Note: The following press release is an English translation of the Japanese-language originalDecember 14, 2012

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

1662 Tokyo Stock Exchange, First Section

President:

Osamu Watanabe

Inquiries:

Media and Investor Relations Department

TEL:+81-3-6268-7110

Final Investment Decision on Hangingstone Oil Sands Projectin Alberta Province, Canada

Japan Petroleum Exploration Co, Ltd. (Japex) has made the Final Investment Decision (FID) onan oil sands project in the Hangingstone area in the Province of Alberta, Canada (HangingstoneProject) at the meeting of the Board of Directors today.

Japan Canada Oil Sands Ltd. (JACOS), a consolidated subsidiary of Japex, currently produces
6,000 to 7,000 barrels per day of bitumen (ultra heavy crude oil extracted from oil sands) at its
Hangingstone Demonstration Project area.

The Hangingstone Project is a joint venture project todevelop an area adjacent to the current Demonstration Project by JACOS and Nexen Inc. (Nexen) in
which JACOS holds a 75% participating interest as the operator, while Nexen holds the remaining
25% interest.

Completing the front end engineering design and obtaining Scheme Approval fromthe Alberta provincial government in November, 2012, the partners will now commence full-scale
development work aiming at production start-up in the first half of 2016.

Considering investment timing and technical risks, the partners have decided to adopt a staged
development approach.

More specifically, the initial stage will result in bitumen production

capacity of around 20,000 barrels per day.

A decision on expansion of the facilities to bitumen

production capacity of approximately 30,000 barrels per day will be made after start-up of theoperation. Bitumen production will continue for around 30 years using the steam-assisted gravity
drainage (SAGD) method, which has already been utilized at the Hangingstone Demonstration
operation for more than 10 years.

JACOS’ produced bitumen will be diluted by ultra-light crude oil such as condensate and sold asdiluted bitumen equivalent to heavy crude oil through pipelines mainly to refineries in U.S.A.

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Total costs for the initial development are anticipated to be around 1.4 billion Canadian Dollars,
1.1 billion Canadian Dollars (90 billion Japanese Yen) net to JACOS (75%), which will be coveredby own funds and bank loans.

JACOS will commence development work immediately after this announced FID.

Nexen hasapproved the design and execution plan for the Hangingstone Project allowing the project to move
forward, and is anticipated to make a final FID decision with regard to their share of thedevelopment during the first quarter of 2013.

＜Summary of Hangingstone Project＞(1) Production start-up (plan):First half of 2016(2) Production (plan):
Production volume at the initial development will be approximately 20,000 barrels per day.
Facilities are expandable corresponding to bitumen production capacity of 30,000 barrels perday.
Production Duration will be around 30 years.

(3) Participating interest:
JACOS

75% (Operator)

Nexen

25%

(4) Total development costs (initial development):
1.4 billion Canadian Dollars
Net to JACOS (75%)

1.1 billion Canadian Dollars (90 billion Japanese Yen)

(5) Financing (initial development):
Own funds and bank loans(6) Marketing
Plan to sell as diluted bitumen mainly to refineries in U.S.A. through pipelines(7) Regulatory approval
Application was filed in Alberta Provincial government (ERCB and AESRD) in April, 2010, and2/4

ERCB Scheme Approval was granted in November, 2012.

(8) Meaning of Hangingstone Project for Japex
Japex, through JACOS and with support of Japanese government and industry, had been
conducting various demonstration tests for finding methods applicable to commercial bitumen
production in the Canadian oil sands region, and started production utilizing the SAGD method
in 1999.

With the development of the Hangingstone Project, the oil sand business is becoming

one of Japex’s core business areas.

Japex also plans to consider the possibility of developingother oil sands leases, including Corner and Chard in the future having the Hangingstone Project
as a basis.

<Attached: Location Map / Image of SAGD method>

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＜Location Map＞

Attachment

tral Processing Facilities >Hangingstone
Demonstration Project area
Hangingstone Project area
Edmonton
Calgary＜Image of SAGD method＞

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