO Masanori

NAGAHAMA Yasushi

OHAMA Tadashi

YASUI Akira

FUNATSU Jiro

Executive Officer

Executive Officer

Fellow

Fellow

Fellow

TAKAHASHI Toshihiro

SUDA Akira

WASEDA Amane

ANRAKU Toshiyuki

TAKANO Osamu

Skills Matrix
Name

Title

WATANABE Osamu Director and Chairman
FUJITA Masahiro

Representative Director and President

ISHII Yoshitaka

Representative Director

Nomination andCorporate
Compensation management
Committee

Member

○

Chair

○

NAKAJIMA Toshiaki Director

Globalbusiness

○

○

○

○

○

○

○

○

○
○

○

Director○○○

ITO Tetsuo

Outside Director

Member○○YAMASHITA Yukari Outside Director

MemberKAWASAKI Hideichi Outside Director

Member

○

○
○

○
○

○

○

Outside Director○

Technologies/
DX

○

○

TEZUKA Kazuhiko

SUGIYAMA Yoshikuni Outside Director

Knowledge
Legal affairs/
ESG/
on the energy
Risk
industry
management Sustainability○

YAMASHITA Michiro Director

KITAI KumikoFinance/
Accounting/Tax affairs

○

○

○

○

○
○

○

○

○

○

NAKAMURA Mitsuyoshi Full-time Audit & Supervisory Board Member

○

○

○

MOTOYAMA Yoshihiko Full-time Audit & Supervisory Board Member

○

○

○

KAWAKITA Chikara Outside Audit & Supervisory Board Member

○

○

○

MOTOYAMA Hiroshi Outside Audit & Supervisory Board Member

○

○

○

Note: The table above indicates the major skills possessed by each individual and does not represent all the knowledge, experience, and abilities possessed by them.
“Corporate management” includes management experience at organizations or associations other than companies.

JAPEX Integrated Report 2023 48

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Risk Management—
Basic Concept
Our business environment is becoming more uncertain as the social environment changes rapidly. Nevertheless, it isinevitable to control risks properly in order to achieve the goals of our management plan and increase our corporate
value. JAPEX has developed and maintains a company-wide integrated risk management process and a process forevaluating and managing business risks in the course of investment decisions associated with various projects, as wellas the execution and operation stages of these projects. Other countermeasures against diverse risks include developing
Business Continuity Plans (BCPs) and establishing and maintaining an information security management system.

Risk Management System
JAPEX established the Risk Management Committee tomanage major company-wide risks. The Risk Management
Committee meets once every three months in principle with
the President as the Chair and the Officer in charge of Finance& Accounting Dept. as the Vice Chair. The primary items to be
discussed by the Committee are as listed below.
⃝ Identification and evaluation of company-wide risks⃝ Management of progress in key projects currently in theexecution and operation stage and the determination of
response to issues⃝ Verification of important matters related to internal
control and that of compliance violation incidents
In fiscal 2022, the Committee met four times to discuss topics
such as the impact of the situation in Russia and Ukraine on
JAPEX’s business, report of the progress of the reduction
target of GHG emission intensity, in addition to the above
matters.
The Sustainability Committee is charged with managing
JAPEX2050 and JAPEX Management Plan 2022–2030, andits response to environmental, social, and governance (ESG)
issues. Moreover, the Sustainability Committee engages in
discussion regarding how to address risks identified by the
Risk Management Committee and deemed to constitutemanagement issues requiring particular attention over the longterm.
In addition, business risks associated with projects thatwould entail a certain level of financial burden are reviewed by
the Investment Evaluation Committee.
The risk management system, including the secretariat of
the Risk Management Committee, is jointly promoted by the
Corporate Strategy Dept., Administration & Legal Dept., andAuditing Dept.

Risk Management

https://www.japex.co.jp/en/sustainability/governance/riskmgmt/

Integrated Risk Management
JAPEX prepares a risk matrix by identifying and evaluatingcompany-wide risks. Each division identities risks in light ofsuch matters as the characteristics and geographical locationsof its business operations as well as relevant regulatory
conditions, then quantitatively assesses each risk fromthe perspectives of probability of its materialization and its
estimated magnitude. The Risk Management Committee istasked with annually deliberating the risk matrix which is, inturn, reported to the Board of Directors, and then, describedin detail in the Annual Securities Report and on the corporatewebsite.
To date, we have identified the following six major risks.
Recognizing the possibility of the occurrence of these risks,
we strive to avoid their occurrence and to take appropriate
measures in the event of their occurrence.
1. Risks related to commodity prices and exchange rates
2. Risks related to business・E&P Business: Risks related to exploration anddevelopment investment, reserves, and those specificto overseas business・I/U Business: Risks related to natural gas sales andnatural gas thermal power generation business・Overall business: Risks related to accidents anddisasters, climate change, and establishment of new
businesses,
etc.
3. 	Specific laws and regulations
4. 	Risks associated with the variation in INPEXCORPORATION’s stock price
5. JAPEX’s shares held by the government
6. Compliance

In fiscal 2022, we have quantitatively assessed and reported to
the Board of Directors the financial impact of combined risks
in the case of simultaneous occurrence of multiple risks ofsignificant importance, in addition to updating the risk matrix.
Please visit the above link to see the detailed risk information
posted on our corporate website.

Risk Management Process
Board of Directors
Direction

ReportRisk Management Committee(Chair: President)
Approval

ReportSecretariat of the Risk Management Committee
Support/Instruction

ReportEach division

JAPEX Integrated Report 2023 49

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Risk Management—

Business Risk Assessment

Emergency Response and Business Continuity Plans

When making investment decisions that would entail a certain
level of financial burden, we employ the Decision Gate (DG)
process consisting of four phases (see the diagram below).
This process identifies risks and opportunities associatedwith such decisions from technical, economical, commercial,organizational, and political-social (TECOP) perspectives, withDecision Gate Reviews (DGRs) being carried out to evaluate
and discuss countermeasures to be implemented by theCompany and other matters. Items examined via each DGR are
also presented below. The Investment Evaluation Committee,
which takes on DGR-4, evaluates the appropriateness ofinvestment by taking into account not only the economic
potential of the project but also a broad range of business risks,
including those associated with ESG and geopolitical issues.
Moreover, the recent shift in the business environment inconnection with climate change has been radical. In conjunction
with this shift, since fiscal 2020, efforts have been under way,in countries and regions where each project takes place, to stepup monitoring of the status of carbon tax introduced along withgovernment-led reduction targets for GHG emissions and otherlocal regulatory trends. Results of each DGR are reported to the
Executive Committee, which is authorized to give final approvalon investment, and the Board of Directors.

The status of projects in the execution and operation
stage is overseen by management and corporate divisions
via monitoring at the Risk Management Committee, which
employs a cross-sectional approach to quantitatively identify
and assess each risk, with the aim of maintaining appropriate
business management.
In addition, the DGR-5 is carried out to utilize insights andtakeaways acquired in the course of business operations(“Lessons Learned”) in future investment decisions. The DGR5 is mainly focused on identifying factors contributing to thesuccess or failure of each project to strengthen and improvethe business risks assessment and management process.
Additionally, we report matters related to important projects to
the Board of Directors.
We also make the above efforts to verify the effectivenessof our risk management processes.

To ensure appropriate response to emergencies at
operation sites and fields, we have in place the Emergency
Countermeasure Regulations and various response manuals.
At the time of an emergency, business divisions andmajor business locations collect information and provide
communications and instructions in accordance with theprescribed processes. In addition, the Emergency Response
Headquarters, etc. will be set up at JAPEX’s Head Office andmajor business locations, if necessary.
Moreover, we also have developed Business Continuity
Plans (BCPs) and initial response manuals to respond to amajor earthquake, an outbreak of infectious diseases such as
COVID-19, and other incidents that would severely impact ourbusiness.
At major business locations, we regularly conduct disaster
drills for emergencies at operation sites and fields, those forlarge-scale disasters in urban areas, and employee safety
confirmation drills, based on the results of which we work to
improve the methods of response to emergencies. We also
reinforce our disaster prevention schemes by participating in
drills carried out in cooperation with local disaster prevention
organizations.

DG Process Overview
Investment decision stage

Execution and operation stage

Phase-1

Phase-2

Phase-3

Phase-4

Identify(Project kick-off)

Assess (Feasibility
study)

Select (Concept
selection)

Define(Detailed study)

DGR-1

DGR-2

DGR-3

Execute projects(Preparation for operationand facility construction)

DGR-4 (Investment Evaluation Committee)
Decision-making(Executive Committee/Board of Directors)

Deliberation New investment projects that could have a particularly significant impact on the Company’s
topicsbusiness and investment projects that will be undertaken as additions to existing projects
Evaluation
pointsRules andguidelines

Confirm the project’salignment with strategy, thenidentify risks and opportunities
based on assessments of theexternal environment

Identify all alternative
options and evaluate
their feasibility, risks,and opportunities

Select the concept
delivering maximum
value from multiple
options

OperateGet ready/Prepare toproceed into
execution phase

DGR-5

Major overseas E&P projects andsome domestic projects
Review the progress of project execution toprevent value impairment

Add to knowledge
for future projects

Decision Gate process and guidelines
Investment Evaluation Committee Rules
Investment Evaluation Guidelines

Information Security

Learn lessons
from businessoutcomes

Risk Management Committee Rules
Project Management Guidelines

JAPEX has set up the Information Security Committee andhas in place an information security management systemthat aims for proper and safe management and effective
use of information. Under this system, we have formulated
various policies, including Information Security Policy, whiledeveloping and maintaining our IT platforms. We also provide
regular education on information security to our employees toraise their awareness and prevent the occurrence of security
incidents.
As part of crisis management, we continuously review ourvulnerability to cyberattacks. In 2022, we received a safetyassessment by an external IT security expert. We respond toissues identified by such assessment.

JAPEX Integrated Report 2023 50

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Integrity and Governance—Compliance and Respect for Human Rights—
Basic Concept
To remain a company trusted by society, JAPEX is striving to establish a corporate culture of compliance withconventional wisdom and social norms where all officers and employees act ethically and with integrity. In line with the
JAPEX Group Code of Ethics and Conduct, the Company has declared its commitment to respecting human rights andnot tolerating any forms of discrimination and harassment, and is engaged in initiatives to advocate for human rights.

Compliancehttps://www.japex.co.jp/en/sustainability/governance/compliance/

Compliance■ Promotion System
JAPEX has formulated the JAPEX Group Code of Ethics andConduct, the Compliance Manual, and a booklet featuringcommentaries on compliance case studies. In this way, we
strive to promote thorough compliance and ensure that ouraction is always guided by corporate ethics. These documents
are updated on an as necessary basis, with the latest versions
distributed to all employees.
Chaired by the President, the Risk Management Committee
discusses structures and policies related to compliance andverifies potential incidents of compliance violation.
■ Prevention of Bribery and Corruption
The JAPEX Group Code of Ethics and Conduct stipulates
that the Company shall maintain sound and transparent
relationships with politicians, political parties, and government
officials/agencies. Based on this code, the Compliance
Manual provides detailed requirements to be observed. These
requirements are understood and practiced by all officers andemployees.
The Group also established the Anti-Bribery Guidelines that
stipulate such matters as the development of a system forensuring strict compliance with relevant laws and regulations
and the clarification of internal authorization procedures. Inline with these guidelines, we implement periodic self-checks,
anti-bribery training, and other measures to prevent bribery
incidents in an effective manner.
There were no incidents involving the violation of theBribery Prevention Guidelines in fiscal 2022. Furthermore, we
do not make any political contributions.

■ Education
We have defined sustainability, compliance, and insider trading
prevention as three basic items deserving attention of all
officials and employees in the course of their daily operations.
Accordingly, lectures on these topics are mandatory for all
and incorporated into training for new hires and career stage
training, both of which are conducted annually.
■ Report & Consultation System
The JAPEX Group has a system for receiving reports on and/or consultation about issues associated with compliancerequirements, including respect for human rights, fairprocurement and trade, as well as the maintenance of properand appropriate relationships with politics and governments.
The system secures an external helpline through which
employees can directly report to or consult with corporate
lawyers while ensuring strict confidentiality to enable
anonymous reporting and consultation. We also prohibit the
detrimental treatment of those who use the system andotherwise strive to protect whistleblowers.
In addition, as response to the amended Whistleblower
Protection Act dated June 1, 2022, JAPEX has developed
relevant regulations to conform to the compliance requirements
under that act. In fiscal 2022, there was no case reported via
this system.

Structure of Report and Consultation System
Risk Management Committee(Chair: President)
Full-time Audit &Supervisory Board Members

ReportDirection/Approval

ReportInvestigation

Administration & Legal Dept.
(or Auditing Dept. if Administration &Legal Dept. is involved in the issue)
Investigation cooperation/Report

Directions on recurrence prevention measures

Investigation cooperation
Report/Consultation

External contact point(corporate lawyers)
Report/Consultation

Invested persons anddepartments

Report of results, etc.

Report of results, etc.

Relevant departments

The JAPEX Group’s officers
and employees, etc.

JAPEX Integrated Report 2023 51

JAPEX’s Vision

Strategy

Value Creation Through Business

Integrity and Governance—Compliance and Respect for Human Rights—

Initiatives to Support Value Creation

Financial and Other Information

Respect for Human Rights

https://www.japex.co.jp/en/sustainability/social/humanrights/

Respect for Human Rights■ Human Rights Policy
JAPEX established JAPEX Group’s “Human Rights Policy” inMarch 2023 in accordance with the UN “Guiding Principles on
Business and Human Rights.” This policy has been established
as a specific policy based on the commitment to respecting
human rights shown in the existing “JAPEX Group Code of
Ethics and Conduct,” taking into account external experts’opinions. By establishing the policy for showing the JAPEXGroup’s stance for respecting human rights once again andour current human rights issues in our businesses, we aim
to promote understanding of our human rights efforts tostakeholders as well as the Group’s officers and employees.
Human Rights Policy■ Human Rights Due DiligenceIn fiscal 2022, we organized human rights issues with value chain stakeholders while receiving advice from external experts,
identified vulnerable stakeholders and potential human rights risks, and organized human rights issues in the industry where JAPEX
belongs.
We will continue to work to identify, prevent and mitigate a negative impact related to our business activities on human rights
in accordance with the Human Rights Policy in fiscal 2023 and thereafter. We will also endeavor to avoid causing or promoting anegative impact on human rights in value chains.
Vulnerable stakeholders and potential human rights risks in value chains
Manufacture (customers)

Vulnerable
stakeholders

https://www.japex.co.jp/en/sustainability/social/humanrights/

Potential humanrights risks

Specific Initiatives■ Anti-harassment Measures
We have in place the Anti-harassment Rules and are working
to realize a comfortable work environment. If an incident
involving harassment occurs, we carefully conduct interviews
with individuals involved and take strict disciplinary action whileissuing a reminder to employees to prevent similar incidents
from recurring.
In fiscal 2022, we distributed periodic e-mail newslettersto all employees and provided them with relevant information
via the intranet to raise their awareness. We also conductedinternal surveys on harassment twice.

Drilling and production

Transportation

Sale (power plant, etc.)⃝Foreign workers and⃝Foreign workers and⃝Workers engaging in
immigrant workers at
immigrant workers at drillingtransportation of petroleum
manufacturing plants
and production sites
products (drivers)⃝All workers at manufacturing ⃝All workers at drilling and⃝Local residents inplantsproduction sites
transportation routes⃝Neighboring residents of⃝Neighboring residents of⃝Workers at construction
manufacturing plants
exploration and production
sites
sites

⃝Power plant workers⃝Treatment of immigrant
workers/foreign workers(forced labor, discrimination,etc.)⃝Appropriate working hours
and wages⃝Occupational health and safety⃝Environmental pollution(impact on surrounding
areas)⃝Occupational health andsafety⃝Appropriate working hours
and wages⃝Treatment of immigrant⃝Occupational health andworkers/foreign workers
safety(forced labor, discrimination, ⃝Appropriate working hours
etc.)
and wages⃝Occupational health and safety ⃝Health of neighboring
residents⃝Health of neighboring
residents and access to water⃝Land rights, original
inhabitants’ rights, violation
by security guards orofficers■ Response to Sexual Minorities
We have the “Inner Rule of Same-sex Partnership,” which
defines treating our employees’ same-sex partners in the samemanner as legally married spouses, and it enables employees
to apply for allowances and benefits in the relevant inner rules.
Also, to prevent prejudice and discrimination against sexual
minorities, the Anti-harassment Rules sets the harassment
regarding SOGI (Sexual Orientation and Gender Identity) as an
object to prevent.

■ UK Modern Slavery Act
JAPEX Group discloses a statement of its policies andinitiatives in accordance with the “UK Modern Slavery Act
2015.”
Measures for the Modern Slavery Act

https://www.japex.co.jp/sustainability/uploads/pdf/JAPEXStatement_ModernSlaveryAct.pdf

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Stable and Sustainable Energy Supply—Climate Change Response—
Information on other individual challenges related to stable andBasic Concept
JAPEX positions climate change response as one of its top management priorities. Aiming to contribute to global
initiatives on climate change and the government’s goal of achieving carbon neutrality by 2050, the entire JAPEXGroup, including subsidiaries and associates, is working to transform its business portfolio by reducing GHG emissions
and developing CCS and other new technologies.

sustainable energy supply is available on the following pages:
Stable and Sustainable Energy Supply (E&P field) P.27 
Stable and Sustainable Energy Supply (Infrastructure/Utility field) P.30 
Development of New Technologies (Carbon Neutral field) P.33 
Development of New Technologies

https://www.japex.co.jp/en/technology/

Climate Change Response■ Policy on and Status of Climate Change Response
Policy on Climate Change Response
In May 2021, JAPEX formulated its carbon neutral direction
and objective JAPEX2050 and clarified its direction to achieve
net zero GHG emissions from its operations by 2050 andcontribute to realization of a carbon-neutral society. As aconcrete roadmap to 2030, we formulated the Management
Plan 2022–2030 (the “Management Plan”) in March 2022.
Based on the Management Plan, we will push forward withthe transition to a carbon-neutral society and work to build amedium- to long-term business foundation.
In addition, we will continue to formulate strategies
based on analyses of scenarios in line with the TCFD
Recommendations*, strengthen internal processes, including
governance structure and risk management, and strive tofurther enhance information disclosure.

Outline of Initiatives Taken in Fiscal 2022
In April 2022, we established the Carbon Neutral Business
Promotion Committee (the “CN Business Promotion
Committee”) for the purpose of cross-departmental information
sharing and problem solving. The committee discusses
important matters related to carbon neutrality in each businessdivision, maintenance of CCS laws and regulations related to
the Management Plan, and the structuring of carbon neutral
projects, with the aim of promoting smooth business operations.
To enhance disclosure information, we received thirdparty assurance for disclosed data on our GHG emissions andenergy consumption and disclosed GHG emissions from eachof the 15 categories of Scope 3 activities. We also responded
to the CDP Climate Change Questionnaire for the second time,
obtaining an A- rating.
*R ecommendations aimed at facilitating information disclosure with regard
to the financial impact of climate change that were issued in 2017 by the
Task Force on Climate-related Financial Disclosures (TCFD), which wasestablished by the Financial Stability Board (FSB; consisting of central bankrepresentatives and financial authorities from major economic powers)

Major Initiatives Taken in Fiscal 2022 in Line with TCFD Recommendations

Governance・Established and operated the CN Business Promotion Committee (meeting held 12 times in fiscal 2022)
・Identified Directors and Audit & Supervisory Board Members with ESG and sustainability skills and disclosed such information as the
skills matrix in the Corporate Governance Report (continuing from fiscal 2021)
・Added items considering the achievement level of climate change response objectives to annual evaluation of Executive Officers

Strategy

・Promoted the carbon neutral direction and objective JAPEX2050 and the Management Plan
・Conducted a scenario analysis and reviewed the portfolio to reflect changes in the external environment

Risk
Management
Metrics andTargets

・Monitored climate change risks (transition and physical risks) of major projects, progress towards GHG emission intensity targets, andclimate change risks using the risk matrix through the Risk Management Committee■ Status of Climate Change Response in Line with TCFD
Recommendations
1. Governance
Climate change response is the priority of JAPEX’s
management, and we have built a system for appropriate
decision-making under the supervision of the Board of
Directors.
Key matters for business execution (medium- to long-term
policies and plans), including climate change response, aredeliberated at the Executive Committee and various othercommittees before being resolved by or reported to theBoard of Directors. In addition, the progress of GHG emission
intensity targets is reported annually to the Board of Directors.
The JAPEX2050 and the Management Plan were all matters
resolved by the Board of Directors.
Climate change-related deliberations are also addressed by
the Sustainability Committee, Risk Management Committee,
Investment Evaluation Committee, and CN Business Promotion
Committee in addition to the Executive Committee. We havecreated a PDCA cycle for climate change response throughdeliberations at and reports to various committees as well
as data collaboration and integrated management among
business divisions and various committees.
In addition, we prepared a skills matrix that lists theknowledge, experience, and skills of each of our Directors andAudit & Supervisory Board Members. In this matrix, we also
specified ESG and sustainability skills as items.

・Continued efforts to achieve GHG emissions intensity target (Fiscal 2022 target: 3.58 tons-CO2/TJ, Result: 3.56 tons-CO2/TJ, Reduction rate from base year: -11%)
・Prepared and implemented GHG emission reduction action plans
・Calculated emissions from each of the 15 categories of Scope 3 activities

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Stable and Sustainable Energy Supply—Climate Change Response—
PDCA Cycle Related to Climate Change
Board of Directors
Supervision

Executive Committee
Proposal and report

PDCA cycle
Investment Evaluation Committee
Sharing ofmanagement
policies

Sustainability Committee
ProposalFeedback on major
management risks

Risk Management Committee

Sharing ofmanagement policies

Evaluation

Report on
results
Risk Management

Supervision and consensus building
for each business division

Business divisions

Risk
Expected
categories timing

Long
term

MarketLong
andtechnology termrisks

Decrease inrevenue due toweaker oil and gas
demand and lower
pricesReputation Medium
risk
term

Divestment fromthe E&P Business

Impacts on onshore
and offshore
facilities due toextreme changes inweather

Chronic Long
risks
term

Impacts of sea-level
rise on onshore andoffshore facilities
and impacts ofwater resources
depletion

Small

Board of Directors

Resolution and report of key matters for major business execution related to climate change response(resolution of the JAPEX2050 and the Management Plan, report on the management risk matrix,
report on ESG activities, etc.)

Around 5 to 10
times per year

Executive Committee

Deliberation of key matters for business execution related to climate change response(deliberation of the JAPEX2050 and the Management Plan and deliberation of the management risk matrix)

Around 4 times
per yearAround 10 times
per year

Sustainability Committee
Risk Management Committee

Deliberation of the Corporate Vision and the basic policies related to ESG (deliberation of the
JAPEX2050 and the Management Plan)
Cross-sectional assessment and management of management risks, including climate change
response, monitoring of individual businesses*, and deliberation and report of countermeasures forvarious issues (deliberation of the risk matrix, report on the results of GHG emission targets)* Such as carbon tax trends in operating regions and GHG emission results at locations

Investment Evaluation

Deliberation of risks for major investments* and the appropriateness of investments

Committee* If carbon tax and GHG emission regulations emerge, we evaluate their impacts, and even if they do not
emerge, we evaluate their impacts based on internal carbon pricing.

CN Business Promotion

・Formulation and implementation of our strategy for each carbon neutral business area
・Management of progress on structuring carbon neutral projects
・Promotion of inter-divisional collaboration on carbon neutrality

Around 2 times
per yearConvened as
appropriate• Assessment oftransition risks
through internalcarbon pricing during
the investment stage

Small

Frequency of action

Acute
risks
Physical risks

Main issue (Matters inside parentheses are those related to climate change addressed in FY2022)

Countermeasures• GHG emission
reduction based on
the net zero target by
2050

Mediumterm

Main Treatment of Climate Change Response at Various Internal Committees
Committee

Impactlevel

Medium

*1 Net Zero Emissions by 2050 Scenario*2 Sustainable Development Scenario*3 Announced Pledges Scenario*4 Stated Policies Scenario

ImpactIncrease inadditional expenses
due to carbon taxes
and otherenvironmental laws
and regulations

Policy
and
legal
risks
Transition risks

1-1 Linkage to Officer Compensation
To strengthen the linkage between the achievement of
GHG emission intensity reduction targets and management
responsibility, we have included the achievement level ofcompany-wide climate change response objectives to annual
evaluation items of Executive Officers from fiscal 2022. The
annual GHG emission intensity targets set forth in the CSR
action plans serve as indicators.

Main Climate Change Risks that Affect JAPEX and Countermeasures

Large

CN Business Promotion Committee

2-2 Climate Change Risk Assessment
Based on the risk assessment results to date, we havedetermined that transition risk has a greater impact thanphysical risk on our business. We have incorporated a policy tocope with this in the JAPEX2050 and the Management Plan.
In fiscal 2022, we continued our quantitative assessment ofphysical risks and confirmed that, at this moment, their impact
is smaller than that of transition risks.

Large

Performance
investment
management
Business portfolio
management

Sharing ofmonitoring matters

Proposal

2. Strategy
2-1 Formulation of the Management Plan
Because of the business characteristics of handling fossil
resources, JAPEX has positioned climate change response asa key matter in the consideration of business strategies. We
conduct scenario analyses to evaluate the medium- to longterm impact that climate change will have on the Company’sbusiness. In formulating the Management Plan in fiscal 2021,
we conducted a financial impact analysis under four scenarios
to evaluate the impact of climate change risks will have on our
medium- to long-term earnings in more details. Specifically,
we conducted a scenario analysis using carbon and oil prices
published in the four scenarios (NZE*1, SDS*2, APS*3, andSTEPS*4) presented in the World Energy Outlook (WEO) of theInternational Energy Agency (IEA) as parameters. We used
the analysis results for the consideration of the Management
Plan by the Sustainability Committee and also evaluatedthe percentage of investment allocated to risk assets fromthe perspective of climate change to develop a sustainablebusiness portfolio, even under the NZE scenario with the moststringent conditions.

• Shift to a sustainablebusiness portfolio
based on the resultsof scenario analysis• As a result of theweather disaster risk
assessment using
hazard maps, theimpact is limited, andno problem hascurrently been found in
the existing
countermeasures.
• As a result of the risk
assessment of
sea-level rise using
scientific data, theimpact is limited, andno problem hascurrently been found in
the existing
countermeasures.

Note: Medium term is five or fewer years and long term is over five years.

*2

Committee*1*1 Established in April 2022 *2 Domestic CCS field, overseas CCS/CCUS field, next-generation energy field, etc.

Convened as
appropriate
JAPEX Integrated Report 2023 54

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Stable and Sustainable Energy Supply—Climate Change Response—⃝ GHG Emission Intensity

gas development businesses in Japan. The fiscal 2030 GHG

JAPEX manages climate change risks within its integrated risk

We reduced GHG emission intensity in fiscal 2022 by 11%

emissions reduction target was revised in December 2021. The

management, which is a process for identifying and assessing

compared to fiscal 2019. We continue our efforts to minimize

target was revised upward from the previous target of reducing

company-wide risks. Within the risk matrix created byour environmental impact and realize a sustainable society

28% compared to fiscal 2013 to reducing 40% compared to

conducting a quantitative risk assessment based on the impact

through GHG emission reduction initiatives (e.g., energy

fiscal 2013. In addition to our GHG emission intensity targets,and probability of risks, we positioned transition risks as major

conservation, introduction of renewable energy, and reduction

we are also working to achieve the JPDA’s GHG emission

risks with a large impact, and list them as business risks in ourof vent/flare emissions).

reduction targets.

Annual Securities Report.

Changes in GHG Emission Intensity

3. Risk Management

In addition to reviewing the risk matrix mentioned above,
the Risk Management Committee also confirms the progress
toward GHG emission intensity targets and manages risksof existing major projects. The Sustainability Committee
addresses medium- to long-term climate change risks, and theInvestment Evaluation Committee manages climate changerisks such as carbon taxes in the investment evaluation of new
projects. In this way, we develop and maintain processes tomanage diverse climate change risks.
P.49 

Risk Management

GHG emission intensity(ton-CO2/TJ)*

Reduction rate frombase year (FY2019) (%)

FY2020

FY2021

FY2022

3.44

3.20

3.56

4-3 Initiatives for Reducing GHG Emissions
We have established priority action items for Scope 1 andScope 2 as an action plan for reducing GHG emissions.

-13%

-19%

-11%

* In line with the base year emissions recalculation of the GHG Protocol, which is aninternational standard for GHG calculation and reporting, we reflected the end of our
Canadian Oil Sands Project business in fiscal 2021, and for the base year emissions (FY2019)
and all fiscal years thereafter, we calculate GHG emission intensity excluding the projectfrom emissions and energy supply volume.

Scope 1 reduction measures include injection of emitted CO2
in oil and gas fields in Japan, whereas Scope 2 reduction
measures include the gradual shift to zero emission electricity
consumption.
In fiscal 2022, we purchased a non-fossil fuel certificate for⃝ Scope 3 Emissions

approximately 27,000 tons-CO2 equivalent to reduce Scope

The total emissions for the 15 categories of Scope 3 activities

2 emissions and achieved zero emissions. In the future, in

4. Metrics and Targets

were 7,240 thousand tons-CO2, of which Category 11

addition to purchasing non-fossil fuel certificates, we will

4-1 JAPEX Group’s GHG Emission Reduction Targets

emissions (use of sold products) accounted for 89% of thework to further reduce emissions with an eye on energy

total Scope 3 emissions. The decrease in emissions in Scope 3

conservation and increasing the amount of renewable energy• 2050: Achieve net zero

Category 11, mainly due to the end of the Canadian Oil Sands

introduced.

• FY2030: Reduce GHG emission intensity in our operations

Project in fiscal 2021, resulted in a 29% reduction in overall

by 40% compared to fiscal 2019For Scope 1 emissions, we will also continue our efforts

Scope 3 emissions compared to the previous fiscal year. Going

to reduce self-consumed gases and vent/flare emissions, inforward, we will continue striving to further reduce emissions

addition to considering the injection of emitted CO2.

We established a net zero target by 2050 and a fiscal 2030

by working to expand the supply of low-carbon energy

target (40% reduction in emission intensity compared to fiscal

resources such as renewable energy and natural gas.

2019) as a milestone for GHG emission intensity (Scope 1+2)
in our own operations. In addition, regarding emissions in our

4-2 Japan Petroleum Development Association Targets

own supply chain (Scope 3), we established qualitative targets

The Japan Petroleum Development Association (JPDA),

where we aim to strengthen business fields that contribute towhich JAPEX belongs to, participates in the Japan Businessemission reductions.

Federation’s Carbon Neutrality Action Plan. JPDA’s Carbon
Neutrality Action Plan covers mining facilities of oil and natural

JAPEX Integrated Report 2023 55

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Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

HSE as Our Culture—Occupational Health and Safety/Pollution Prevention—
Basic Concept
JAPEX prioritizes occupational health, safety, and environment (HSE) in its business activities in consideration of thebusiness characteristics of handling crude oil and natural gas and works to reduce the risks of accidents and injuries
and environmental pollution. Under the JAPEX HSE Policy, we have established an HSE management system to assess
HSE risks and implement countermeasures, followed by periodic reviews by the HSSE Committee, thereby creating a
PDCA cycle, in an effort to foster a culture of “HSE First” and “Safety First.”

Health, Safety, and Environment (HSE)

https://www.japex.co.jp/en/sustainability/social/hse/

Medium-term HSE Plan
To share the medium- to long-term vision and targets across the Group and simultaneously take action, we have formulated the Medium-term HSE plans and are working to reduce risks and foster an
HSE culture. This medium-term plan consists of eight goals, with priority targets set for each goal. HSE targets at each of the Company’s locations are set based on this medium-term plan. In addition,
we set some of the targets in the CSR Action Plan and carried out activities.
In fiscal 2022, the second year of the Second Medium-term HSE Plan (FY2021–FY2023), we enriched internal education and training, improved processes and optimized documentation to reduce
HSE risks, conducted a water risk assessment, and worked on energy conservation, thereby largely achieving our targets for that fiscal year.
Eight Goals of the Second Medium-term HSE Plan and Main Achievements
Individual challenges

Eight goals of the Second Medium-term HSE Plan

Priority targets by FY2023

Main achievements in FY2022

・Mitigation: internally examined such measures as those to reduce CO2 emissions derived from energy consumption as
measures to conserve energy at production fields, and created a list and visualized the implementation status of GHG
emissions reduction measures
・Adaptation: identified impacts of climate change and sorted out the situation for examining adaptation measures

Strengthening of measuresagainst climate change

・Enhance activities for reducing GHG emissions for mitigation
・Strengthen efforts for adaptation

Reduction of injury frequency*1・Established targets for reducing the frequency of accidents and injuries: 0.00 for LTIF
and 0.86 for TRIR*2
・LTIF target: 0.09, result: 0.84
・Strengthen the analysis of accident factors and promote the “Stop Work Authority” approach ・TRIR target: 0.88, result: 1.39
・Improve the health of employees and manage the hygiene of workplaces

HSE awareness raising andfostering of positive behavior

・Foster positive behavior to enhance HSE leadership・Clarify requirements for HSE-related education, experience, and qualifications andstrengthen the human resource development program・Optimize HSE staffing including the assignment and utilization of HSE officers

・Held a seminar for management officers and provided HSE training for new managers

Instillation of process safety andbuilding of management systems

・Instill process safety methods
・Put in place a process safety management system

・Revised process safety documents to reflect improvements made through training and other measures.
・Already provided training, which also served as an assessment for building a system to provide support across district offices

Pollution prevention andresource recycling
Preserving biodiversity andecosystems

Enhancement of environmental
risk management

・Promote initiatives for water resources, pollution prevention, and conservation of
biodiversity
・Strengthen the environmental risk assessment system

・Conducted a water risk assessment in JAPEX’s operating areas and confirmed that there were no high-risk areas
・Disclosed policies to promote reduction of water and waste (* The amounts of water consumption and waste are monitored
and disclosed separately in the ESG Performance Data)

Governance

Strengthening of overseas HSE
governance・Strengthen HSE audits and HSE management in overseas business・Boost physical security (facility security, mobile security, and personnel protection)

・Developed the Company’s guidelines for physical security
・Inadequate response to overseas security incidents occurred: 0

Crisis management

Enhancement of emergency
response capabilities

・Enhance employees’ disaster prevention capabilities (knowledge and skills)
・Build a company-wide disaster prevention system

・Enlightenment and education activities for disaster prevention: held a company-wide lecture, inviting an external disasterprevention authority as a lecturer, provided disaster prevention education for rank-and-file employees, and disseminateddisaster prevention information using the Company’s IT platform・Emergency drills: continued to conduct combined drills between JAPEX’s Head Office and district offices and between
district offices and subsidiaries/associates as well as drills at each district officeCompliance

Legal compliance and HSE
management system optimization

・Optimize HSE documentation
・Strengthen the contractor management system for small- to mid-sized construction

・Completed the formulation of a guideline policy and the implementation of an HSE management system for small- to
mid-sized construction contractors

Climate change response

Occupational health and safety*1 Lost Time Injury Frequency: Calculated as the number of lost time injuries per 1,000,000 work hours.
*2 Total Recordable Injury Rate: Calculated as the number of total recordable injuries per 1,000,000 work hours.

JAPEX Integrated Report 2023 56

JAPEX’s Vision

HSE as Our Culture—Occupational Health and Safety/Pollution Prevention—

Strategy

The Company has been implementing its unique HSE management■ Identification of and Countermeasures against HSE Risks
To reduce HSE risks, we conduct a risk assessment.
Specifically, hazard sources are identified, and then therisk level of the possible risks from those hazard sources
is categorized as H (high), M (medium), or L (low). For
risks categorized as H and M, risk reduction measures are
considered and implemented until the level is reduced to L. We
review the list of hazard sources and risks every year and sharethe information among district offices to prevent accidents,
disasters, and environmental pollution.
■ HSE Education
We established various HSE education programs aligned withdifferent purposes under the HSE-MS and conduct them at
each location. These include basic education for all employees,
career stage education such as for middle-level employees
and new managers, professional education and training toprevent incidents for specific operational employees, and visitor
education for contractors when they conduct operations on thepremises of the Company or its locations for the first time.
In fiscal 2022, we embarked on initiatives to improve skills of
HSE personnel, in addition to providing education for employees
who are engaged in HSE.

Initiatives to Support Value Creation

Financial and Other Information

Water Resources

Pollution Prevention

https://www.japex.co.jp/en/sustainability/environment/water/

https://www.japex.co.jp/en/sustainability/environment/pollution/

HSE Management Systemsystem (HSE-MS) and applying it to businesses the JAPEX Group
operates. Under the system over which the HSE Department hascontrol and which consists of relevant departments establishedin each district office and subsidiary, the HSE-MS sets out risk
assessment methods, targets, education, operation management,
audits, and review methods by management.
The HSSE Committee, which is chaired by the executive incharge of the HSE Dept. and attended by the President and labor
union president, conducts an overall review of the HSE-MS anddeliberates important matters and basic policies related to HSSE,
which adds the ‘S’ of (overseas) Security to HSE. The status of
HSE activities is reported annually to the Board of Directors.

Value Creation Through Business

Environmental Risk Management■ Process Safety
In Japan, there has been an increase in production equipmentthat is decades old, and safety management of such equipment
has become an issue. In particular, assuring the process safety of
production facilities is important to prevent major accidents, suchas explosions.
While JAPEX has fields that have continued to be operated
for over 60 years in Japan, there are also locations thathave only been operational for a few years. Depending on
the location, there are differences in operational years andbusiness characteristics. Therefore, we are working to set up
comprehensive and systematic process safety in line with thestatus of each location.
In fiscal 2022, we provided basic education on risk
assessment (HAZOP*, etc.) for technicians, which started in fiscal
2021, by holding workshops 20 times, among other measures,to increase their sensitivity to risks.
* HAZOP: Hazard and Operability Studies■ Overseas Security Measures
To protect the safety of our employees engaged in overseas
operations, JAPEX conducts countermeasures, training, andeducational activities from ordinary times based on our overseas
safety and crisis management guidelines.
Moreover, in high-risk countries, we perform audits for
specialized local security systems.

We are working to voluntarily assess various environmental risks(pollution, water resources, biodiversity, climate change, etc.)that arise in the course of our business activities and implement
countermeasures against them, on top of ensuring compliancewith laws and regulations.
■ Water Resource Management
JAPEX appropriately disposes of the water resources it uses.
After purifying water used in the production of oil and natural gas,
as well as pit water collected in the course of mining, to meet
wastewater standards set by laws and regulations, we either
expel it into public waterways or inject it back underground, in
addition to being discharged as sewage.
At our domestic operation locations, we strive to use water
more effectively by promoting the recycling and reuse of water
resources used as a coolant in production facilities and waterused as boiler water.
As part of strengthening water resource management,
we conducted a water risk assessment at JAPEX’s operating
locations using the water risk mapping tool of the World
Resources Institute. We have confirmed that none of the areas
are under high water stress as of March 2023.
■ Air Pollution Prevention
We are working to assess, manage, and limit emissions of the
air pollutants VOCs (volatile organic compounds), NOx (nitrogenoxide) and SOx (sulfur oxide).
We have been participating in a voluntary action plan toreduce domestic VOCs emissions as a member of the Japan
Natural Gas Association since fiscal 2005. As part of our ongoing
drive to reduce VOC emissions, we are working to seal crude oil
storage tanks better and incinerate VOCs that would otherwise
be emitted from production facilities. Fiscal 2022 domestic VOCemissions totaled 989 tons, a year-on-year decrease of 9 tons.

Local security audit

JAPEX Integrated Report 2023 57

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Being a Good Neighbor—Growing Together with Stakeholders—
Basic Concept
JAPEX believes that in order to continue our business activities in a safe and stable manner, it is important to accurately
understand social demands, and gain an understanding of and build relationships of trust with our stakeholders. We
are committed to building good relationships with our stakeholders through various contribution activities with respect
for the cultures and customs of our operating regions in Japan and overseas, as well as through constructive dialogue
and provision of information.

Relationship with Stakeholders

https://www.japex.co.jp/en/sustainability/management/stakeholders/

Relationship with Stakeholders
JAPEX continuously engages in dialogue with our stakeholders to gain theirunderstanding and cooperation in our business activities. We also aim tocontribute to the revitalization and development of local communities by
responding to the expectations and requests from various stakeholders.
Stakeholders

Main means of communication taken in FY2022• Dialogues with clients through marketing activities• Provision of product information • Tours of our facilities for clients• General meeting of shareholders• Financial results briefing for analysts and institutional investors (quarterly)• One-on-one meetings with analysts and institutional investors
Shareholders • Tours of our facilities for analysts and institutional investors
and investors • Business briefings for individual investors• Tours of our district offices for shareholders• Issuance of an integrated report and shareholder newsletters (business report)• Disclosure through the Company’s website• Dialogues with local governments, local communities, etc.
Local
• Tours of our facilities
communities • Participation in, support for, and sponsorship of local events• Social contribution activities and volunteer activities
Oil- andInterviews related to new projects
gas-producing •Various meetings and briefings on the progress of projects•
countries• Meetings with companies involved in new projects
Business• Workshops, meetings, and briefings related to operations and technologies
partners• Regular meetings with operators (including technical discussions)• Meetings that we attend as a shareholder of project companies• Disclosure of the CSR procurement policy and CSR procurement guidelines
Transaction• CSR procurement questionnaire
partners• F air transactions—compliance with the terms and conditions for transmission• HSE management based on the Company’s contractor HSE management guidelines• Individual interviews (three times a year)• Townhall meetings and skull sessions between management and employees
Employees• Training and seminars• Regular meetings with the labor union• Provision of information through in-house intranet and in-house journal
Clients■ IR Activities
In fiscal 2022, we held a tour of our facilities for sellside analysts to facilitate their understanding of our
E&P technologies, and invited them to see the drillingrigs and production facilities at the Katakai Gas Field.
We also participated in “IR Seminars (Company
Presentations for Individual Investors)” hosted by the
Securities Analysts Association of Japan (SAAJ) bothin Tokyo and Osaka in order to increase recognition of
the Company among individual investors.
At one-on-one meetings with analysts andinstitutional investors, we had dialogue primarily on
our business performance, progress in each businessand our management plan, and capital and shareholder
return policies. Opinions and requests we received
during the meetings were summarized and fed backto management. JAPEX was also selected for the firsttime as a “Company of Remarkable Improvement in
Disclosure” in the energy sector of the “Selection
for Excellence in Corporate Disclosure by Securities
Analysts” (FY2022) hosted by SAAJ, in recognition for
its IR activities.

■ Dialogue between Management and Employees
We hold a townhall meeting (company-wide dialogue
meeting) every year as an opportunity to conduct
dialogues that foster direct communication frommanagement to employees regarding our management
policies and vision of the future. We also hold skull
sessions conducted in small groups consisting ofseveral officers and employees. At the session, they
lively exchange opinions on themes solicited from
attending employees. Furthermore, as an opportunity
for conveying a message from the President toemployees, the “President’s Channel” is delivered ona regular basis. We will continue to work on creating
opportunities for dialogue between management andemployees so that such opportunities will help create an
open working environment and act as a catalyst to bringthem together to work to instill our Corporate Vision as
well as to achieve goals set forth in management plans.

Tours of our facilities for sell-side
analysts (Katakai Gas Field)

Skull session

IR Seminars (Company Presentations
for Individual Investors) in Osaka

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Strategy

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Financial and Other Information

The Employer of Choice—Diversity Promotion—
Diversity, Equity & Inclusion

Basic Concept

https://www.japex.co.jp/en/sustainability/social/diversity/

From the perspective of realizing job satisfaction
for each of our diverse employees and maximizing
their abilities, as well as creating innovations forchange, we will work to promote diversity and gain
diverse perspectives to strengthen our organizational
capabilities.

Targets related to DE&I and Good Working Environment

Number of female managers

25 or more by the end of FY2025

Percentage of female
new-graduates hired

30% or more every year

Percentage of mid-career hires
in management positions

Maintain 20% or more until theend of FY2025

Percentage of mid-careerhires to total hires

50% or more every year

Percentage of male employees
taking childcare leave

80% or more by the end of
FY2025

Diversity, Equity & Inclusion
Utilization of diverse human resources with consideration
to improving engagement■ Policy
In order to respond to changes in the business environment andachieve further growth as a comprehensive energy company under
the JAPEX Diversity, Equity & Inclusion (DE&I) Policy, JAPEX
regards the promotion of DE&I as an important management
issue, and aims to strengthen its corporate competitiveness andachieve sustainable development. To this end, we enable ourdiverse employees to create new value by encouraging each andevery one to play their active role and grow their careers throughfully demonstrating their inherent capabilities.

■ Efforts to Recruit Women to Management Positions
We secure excellent human resources regardless of genderand promote them to positions with responsibilities. To
promote women’s participation and career advancement, we
conduct individual interviews with female employees in premanagement positions. We also have introduced a system tosupport female employees in balancing their life events andcareer development. We are working to improve environments
to enable female employees to thrive as independent
professionals and continue to grow without fear of change.

Number and Percentage of Female Managers
Number of female managers (left axis)

Percentage of female managers (right axis)(People)

(%)

25

10

20

17

17

19

19

18

5.9

6.0

6.0

15

10

6

5.2

5.2

5

4

2

0

Women Energy“Women Energy” is a networking activity for female
employees that was voluntarily initiated to create
opportunities for facilitating ongoing connections andcommunications with other female employees beyond
the boundaries of organizations and professions and makeuse of these opportunities for their career development.
They periodically holdmeetings for active
information exchange andlectures to help female
employees build their career
visions and develop theircareers.

8

0

2018

2019

2020

2021

2022

33.3

33.3

2021

2022

(FY)

Percentage of Female New-graduates Hired
(%)

40

36.4

38.5

30

20

10

0.0
0

2018

2019

2020

(FY)

* Data as of April* Only two female graduates were hired for electrical jobs in FY2018.
その他国内法人

Percentage of Mid-career Hires

Environment where diversity is respected
We are making efforts to prevent discrimination and bias
by introducing training and rules on unconscious bias andpsychological safety as well as those on recognition of sexual
minorities. Through these efforts, we are working to improvea working environment where diversity is respected andemployees can feel job satisfaction.

(%)

100

80

Percentage of mid-career hires in management positions
Percentage of mid-career hires to total hires

83.3
56.7

60

63.8

56.4

52.1

24.5

25.9

2021

2022

40

20

0

17.5

17.0

2018

2019

20.1
2020

(FY)

JAPEX Integrated Report 2023 59

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

The Employer of Choice—Health Management and Good Working Environment—
Basic Concept
JAPEX practices health management based on the idea that consideration for the health of employees contributes to
the growth and sustainability of the company. In addition, JAPEX is working to ensure a good work-life balance and tocreate a working environment where employees who have restrictions on working hours or locations due to childcare,
caregiving, or disabilities can also play an active role.

Health Management■ Promotion System
JAPEX has established a promotion system managed by
the President to practice health management. Based on the
JAPEX Group Code of Ethics and Conduct, the JAPEX HealthManagement Declaration, and the JAPEX HSE Policy, we workin cooperation with the health insurance association and thelabor union to support employees in maintaining and promoting
their health primarily by preventing industrial accidents,
creating a good working environment, respecting the diversity
in values, and preventing harassment.
■ Initiatives that Help Promote Employee HealthAs for mental health, we recommend high-stress individuals
for consultation with an industrial physician based on the
results of stress check tests, and work to improve a working
environment based on the results of group analysis. For
those on leave, we provide them with periodic interviews
and support for returning to work. In addition to providing
employees who work long hours with interviews requiredby law, we assess the level of fatigue accumulation of those
whose overtime working hours exceed 45 hours and provide
them with interviews if necessary. To prevent lifestylerelated diseases, we conduct walking and dieting campaigns
to raise awareness of health among employees. In addition,smoking is prohibited throughout the day in offices (at some
district offices) to prevent passive smoking. Furthermore, we
provide training on female-specific cancers to all employees toencourage them to receive cancer screening.

Health Management

https://www.japex.co.jp/en/sustainability/social/healthmgmt/
Good Working Environment

https://www.japex.co.jp/en/sustainability/social/workenvironment/

Good Working Environment■ Work-life Balance
JAPEX is reviewing its systems and introducing new
systems to respect the diversity in employees and realize an
autonomous and flexible working styles. We are working tocreate a good working environment where diverse humanresources can play an active role by allowing them to combine
work at office and work from home and promoting the use ofchildcare and caregiving systems. From fiscal 2022, we are
implementing a casual dress code (on a trial basis) to improve
productivity, create innovation and revitalize communications
by allowing employees to dress in their own way and workin clothing that is comfortable for them to wear. We arealso encouraging employees to take paid leave. We set
recommended days for taking annual paid leave and encourage
employees to take consecutive holidays. In fiscal 2022, the rateof paid leave taken was 83.2%, and the percentage of male
employees taking childcare leave was 58.9%. We will continue
to work on improving the working environment to enhancework-life balance.
Main Working Systems Introduced by JAPEX• Flextime system (no core time)• Work-from-home system• Casual dress code (on trial basis)• Setting of recommended days for taking annual paid leave and encouragement totake consecutive holidays• Special leave for spouse’s childbirth• Support for childcare costs (support for employees returning to full-time work afterchildcare leave, etc.)• Support for childcare provided until the child enters the fourth grade of elementary
school (days off for child nursing care, shortened working hours for childcare, support
for childcare costs for sick children, support for costs of extended-hours childcare
during business trips, etc.)• Support measures during childcare leave (partial paid leave, guarantee for thepayment of 80% of the bonuses)

Rate of Paid Leave Taken
(%)

100

80

74.1

60

77.4

73.3

2019

2020

81.5

83.2

2021

2022

40

20

0

2018

(FY)

Percentage of Employees Taking Childcare Leave by Gender
Male

(%)

100

Female

100

100

100

100
75.6

80

58.9

60

40

100

44.1

45.3

2019

2020

28.9

20

0

2018

2021

2022

(FY)

JAPEX Integrated Report 2023 60

Financial and
Other
Information

INDEX
Financial Highlights......................................................................... 62
Non-Financial Highlights................................................................. 63
External Evaluation.......................................................................... 64
Glossary............................................................................................ 65
Corporate Data................................................................................. 66

JAPEX Integrated Report 2023 61

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Financial Highlights(Fiscal years ended March 31)

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/32023/3114.6781.71

110.51
99.31

96.48
106.2351.48
121.0645.60
108.5356.20
111.6771.94
110.3568.11
109.1542.91
105.8673.28
111.20102.26132.86

231,086
172,075
13,08632,017
13,90628,082
1 (865)

43,04634,254(14,836)(7,177)
112,639

276,588
210,460
9,800
31,692
24,63443,88929,01553,90545,2264
5 (131,600)

71,680102,830

304,911
234,649
4,489
33,62532,146
54,83929,56761,96378,666
7 (63,031)

18,475
142,657

240,302
193,022
6,516
32,426
8,336
4,652
2,090
31,20057,659(125,771)
54,816
126,570

207,130
174,957
1,512
29,975
685
2,222
3,443
21,88743,672(84,686)
18,360103,630

230,629
191,366
1,324
29,1738,764
3,828
8 (30,959)
33,211
52,881(54,218)(1,196)99,892

267,980
233,133788
31,743
2,313
12,523
14,77041,73630,970(13,969)(15,493)
100,633

318,822271,780893
31,864
14,28332,635
26,81558,29669,895(18,701)(13,743)
138,259

240,078
203,543989
31,352
4,192
10,001(2,725)
37,15043,263(6,453)(15,626)
157,963

249,140
199,237359
29,73419,80943,674
12 (30,988)
57,391(1,052)52,067(70,939)
144,513

336,492
240,380
2,885
31,13962,085
83,13067,39485,316
104,581(52,723)(14,506)
186,166

525,172
403,625
24,197
77,325663,038
495,915
21,636
98,345736,862
540,647
20,726
121,827

707,601495,317130,030
163,575

746,739
510,609
141,903
176,012699,536459,255
135,959
170,193655,288
450,156
127,715
151,726

627,132
440,157
118,774
140,848624,786
434,492
50,180118,710

471,941
402,770510
6,156

568,180
457,169
250
10,412(15.14)(0.2)
1.8
6,691.58
40.00

507.687.2
1.8
7,389.82
50.00

517.356.7
2.0
8,055.59
50.00

36.58
0.5
5.2
7,366.40
50.00

60.24
0.8
8.0
7,655.26
15.00(541.70)(7.2)
5.1
7,438.23
20.00

258.44
3.5
3.6
7,287.32
40.00

469.186.5
2.4
7,046.18
50.00(47.73)(0.7)
3.2
7,011.36
50.00(545.64)(8.0)
0.1
6,679.85
50.00

1,236.65
16.9
0.1
7,849.18
14 370.00Natural gas
Crude oil*4
Total

23.3
13.3
36.6

26.4
6 21.8

48.3

32.3
42.1
74.4

34.0
39.7
73.7

33.7
38.3
72.0

31.2
29.5
60.7

28.1
10 33.4

61.5

26.6
49.6
76.2

25.3
36.3
61.7

22.4
36.1
58.5

14.1
14.3
28.4

Domestic
Overseas
Total

2 147

3 160


112
5 193


110
203

94
255

74
277

73
9 229


64
11 323


58
296

51
266

54
13 105


52
85

307

305

313

349

352

302

387

355

317

159

137

Crude oil CIF price (JCC)*1 (USD/bbl)
Exchange rate*1 (JPY/USD)For Fiscal Year (Millions of yen)
Net sales
Cost of sales
Exploration expenses
Selling, general and administrative expenses
Operating profit
Ordinary profit
Profit (loss) attributable to owners of parent
EBITDANet cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Cash and cash equivalents at end of period
At Fiscal Year-end (Millions of yen)
Total assets
Net assets
Long-term borrowings
Interest-bearing debt
Financial Ratios
Basic earnings (loss) per share (Yen)
Return on Equity (%)
Debt*3-to-EBITDA*2 ratio (Times)
Net assets per share (Yen)Annual dividends per share (Yen)
Production Volume in the Fiscal Year (daily) (Thousand boe/d)
Production volume
Proved Reserve Volume at Fiscal Year-end (Millions of boe)
Proved reserves

Crude oil CIF price (JCC) (left axis)(USD/bbl)(Millions of yen)

80,000120

Profit (loss) attributable to ownersof parent (right axis)

60,000100
40,000*1 Domestic sales price of crude oil referring to crude oil (CIF ) price (JCC)and its conversion exchange rate
*2 EBITDA is the total of operating profit, depreciation, and interest and dividends received based on investment cash flow statement.
*3 Interest-bearing debt includes lease obligations, retirement benefit liability,
and contingent liabilities.
*4 Figures for crude oil include bitumen. These figures include production
volumes of equity-method associates.
Conversion Factors and Units:
Crude oil 1 kL = 6.29 bbl
Crude oil 1 kL = Natural gas 1,033.1 m³
boe: barrels of oil equivalentboe/d: barrels of oil equivalent per day

20,00080

060(20,000)(40,000)

40
1 Impairment loss related to the Yufutsu Oil and Gas Field2D ownward revision of reserves upon evaluation of the

Yufutsu Oil and Gas Field
3 Decision to invest in development of Canadian Oil Sands

Project
4 Investment in development of Canadian Oil Sands Project
5 Participation in Canadian Shale Gas Project

6 Commencement of commercial production in Iraq Garraf Oil Field
7 Commencement of construction of Soma LNG Terminal (commencement of

operation in March 2018)8 Impairment loss due to decision to end commercialization of Canadian LNG Project
9 Decision to end commercialization of Canadian LNG Project
10 Achievement of stable production of 20,000 barrels/d in Canadian Oil Sands Project
11 Decision on additional development in Iraq Garraf Oil Field

12 Extraordinary losses resulting from the end of ourparticipation in two projects in Canada

13 End of our participation in two projects in Canada
14 Adoption of consolidated dividend payout ratio as adividend policy

JAPEX Integrated Report 2023 62

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Non-Financial Highlights(Fiscal years ended March 31)

Environment*1
GHG emissions(1,000 ton-CO2)(Scope 1 + Scope 2)

Energy consumption (TJ)

Water withdrawal (1,000 kL)*3

Waste discharge (1,000 kL)*3

Society
Occupational health and safety

Domestic*4

Overseas*5

Number of employees (Persons)
Number of mid-career hires (Persons)Turnover rate (voluntary) (%)
Average length of service (Years)
Percentage of female managers (%)
Employment rate of people with disabilities (%)
Annual paid leave
Childcare and caregiver leave*1

2016/32017/3

2018/3

2019/32020/32021/32022/3

Domestic
Overseas
Total (Domestic + Overseas)

231

241

383
205

319
481

284
582

268
548

242
379

251 *2
0

231

241

589

800

866

816

620

251

Domestic
Overseas
Total (Domestic + Overseas)

2,374

2,453

2,610
3,815

2,873
9,082

2,971
10,764

3,102
10,936

3,052
7,459

3,190
0

2,374

2,453

6,425

11,955

13,734

14,03810,511

3,190

Domestic
Overseas
Total (Domestic + Overseas)

699

708

946
200

806
406

943
201

871
293

45,524
166

47,310
0

699

708

1,146

1,212

1,144

1,164

45,69047,310

Domestic
Overseas
Total (Domestic + Overseas)

982

992

1,250
140

1,081
260

1,212
282

1,607
210

46,566
121

48,266
0

982

992

1,390

1,341

1,494

1,816

46,68748,266

0.00

0.00
0.00
1.46

0.00
0.29
0.58

0.00
0.00
0.88

0.00
0.84
1.39

Fatal Accident Rate (FAR)*6
Lost Time Injury Frequency (LTIF)*7
Total Recordable Injury Rate (TRIR)*8
Fatal Accident Rate (FAR)*6
Lost Time Injury Frequency (LTIF)*7
Total Recordable Injury Rate (TRIR)*8

Consolidated
Non-consolidated
Non-consolidated
Non-consolidated
Non-consolidated
Non-consolidated
Non-consolidated
Non-consolidated Average days of paid leave taken (Days)
Average rate of paid leave taken (%)
Non-consolidated Percentage of male employees taking childcare leave (%)
Percentage of female employees taking childcare leave (%)
Percentage of employees returning to work after childcare leave (%)*9
Retention rate after childcare leave (%)*10
Number of employees taking caregiver leave (Persons)
Number of employees taking time off for caregivers (Persons)

Scope of non-financial data
2016/3–2017/3: JAPEX and Japex Offshore Ltd.
2018/3–2020/3: JAPEX and its 14 consolidated subsidiaries
Domestic: Japex Offshore Ltd.; Akita Natural Gas Pipeline Co., Ltd.; SK Engineering Co., Ltd.; JAPEX SKS Corporation; North Japan Oil Co., Ltd.; Shirone Gas Co.,
Ltd.; Japex Pipeline Ltd.; JGI, Inc.; Geophysical Surveying Co., Ltd.; North Japan Security Service Co., Ltd.; and Japex Energy Co., Ltd.
	Overseas: Japan Canada Oil Sands Limited (JACOS) (JACOS is based on data collected until the end of the project in August 2021.); Japex (U.S.) Corporation (JUS);JAPEX UK E&P Limited (JUK) (JUS and JUK are out of the scope of report of water withdrawal and water discharge data.)
2021/3–: JAPEX and its 15 consolidated subsidiaries (added GEOSYS Inc. to the scope of “Domestic” above.)2023/3–: Added Kirsche Energy Service LLC. to the scope of report of GHG emissions data.
*2	Scope 2 emissions (Domestic) for 2023/3 were obtained by subtracting a reduction of approximately 27,000 tons-CO2 calculated based on the
non-fossil fuel certificate purchased in accordance with the GHG Protocol.
*3 Added “Seawater” and “Marine waters” to the scope of calculation of water withdrawal and water discharge from 2022/3.
*4 Scope of report: JAPEX and Japex Offshore Ltd. and contractors*5	Scope of report: JACOS and contractors (JACOS is based on data collected until the end of the project in 2021/8. No data subject to disclosurefor 2023/3 as there is no overseas operator project.

1,847
902
20
0.9
16.6
4.5
2.2
13.8
72.0
2.4
100
100
100
0
11

2023/3

0.00
0.00
1.46

0.00
0.00
5.50

0.00
0.00
5.13

0.00
0.00
7.94

0.00
2.42
7.25

0.00
0.00
0.00

—
—
—

1,825
897
9
1.7
17.2
4.9
2.0
13.6
70.5
21.1
100
100
100
0
12

1,788
920
7
1.8
17.3
5.0
2.0
13.5
70.3
18.6
100
100
100
0
24

1,741
904
10
2.7
17.9
5.2
2.8
14.3
74.1
28.9
100
100
100
0
19

1,739
919
17
2.0
17.1
5.2
2.6
14.7
77.4
44.1
100
100
100
0
12

1,780
937
30
2.0
16.6
5.9
2.8
14.0
73.3
45.3
100
100
100
1
13

1,634
965
31
3.2
16.0
6.0
2.6
15.4
81.5
75.6
100
100
100
1
20

1,617
954
25
2.5
15.7
6.0
2.6
15.8
83.2
58.9
100
100
100
0
17

*6 Fatal Accident Rate: Calculated as the number of fatal accidents per 100,000,000 work hours.
*7 Lost Time Injury Frequency: Calculated as the number of lost time injuries per 1,000,000 work hours.
*8 Total Recordable Injury Rate: Calculated as the number of total recordable injuries per 1,000,000 work hours.
*9	Percentage of employees returning to work after childcare leave = (Number of employees returning to work after taking childcare leave during thecurrent fiscal year / Number of employees expected to return to work during the current fiscal year after taking childcare leave) × 100*10	Retention rate after childcare leave = (Out of those returning to work in the previous fiscal year after taking childcare leave, Number of employees
who remained employed as of March 31 of the current fiscal year / Number of employees returning to work after taking childcare leave in the previous
fiscal year) × 100
ESG Performance Data

https://www.japex.co.jp/en/sustainability/management/esgdata/
Third-Party Assurance of Data
To ensure the reliability of our disclosed information, JAPEX has obtained independent third-party assurance for certain data accessible in “ESG Performance Data” on our website.

JAPEX Integrated Report 2023 63

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

External Evaluation
Moody’s:
Credit Rating

Baa1 (Stable)

ESG Indices of which JAPEX is a Constituent
FTSE Blossom Japan Index
This is a general ESG index that reflects the performance ofJapanese companies that demonstrate strong ESG practices,which are evaluated using the ESG rating scheme developed
by FTSE Russell. The index is one of the ESG indices adopted
by the General Pension Investment Fund (GPIF).

FTSE Blossom Japan Sector Relative Index
This is a general ESG index that reflects the performance ofJapanese companies that demonstrate relatively strong ESG
practices in each sector. Companies are evaluated from threeperspectives: ESG rating by FTSE Russell, GHG emissions
per unit of net sales, and management attitude toward
climate-change risks and opportunities. The index is one of
the ESG indices adopted by GPIF.

S&P/JPX Carbon Efficient Index
This is an index developed by S&P Dow Jones Indices LLC,
and the weighting of its components is determined basedon their status of environmental information disclosure andcarbon efficiency (carbon emissions per unit of net sales).
The index is one of the ESG indices adopted by GPIF.

MSCI Japan Empowering Women Index (WIN)*
This is an index developed by MSCI Inc. to select companies
with higher Gender Diversity Score, which is calculated
from multiple perspectives based on data related to female
employment as disclosed under the Act on Promotion of
Women’s Participation and Advancement in the Workplace,from each sector. The index is one of the ESG indicesadopted by GPIF.

Rating & Investment Information(long-term rating):

A+ (Stable)

Rating & Investment Information(short-term rating):

a-1

Evaluation for Sustainability
CDP
CDP is a UK-based non-profit organization that works
with institutional investors around the world to encouragecompanies to disclose climate change and otherenvironmental information. CDP also publishes its scoringdata to the world. It is one of the key indicators to measure a
company’s commitment to the environment. JAPEX obtainedan A- rating for its response to the CDP Climate Change
Questionnaire.
Health & Productivity Management Outstanding
Organizations
JAPEX has been certified as one of the Health & Productivity
Management Outstanding Organizations (Large Enterprise
Category) for the seventh year in a row since 2017 under the
Certified Health & Productivity Management Outstanding
Organizations Recognition Program, in which companies thatpractice excellent health and productivity management arecommended by the Ministry of Economy, Trade and Industry
and the Nippon Kenko Kaigi.
“Kurumin” certification
In August 2018, JAPEX obtained the Next-Generation
Certification Mark (nicknamed “Kurumin”) certification fromthe Tokyo Labor Bureau of the Ministry of Health, Labour andWelfare as a childcare support company that balances workand childcare according to the action plan (from April 2016 to
March 2018) based on the Act on Advancement of Measures
to Support Raising Next-Generation Children.
“Eruboshi” certification
In February 2021, JAPEX acquired the “Eruboshi”
certification mark (third level) from the Tokyo Labor Bureau of
the Ministry of Health, Labour and Welfare, based on the Act
on Promotion of Women’s Participation and Advancement in
the Workplace, as a company with excellent implementationof initiatives to promote women’s activities.

*MSCI ESG Indexes
THE INCLUSION OF Japan Petroleum Exploration Co., Ltd. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Japan Petroleum
Exploration Co., Ltd. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

JAPEX Integrated Report 2023 64

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Glossary
Bioenergy with carbon capture and storage (BECCS)

Exploration & Production (E&P)

LNG bunkering

A term coined to refer to a technology that links CCS and biomass

Businesses that engage in the exploration, development, andSupplying LNG fuel to vessels

energy. When biomass is burned for energy use, CO2 is emitted,

production of oil and gas

but it is not counted as CO2 emissions because the amount of CO2

Negative emissions technologies (NET)emitted during the entire life cycle of biomass remains the same.

Final investment decision (FID)

Technologies that contribute to the removal of atmospheric CO2, i.e.,

If the CO2 from biomass combustion is captured, transported, andIn the context of oil and gas projects, FID often refers to the final

carbon dioxide removal (CDR), by separating and capturing CO2 fromstored underground, there will be a net reduction in atmosphericdecision regarding investment before entering the development

the atmosphere and storing it undergroundCO2.

phase (i.e., facility design, procurement, and construction). Prior to
FID, relevant parties must meet all requirements, such as formulating

Operator

Carbon dioxide capture and storage (CCS)

robust plans for development, marketing, and fundraising; signing

A contractual term used in the exploration, development, andCarbon dioxide capture, utilization, and storage (CCUS)

necessary contracts; obtaining approval from authorities; andproduction of oil and natural gas via collaboration between multiple

CCS technologies separate and capture CO2 from gas emissions

securing sufficient human resources.

partners; the “operator” is the partner commissioned to handle andmanage actual operations. Any partner to the contract other thanof electric power plants, factories, and other facilities, then inject
and store the CO2 in stable underground geological layers. CCUS

Flare

the operator is a “non-operator.” Signing a joint operation contract,technologies effectively use the separated and captured CO2 to

Burning excess gas other than one that is shipped as products orboth the operator and non-operator determine methods for making

enhance oil recovery and for other applications and then store it.

one that is used as refinery fuel at gathering stations, crude oil

operational decisions and raising necessary funds before they launch

production facilities, gas processing facilities, natural gas liquefaction

the project.

Carbon-Neutral LNG (CNL)

and storage terminals, refineries and other facilities

CNL is liquified natural gas that is deemed to generate zero CO2 in

Smart cityuse on a global scale by offsetting GHGs generated in the process,Greenhouse gas (GHG)

A sustainable city or region that solves various problems faced

from extraction to combustion of natural gas, with CO2 credits

A gas in the atmosphere that absorbs a portion of the infraredby cities and regions through advanced management (planning,

created through environmental conservation projects (carbon offset).

radiation emitted from the earth’s surface, thereby producing amaintenance, management, operations, etc.), while utilizing ICT andgreenhouse effect. Water vapor and carbon dioxide (CO2) fall into thisother new technologies, and that continues to create new value

Cost, insurance, and freight (CIF)

category. In recent years, the concentration of some of these gases

The CIF price for crude oil consists of the Free on Board (FOB) price,in the atmosphere has been increasing, and they are considered to

Tight oilinsurance, and freight costs to the destination port. The CIF price forbe the main cause of global warming.

Crude oil trapped within geological layers with low porosity andpermeability. Although the crude oil itself can be classified as lightcrude oil is the FOB price plus insurance and tanker transportation
costs to the destination port.
Enhanced/Improved oil recovery (EOR/IOR)

Health, safety, and environment (HSE)

to medium oil, tight oil is developed by means of fracturing with

An acronym for Health, Safety and Environment that refers tohorizontal wells due to the poor fluidity in the reservoir.

occupational safety, health, and the environment

EOR, also known as tertiary recovery, involves the injection of heat,

Vent

gaseous carbon dioxide or other chemicals into the reservoir. While

Health, safety, security, and environment (HSSE)

Releasing excess gas directly into the atmosphere for operation at

primary recovery uses natural oil emission energy and secondary

HSE with the addition of security, refers to occupational health,

the time of emergency or startup

recovery increases the volume of oil recovered by maintaining or

safety, environment, and overseas security.

raising pressure in the oil sands layer, EOR alters the physical orchemical behavior of the residual crude oil, thereby enhancing oil

Japan Crude Cocktail (JCC)

recovery. IOR is a broader term referring to a range of methods

The average price of crude oil imported by Japan and determined in

aimed at improving oil recovery, including secondary recovery.

reference to cost, insurance and freight (CIF)

JAPEX Integrated Report 2023 65

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Corporate Data (As of March 31, 2023)
Corporate Profile

Stock Information

Company Name Japan Petroleum Exploration Co., Ltd (JAPEX)

Exchange Listing

Established April 1, 1970

Common Stock (Authorized) 120,000,000 shares
Common Stock (Issued) 54,300,076 shares

Share Capital ¥14,288,694,000

Head
OfficeHead Office (see below), Hokkaido, Akita,
Nagaoka, Soma, JAPEX Research Center (Chiba),
Sendai,
Houston, Jakarta, Aberdeen, Dubai, Singapore
SAPIA Tower, 1-7-12 Marunouchi, Chiyoda-ku,
Tokyo
100-0005, Japan
TEL: +81-3-6268-7000 (Administration & Legal Dept.)

30.0

15,00020.0

10,000

10.0

5,000

Shareholder name

Main
Exploration, development, production, and sale ofBusinesses oil, natural gas, and other energy resources,
contract service-related operations such as
drilling; development of solar, wind, geothermal,
biomass, and other renewable energy resources;
and supply of electric power

(%)
40.0

20,000Major Shareholders

Number of Employees 1,617 (consolidated basis)

Number of Shareholders and Shareholding (%) by Shareholder Type
(People)25,000

Number of Shareholders 20,540

Fiscal Year April 1 to March 31 of the following year

Main
OfficesTokyo Stock Exchange, Prime Market (Securities Code: 1662)

Number of shares Voting rights* (%)

Minister of Economy, Trade and Industry

19,432,724

35.79

The Master Trust Bank of Japan, Ltd. (Trust Account)

6,341,800

11.68

INPEX CORPORATION

2,852,212

5.25

CEP LUX-ORBIS SICAV

1,913,104

3.52

2017

2019

2020

Minister of Economy, Trade and Industry
Individuals and others

2021

2022

Foreign investors, etc.
National and local governments(As of March 31)

Financial institutions
Securities companies

Total Shareholder Returns (TSR*1) over Five Years*2
(%)
160

2.55

JFE Engineering Corporation

924,0121.70

80Mizuho Bank, Ltd.

720,152

1.33

40

JPMorgan Securities Japan Co., Ltd.

615,320

1.13

JP MORGAN CHASE BANK 385632

504,8100.93

STATE STREET BANK AND TRUST COMPANY 505001

482,986

0.89* Voting rights are calculated by excluding treasury shares (2,630 shares).

2018

Number of shareholders (left axis)
Other domestic corporations

1,384,500

Custody Bank of Japan, Ltd. (Trust Account)

0

0

120

100.3
82.2

0

2018
JAPEX

76.9
51.2

90.4

124.1

133.9

113.7

106.9

2021

2022

65.8

2019
2020
TOPIX (mining industry)(As of March 31)(Comparative index: TOPIX (mining industry) Total Return Index by industry)*1 Calculated using the formula set by the Cabinet Office Order for total returns for shareholders,combining capital gains and dividends.
*2 The year-end value from fiscal 2018 onward if invested at the final price as of March 31, 2018

Organization
Board of Directors

Audit & Supervisory Board

President
Executive Committee

Technical Division

Domestic E&P Project Division

Technical Planning & Coordination Dept.

Project Planning & Coordination Dept.

Carbon Neutral Technology Dept.

Exploration & Development Dept.

Subsurface Evaluation Dept.

Operations Dept.

Research Center

Carbon Reduction Project OfficeSecretary Office
Corporate Communication Office
Auditing Dept.
Corporate Strategy Dept.
Administration & Legal Dept.
Human Resources Dept.
Finance & Accounting Dept.
Procurement Dept.
Information Technology Dept.
HSE Dept.
Deal Execution/PMI Support Dept.

Marketing & Sales Division

Gas Supply & Facility Engineering Division

Hokkaido Marketing & Sales OfficeBusiness Planning & Coordination Dept.

Marketing & Sales Planning Dept.

Supply Planning & Coordination Dept.

Marketing & Sales Dept. I

Facility Engineering Dept.

Marketing & Sales Dept. II
Marketing & Sales Dept. III
Sendai Liaison Office

LNG Marketing & Procurement Office
Singapore Branch

Hokkaido District Office
Akita District Office
Nagaoka District OfficeSoma District Office

Overseas Business Division I
Strategic Planning Dept.
Business Development Dept. I
Business Development Dept. II
Business Development Dept. III
Houston Representative Office
Jakarta Representative Office
Aberdeen Representative OfficeDubai Representative Office
Overseas Business Division II
Americas & Europe Business Dept.
Middle East & Asia Business Dept.
Carbon Neutral Business Dept.
Power Business Division
Power Business Dept.
Renewable Energy Business Dept. I
Renewable Energy Business Dept. II
Environmental Business Promotion Dept.
New Business Promotion Dept.
JAPEX Integrated Report 2023 66

JAPEX’s Vision

Strategy

Value Creation Through BusinessInitiatives to Support Value Creation

Financial and Other Information

Corporate Data (As of March 31, 2023)
Group Companies
Consolidated Subsidiaries
Share capital (Millions of yen)

Akita Natural Gas Pipeline Co., Ltd.

250

Transportation of natural gas by pipeline in Akita Prefecture

100.00SK ENGINEERING CO., LTD.

300

Provision of contracted well drilling and engineering services

100.00JAPEX SKS Corporation

90

Manufacture and sale of oil products; real estate management; and insurance agency

100.00

North Japan Oil Co., Ltd.

80

Sale of crude oil, recycling of waste oil, contracted transportation of crude oil

100.00

Production, supply, and sale of gas in Tsubame City and Niigata City, Niigata Prefecture

100.00

Pipeline maintenance and management

100.00Conduct of contracted geophysical exploration work and development of geophysical exploration technology

100.00Conduct of contracted geophysical logging and mud-logging work

100.00Shirone Gas Co., Ltd.

3,000

Japex Pipeline Ltd.

80

JGI, Inc.

2,100

Geophysical Surveying Co., Ltd.

446

Main businesses

JAPEX’s stake and percentage of voting rights held (%)

Company name

Stake

Percentage of voting rights held

Japex (U.S.) Corp.

thousand USD

180,000

Exploration and development of petroleum resources in the United States

100.00JAPEX UK E&P Ltd.

thousand GBP

151,662

Exploration, development, and production of petroleum resources in the UK North Sea

100.00Industrial safety services, security services

89.42

Exploration, development, and production of petroleum resources on the continental shelf of the Sea of Japan

70.61

North Japan Security Service Co., Ltd.

30

Japex Offshore Ltd.

5,963

1

GEOSYS, Inc.*

49

Conduct of contracted geophysical exploration work and sale of geophysical exploration equipment

57.82

Japex Energy Co., Ltd.

90

Purchase and sale of LNG, oil products, etc.

90.00

Japex Garraf Ltd.

20,930Exploration, development, and production of petroleum resources in the Garraf Oil Field, Iraq

55.00

JAPEX Insurance Ltd.

3,500

Underwriting reinsurance of non-life insurance of JAPEX group100.00(57.82)Equity-method Associates
Share capital (Millions of yen)

TOHOKU NATURAL GAS Co., Inc.

300

Purchase and sale of natural gas in the Tohoku region

45.00

TELNITE CO., LTD.

98

Manufacture and sale of drilling fluid chemicals and provision of mud services

47.00

Fukushima Gas Power Co., Ltd.

537

Operation and contract work of power generation business using a natural gas power plant

33.30

22,592

Exploration, development, and production of petroleum resources on Sakhalin Island and its land shelf in the Russian Federation

15.29

thousand USD

1,000

Exploration, development, and production of petroleum resources in the eastern Java Sea, Republic of Indonesia

25.00

thousand USD

10Exploration, development, and production of petroleum resources in the eastern Java Sea, Republic of Indonesia—［100.00］

GBP

100

Exploration, development, and production of petroleum resources in the eastern Java Sea, Republic of Indonesia—［100.00］

2

Sakhalin Oil and Gas Development Co., Ltd.*
Energi Mega Pratama Inc.
2,

Kangean Energy Indonesia Ltd.* *3

EMP Exploration (Kangean) Ltd.*2, *3
Abashiri Biomass Power 2 LLC
Two other companies

1,297

Main businesses

JAPEX’s stake and percentage of voting rights held (%)

Company nameOperation of biomass power generation business using domestic wood chips

Stake

Percentage of voting rights held

33.80

10

*1 The figure inside the parentheses under “Percentage of voting rights held” represents the percentage of indirectly held voting rights and is included in the above percentage.
*2 The company is considered to be an associate because JAPEX has a substantial influence thereon despite having a stake therein that is less than 20%.
*3 The figure inside the square brackets under “Percentage of voting rights held” represents the percentage held by parties who are closely related to or aligned with the Company and is excluded from the above percentage.

JAPEX Integrated Report 2023 67

10 Year Financial Data

https://www.japex.co.jp/ir/uploads/JAPEX_10yearFinancialData_e.xlsx
Financial Results

https://www.japex.co.jp/en/ir/library/result/
Security Reporthttps://www.japex.co.jp/en/ir/library/report/
Explanatory Materials

https://www.japex.co.jp/en/ir/library/explanatory/
Management Plan

https://www.japex.co.jp/en/ir/management/managementplan/
ESG Data

https://www.japex.co.jp/en/sustainability/management/esgdata/

Inquiries:

Japan Petroleum Exploration Co., Ltd.
Corporate Communication Office

TEL: +81-3-6268-7111 FAX: +81-3-6268-7302
https://www.japex.co.jp/en/