Note: The following press release is an English translation of the Japanese-language original

May 12, 2015
Company Name: Japan Petroleum Exploration Co., Ltd. (JAPEX)
President:

Osamu Watanabe

Inquiries:

Media and Investor Relations Department

TEL.:+81-3-6268-7110

Long Term Business Vision andMedium-Term Business Plan of the JAPEX Group
Japan Petroleum Exploration Co., Ltd. (hereafter “JAPEX”) has formulated Long
Term Business Vision, with the key message of “Transformation to Integrated Energy
Company, around Oil and Gas E&P Business”. Together, JAPEX has formulated
Medium-Term Business Plan from 2015 to 2019.
On May 2011, JAPEX has announced Medium-Term Business Plan (Fiscal Year 2011
to Fiscal Year 2015, hereafter “Previous Plan”), with the basic policies of E&P(Exploration, Development and Production of Crude Oil and Natural Gas) business,domestic Gas Business, and Environmental and Innovative Technology Businesses.
In the Previous Plan, we have set 3 stages of quantitative targets (1st stage: Shifting
Investment to overseas, 2nd stage: Expanding consolidated daily production to 70,000
barrels of crude oil equivalent by Fiscal 2016, 3rd Stage: Expanding the consolidated
reserves to 450 million barrels of crude oil equivalent by Fiscal 2021). By our efforts sofar, these targets are likely to be achieved. For this reason, we have decided to formulateLong Term Business Vision aiming 10 years, and Medium-Term Business Plan for 5
years in order to achieve this Long Term Business Vision.
Although the international oil prices have fallen rapidly from second half of last year,
and outlook for recovery is still unclear, we have perception that crude oil and natural
gas will further be a vital source as a primary energy in the world. In this Long TermBusiness Vision and Medium-Term Business Plan, we have set our plan for future inorder to further promote policies set in the Previous Plan. The summaries are as
follows:“Transformation to Integrated Energy Company, around Oil and Gas E&P Business”
As a result of shifting business into overseas such as proceeding Canada Oil Sand
Hangingstone Expansion Project and acquiring stake of Pacific Northwest LNG, volume
of production and reserves targeted May 2020 are estimated to be 100,000 BOED of
Production / 550 MMBOE of Reserves.
We have faced rapid decline of the oil price recently, and re-recognized the volatility of
1/2

the oil price. We also recognize that we need to diversify our business in order tomitigate the effect of oil prices and stabilize business.
For this reason, we will expand our business into areas related to oil and gas business,
including electricity generation, and areas that have close relations with E&P
technologies. JAPEX will aim for earning profits from new businesses other than
traditional E&P business.
Areas

Target / Policies

Business E&P Business・Pursue currently ongoing projects and making profits

Policies

at the production stage.
・Seek for domestic potentials and build efficient
operational frameworks
・Keep RRR（Reserves Replacement Ratio）＞1 even after
ongoing projects have settled by 2020.
Domestic
Natural Gas
SupplyBusiness

・Diversify supply sources and supply methods, andexpand scales.
・ Commence operation of Soma LNG Terminal andcommercialize power generation business.
・Become supplier of natural gas handling 2.5 million ton
by 2025. (1.2mm ton in 2014 and 1.5 mm ton in 2019)

Environment

・Develop technology for Methane Hydrate

and Innovative・Pursue establishment of CCS technology and makeTechnology

legislative preparation for private companies.

Business・Pursue geothermal power business

CSR

・Pursue efforts to priority agendas “SHINE”

・Maximize profits through best project management
Profit・Keep stable dividend even during oil prices have declined

Goals

・Increase dividend at the time when oil prices have recovered and ongoingprojects have started to make profits.

Please refer to the appendix for details.
By promoting these plans, JAPEX group will establish basement for business andfurther strengthen our competitiveness, and by promoting efficiency as well, JAPEX
will make efforts to promote sustainable development and maximizing the shareholder
value.

Appendix: The Long-Term Vision –Towards the Leap to 20252/2

Long-Term Business Vision～Towards the Leap to 2025～“Transformation to Integrated Energy Company
Around Oil and Gas E&P business”

12 May, 2015
Japan Petroleum Exploration Co .,Ltd.

Long-Term Business Vision

Contents
Introduction
Ⅰ. Progress of the previous Medium-Term Business Plan
Ⅱ. Perception of the business environment
Ⅲ. Long-Term Business Vision ~ Image of the Leap on 2025
Ⅳ. Short and Medium-Term target and policies
Ⅴ. Outlook of revenue and profits
Ⅵ. CSR (Corporate Social Responsibility)
Ⅶ. Summary
Ⅷ. <Appendix>Current status of business / Acronyms

1Long-Term Business Vision

Introduction
 JAPEX announced Medium-Term Business Plan from FY3/12 to FY3/16(hereafter “the previous plan”) setting 3 quantitive targets of E&P(Exploration and Production) business, domestic gas business, andenvironment and innovative technology on May, 2011.
 By our execution after announced the previous plan, we are likely to achieve
the targets settled as follows; ① shifting businesses overseas, ② expanding
consolidated daily production to 70,000 bbl of crude oil equivalent by
FY3/15, and ③ expanding consolidated proved reserve to 450 million bbl of
crude oil equivalent by FY3/21.
 For this reason, we decided to formulate Long-Term Vision aiming 10 years
and Medium-Term Business Plan for next 5 years from FY3/16 to FY3/20 inorder to achieve this Long-Term Vision.
 By promoting these plan, JAPEX group will establish basement for businessfurther strengthen our competitiveness, and by promoting efficiency as well,
JAPEX will make efforts to promote sustainable development and maximizing
the stakeholder value.

2

Long-Term Business Vision

Ⅰ. Progress of the previous plan (1)~ 3 quantitive targets of our business

Major achievement of the previous plan
* E&P：Exploration and Production

Shift businessoverseas

E&P Business

Domesticgas
business

Environment
and innovativetechnology

Expanding
production

Expanding
proved reserve

Joined Canada Shale Gas/LNG Upstream Project (FY3/14)
FID on Development Expansion of Canada Oil Sands (FY3/13)
Commencement of Ppoduction from Kangean TSB Phase 1 (FY3/13)
FID on Kangean TSB Phase 2 FID (FY3/15)
Commencement of production from Garraf Oil Field (FY3/14)
Commencement of production from Arkton-Dagi Field in Sakhalin 1 (FY3/15)
Joined Shale Oil project in Eagleford, in Texas, United States (FY3/13)

Establishment globally comprehensive supply model,
Completion infrastructure,
Development demands for natural gas
FID of Soma LNG Terminal (FY3/13)
Commencement Koriyama North Gas P/L (FY3/15)

Accelerating to execute big projects
such as CCS and Methane Hydrate (MH)Developing businesses in new areasuch as renewable rnergy
Developed Technology for MH (the 1st offshore production test on FY3/14)
Deposited CCS verification test at Tomakomai, Hokkaido (FY3/13～)
Commencement 2 Mega-Solar (FY3/15)

3

Long-Term Business Vision

Ⅰ. Progress of the previous plan (2)~ Shifting businesses overseas


Executed drastic commitment to shifting businesses overseas
Target : shifting businesses overseas (FY3/12～FY3/16)
Target on the previous plan

Actual of FY3/2012～FY3/15

Overseas Ratio:
Around 60%

Overseas Ratio:
Around 30%

Overseas
170

Overseas
90

Domestic ; 20%
70 billon Yen

Domestic110

FY3/07～FY3/11

270 billion Yen

FY3/12～FY3/15

FY3/12～FY3/16

390 billion Yen

280 billion Yen

Domestic
180

Overseas; 80%
390 billion Yen◆ Major overseas businesses
Canada LNG Upstream
Canada Oil Sands
Iraq Garraf* Including investment through loans to equity method affiliates

4Long-Term Business Vision

Ⅰ. Progress of the previous plan (3)~ Target of production and proved reserve
 The Latest actual on FY3/2015;
74,000 BOED of daily production / 313 MMBOE of proved reserve

54% increase in production and achieved the target of production on the previous plan a year ahead by contributions offull-year production on Canada Shale Gas Project and Iraq Garraf Oil Project

3% increase in reserve by compensation from progress of Canada Shale Gas development

Through further development of Canada Shale Gas project and progress of Iraq Garraf Oil project, we are standing toprospect of achieving the target proved reserve (450MMBOE by FY3/21).

Production
国内
Domestic

7.4

海外
Overseas

4.8
4.0
0.8
3.2

FY3/11
11/3月期

3.8
0.8

3.6

3.0

2.5

FY3/12
12/3月期Proved reserve(10 thousand BOED)

1.1

FY3/13
13/3月期

5.4

Domestic
国内【Target 】

257
49

7.0

2.7

208
2.1

2.0

FY3/14
14/3月期

FY3/15
15/3月期

FY3/16
16/3月期(Target)(中計目標)(MMBOE)

Overseas
海外

307

305

313

223
38

160

193

203

185

147

112

110

FY3/11 12/3月期
FY3/12 13/3月期
FY3/13 14/3月期
FY3/14 15/3月期
FY3/15
11/3月期Medium‐Term Business Plan (FY3/12～FY3/16)【Target 】

450

FY3/21
21/3月期(Target)(中計目標)

Medium‐Term Business Plan(FY3/20～FY3/21）* These figures concerning production and reserve mean the amount by economic share of JAPEX group5Long-Term Business Vision

Ⅱ. Recognition of business environment (1)~ Transition of oil price (actual)

Oil prices has plunged from the middle of 2014. Its fluctuation range tend to be large in recent
years and also unforeseeable how change in feet.
However, in the longer terms, the major view is that demands of the emerging countries are
expected and oil and natural gas will still be a primary energy globally.

（$/bbl）

Actual transition of major oil prices (2000～2015)

160
economic downturn precipitated by
the Lehman Brothers bankruptcy

140

・Pending to reduce production by OPEC
・Increasing to provide via non-OPEC・Slacking demand globally
etc.

120
100
inflow of speculative funds

80
60“Arab Spring”

40
Brent
WTI
JCC

20
0
00

01

02

03

04

05

06

07

08

09

* Arranged by JAPEX from Statistics by The Institute of Energy Economics, Japan

6

10

11

12

13

14

15

Ⅱ. Recognition of business environment (2)Long-Term Business Vision~ External environment
Actualized fluctuation risk ofinternational crude oil price

Geopolitical risk

Rapid decline of oil price from 2014 summer

Excess supply trend of crude oil against the background suchcountries by IS
as “Shale Revolution”
Global demand declination of crude oil particularly in EuropeDecrease the value of oil and gas assets / movement ofWhereabouts of economic sanctions to Iran concerning their

Systematic reform of electric and gas business / entirely retailAbsence of energy policy after Great East Japan Earthquakeon 2011 / discussion of future energy best mix

Movement of alliance and new entry beyond the boundary of

Tendency of the target of green house gas reduction by
COP21 until the end of 2015



Immutable of the big trend of GHG reduction

Commencement of commercial operation of domestic LNG
receiving terminal by competitors

etc.

Measure for earth environmental problems

energy sector

Sanctions to Russia stemming from the Ukraine problem
nuclear development

liberalization




etc.

Intensifying competition ofdomestic gas business

Political destabilization of Yemen and military intervention by
Arab countries

industrial consolidation including M&A

Destabilization of the situation in Iraq and neighboring

etc.

etc.

On the other hand, we have prospects as follows; Increasing drastically demands for oil and natural gas particularly in emergency countries in mid-long term Unlikely to form the international agreement of extreme suppression of using fossil fuel
 Oil and natural gas will continue to play major role of primary energy longer and internationally7

Long-Term Business Vision

Ⅱ. Recognition of business environment (3)~ Premise of oil price and exchange rate
Assumption future oil price and foreign exchange rate as below based on
current rends and feeling of rising future price Also supposing low oil price case to correspond oil price fluctuation in addition
to base case

FY3/16～FY3/20（$/bbl）

90

Base case

Increasing gradually

Oil price70
Low oil price caseLow oil pricecase

60
Continuing current level
50
2015

Exchangerate

80Base case¥120/USD¥105/CAD

8

16

17

18

19

20

21～

Ⅲ. Long-Term Business Vision (1)Long-Term Business Vision~ Towards the Leap to 2025

“Transformation to Integrated Energy Company
around oil and gas E&P business”
Domestic customers are the most important for our businesseven though decline proved reserve is fated to E&P business companies

Expansion of supply infrastructure corresponding increase of LNG demands
for aiming to stable domestic supply of natural gas+

Expansion of business basement that is difficult to be affected by impact of oil price
Fluctuations being aware of volatility of crude oil priceExpanding our business actively around E&P including power generation
as well as our focused and conventional E&P business
9Long-Term Business Vision

Ⅲ. Long-Term Business Vision (2)~ E&P businessMedium-Term actions【Target】

RRR ＞ 1
【Add to high-profitablereserve】
RRR ：Reserve Replacement Ratio＝(During certain period)【Increase amount of reserve】
÷【Production amount】

 Increasing production and reserve Return of investment / secure earnings
 Realignment of strategy for studying
new opportunities(contributed mainly overseas projects)

Proved Reserve

 Expanding Reserves of Ongoing
Projects

 Investment New Opportunities－Regarding important Profitability

Most
importantmission Pursuing additional E&P potentials
 Maximization of production volume
by EOR Establishment of efficient operation
 Contribution to research anddevelopment of Methane Hydrate Pursuing conversional marine area
potentials through government’s
basic research

Breakdown image on FY3/20

Long-Term actions－Upgrading “Holding Resource” to“Reserve”（JACOS, Canada Shale Gas, andDomestic ones）【Domestic】【Overseas】
Stable execution of ongoing big projects(MMBOE)+100
Establishmentof
re-Investment
cycle

Production

7.4(10 thousand BOE)

+3.0

313
450

than Scale－Consideration including M&A“Proved Reserve”: Amount of oil and natural gas that will be able to productcommercially in development known integrated oil“Resource”: Amount of oil and natural gas that exist naturally (undeveloped or
expected ones that will find in future)

FY3/15

15/3月期

10

FY3/20(Estimate)
20/3月期（予想）

7.0

FY3/15

15/3月期

FY3/2020/3月期(Estimate)Long-Term Business Vision

Ⅲ. Long-Term Business Vision (3)~ Domestic supply business① - Soma LNG terminal
Supply Canadian LNG for domestic customers~ Establishment of comprehensive supply system of natural gas ~Canada Shale Gas/LNG projectNorth Montney Block

Yufutsu LNG receiving terminal

Prince Rupert(Candidate Site of LNG Plant)

LNG domestic vessel

Delivering for Japanaround 8-9 days

* LNG plant capacity: 12 million tons/y(JAPEX subsidiary has interest to receive 10% of LNG)

Niigata - Sendai strategic pipeline
Connecting pipeline

Soma LNG terminal■Construction Schedule of Soma LNG Terminal

Completion image of Soma LNG terminal
相馬LNG受入基地完成イメージand natural gas power plants

11Nov. 27, 2013

Final Investment Decision (FID)

Nov. 2014

Commencement of construction

End of 2017

Completion of the Terminal (planned)

Mar. 2018

Commencement of operation(planned)

Long-Term Business Vision

Ⅲ. Long-Term Business Vision (4)~ Domestic supply business② - Soma power generation


Now studying the business of thermal power generation using vapor gas from Soma LNG terminalInstallation of power generation facilities which is high-efficiency gas turbine combined cycle type atadjoining place of Soma LNG Terminal

Strategic merit
1. Expanding business based on oil and gas business
2. Resistance to fluctuation of oil price
3. Limited financial burden (practical use of project finance)⇒ Comprehensive energy company⇒ Strong business portfolio⇒ Best finance mix
Aiming to commence thesupply electric power toTokyo Metropolitan Area

Power Plant Site

Revitalization of local area

(Job creation, Enterprise attractions, etc.)

Completion Image of Soma LNG Terminal
and Natural Gas Power Plants■Schedule (Planned)
Nov. 2014

Start the 1st step for Environmental Assessment

Apr. 2015

Establishment of Fukushima Gas Power Co,. Ltd. *Mid 2017

Completion of environmental assessment
Commencement of construction

Jan. 2020

Commencement of commercial operation of No.1 plant

Apr. 2020

Commencement of commercial operation of No.2 plant

12* Established by JAPEX and Mitsui Corp. to study and prepare of electric power businessLong-Term Business Vision

Ⅲ. Long-Term Business Vision (5)~ Domestic supply business③

Maintain stable supply by practical using and expanding our supply infrastructure even though declining amount ofdomestic natural gas
Diversifying both “supply” and “procurement” and expanding scale of supply
Current (FY3/15)
Business volume of natural gas (actual) ：1.2 million tons (LNG equivalent)(Domestic produced gas : LNG ≒ 50：50)【Target】

Become the supplier handling
2.5 million tons of natural gas
per a year by 2025

SupplysystemProcurement
sourcePipelines, Satellite shipment from Nihonkai LNG (byLNG tanker trucks or freight containers), Owned
domestic vessel supplying LNG to customers’ bases etc.
Domestic gas, Long-term contract of Malaysia (until
2022), Spot LNG purchase
Diversifying both “supply” and“procurement”

Medium-Term actions (FY3/21)

Long-Term actions

Procurement
source(additional)• No.1 &2 Train of PNWL (PacificNorth West LNG)*, PNWL expansion,
Sakhalin1 LNG, New interest project(s),LNG purchase

Expansion ofdiversity

Supplysystem(additional)• Soma power generation (1.2 million
kW＋α). Reloading ocean-going vessels
at Soma LNG terminal, Using
underground storage etc.

Supplysystem(additional)

Soma LNG terminal, Somasatellite/domestic-vessels shipment,
Soma power generation (600 thousand kW)

Procurement
source(additional)

spot LNG purchase)

Start up PNWL No.1/No.2 train * (or tentative

Business volume of natural gas (estimate) :1.5 million tons (LNG equivalent)* PNWL will start up around Mid-FY3/20～end of FY3/21

13

Long-Term Business Vision

Ⅲ. Long-Term Business Vision (6)~ Environment and innovative technology①

 Pursuing adaptation technologies which has affinity with E&P business Accelerating renewable energy business

Geothermal energy

CCSSouthern area of
Mt. Furebetsu(Kushiro City)●area● Musadake（Shibetsu Town）●

Tomakomai

Photo provided by Japan CCS Co., Ltd

Drilling operation of Musadake area

Drilling of CCS observation well

Methane Hydrate● Mt. Bandai area

Photo provided by JOGMEC

画像提供：日本CCS調査㈱画像提供：日本CCS調査㈱●Offshore Atsumi and
Shima peninsulas

World’s first offshore methane hydrate
gas production tests* continuing the consensus of the local community

14

Ⅲ. Long-Term Business Vision (7)Long-Term Business Vision~ Environment and innovative technology② - Present actions
Methane Hydrate


2015

2016

2017

2018

2019

2020

Phase 3
Offshore production test
Overall verification

Japan government has a plan of mid-long term offshore production tests
concerning sand layer type methane hydrate. JAPEX is aiming to start the
project for commercial production taking a leading position until 2027



Established Japan Methane Hydrate Operating Co., Ltd.(JMH) on Oct. 2014



JAPEX is joining JMH as a front runner to lead Methane Hydrate business

CCS verification test
2015

2016

2017

2018

2019

2020

CCS verification test at Tomakomai

Established Japan CCS Co,. Ltd. on 2008 to conduct CCS business bothpublic and private sectors
 Starting CO2 indentation into wells and monitoring them later 2016


Focusing on stable execution of CCS Verification Test and Accumulation andEstablishment of CCS Technology to achieve its implementation after 2020
Studying next project

Geothermal energy
2015

2016

Musadake
exploration well

2020



Planning to explore the 3rd test well in Musadake area on 2016

Evaluation/Environmental assessment

Examining business potential based on the evaluation of 3 exploration wells

Studying other candidate areas except for Hokkaido

2017

2018

2019

Studying other candidate areas

15

Long-Term Business Vision

Ⅳ. Actions in short and medium-term (1)~ E&P business / Domestic gas business Pursuing the best optimal financing mix through practical use of Public Investment/Debt Guarantee Scheme,
Project Finance, and others
 Expecting Total amount of required finance on FY3/17-3/21 as 200-220 billion yen
 Appropriating 100 billion yen of own funds into its finance
Financing after FY3/17
FY
3/16

FY
3/17

FY
3/18

FY
3/19

FY
3/20

FY
3/21

Canada Oil Sands
HE Exploration

◆Commencement of production

Iraq Garraf Oil Field
Operational
Expansion

Pending Approval◆Achieving plateau volume of production

Indonesia Kangean
TSB phase 2

Step-by-step increasing of production volume

Upstream
Gas Exploration

Canada LNG
Liquefaction
Business◆ ◆ FID (targeting mid 2015)

◆

Pre-FID

Soma◆

Commencement of
LNG production◆Commencement of receiving LNG

LNG Terminal

Soma



◆ Commencement of production

Canada LNG

Pre-FID

◆Commencement of
No.1 plant operation◆Commencement of
No.2 plant operation

◆FID (targeting 2016)

Power Generation

Note1: For funding method and amount, it is our outlook at the present time, there is a possibility to change.
Note2: Required finance total amount 200-220 billion yen, the total of “JAPEX Funds”, “ Investment of country etc.” and “Loans” in the table

16












Long-Term Business Vision

Ⅴ. Outlook of revenue and profitsand shareholder profits

Even though keeping the trend of recovery until FY3/15, consolidated profit and Loss of FY3/16) is
prospecting to decrease significantly.

Keeping stable dividend even during oil prices declined by planning to secure future profit throughcompletely progress management in ongoing big projects.



In view of medium-term, we have several potentials to improve our profit dramatically such as
Hangingstone Extension (HE) of Canada Oil Sands project, rising Canada LNG (PNWL; Pacific NorthWest LNG) project, and rising business of gas sales expansion and power generation through Soma
LNG terminal as well as expectation of oil price recovery.
Transition of consolidated profit and Loss(100 M Yen)
(Actual)(Estimate)

Yufutsu
impairment →

170

295

100

Influence of oil price decline→

290

PNWL
start up(commercial
production)

HE start up(commercial
production)

117

Power generation
business start up
Expansiongas businessvolume

▲8
2010

2011

2012

2013

2014

Medium‐Term Business Plan
(FY 2011 Ended March 31 2011 to FY 2015 Ended on March 31 2015)

Beginning of 2020s

2015(Estimate)(Estimate)17

Ⅵ. CSR (Corporate Social Responsibility)

Long-Term Business Vision~ Promotion priority agenda “SHINE”
Pursue efforts to priority agendas “SHINE”
in order to respond expectations and requests from all stakeholders
and grow as a trusted global company

S ：Stable & Sustainable Energy Supply ⇒ Development of New Technologies
H ：HSE as Our Culture⇒ HSE Management,
Global Warming Countermeasure etc.

I ：Integrity & Governance⇒ Corporate Governance, Compliance etc.

N ：Being a Good Neighbor⇒ Coexistence and Developmentwith local communities

E ：The Employer of Choice
Recruit anddevelopvarious humanresources⇒ Diversity, HR Development etc.

Ratio of female manager⇒ 2014:
3.4％
until 2020:
3 times

18

Improve HR development⇒ Improve individuals’ capabilities
on their versatility or specialty

Long-Term Business Vision

Ⅶ. Summary~ Image of Leap on 2025

“Transformation to Integrated Energy Company around Oil and Gas E&P Business”

If we liken our business into a tree, E&P business will be “root” and “trunk”, and we will grow each businessaround E&P business as “the well-proportioned wood”
LNG power generation
at Soma

1.2 million kW＋αPower generation business
FID

Domesticgas business
Completion of Soma
LNG Terminal

Domesticgas business

Environment and innovativetechnology

Improverevenue andprofitShareholder
returnTransaction volumeof natural gas
2.5 million ton

Business Prospectof geothermal
generation, methane
hydrate, and CCS(in LNG equivalent)

Environment andinnovative technology
business

Implementation of ongoing projects
e.g. HE, PNWL, Garraf

E&P business

E&P business

Substantial
Shareholder
returnRRR＞1

E&P business

Expansion of profit
Establish re-Investment cycle

Re-Investment Cycle
CSR management

2011

CSR
management

CSR management

2015～19192025

Long-Term Business Vision<Appendix>
Current status of business

20

Long-Term Business Vision

Ⅷ. Current status of business (1)Shale Gas/LNG project

Sakhalin

U.K. / Norway

Sakhalin 1 project

UK North Sea Block(Production & Development)

Oil Sands development(Production & Development)

Canada(Exploration)

MiddleEast(Production of natural gas/planning of LNG plant)

Iraq
Garraf oil field

Japex (U.S.) Corp.(Production)(Production & Development)

Southeast Asia

Overseas focusing areas

Kangean Block (Production & Development)
Block A Aceh (Development & Exploration)
Universe Gas & Oil (Production)

Blocks owned by our consolidated
subsidiaries or equity-method affiliates
21Long-Term Business Vision

Ⅷ. Current status of business (2)~ Indonesia: Kangean Block
Pagerungan Utara oil field
West Kangean gas field（Productionsuspended）(Exploration)

Jacarta
Pagerungan gas field
West Java Pipeline(Production)

Sepanｊang Island oil field（Production suspended)

Bali Island
To Surabaya

Project
Kangean Energy
Company

Indonesia Ltd. (KEI)TSB gas field （Production-partly）

Terang gas field

Sirasun gas field
Batur gas field

South Saubi+ 2 other equity-method affiliates

Interest

25％ （Operator: KEI）

South Chelukan■ Current gross production : Crude oil equivalent of around 50,000 bbl/d□ TSB gas field(Phase1) Terang ： Commenced production in end-May 2012.
Maximum production 0.3billion cf/d(around 50,000boe/d in crude oil equivalent)(Phase2) Sirasun, Batur : Preparing for development□South Saubi Structure: Preparing for prospecting in 201622

FPU of Terang gas fieldLong-Term Business Vision

Ⅷ. Current status of business (3)~ Iraq: Garraf Oil Field
Project
company

Japex Garraf Ltd.

Interest

30％（ cost share 40％ ）Operator ： PETRONAS

Field

Garraf2013

BaghdadProduction

Expected cumulative production :Around 1.3 billion bbl

Garraf oil field
Samawah

2030

Nasiriyah
Basrah■ Time Schedule
2013

Commenced production
August 31 from the Garraf oil field
Average daily production : Around 64,000 bbl/d

2014～
2016

Average daily production(Dec.31 ,2014) :Around 84,000 bbl/dPlan to increase production gradually

2017～

Plan to achieve plateau production target of
230,000 bbl/d

Garraf oil has been smoothly shipped from Basrah

23

Ⅷ. Current status of business (4)Long-Term Business Vision~ Sakhalin 1 project
Project
Company

Sakhalin Oil and
Gas Development Co., Ltd.
(SODECO)OdoptuInterest
Sakhalin 1 Consortium
Exxon Neftegas Ltd.
30％
SODECO
Others
40％

30％

SODECO
Minister of
Economy,Trade andIndustry
50.00％

Arkutun-Dagi

JAPEX
15.29％
Others
34.71％

ChayvoIn Production at each fields
Block

Chayvo,Odoptu,ArkutunDagi※Commencement of Production from Jan.
2015 at Arkutun-Dagi

Total production of Crude Oil：Around 180,000 bbl/d*※ average production rate per day on 2015
based on JAPEX’s Estimates

24

Sakhalin
1 Project is steadily development
Arkutun-Dagi:
Commencement
commercial of
production
crude oiland production
crudeofoil

Long-Term Business Vision

Ⅷ. Current Status of Business (5)~ Canada Oil Sands project
Project

Canada Oil Sands Co., Ltd. (CANOS)

Company

Operator : Japan Canada Oil Sands Ltd. (JACOS)

Block

Hangingstone 3.75 section

100％Interests

Around 5,000～6,000 bbl/d

In production(Cumulative
production：33.23M bbl as of endof Mar. 2015)

Expansion project of undeveloped
part of Hangingstone area

75％ Interests

In development

Additional production of 20,000 bbl/d atthe maximum

Coner JV lease

In appraisal

12％ Interests
Other bitumen leases(include Corner, Chard & Thornbury)

Calgary
FORT McMURRAY Area
Hangingstone
3.75 Section(In production)

Hangingstone
expantion
developing area

Corner JV lease

Considering future activities■Schedule of expanded development in Hangingstone
2013

Feb.： Started early civil work for construction facilities
Sep.: Concluded EPC contracts for major facilities

2014

Aug.： Completed early civil work and commenced construction of
Facilities

2015

Feb. ： Completed Exploration of Horizontal Wells

2016

Commencement of production (Planned)

25

Central facility construction area of
expantion development in HangingstoneLong-Term Business Vision

Ⅷ. Current status of business（6）～Canada Shale Gas and LNG project
Shale Gas development
and production project(Up-stream)

LNG project(Middle-stream)

Block/
Candidatesite

North Montney, British
Columbia, Canada

Lelu Island, the Port ofPrince Rupert, British
Columbia, Canada

Interest

10% Interest

10% Equity

Operator

PETRONAS(Including subsidiaries)

PETRONAS(Including subsidiaries)

Current
statusIn production and sales ofnatural gas

In FEED of the facilities

Conclusion of contract

Dec 2013

Acquired the export license

In 2015

FID of LNG plant (Planned)(After Government Approval)

Prince Rupert(Candidate siteof LNG plant)

North Montney（Block)Pipeline

Vancouver Calgary
Export LNG to Japan■Project Schedule
26 Apr. 2013

Calgary

From 2015

Construction of LNG plant

From 2019

Starting LNG production (12MM ton/y)26

Drilling at North Montney for producing shale gas

Ⅷ. Current status of business (7)Long-Term Business Vision~ Domestic E&P business
Aiming to strengthen profitability of domestic businessMaximization of asset values of existing oil and gas fields
Compensation of production volume and recovery ofproved reserve availability⇒ Examination and implementation of IOR/EOR
Artificial picking at Numanohata SK No.4 well
Implementation of WAG at Iwafune‐oki oil and gas field etc.

●
Tomakomai

Exploration of Land area
⇒ Prospecting of Minami Kashiwazaki Loc.A1⇒ Physical exploration survey in Niigata Uonuma area

Akita

●


Development of domestic shale oil (Tight oil)
⇒ Verification of validity in fracturing at Fukumezawa oil field(optimization of the method)⇒ Development of tight oil at Akita Ayukawa oil and gas field

Niigata●

Excavation of new domestic E&P opportunities⇒ Potential evaluation of exploration in wide sea area
⇒ Pursuing potentials in boundary of land and sea (shallow sea)

Long-Term Business Vision

Ⅷ. Current status of business (8)~ Soma LNG terminal and power generation business■Soma LNG terminal facilities■Schedule of Soma LNG terminal

Site

Shinchi-Town, Fukushima Pref.
(No.4 wharf area of Soma Port)

Nov. 2013

Final Investment Decision(FID)

Type and capacity

One LNG Tank of Aboveground
Style/PC type containing 230,000kl

Nov. 2014

Commencement ofconstruction

Latest condition

Under construction of LNG
terminal and connecting pipeline

End of 2017

Completion of the terminal(planned)

Mar. 2018 (Planned)

End of 2017

Receiving the 1st LNG tanker(planned)

Mar. 2018

Commencement of operation(planned)

Commencement ofoperation■Outline of the plan of Soma natural gas
power plant (tentative name)
Driving force

Gas turbine and steam power(combined cycle system)

Output power

About 1.2 million kW(about 600 thousand kW×2)

Current status

Establishment of Fukushima Gas
Power Co,. Ltd. / Proceeding
environmental assessment

Commencement ofoperation

Plant No.1 Jan. 2020 (planned)
Plant No.2 Apr. 2020 (planned)
28Completion image of Soma LNG terminal
and natural gas power plants

Long-Term Business Vision

Ⅷ. Current status of business (9)~ Environment and innovative technology ①
Solar power business

Geothermal energy●●●
Tomakomai

Mega-solar power station at JAPEX
Hokkaido district office

Musadake area
（Shibetsu
Town）

Drilling operation ofMusadake area

CCS

Methane Hydrate● Mt. Bandai area

Photo provided by JOGMEC
Photo provided by Japan CCS Co., Ltd

Drilling of CCS observation well

●Offshore Atsumi and
Shima peninsulas

29

World’s first offshore methane hydrate
gas production tests

Long-Term Business Vision

Ⅷ. Current status of business (9)~ Environment and innovative technology ② - Methane HydrateJapanese Government is planning Medium-to-Long-Term Offshore Production test of Methane Hydrate in2016-2018.
JAPEX will aim for becoming contractor of the project through Japan Methane Hydrate Operating Co., Ltd.
and will contribute to developing technologies.
JAPEX will aim for starting project for commercialization lead by our company by around 2027.

Technological road map
2014

Pore FillingType
MethaneHydrateImprove technology, withthe commercialization
target of 2018

Shallow Type
MethaneHydrateInvestigation for 3 years
starting from 2013

2020

2030

Improve technology so that thecommercialization project will start
between 2023-2027 depending on
international circumstances.

Based on the results of the resource volume
investigation and discussions of the future, startresearch of resource recovery technology andresearch & development.

Referred from “Ocean energy mineral resources development plan” by Ministry of Economy, Trade and Industry on Dec. 2013

30

2050

Long-Term Business Vision

Ⅷ. Current status of business (9)~ Environment and innovative technology ③ - CCSJapan CCS Co., Ltd has been established in 2008, and project started by both public and private.



JCCS has been assigned as a contractor of verification test from the government, and planning to start
injection and monitoring from 2016.



JAPEX is targeting practical use of CCS from 2020. In order to achieve this target, JAPEX will make ancontinuous effort to implement CCS verification test, and will accumulate and establish CCS
technologies.

CO2 capture and Storage (CCS) Roadmap

referred from “Energy related technologies development roadmap” by Ministry Economy, Trade and Industry

Technological road map
2014【Separate and capture
technology】

Separate cost: ¥4,200 level/t-CO2

2020

Separate cost: ¥2,000 level/t-CO2 (chemical absorbing method)[possibility of ¥1,500 level by utilizing separation film](chemical absorbing method)

Separate and capture energy:
4.0GJ/t-CO2【Reservoir technology】
Verification test

【Environmental
arrangement】

Separate and capture energy: 4.0GJ/t-CO2

Large-scale verification test

2030

2050

Separate cost: ¥1,000 level/t-CO2[by utilizing separation film on high pressure gas]
Chemical absorbing, physical absorbing/sucking, separation film etc.
Larger–scale/serial production of separation film,
Separate and capture energy: 1.0GJ/t-CO2

Aquifer / depleted oil and gas fields

Domestic appropriate places evaluation
Securing national confidence and social capacity consensus (including environmental affection evaluation, monitoring after depletedCO2)
Arranging domestic/international lows and rules, constructing framework related business economics

Long-Term Business Vision

Ⅷ. Current status of business (9)~ Environment and innovative technology ④ - Geothermal For Musadake and Bandaisan area, planning to commence operation around Mid-2020th.
 Will work on other high potential areas including southern region of Furebetsu Mountain,
with the consent of local residents.

Roadmap to development of geothermal power（Model case from “Long term Energy Supply and Demand Forecast Sub-Committee” made by Agency for natural resources and energy

Land
investigation

Exploration (drilling of
exploration well etc.)＜Investigation＞

subsurface
structure by
gravity
investigation etc.

○Actually drilla well andfind out thesubsurface
structure.

○Drill Exploration wellwith small diameterand evaluate
feasibility forsustainable power
generation.

Approximately 2 years
Bandaisan Area

Musadake Area

Environmental Assessment○Investigate＜Exploration＞

Decision of Commercialization

Consent of Local residents
South of
Furebetsu
Mountain

Drilling
investigation

Building power
generation facility＜Development＞＜Production＞○Drill Production

Approximately Approximately
3 years
3-4 Years

32

Drilling ofproduction well

Well with large
diameter andcollect steams for
power generation.

○Construct pipelines
and power
generation plant,
based on theenvironmental
assessment.

About 3-4 Years

Long-Term Business Vision

Acronyms
 BOE(D)Barrels of Oil Equivalent (per Day)

 CCS

Carbon dioxide Capture and Storage COP

Conference Of the Parties CSR

Corporate Social Responsibility

 E&P

Exploration and Production

 FID

Final Investment Decision

 GHG

Greenhouse Gas

 HE

Hangingstone Expansion

 HSE

Health, Safety and Environment

 IOR (EOR)

Improved (Enhanced) Oil Recovery

 JCC

Japan Crude Cocktail

 JOGMEC

Japan Oil, Gas and Minerals National Corporation

 LNG

Liquefied Natural Gas

 MH

Methane Hydrate

 P/L

Pipeline

 PNWL

Pacific North West LNG

 ROE

Return on Investment

 RRR

Reserves Replacement Ratio SODECO

Sakhalin Oil & Gas Development Co., Ltd.

 TSB

Terang, Sirasun, Batur

 WTI

West Texas Intermediate33