English Translation of News Release

May 8, 2008, TokyoJapan Petroleum Exploration Co., Ltd.

Environmental Impact Assessment of Hangingstone Oil Sands Expansion Project in theProvince of Alberta, Canada

Japan Canada Oil Sands Limited (JACOS), a consolidated subsidiary of Japan Petroleum
Exploration Co., Ltd. (JAPEX), currently produces approximately 8,000 barrels of bitumen per day
at its Hangingstone Demonstration Operation (the so called 3.75 Section Operation) south of Fort
McMurray. In an undeveloped part of the Hangingstone area, JACOS has been conducting
geological evaluation as the operator (a 75% interest) in a joint project with Nexen Inc. (a 25%interest). The results of the evaluation so far have led JACOS/JAPEX to judge that the expectedresource of recoverable bitumen in the area is large enough to justify development. Consequently, as
part of the necessary work for the final decision to carry out the development, JACOS has submitted
its Public Disclosure Document to initiate the process required by the Ministry of Environment ofthe Government of Alberta to conduct an Environmental Impact Assessment on the oil sands
expansion project applying the process of Steam-Assisted Gravity Drainage (SAGD) (hereinafter,“the project”).

As the first step in the Environmental Impact Assessment process, JACOS submitted a Public
Disclosure Document outlining the project to the Ministry of Environment of the Government ofAlberta on May 7th, local time. JACOS will thereafter proceed with the preparatory work by holding
careful discussions concerning the environmental and socio-economic impacts of the project in thelocal area. The discussions will involve the landowners, residents, including local Aboriginalcommunities, and other stakeholders in the area, as well as the appropriate authorities. It is expected
to take approximately 18 months after the submission of the Public Disclosure Document tocomplete the Environmental Impact Assessment.

Based on the current assessments of the resource of recoverable bitumen, JACOS estimates thatup to 35,000 barrels of bitumen will be produced per day for over the next 25 to 30 years from theundeveloped portion of its Hangingstone area. JACOS aims to start production around the fourth
quarter of 2014, although the development schedule will vary according to factors such as theprogress of the additional geological evaluation to follow and the business environment.

Since 1999, JACOS has been engaged in a demonstration project for bitumen production applying
the SAGD process. Bitumen is extra heavy oil whose viscosity is extremely high at natural reservoir
temperature. The SAGD process is generally used in the case of oil reserves at approximately 100
meters or more below ground level. Under this process, two horizontal wells are drilled in parallel.
Steam is injected into the bitumen underground from the upper well to increase its mobility, and thebitumen is extracted through the lower well. JACOS was among the first to initiate operations
applying the SAGD process in Alberta, and has expertise in operations using the SAGD process.

The document outlining the project, submitted to the Ministry of Environment of the Governmentof Alberta, will be posted on the JACOS website (http://www.jacos.com) commensurate with thisnews release. The area to be developed that is subject to the Environmental Impact Assessment, iscalled the Hangingstone SAGD Project, while the existing producing project is called theHangingstone Demonstration Project (3.75 Section Project).

Hangingstone SAGD Project Area Map

SAGD Process Schematic Representation