Social&
E n v ir o nme ntt a l

REPORT
R
RE
EP
P OR
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O RT
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2005

JapanEnergyCorporation
Editorial Policy
1. Japan Energy Corporation has been publishing an Environment
Report since 2003. From this year we have expanded sociallyinclined content and have published this report as the Social &Environmental Report 2005.
2. The triple bottom line of our CSR activities consists of the economic, environmental, and social aspects, and this report focuseson the latter two.
Looking at the economic aspect, for unconsolidated financial
information see our website, and for Group financial information
see the website of our holding company, Nippon Mining Holdings,
Inc., their Business Reports, and their Annual Reports.
■ Japan Energy Homepage
http://www.j-energy.co.jp/■ Nippon Mining Holdings Homepage
http://www.shinnikko-hd.co.jp/
3. For the structure of this report we have referred to the Ministryof the Environment’s Environmental Reporting Guidelines(Fiscal Year 2003 Version), and the Global Reporting Initiative(GRI)’s GRI Sustainability Reporting Guidelines 2002*. For
environmental accounting we have referred to the Japan Petroleum Energy Center’s Investigation Report on the Introduction ofEnvironmental Accounting in the Petroleum Industry (2002).
* The GRI Guidelines state that when an organization reports on activities
or products and services from economic, environmental and social
perspectives, it should state clearly how it is contributing toward asustainable society, and this should be done in a way that is easy tounderstand for the organization itself and for its stakeholders.

Scope of the Report
1. Period Covered by the Report
This report covers the CSR activities of Japan Energy Corporation for the fiscal year 2004 (April 1, 2004 to March 31, 2005),
but also includes part of the post April 2005 period.
2. Companies Covered by the Report
The financial data covers Japan Energy Group consolidated
companies. The environmental initiatives (including site data)and environmental accounting cover Japan Energy Corporation
and Kashima Oil Co., Ltd. All other areas, except where stated,
relate to Japan Energy Corporation (non-consolidated).

Corporate Profile

Profile of Japan Energy Corporation

Nippon Mining Holdings Group

Within the Nippon Mining Holdings Group, which has Nippon
Mining Holdings as its holding company, Japan Energy Corporation is the core operating company developing petroleum-related
business from oil exploration and development to refining andmarketing, extending to petrochemicals.

The former Japan Energy Corporation and Nippon Mining &Metals Co., Ltd., jointly established a holding company, Nippon
Mining Holdings, Inc., in September 2002, and made a new startas the Nippon Mining Holdings Group.
The Nippon Mining Holdings Group is unique with its identity inresources and energy, possessing operations with different
operational characteristics and stages of growth. The Group’s
core businesses are petroleum, resources and non-ferrous
metals, electronic materials, and metal fabrication.

Company name Japan Energy Corporation
Headquarters

10-1 Toranomon 2-chome, Minato-ku,
Tokyo, Japan 105-8407

Founded December 1905
Established April 1, 2003
Capital35 billion yen (as of April 11, 2005)
Japan Energy Group(Petroleum Business)* Fully owned by Nippon Mining Holdings, Inc.

President Mitsunori Takahagi

2,623 (as of March 31, 2005)
Number of employees * Includes 1,247 employees dispatched toaffiliated companies

Nippon Mining & Metals Group(Resources & Non-ferrous Metals Business)

Oil & gas exploration, development andproduction
Manufacturing and marketing of gasoline,
Main Businesses naphtha, kerosene, gas oil, heavy fuel oil,LP gas, lubricating oils, etc.
Manufacturing and marketing of
petrochemical products, etc.

“Japan Energy Corporation,” our company
name, is intended to imply our responsibility to society as one of Japan’s leading
companies in the energy industry forensuring a stable supply of energy. At thesame time, it also signifies our “energy” todevelop new technologies and to promote
new businesses.
“JOMO,” our corporate brand name, isderived from terms the “Joy of Motoring”
and the “Joy of Movement”.
The sphere-shaped graphic element in the JOMO corporate markrepresents the “earth,” while the color gradations from blue togreen symbolize a “clear and serene global environment of water,
grass and trees.” The square graphic element in the top part of thecorporate mark represents the “sky above us,” while the color
gradation from reddish orange to yellow therein symbolize the“dawn to a new era.” By coordinating these two graphic elements,
we intend to express our deep interest as a corporation in theearth and its environment. At the same time, the corporate mark isalso intended to express that we are moving towards a “new era.”

Nikko Materials Group(Electronic Materials Business)

Nippon Mining
Holdings, Inc.

Nikko Metal Manufacturing Group(Metal Fabrication Business)

Independent Operating Companies

Functional Support Companies

1Top Message

Japan Energy Corporation will fulfill its
social responsibility throughenvironmentally friendly operations andvarious social contribution activities.

Our Social Mission
Petroleum has contributed greatly to the development of theJapanese economy as a low-priced, stable source of energy. It
is predicted that petroleum will continue to account for a large
proportion of Japan’s primary energy in the future.
With environmental protection and safety as the foundation of
our operations, Japan Energy Corporation will contribute to thedevelopment of society and the improvement of people’s qualityof life by maintaining a stable and efficient supply of energy andraw materials primarily in the form of petroleum products, andpetrochemicals.

Our Mission – We Create Energy –and our activities
In April 1997, Japan Energy Corporation established its corporate
mission, We Create Energy, as well as 5 business principles,
Five Pledges for the purpose of achieving this mission.
Using the word “Energy” in our corporate name as a keyword,
We Create Energy means aiming to create a cohesive anddynamic society, by working through the 3 most important
relationships of energy: the energy in people, the energy of theearth, and the energy of society.
The Five Pledges address corporate ethics and social contribution; environment and safety; respect for the individuality; thecustomer-first approach; and profitable growth. These are
principles that each director and employee should keep in mind
in his or her daily work. Corporations exist within society and assuch are citizens, and so in these pledges we also pledge tofulfill our responsibilities as a good corporate citizen.
Soon after we established our mission and business principles,the Mission Promotion Headquarters Meeting, with the company
president as the director-general, was held monthly, and sincereorganization as Nippon Mining Holdings Group, the Corporate
Principles Committee has met monthly, chaired by the company
president, and through these we have been striving to increaseawareness of the mission and the business principles, and to
put them into practice. The Committee debates various topics
including rigorous legal compliance, as well as issues related tocorporate ethics; our approach to top prioritization of environment and safety and associated costs; case studies of corporate
scandals; the status of social contribution programs, and so on.
In April this year, we held the 100th Corporate Principles
Committee.
In 2003 we launched the Compliance Committee as a subsidiary body of the Corporate Principles Committee, and wehave been striving to further consolidate compliance through2

measures such as the establishment of the Basic Compliance
Rules in 2004.

Our System for Promoting CSR
Corporate Social Responsibility (CSR) began to appear all overnewspapers and magazines around 2002. Japan Energy
Corporation is actively involved in CSR activities based on ourbelief that implementation and promotion of the Corporate
Principles are precisely CSR activities. To take this a stepfurther, we established the Corporate Social Responsibility(CSR) Department in January this year as the specialist division
to drive all aspects of our CSR activities. The Corporate Social
Responsibility Department drives operations in line with thecompany’s triple bottom-line of economy, environment, andsociety particularly with strong awareness of the environmental
and social aspects such as compliance, global environmental
conservation, and social contribution.

Our Environmental Protection Activities
Japan Energy Corporation undertakes many initiatives to reduce
the environmental load of all operations including the exploration, development and production of crude oil, as well astransportation, refining and marketing. We implement measuresfor energy conservation, prevention of air and water pollution,
recycling and waste reduction, chemicals risk management, andsoil contamination countermeasures, with consideration forcharacteristics of each operation and community in which we
operate. As an environmental management system for promoting these continual improvement activities, we have clearly
defined our environmental management system and its
organization, as well as the role of every committee and theoverall environmental audit methodology. In addition to this wehave gained ISO14001 certification (the international standard
for environmental management systems) at all refineries andplants.
In January this year, we began supply of sulfur-free gasoline
and diesel fuel, with sulfur content below 10ppm. We are also
focusing on R&D for environmental improvement technologies
including environmentally-friendly products in the fields of fueloils, lubricating oils, and petrochemical products and waste
plastic recycling. We are also actively involved in R&D for clean
energy in preparation for the next generation.
As another environmental protection activity, we are involved inconservation of forests, which are carbon dioxide sinks. In April
this year, we endorsed the objectives of the Adopt-a-Forest

TOP MESSAGE
Promotion Operation promoted by Nagano Prefecture, and concluded an Adopt-a-Forest contract with Hara Village, Suwa
District in Nagano. This means Japan Energy is the caretaker ofHara Village’s forests, and we provide donation for maintenanceof the forests in the village and volunteer employees undertakea part of maintenance activities.
We plan to continue to engage actively in forestry maintenancefor global environmental conservation in the future.

Our Social Contribution Activities
Japan Energy Corporation develops a variety of social contribution programs that prioritize the areas of sports and culture,child welfare, welfare of disabled people, and global environmental conservation, and we actively support employee volunteer
activities.
The initiative with the longest history among our activities is the
JOMO Children’s Story Award. Every year we collect original
creative stories from the public, provide prizes for good works
and compile them in the JOMO Children’s Story book, Bouquetof Children’s Stories. Last year was the 35th anniversary for thisaward.
Since 1992 we have been aiming to contribute to social welfare
through this Bouquet of Children’s Stories, and have had oursales networks purchase copies through the nationwide JOMO
Association (the nationwide association of sales networks
running JOMO stations) and the nationwide LP Gas JOMO
Association (the nationwide association of LP gas sales networks), and the proceeds have been donated to the social
welfare organization, Japan National Council of Social Welfare,and used to assist child welfare as the JOMO Scholarship
Grant.
We would like to continue these activities permanently in the
future. We also, strengthen our sports promotion programs,
mainly with JOMO Basketball Clinic activities, and our support
activities for disabled people’s sports through Click Donation,and so on.

initiatives, we are running social action programs, in which our
employees are volunteers, working with NGOs to help inchildren’s education.

Publication of the Social &Environmental Report 2005
Japan Energy Corporation has published its Environmental
Report since 2003, but from this year, we have expanded thecontents and are publishing it as the Social & Environmental
Report 2005, covering all CSR activities. The content may still
be far from sufficient, but we would like to reflect the voices ofeveryone in the way we manage our CSR, so please allow us toinvite all opinions without reservation.

October 2005

Mitsunori Takahagi
President
Japan Energy Corporation

Participation in the UN Global Compact
Japan Energy Corporation was the 5th Japanese company tobegin participating in the UN Global Compact in July 2002.
Through practice of our Mission and our Business Principles, weare striving to comply with the 10 principles of the UN Global
Compact relating to human rights, labor, environment, and anticorruption. In addition to our global environmental conservation

3

Our Mission and Business Principles / Corporate Governance

In April 1997, Japan Energy Corporation established our Mission, We Create Energy, and the Five Pledges as
our Business Principles. Our Mission, We Create Energy, expresses the direction in which we need to progress,
and the form we need to adopt, and expresses the values and mental readiness that should be shared by all
directors and employees.
The Five Pledges of the Business Principles indicate the standards of conduct that should be honored by all
directors and all employees in order to implement this Mission. They address: Corporate Ethics and Social
Contribution; Environment & Safety; Respect for Individuality; the Customer-First Approach; and Profitable
Growth. The process of each director and employee carrying out their daily duties with this in mind forms thefoundation of the company’s Mission and CSR activities.

Our Mission
WE CREATE ENERGY
for a more cohesive and dynamic society.
We activate the natural Energy in People,
placing a high value on individual imagination and creativity.
We use the Energy of the Earth wisely,
fully aware that the global environment forms the basis for
mankind’s present and future existence.
We enhance the Energy of Society
by continually improving corporate performance and credibility,and discharging our responsibility as a corporate citizen to discover
new values and additional areas for growth.

Our Business Principles
FIVE PLEDGES
To achieve our mission, we will:
Communicate openly about our policies, programs and performance, andalways act as a good corporate citizen.
Always give top priority to safety and the environment.
Foster a work environment based on teamwork and a can-do
spirit to offer innovative technologies, products and services.
Accurately identify and fully satisfy the ever-evolving needs of our customers.
Strive to achieve corporate growth through sustainable earnings
in close cooperation with our group of companies.

4

Implementation of Our Mission and Business Principles
Japan Energy Corporation’s initiatives to achieve our Mission are
based on a foundation of participation by all directors andemployees, and their thoughtfulness and implementation in their
day-to-day work. For this reason, we have established individual
business principles for each department that fit with the nature of
their operations, and each year we specify priority issues to beaddressed, and evaluate the status of their implementation twicea year.
Initiatives on company-wide issues such as compliance, global
environmental protection, and social action programs are driven
primarily by the Corporate Principles Committee and the Compliance Committee.
The Corporate Principles Committee is chaired by the company
president, and the executive officers in charge of each department are its members. The body meets almost monthly to
examine company-wide issues relating to the Mission and CSR,
and make decisions on associated policies and actions. Decisions

made here are publicized proactively to the whole company
through mission promotion officers in each department.
The Compliance Committee was established as a subsidiary bodyto the Corporate Principles Committee in July 2003. As the president’s advisory body, it is chaired by the vice-president and ismade up of the executive officers in charge of each department,
the head of the Auditing Department, the General Administration& Public Relations Department, the Legal Department, and the
Human Resources Department. The Committee meets twice a
year.
The business offices of the Corporate Principles Committee andthe Compliance Committee are both run by the Corporate Social
Responsibility Department.
We opened the Mission Consultation Office in June 2001 as partof the efforts to promote our Mission. This body responds toquestions, opinions and doubts related to the Mission raised by
employees, and also functions as a corporate ethics hotline.

Our Mission and Compliance Promotion Bodies
Each department:
Mission Promotion Managers
President
Each plants:
Mission Promotion Managers

Corporate Principles
Committee
Business offices(CSR Dept.)
Compliance Committee

Mission Consultation Office

Each branch office:Mission Promotion Managers

Corporate Governance
In June 1999, we separated the functions of management andexecution of duties by introducing an executive officer systemwith the objective of increasing the efficiency of management andthe transparency of our system of accountability. We also reorganized the Executive Committee and established the Board of
Operating Officers and simultaneously abolished the Board of
Executive Officers.

We are striving to further improve the efficiency and transparencyof management. We have established the Corporate Principles
Committee that meets every month, chaired by the president,
and other advisory bodies at the highest level of managementthat give specialist consideration to company-wide issues including the Strategic Committee and the Monthly Performance Review
Committee.

Participation in the United Nations Global Compact
The United Nations Global Compact (Below referred to as GC) isa movement proposed by UN Secretary-General Annan at theWorld Economic Forum held in Davos, Switzerland, in January
1999, and relates to the social responsibility of corporations. The
aims of the GC are a good fit with our Mission, so in July 2002 we
became one of the first Japanese corporations to announce ourparticipation in the GC. We also participated from the outset in theJapanese body of participating corporations, the Global Compact
Japan Network, launched in December 2003.
The spirit of the 10 principles in the 4 areas of human rights,
labor, the environment, and anti-corruption proposed by the GC
are encompassed within our Mission and we are complying withthose 10 principles through the practice of our Mission andBusiness Principles.

Our Mission Guidebook, published in February 2002, contains
sections on prohibition of unfair discrimination; environmental
protection; clean relations with politicians, government and otherpublic offices, and public officials; and prevention of child laborand forced labor, and this document wasproactively publicized to all employees.
In May 2004 we consolidated these
ethics as rules in the Basic Compliance
Rules, and have been striving to achievecomprehensive compliance with them.

5Economy

Economic Report
Sales volumes of fuel oil in fiscal year 2004 increased 2.7% on the previous year to 29.62
million kiloliters. Product prices rose greatly due to the sharp rise in crude oil prices.
Sales volumes of petrochemical products decreased, but their prices increased due tostronger demand in Asia. Sales volumes in LP gas and lubricating oils increased, as did
their prices.
As a result, Japan Energy Group’s net sales increased 13.4% on the previous year to
1,986.3 billion yen, and income before special items increased 144.3% to 87.8 billion yen
on the back of profit growth due to the influence of inventory valuation after theappreciation in crude oil prices, as well as being supported by a good demand environment and improved market prices for petrochemicals.

Financial Highlights (consolidated and non-consolidated)
Primary Affiliated Companies

Net Sales

Consolidated
Non-consolidated

Japan Energy Development Co., Ltd.
NMC Pearl River Mouth Oil
Development Co., Ltd.
Southern Highlands Petroleum
Co., Ltd.

(Units: hundred million yen)

19,86320,00016,321

10,301
15,927

10,00010,496
9,848

9,924

15,000

8,388
7,803

8,000
10,000

6,000

4,000

Kashima Oil Co., Ltd.
JOMO-NET Sapporo Co., Ltd.

(Units: hundred million yen)

18,39917,51017,438

Consolidated
Non-consolidated

12,000

Abu Dhabi Oil Co., Ltd.
United Petroleum Development
Co., Ltd.

Total Assets

5,000
2,000

JOMO-NET Tohoku Co., Ltd.
JOMO-NET Kita-Kanto Co., Ltd.

0

2003

2002

2004

0

2002

2003

2004

JOMO-NET Nishi-Tokyo Co., Ltd.
JOMO-NET Higashi-Tokyo Co., Ltd.
JOMO-NET Minami-Kanto Co., Ltd.

Operating Income

JOMO-NET Tokai Co., Ltd.
JOMO-NET Kyoto Co., Ltd.

Consolidated
Non-consolidated(Units: hundred million yen)

1,000Interest-Bearing
Liabilities(Units: hundred million yen)

6,000

923

JOMO-NET Kansai Co., Ltd.
JOMO-NET Sanyo Co., Ltd.

Consolidated
Non-consolidated

5,233
800

758

JOMO-NET Kyushu Co., Ltd.

5,000
4,394

4,387

4,044

4,000
600

J-Quest., Inc.

JOMO Sun Energy Co., Ltd.

400

377
323

295

257

Japan Energy (Singapore) PTE., Ltd.

2,000

200

1,000

Nikko Liquefied Gas, Co., Ltd.
KYO-Pro Co., Ltd.

0

3,149

2,957

3,000

JOMO Retail Service, Co., Ltd.

2002

2003

2004

0

2002

2003

2004

JOMO-PRO Kanto Co., Ltd.
Petrocokes Ltd.
Nissho Shipping, Co., Ltd.
Nippon Tanker Co., Ltd.
Nichiyo Consulting andEngineering Co., Ltd.

Income Before
Special Items

Consolidated
Non-consolidated(Units: hundred million yen)

1,000

Irvine Scientific Sales Co., Inc.

Consolidated
Non-consolidated(Units: people)

5,000
4,447

878

JOMO Enterprise Co., Ltd.
JOMO Support System Co., Ltd.

Number of
Employees

800

4,000

4,254

679
600

3,000

2,694

Nikko Real Estate Co., Ltd.
(As of March 31, 2005)

4,180

3,629

400

200

0

2,000

359
247

2,623

237
185

2002

1,000

2003

2004

0

2002

2003

2004

* The figures shown are rounded down if they are less than 100 million yen.
* These are the non-consolidated results of Japan Energy Electronic Materials Inc., for FY2002 (the year ended March 2003).
* Numbers of employees on a non-consolidated basis include employees dispatched to affiliated companies.

6

2005-2007 Medium-Term Management Plan
Nippon Mining Holdings Group set a medium-term management plan covering the period from2005 to 2007 and the whole Group is working toward achieving its objectives. Japan Energy
Group will also be implementing various policies to achieve the objectives of the plan that relate
to the petroleum business.
The Income Before Special Items posted in Japan Energy Group’s financial accounts for
FY2004 had already achieved the target for FY2006 set in the previous medium-term management plan (FY2004 to FY2006). We see this as being due to the cost-reductions resulting fromstructural reforms, and the good operational environment.
In the current medium-term management plan (FY2005 – FY2007), we have stepped up ourearnings base to secure a high level of earnings in response to the changing environment of the
future. In addition to strengthening the competitive power of our existing businesses, we will
strive to further reinforce our business structure by expanding our businesses as a growthstrategy for the future. We will also actively promote CSR activities and other management
Issues.

Japan Energy Group’s Medium-Term Management Plan
(1) Basic policy
Reinforcing the competitiveness of our existing businesses
Realization of a growth strategy
Promoting CSR activities and dealing with other management issues(2) Important issues
Reinforcing the competitiveness of our existing businesses
Refining Division• Early realization of the e-Refinery initiative
Mizushima: Making it bottomless
Kashima: Increase added value through linkages in the industrial complex
Chita:
Strengthen competitiveness of petrochemical business through investment inenergy conservation, and other actions.
• Bring our refineries into the top echelon of cost-competitiveness in Japan
Retail Division• Reinforce competitiveness by improving earnings from car maintenance, etc.
Growth Strategy
Increase profitability through large-scale capital investment• Increase production of aromatic compound products
Promote resource development• Promote development of Sanrikuoki and Iburioki gas fields
Promote new businesses• Fuel cell business
Financial targets for FY2007
Net sales:
1,910 billion yen
Operating Income:70 billion yen
Income Before Special Items: 65 billion yen

7Environment

Principles of Environmental Protection / Environmental Management System

Principles of Environmental Protection
Japan Energy Corporation has prepared the Principles of Environmental Protection based on
the section of our Mission that states “we use the energy of the earth wisely”, and the section of
our Business Principles that states “always give top priority to safety and the environment”, andwe are promoting initiatives to protect the environment, reduce environmental loads, and tackle
global environmental problems.

Principles of Environmental Protection
1. We will strive to give consideration to the environment and prevent pollution in all of ouroperations.
2. So that we use resources wisely, we will strive to promote recycling and efficient use of theenergy.
3. We will comply with all related laws and strive to secure environmental levels that generate
trust in the community.
4. We will make efforts in the R&D of environmentally friendly products and technologies andcontribute to improvement of the global environment.
The Origin of the Initiatives
Our environmental initiatives can be traced back towhen our predecessor organization, Kuhara Mining
Co., invested a large sum of money to construct the
Giant Stack to avoid air pollution from the Hitachi
Mine in 1914. At the time, every company involvedin copper ore mines and the smelting industry, which
could be said to be the origin of Japanese industry,
was agonizing over the battle with smoke pollution.
After much trial and error, the final decision was toconstruct the world’s highest smokestack.

Environmental Management System
Environmental Management System and its Organization
The roles and general environmental auditing methods of the company-wide environmental
management system and its organization, as well as each committee, are clearly laid out in theenvironmental protection rules, the outline, etc., and we are promoting environmental protection
activities.

Headquarters

The highest levelsof management

Environment &Safety Department

Offering opinions

Global Environment
Committee

Offices
OrdersReports

Reports

Central Environmental
Strategy Promotion
Committee
Audits(General environmental audits)

Reports

Environment & Safety Office(Department in chargeof environment)
Environment & Disaster
Prevention Committee(Internal environmental audits)

Reports

Company-Wide Environmental
Officers Conference
Company-Wide Environmental
Conference8

Branch Offices

Systematic, Continual Environmental Improvement Activities
The environmental protection rules are the basis for our environmental improvement activities.
In particular, we obtained ISO14001* certification at our refineries and plants by 1999, and wehave been systematically and continually engaging in environmental improvement activities
such as energy conservation, recycling and waste reduction, air and water pollution prevention,etc., with consideration given to the particular type of operations and regional characteristics ofeach site.

Status of ISO14001 Certification
Mizushima* ISO:
International Organization for Standardization
ISO14001:
The international standard for environmental
management systems

Chita

Funakawa Sodegaura Kawasaki

Kashima

Date of certification

1999.2.26

1999.3.5 1998.11.27 1998.3.18 1999.5.21 1999.3.12

Certifying institution

LRQA

JQA

LRQA

LRQA

JQA

JQA

Certification number

772494JQA-EM
0353

771917771512JQA-EM
0427

JQA-EM
0373

Auditing System
In order to appropriately implement and maintain our environmental management system, we
receive regular inspections from ISO certification institutions, and we conduct internal
environmental audits based on the outline for internal auditing.
We improve any problem that pointed in the inspections and audits immediately, and verify the
results of improvement in the follow-up inspections.

Education

An on-site presentation in a TPM activity

Japan Energy Corporation considers environmental education to be the first step ofenvironmental management.
We conduct educational programs as needed on environmental management relating to
reducing environmental loads from production activities in the manufacturing division, and on
deepening knowledge and improving technology for reducing the environmental loads ofproducts in the marketing division.
At our refineries we are devoted to TPM activities (Total Productive Maintenance: productive
maintenance with the participation of all employees). Due to the fact that environmental
improvement initiatives are critical in these activities, we have been conducting environmental
education programs, as well as devoting our energies to promoting acquisition of environmentalrelated qualifications that we have been working towards for some time.
The Sales Division, together with the dealerships and sales companies that run the service
stations, has introduced the TACS(*1) Program and the JOMO Lube Power-Up Program(*2) toimprove automobile fuel efficiency and reduce exhaust gas, and is conducting educational
programs on providing customers with high-quality fuel, the most appropriate lubricating oil, andsuitable maintenance.

(*1) TACS
This is an acronym of Top of Area to Customer’s Satisfaction, meaning stores that provide top-level customer satisfaction ineach region.

Presentation ceremony
for the JOMO Oil Master certificate(*2) JOMO Lube Power-Up ProgramThis is a system of education and qualification for the purpose of improving product knowledge and management skills
relating to sales of lubricating oils. Those who complete the program are awarded the qualification of JOMO Oil Master.
It has received accreditation from the Health, Labor and Welfare Ministry’s Business Career System.

9

Environment
TopicsWind power generation facilities
Opened in March 2005, at the Kashima
Oil Refinery. Japan Energy Group’s
second such facility.

Initiatives to Prevent Global Warming
Prevention of global warming is an urgent issue that the world must tackle as a whole.
As part of this, Japan Energy Corporation has been engaged for some time in energy
conservation in an attempt to reduce emissions of carbon dioxide, a greenhouse gas.
In the future we aim to be at the forefront of the industry in reducing energy unit
consumption, an issue on which the petroleum industry is currently focusing.
We are endeavoring to reduce fuel consumption in the production processes and thetransportation stage of our refineries and plants, while also striving to improve the fuelefficiency of automobiles by developing sulfur-free gasoline and gas oil, high-quality
lubricating oils.
In addition, we will work to prevent global warming through actively participating in funds
that invest in overseas clean development mechanisms (CDMs)(*1) in future.

The Kyoto Protocol came into effect in February this year. Japan is committed to achieving
average greenhouse gas emissions between the fiscal years 2008 and 2012 at 6% (CO2equivalent) below fiscal 1990 levels.
The Kyoto Protocol recognizes clean development mechanisms, joint implementation(*2)
and emissions trading(*3) as Kyoto Mechanisms for reducing greenhouse gases.
(*1) Clean development mechanisms (CDM)
Arrangements where advanced nations and developing nations implement energy conservation projects together andgreenhouse gas reductions are transferred between them.
(*2) Joint implementation (JI)
Arrangements where advanced nations implement energy conservation projects together and greenhouse gas reductions
are transferred between them.
(*3) Emissions trading
An arrangement where advanced nations trade emissions (including reductions from (*1) and (*2) above)

Energy Conservation at Refineries
Carbon dioxide is emitted from refineries by combustion of fuel in the furnace during the processof crude oil treatment, and by the reforming reactions in the hydrogen production process. There
have been several causes of increased fuel usage at refineries, such as the increase in crude
oil treated, introducing deep desulfurization of diesel fuel, and lowering the benzene and sulfur
contents of gasoline, but we have been keeping on saving energy by recovering waste heat,
heat recovery using heat exchangers, reducing steam loss, and so on.
Due to the influence of accidents, etc., our energy unit consumption(note) in FY2004 remained
approximately equal to the previous year despite making efforts to reduce it such as improving
our steam reforming units.

Amount of carbon dioxide (CO2) released and energy unit consumption
Boiler waste heat recovery equipment

CO2 emissions(thousands of tons – CO2)

Energy Unit Consumption(k crude oil / 1000 k )
10

6,000

CO2 emissions
9.07

9.16

9.19

9.00

8.89

Energy unit consumption

8.95
8

4,805

5,000
4,000

4,551

4,489

4,606

4,355

3,000
Liquefied carbon dioxide units
Carbon dioxide gas released from the refinery iscollected and purified, and liquefied carbon
dioxide is produced.

2,000
1,000
0

1990
Year

10

Note: Energy unit consumption

6 Petroleum refining equipment

3,740

2000

2001

2002

2003

2004

includes several units including
crude oil distillation units,
catalytic reforming units,
4 desulfurization units, andcrackers, and the configurationof units varies depending on
2 the refinery, so different
adjustment coefficients areused that match thecharacteristics of the units in
0 order to calculate and compareenergy usage per unit ofproduction.

Energy Conservation in the Transportation Division
Transportation of petroleum products can be broadly divided into land transportation and sea
transportation. In land transportation tank lorries and tank cars (railway) are used, while in sea
transportation coastal tankers are used.
We improve the efficiency of product transportation by increasing the size of the tank lorries andcoastal tankers, and we are cutting the amount of fuel used for transportation year by year.

Land Transportation
By increasing the size of tank trucks used to deliver to service stations, we have increased theamount transported per delivery, and cut fuel usage by reducing the number of trips required.

A large tank truck (trailer-style)● Increased size of tank trucks
Average capacity

1998

17.2
k /vehicle

Annual fuel usage for tank trucks
Fuel usage (k )23,00022,447

22,68322,00021,74221,00020,72920,37920,0002004

18.6

19,000k /vehicle
0

2000
Year

2001

2002

2003

2004

Marine Transportation
We have improved transportation efficiency by increasing the size of coastal tankers to cut fuelusage.
● Increased tanker size
Average ship size

Annual marine fuel usage
Fuel usage (k )A large coastal tanker – Nittan Maru No. 21

1998

2,593
k /vessel

120,000

106,503 100,052

113,217
105,031

100,000
80,00072,71760,00040,0002004

2,908
k /vessel

20,000
0

2000
Year

2001

2002

2003

2004

11

Environment

Initiatives to Prevent Air Pollution
While crude oil accepted by the refinery is refined to produce various petroleum
products, pollutants such as sulfur oxides, nitrogen oxides, soot and dust are generated
from the furnace, boiler, and desulfurization units.
We implement various environmental strategies to prevent these pollutants leading to air
pollution.

Sulfur Oxides (SOx)

Soot and Dust

We mainly use gas with low sulfur content and low-sulfur
heavy fuel oil as fuel in our furnaces and boilers. In some of
our units we have set up tail gas treating equipment, and haverealized emissions 35% below regulatory limits.

Refinery furnaces and boilers use more fuel gas than heavy
fuel oils, so their combustion generates little soot and dust. In
boilers that use a larger amount of heavy fuel oil, we set up
electrostatic precipitators to reduce emissions. As a result wehave achieved emissions 15% below regulatory limits.

SOx Emissions

Soot/Dust Emissions

Regulatory limit(14,393 tons)

Emissions (tons)
16,000Emissions (tons)
3,000

14,0002,500

Regulatory limit (1,914 tons)

12,0002,000

10,000
8,000

1,500

6,000 4,200
4,000

Sulfur recovery and tail gas
treating unit

3,853

4,464
3,440

1,000
2,734

2,000
0

Electrostatic precipitators
2000
Year

2001

2002

2003

500
0

2004

205

192

203

205

197

2000
Year

2001

2002

2003

2004

Nitrogen Oxides (NOx)

Volatile Organic Compounds (VOC)

We use fuel with low nitrogen content in our furnaces andboilers. We have suppressed nitrogen oxide generation byusing burners with improved combustion characteristics, andhave set up flue-gas denitration equipment in some units,
resulting in emissions 55% below regulatory limits.

To prevent release of volatile organic compounds (naphtha,benzene, toluene, and xylene contained in gasoline, etc.) into
the atmosphere, we have rebuilt the tanks with floating roofs
and set up vapor recovery facility in the offloading units. Using
this preventative strategy, benzene emissions have been
decreasing year by year.

NOx Emissions

Flue-gas denitration equipment

Benzene Emissions

Emissions (tons)
10,0009,000
8,000
Regulatory limit (6,349 tons)
7,000
6,000
5,000
4,000 3,181
3,089
3,067
3,008
2,828
3,000
2,000
1,000
0
2000
2001
2002
2003
2004
Year

Emissions (tons)
80.0
70.0
60.0
50.0

41.9

40.0
30.0
20.0

13.7

14.8

14.3

2001

2002

2003

11.9

10.0
0
Hydrocarbon Recovery Facility

2000
Year

2004

TopicsThe Kashima Oil Refinery has been actively participating in the Council for
Voluntary Management of Benzene in the coastal area of Kashima, and in
November 2004 this council was granted an award by the Ministry of theEnvironment for meritorious service in the protection of the atmosphericenvironment (division for organizations) at the Air Pollution Prevention Promotion Month awards ceremony.

12

Environment

Initiatives to Prevent Water Pollution

Wastewater Management at Refineries and Factories
There are two types of wastewater from manufacture of petroleum products. One of them is flow
down water from cooling towerthat does not contain oil, or wastewater that contains oil andsludge. These wastewaters are separated by each individual system, and wastewater that
contains oil is treated in activated sludge treatment facilities and activated carbon adsorption
facilities. We manage wastewater as appropriate depending on indicators such as the chemical
oxygen demand (COD) that express the degree to which wastewater is polluted.
These indicators change depending on the amount of wastewater, etc., and we are endeavoring
to cut back on this.

Polluted Water Treatment System
Wastewater or
rainwater thatdefinitely does
not contain oil

Wastewater treatment facilities

Rainwater that
may contain oil

Householdeffluent

Ballast water

Wastewater
Wastewater fromfrom production
special facilities
equipment, oil(includingtanks, and services industrial waste)

Oil separating tank

Anaerobic
treatment facilities

Blow water
Flocculation andsedimentation tank

Floatation tank

Cooling facilities

Activated sludge
process facilities
Activated carbon
adsorption
facilities
Guard basin

Guard basin

Wastewater outlet

Wastewater outlet

COD sludge loading

COD loading (tons)

500
Regulatory limit (310 tons)

400
300
200
106
100
0

2000
Year

88

2001

48

51

56

2002

2003

2004

(The Kashima Oil Refinery is excluded because its waste is treated at Ibaraki Prefecture Kashima Sewerage Office’s Fukashiba
Treatment Plant)

13

Environment
Environment

Recycling & Waste Reduction / Chemical Risk Management /Strategies against Soil Contamination
Waste reduction and chemicals management in refineries and factories are important
initiatives for regional environmental protection.

Recycling & Waste Reduction Initiatives
Wastes generated at refineries include waste oil and sludge, ooze, spent acid, waste alkalis,
dust collected from electrostatic precipitators, used solvents, and construction waste. We reducethe volume of some of these wastes using intermediate treatments such as oil recovery for
waste oil and sludge, dehydration and incineration for ooze, and so on. We are also devoted toresource recovery methods such as re-refining waste oil, using ooze and collected dust as
cement material and roadbase, and separation of construction materials.
Due to the impact of typhoons unexpected waste (1,245 tons) was generated in FY2004, andour waste to landfill increased, but we increased the proportion of waste we put to good use up
to 96.5%.

Waste to Landfill

Waste Disposal Status

Amount of waste to landfill (tons)
4,000
3,799

Amount of waste to landfill
3.5%

3,500
2,968

3,000
2,500

2,205

2,000

1,816

2,388

1,945

1,500

1,241

1,000

1,143

Amountrecovered asresources
40.9%

Amount of
reduction
55.6%

500
0

1998
Year

1999

2000

2001

2002

2003

2004

Chemical Risk Management
Among the chemical substances used at refineries that are prescribed in the PRTR Law(Pollutant Release and Transfer Register Law: the Law Concerning the Reporting of the Release
into the Environment of Specific Chemical Substances and Promoting Improvements in Their
Management), the substances discharged or moved are the 10 types shown in Site Data (P36P41), and we also store and manage PCBs (Polychlorinated Biphenyls) appropriately.

Strategies against Soil Contamination
We undertake studies to systematically search for soil contamination in the land where ourrefineries, factories, oil tanks, service stations and other company owned land are located.
In FY2004 we completed the backfilling works being conducted since 2000, of areas where thesoil contained oil content at the site of the former Funakawa Oil Refinery.

Backfilling works at the former
Funakawa Oil Refinery

14

After completion of backfilling works at the former
Funakawa Oil Refinery

Environment

Environmental Friendliness of Products and Services
We have produced a large lineup of products with reduced environmental loads toimprove the environment at the stage where our customers use petroleum products.

Environmental Friendliness of Fuel Oil
The Company offers environmentally friendly products that contribute to reduced emissions ofcarbon dioxide, which causes global warming, and reduction of toxic substances in exhaustgases.

Gasoline

Sulfur-free gasoline production units• Premium gasoline
The company’s premium gasoline, GP-1 Plus, has environmentally beneficial effects overregular gasoline such as better fuel economy due to its high-octane value, and better internal
engine cleanliness due to addition of cleaning agents.
We have also been supplying sulfur-free gasoline with sulfur content less than 10ppm since
May 2002, ahead of the regulations.
• Regular gasoline
We have been supplying sulfur-free gasoline with sulfur content less than 10ppm since
January this year, ahead of the regulations.
When the sulfur content in gasoline is high, the catalytic performance of the vehicle’s exhaust gas purification equipment deteriorates, and energy is used to regain this performance. Sulfur-free gasoline reduces
the deterioration of the catalyst, contributing to reduced carbon dioxide emissions.

• Reducing benzene content
Since January 2000, we have reduced the content of benzene, a carcinogen, in our gasoline
from 5% to 1% of the former values.
• Reduced vapor pressure
We have reduced vapor pressure to below 65kPa to suppress generation of summertime
photochemical smog.

Diesel Fuel
Leading the regulations, we have been supplying sulfur-free diesel fuel with sulfur content lessthan 10ppm since January this year.
JOMO station shop front posters

There is a demand for diesel particulate filters (DPF) in diesel cars to improve the atmospheric environment. Sulfur free diesel fuel is required to realize and maintain the good performance of these DPFs.
To reduce particulate matter (PM) and sulfur oxides released from diesel vehicles, we have sequentiallyreduced the sulfur content of diesel fuel to below 0.5% (1976), 0.2% (1992) and 0.05% (1997).

Environmental Friendliness of Lubricating Oils
The Company, with its environment-friendly long-life and superiorbiodegradable products, has contributed to energy conservation in
automobiles and industrial machinery.
With the motto of “to be gentle on people, environment, and resources”,
we have been making efforts to research and develope environmentallyfriendly lubricating products. Responding to the further global environmental requirements, we put the JOMO ECO Series to the market inFebruary 2004.
JOMO DELSTAR DH-2

Lubricating Oils for Automobiles• JOMO DELSTAR DH-2 A low ash diesel engine oil suitable for every diesel engine, especiallyfor those adapted exhaust gas regulation with DPFs. It has confirmed
to the DH-2 standard (An engine oil standard made for trucks, buses,
etc., with DPFs installed by the Japan Automobile Manufacturers
Association, Inc., and the Petroleum Association of Japan).
• JOMO CNG Oil• JOMO GE Power Oil

JOMO GE Power Oil

A performance-oil made for engines that use Compressed NaturalGas (CNG) and Liquefied Petroleum Gas (LPG), with superior
oxidation stability. It is also low ash content and is the highest grade
long-drain gas engine oil that cuts down on post-combustion
deposits, contributing to lower maintenance costs.

15

Environmental Friendliness of Products and Services

Environmental Friendliness of Lubricating Oils (continued)• JOMO DREAMER Series We have developed the super-efficient, environmental-performanceconscious 0W-20 engine oil and increased the environmental
performance.
The existing products, 0W-30, 5W-40, and 10W-40 have all obtained
the American Petroleum Institute’s (API) highest grade (the SM
Grade).
JOMO DREAMER Series

Industrial Lubricating Oils
• JOMO Bio Turbine• JOMO Bio Hydro• JOMO Bio Transformer• JOMO Bio Grease EP

JOMO Bio Hydro

100% synthetic lubricating oils JOMO Bio Series have excellent
oxidative stability and biodegradability, so if it leaks accidentally,
the influence on water and soil will be reduced.
We have obtained the Eco-Mark for all of these products.

Refrigeration Lubricants
We are the leading supplier of synthetic polyol ester based refrigeration lubricants as chlorofluorocarbons (CFCs) alternativeand these products now make up the largest world market
share.
We also led the industry in developing CFC-free refrigeration lubricants, and we are thedominant in Japanese market.

Environmental Friendliness of Petrochemical Products
TopicsThe Company supplies environmental products such as industrial detergents used as substitutes for chlorinated detergents, and non-aromatic naphthenic solvents.
We also succeeded in practical implementation of TS paraffin (normal paraffin used as a latent
heat storage agent) which contributes to carbon dioxide reduction and energy conservation.
This year we also commercialized naphthalene-free high-boiling point aromatic solvents.

NS CleanHydrocarbon type cleaner with excellent washing power, dehydrating ability, and reusability forremoval of metal processing oil, particulate, water, etc. Used as a substitute for chlorinateddetergents.

EM CleanThe sixth ozonosphere protection andglobal warming prevention grand prix,
examination committee special prize

In recognition of our contribution* to the
reduction of 1,1,1-trichloroethane, anozone-destroy substance, we wereawarded “the sixth ozonosphere protection
and global warming prevention grand prix,
examination committee special prize” in
September 2003.
* Trial calculations indicate we achieved
approximately a 50,000 ton /year
reduction.
This is equivalent to roughly 25%of the peak demand (FY1993) for
1,1,1-trichloroethane.

Highly soluble hydrocarbon detergent, which performs well removing hardly soluble substancesfrom pitch and wax to urethane and epoxy resin. Can be used to complement NS Clean as a
substitute for chlorinated detergents.

Nikko White
Highly biodegradable, low-smell cleaning agent, which does not contain aromatic hydrocarbons
like toluene and xylene, which are atmospheric pollutants.

Cactus Solvent
Highly biodegradable, low-smell industrial solvent product, which does not contain aromatichydrocarbons, which are atmospheric pollutan. Naphthenic industrial solvents and industrial
volatile oil products have characteristics including non-normal hexane, low benzene, lowaromatic, and naphthalene-free.

TS Paraffin (normal paraffin used as a latent heat storage agent)
Currently used in the field of construction materials, but in future it may be applied in the fields
of construction, automobile air-conditioning, fibers, and so on, as energy conservation gains
momentum.

16

Environmental Friendliness of LPG
TopicsFuel Cells
In January 2005, at the Kawasaki LPG
base, we began full-fledged implementationof a LPG-reforming type stationary fuel cellsystem.

LPG is a weaker greenhouse gas than other fuels, and like natural gas it is a gaseous energy
with a small environmental load. The energy supply and demand outlook for Japan up to 2030
sees demand for LPG rising as highly-efficient cogeneration systems and LPG vehicles become
more numerous.
The Company is promoting LPG to the community as a clean energy, and is striving for the
expansion of clean cogeneration fuel cells and LPG vehicles.

Dispersive Power Generators

LPG-reforming type stationary fuel cell system

TopicsOur Submissions to ENEX 2005 – The
29th Energy & Environment Exhibition
We submitted our LPG-reforming typestationary fuel cell system, hydrogen leakmonitoring system, as well as the TS
Paraffin and some others. We also gave
panel-board and video presentations on ourwork on organic hydrides, which are atechnology for the storage and supply ofhydrogen for fuel cells, and wind power
generation, etc.

Fuel cells and other cogeneration methods involve decentralized power generation, so energy
loss is low, and are expected to contribute to energy conservation and reduced carbon dioxide.
LPG, with its excellent portability, is the focus of much attention as an energy source fordecentralized power generators that are predicted to increase dramatically in popularity. LPG
demand is forecast to grow.
The Company has been working to promote the popularization of gas engine cogeneration(ECOWILL), general sales of which have already begun, and we are expanding field trials of fuelcell at LPG bases and the homes of employees. Starting in FY2005, we participated in a largescale trial operations of stationary fuel cells, and have been promoting initiatives in lead up to
the anticipated fuel cell era.

Conventional SystemPowerstationPowertransmission
lines

Transformer

Fuel Cell Cogeneration
Residences,
etc.

LPG
import bases

Transportation

Fuel cellcogenerationEleyicit t
a
He

ctr

LPG

Residences, etc.

39%
Primaryenergy 100%

Electric
energy34%
Primaryenergy (LPG) 100%

Electric
energyUsable39% waste

Transmission loss, etc.

heat

61%
27%
Unused waste heat, etc.

Waste heat that is difficult to utilize
A model comparing the energy efficiency of the previous system and the decentralized system.

Topics

Low-Pollution LPG Vehicles

Large-Scale Stationary
Fuel Cell Trial Operations

LPG vehicles do not contain black smoke and suspended particulate matter (SPM) in their exhaust emissions and their popularization is being pushed by national and regional governments
as next-generation low-pollution vehicles with low levels of nitrogen oxide and hydrocarbon
emissions.
The Company is actively engaged in promoting the popularization of LPG vehicles, for instanceby implementing the system to support introduction of LPG vehicles within the JOMO Groupsince 1996, and we have steadily increased the number of vehicles in the Group year by year.

We participated in the large-scale stationary
fuel cell field trials started by the New
Energy Foundation (NEF) this financial year.
In the first half of this year we set up 12 fuelcells in general households and we are in
the process of collecting operating data. We
plan to set up an additional 18 in the second
half of the year, and plan to install 150 overthe 3 years to FY2007.

17

Environment

Environmental Friendliness of Service Stations
We cooperate with the franchisees of our service stations in efforts to recycle waste,
reduce the amount of wastewater that results from cleaning cars and washing sites,
prevent soil contamination, prevent release of vapors of gasoline, etc., and so on.

Initiatives to Reduce Environmental Loads* 3R:
Reduce: suppressing waste generation
Reuse: reusing waste appropriately
Recycle: appropriate recycling of waste

Waste Recycling
We promote the 3R* approach for used tires and oil, and other wastes.

Purifying Wastewater

Water recycling car wash machine

All wastewater collected from thesurface of the sites is collected in theoil separating tanks where the oilcontent and the sludge are removed.
At service stations where car washingis common, a lot of water is used, so
we have installed recycling equipment
and we are using water resources
effectively by economizing on water
usage in car washes.

Dealing with the Environmental Loads of Service Stations
Purifying wastewater

Soil checks

Recovery of vapors

Correct waste management

Preventing Soil Contamination
We systematically undertake oil pollution studies at service stations owned by Japan Energy toprevent soil contamination.
We organized a comprehensive support system for soil protection around the undergroundtanks at service stations, called Japan Soil Solution Group (JSSG), and began providing support
in November 2004.This is based on the results and experience from soil pollution risk control
measures in our service stations, and is meant to support service stations not owned by us inconsistent soil protection activities ranging from equipment and soil studies to soil restoration,
aiming to prevent environmental burdens in advance at all JOMO service stations. This support
also applies to underground facilities at our factories.

Vapor Recovery
Car wash water recycling equipment

We are progressing towards finding a
way to set up collection equipment torecover fuel oil vapors released whentank lorries transfer gasoline toservice station tanks.

Vent
Vapors ofgasoline, etc.
Tank truck
Oil filling

Energy Conservation Initiatives
We have installed photovoltaic power generation panels to the roofs of our service stations andare introducing the clean energy of solar power generation. We are presently doing this at 16
service stations.

A service station with photovoltaic power
generation panels installed

Preventing Static Electricity Accidents

Measuring instruments and POS machines fittedwith static electricity removal sheets18

For the safety of our customers, we are preventing static electricity accidents by installing
equipment (static electricity removal sheet) in our measuring instruments and POS
machines that removes static electricity from the body of our customers just by coming
into contact with it.
This is recognized by the Fire Department and has also been adopted by othercompanies.

Environment

R&D for Technologies and Products Made for Environmental Protection
We are actively engaged in R&D for environmental protection, such as clean energy,
environmental improvement technologies and environmentally friendly products.

R&D in Clean Energy
Fuel Cells
In order to widely spread fuel cells, which now attract much attention as a highly efficient andclean technology, it is critical to establish the infrastructure (social basis).
Aiming to utilize existing petroleum fuels such as kerosene and LPG effectively in a diverse
range of fuel cells, Japan Energy researches and developes new catalysts and systems
reducing the sulphur level of fuels to the ppb (parts per billion) order, and produce hydrogen
efficiently.

Hydrogen Energy
We research and develope organic hydride method that enables us to facilitate easier storage
and to supply of hydrogen in liquid form. The organic hydride method is a hydrogentransportation system using hydrogen transfer reactions represented by toluene and methyl
cyclohexane, and is distinct in that it uses existing infrastructure.
We also develop a composite monitoring system for the early detection of hydrogen gas leaks athydrogen refueling stations by combining 3 types of sensors (sound, gas, and image).
A hydrogen storage and supply system that utilizes organic hydrides
Tank truck
RefineryHydrogen refueling station

Production of Aromatics
Hydrogen production
Hydrogen storage

Hydrogen generationand supply
Transportation of hydrogen as a liquid hydrideR(Methylcyclohexane, etc.)

Recovery of aromatics
R(Toluene, etc.)

Fuel cell vehicle

Residence

Factory

Environmentally Friendly Clean Energy(*1) GTL: Gas to Liquids
A technology for synthesizing liquid fuels(kerosene, diesel fuel, etc.) from natural gas(methane).
(*2) Bio-Diesel Fuel (BDF)
A fuel substrate for diesel engine fuels madefrom the renewable resources such as used
waste of tempura oils and plant oils.

We are undertaking R&D related to environmentally friendly clean energy such as production
technologies for paraffin-based fuel substrates that do not contain aromatic or olefin
compounds.
We have also been contracted by the Japan Oil, Gas and Metals National Corporation to
conduct R&D concerning new fuel oils, including use of new GTL(*1) technology to synthesize
fuel oils from natural gas, and developing new production methods for bio-diesel fuels(*2)
derived from plant oils. We are also engaged in developing solid superacid catalysts that have abroad range of uses in petroleum refining and petrochemical industries, and are useful in thetreatment of diesel vehicle exhaust gas.

19

Developing Environmentally Friendly Products
Gasoline & Diesel FuelJapan Energy is engaged in R&D that contributes to cutting back carbon dioxide, which causes
global warming, and reduction of carbon dioxide and toxic substances in exhaust vehicle gases.

Lubricating Oil
We are pushing forward with development of products that are friendliness on people, theenvironment, and resources with characteristics including energy conservation, long-life, biodegradability, and responsiveness to environmental regulations.
We are also developing the JOMO ECO Series, including the fire-resistant hydraulic oil, JOMO
Hydria E, with 40-50% water content, low COD (chemical oxygen demand), and excellent for
wastewater treatment.

Petrochemical Products
We consider the most important environmental challenges to be preventing destruction of theozone layer, preventing global warming, reducing on regulated chemicals, energy and resource
conservation, and people-friendliness. We have developed NS Clean as an environmentallyfriendly industrial detergent, and we have also developed high-boiling-point aromatic solvents
that do not contain naphthenic solvents or naphthalenes as substitute solvents in response tostrengthened regulations on toluene and xylene.

Developing Techniques for Environmental Improvement
The Status of Chemical Recyclingof Waste Plastic

Generalconsumers

Plastic
garbageOil chemicalcompanies

Crackeddistillate

Plastic
makersPetrochemical
manufacturers

Chemical Recycling of Waste Plastic
We are conducting R&D into treatment technologies where petroleum refining facilities are
utilized to make petroleum products from thermally decomposed oil produced from factories thatconvert waste plastic into oil.
This technique was introduced to the Mizushima Oil Refinery from FY2004, and the light
distillate from waste plastic cracked distillate is being treated in the petroleum refining facilities.
In this way waste plastic cracked distillate can be recycled as a highly versatile petroleum
product, making a significant contribution to forming a resource-recycling society.

Refinery

Restoration of Contaminated Soil

NaphthaFuel

We have been engaged in development of technologies for investigating and remediating soil
contamination.
We developed new technologies of measuring on-site oil contamination and soil microorganisms.
We conduct R&D on purification technologies such as application of bio-surfactants(*) to oilcontaminated soil, dioxin purifying technologies, contaminated soil purifying technologies using
plants (phytoremediation technologies).

Reducing the Environmental Loads of Refinery Operations
We are conducting research to reduce the amount of fuel consumed by refinery operations andcut carbon dioxide emissions by using technologies that prevent contamination of equipment
and technologies that automatically measure and monitor extreme processes (online sensing
techniques).
We are also conducting research into recycling and reuse for the purpose of cutting down on
spent solvent waste and reducing the associated environmental load.

Research Relating to Production Techniquesfor High-Performance Base Oil for Vehicle Engine Oil* Bio-surfactant
A surfactant derived from microorganisms thatis highly biodegradable and works as anenvironmentally friendly oil detergent.

20

High levels of quality, such as low sulphur content in diesel engine oils, are demanded forengine oil for vehicles, as are improved fuel efficiency and durability. Japan Energy
manufactures high-performance lubricant base oil with techniques developed in-house, and weare continuing broad-based research into base oil production techniques to satisfy these needs.

Environment

Environmental Accounting
We have prepared environmental accounts that cover the following points such as ourenvironmental costs for environmental protection, our investment including the costs ofestablishing and modifying environmental improvement equipment, and their resulting
effects.

Environmental Costs

Units: millions of yen
Item
Total
1 Cost of environmental strategies of our products (decreasing the sulphur-content
of heavy fuel oil and diesel fuel, improving the quality of gasoline, etc.)
24,1612 Cost of reducing direct environmental loads(1) Cost of preventing pollution (preventing air pollution, water pollution,and soil contamination)
1,599(2) Cost of protecting the global environment (Preventing global warming)
502(3) Cost of waste treatment & recycling250
3 Cost of environmental activities(1) Cost of management activities
336(2) Costs of social activities
5(3) Environmental donations and contributions
676
4 Cost of R&D for reducing environmental loads
1,536
Sum total
29,065Investment

Units: millions of yen
Item
Total
1 Expenditures for establishment and modification of environmental
improvement equipment
7,363
2 Management expense for maintenance of equipment (repairs and updates)
12,806
Sum total
20,169Effects
Our operations impose loads on the global environment, but we have calculated the following
effects as a result of our expenses incurred and funds invested for environmental improvement.
Improvements in the Atmospheric Environment• Reduction in sulphur oxides released into the air
Amount of sulphur produced: 162,488 tons per year
• Reduction in benzene released into the air
Benzene recovered: 47 ton increase (compared to 1998)
Curtailing Resource Use• Reduction in fuel usage due to energy conservation
Cude oil equivalent: 24,643k reduction (compared to FY1990)• Amount of waste oil recycled
Crude oil equivalent: 3,099k per year
Converting the reduction in resource use to a monetary figure indicates a 780 million yen
saving.

21

ComplianceSociety
Relations with Society

Compliance is a fundamental underlying premise of all Japan Energy operations, and all
directors and employees are conscious that it is their minimum necessary duty as acorporate citizen and a community citizen to comply with laws and business ethics. Our
fundamental policy, concrete standards and system of implementation are set in rules
and we are striving to promote compliance.

Fundamental Compliance Policy
The Fundamental Policy of Japan Energy’s Fundamental Compliance Rules is that, based on our Mission, and led by top management,each director and employee will behave earnestly in the public sphere and strictly adhere to rigorous legal compliance, and social norms
and corporate policies, and, to that end, we will endeavor to establish a system of anti-corruption and responsibility while continually
evolving our corporate culture.

Concrete Standards of ComplianceJapan Energy has listed the following 22 points as concrete standards that all directors and employees should adhere to, based on theabove Fundamental Policy. These are only examples and due to the fact that the Fundamental Policy gives rise to many other rules tocomply with, the Fundamental Compliance Rules relate to all other laws and regulations.
1. Adherence to the AntimonopolyAct
2. Prohibition of insider trading
3. Environmental protection
4. Safety management
5. Adherence to the Unfair
Competition Prevention Law

6. Fair relations with politicians, publicagencies, and public officials
7. Consumer protection
8. Disclosure of information, andaccountability
9. Dealing with anti-social forces
10. Appropriate accounting
11. Fair reporting of working hours

12. Prohibition on receipt of gifts
13. Prohibition of unfair discrimination
14. Prevention of sexual harassment
15. Protection of personal information
16. Prevention of child labor andforced labor
17. Prohibition of conflicts of interest
18. Prohibition of private usage ofcompany properties

19. Assurance of the security ofcompany information
20. Appropriate management ofexports
21. Prohibition of trading forspeculative purposes
22. Rigorous crisis management

Compliance Initiatives
System of Implementation
Japan Energy’s compliance activities are driven by the Compliance Committee, which was established as a subsidiary body to
the Corporate Principles Committee in July 2003.The committee
sets policy for company-wide educational activities relating tocompliance, and studies and evaluates the status of compliancepromotion in each division every 6 months.
● The Mission Consultation Office for internal reporting
Japan Energy established the Mission Consultation Office inJune 2001 as part of the efforts to promote our mission.
This body responds to questions, opinions and doubts raised by
employees relating to the mission, and was established as aconduit for information on unethical behavior. The Whistleblower
Protection Act, enacted in June 2004, prohibits dismissal, demotion, salary cuts, and other disadvantageous actions forwhistleblowers.

Japan Energy strictly prohibits organizational and personal
retaliation against people who disclose corruption, and clearlystipulates protection for whistleblowers.

Education & Trainings
Japan Energy has always promoted compliance as part of theimplementation of our Mission and is persistent and honestly intaking every opportunity to educate all directors and employees
on compliance so that the spirit of compliance takes root deeply.
In FY2004 we ran education programs on compliance in training
for the different levels of employees including new employee
training and training for newly appointed managerial staff. We
also conducted lectures and workshops with external lecturers
under the theme of compliance targeting the Mission Promotion
Managers in each division at head office and all other offices
and facilities.

Important Points Relating to Compliance● The violation of the Antimonopoly Act relating to the 1999 competitive bidding for
supply of fuel oil to the Japan Defense Agency
In November 1999, the former Japan Energy Corporation (merged with Nippon Mining
Holdings, Inc. in October 2003) received an order to pay surcharges after it was judgedthat the Antimonopoly Act had been violated in delivery of petroleum products to theJapan Defense Agency. Nippon Mining Holdings, Inc. acceded to the position of
defendant and in February this year received the judgment and in April paid asurcharge of 483 million yen.
The Company took this opportunity to strengthen its adherence to the Antimonopoly
Act and all other laws, and in November 1999 formed the Antimonopoly Act Compliance Promotion Committee, devoted to preventing reoccurrence, and presented theFundamental Policy and the concrete standards of compliance in the Mission
Guidebook, published in February 2002, and then in July 2003 the Antimonopoly Act
Compliance Promotion Committee was dissolved to pave way for the establishment of
the Compliance Committee, and other policies were adopted.
In April 2004, we revised the Antimonopoly Act Compliance Manual , and in addition to
distributing it to all directors and employees, we held training sessions at sales sites inan effort to keep everyone well enough informed about it. The Fundamental
Compliance Rules were established in May of the same year, and through thepresident’s message we committed to initiatives to establish a system of anticorruption and accountability, and to continually evolve the organization’s ethical22

culture to achieve earnest conduct in line with rigorous legal compliance, social
norms, and corporate ethics.
● Leaks of customers’ personal information
It was ascertained in June this year, through a study by our affiliate credit cardcompany, Toyota Finance Corporation, that there had been incidents of people
attempting unauthorized use of the Company’s credit cards, JOMO Card Plus, tomake purchases via internet using card numbers pretending to be the cardowners. This was ascertained due to the fact that all the card numbers usedwithout authorization had been initiated in the same store.
Due to a prompt response, no charges were made to customers’ accounts, butconcern and inconvenience to our customers did result, and for this we offer oursincere apologies.
For our part we have established a task force and will continue to strive to prevent
reoccurrence through studies and investigations in cooperation with Toyota
Finance.
In line with the enforcement of the Personal Information Protection Law in April
this year, we have been implementing various management policies on retention
and destroy customer information in the JOMO stations, but we will provide thegroup of our sales network with thorough guidance to ensure they undertake
personal information management even more strictly.

The Course of Action for Purchasing Deals
The Purchasing Division revised its roles and accountability to laid out the fundamental rules ofpurchasing, one aspect of corporate conduct, in the Course of Action for Purchasing Deals,
Fundamental Rules for Purchasing Deals, and Ethical Rules for People in Charge of Purchasingin October 1997. Based on our Mission and Business Principles established in April 1997, Japan
Energy is building transparent, fair relationships with suppliers based on these fundamental
rules.

Course of Action for Purchasing Deals
1. Transparency:
Purchasing deals will be carried out in an open manner from start to finish.
2. Fairness:
Selection of suppliers will be carried out based on fair evaluations.
3. Rigorous legal compliance: During purchasing deals, we will comply with all related regulations, and will
not only observe the individual clauses of each law, but will also adhere to thespirit of compliance.
4. Ethics:
The person in charge of purchasing will carry out purchasing duties based ona rigorous ethical viewpoint.
5. Environmental protection:
We regard the environment as the most important thing, and endeavor topurchase materials that have good effect on environmental preservation.
6. Mutual trust:
We will build relationships of trust with our suppliers, based on friendly
partnerships.

Fundamental Rules for Purchasing Deals
1. Fair Entry Opportunities:

We will provide companies that wish to trade with us fair opportunity to do so,
and will respond to any proposals earnestly.
2. Fair evaluation:
Selection of suppliers will be conducted based on a fair evaluation of productquality, price, delivery schedules, technical capabilities, performance, and soon.
3. Clear specification of purchasing procedures:
We will clearly publicize the Course of Action for Purchasing Deals, Fundamental Rules for Purchasing Deals, registration procedures for new suppliers,
and the various procedures from ordering through to payment, and thecontact details for the person in charge as well.
4. Management of confidential information:
We will strictly manage information received in the course of purchasing
operations, and ensure maintenance of confidentiality.
5. Disclosure of the reasons behind selections:
Where suppliers are not selected in tenders or competitive bids, we willclearly inform them, if requested, of the facts and reason behind the decision.
6. Fair and just negotiations:
In tenders and competitive bids, we will not intentionally change conditions or
negotiate prices that will be advantageous to particular suppliers.
7. Prohibition of improper reciprocal trading:We will not use our purchasing power or superior standing to force companies
to purchase our company’s products (including products of all Group
companies) as a condition of a purchasing deal.
8. Environmental preservation: We will place a high value on the environmental perspective as well as
product quality and price, and actively engage in green purchasing when
procuring materials and services.
9. Independence of the Purchasing Division:
The Purchasing Division will carry out decisions relating to purchasing deals
independently from other divisions.
Also, the authority to negotiate changes to the content of purchasing contracts
is held solely by the Purchasing Division.

Ethical Rules for People in Charge of Purchasing
1. People in charge of purchasing are not permitted to have personal vested interests in suppliers.
2. People in charge of purchasing are not permitted to accept offers of entertainment or gifts outside therange of normal social custom and common sense.
3. People in charge of purchasing are not permitted to request donations from suppliers.
When divisions other than the Purchasing Division carry out purchasing deals, they must also adhere to thefundamental rules set by the Purchasing Division, which are stated above.
(Note) In July this year Nippon Mining Holdings Group’s devoted purchasing company Nippon Mining Procurement, Inc. wasestablished and began subcontracting Japan Energy’s purchasing.

23

Society

Social Contribution Activities
Japan Energy is actively engaged in social contribution programs as a corporate citizen,
based on our Mission and Business Principles.
The continuing Mécénat (artistic and cultural support) activities, primarily the JOMOChildren’s Story Award, as well as JOMO Basketball Clinic and other sports promotion
activities have been the centerpiece of our activities, and these have extended into childwelfare and welfare for the disabled, and we wish to continue expanding these activities in
the future.
We have enriched and strengthened forest preservation activities as an initiative to conserve
the environment, and will continue combining this with employee volunteer activities.

JOMO Children’s Story Award

Sports Promotion

In the JOMO Children’s Story Award activity that we have been
undertaking since 1970, we appeal for public contributions ofcreative stories with the theme of “heart-to-heart communication”, and award prizes to the good works. We also publish acollection of the works called “Bouquet of Children’s Stories” andprovide them free of charge to many members of the public.
Each year we receive about 10,000 entries, making this thelargest children’s story award in Japan. In the 35th JOMOChildren’s Story Award held in 2004 we received 8,982 generalentries (junior high school students and older), and 843 entries
in the children’s division (elementary school children and under),making a combined total of 9,825 entries.

● JOC Sports Award
In addition to turning out 8 players, as well as a coach and staff
for the Japanese women’s basketball team for the Athens
Olympics held in 2004, we also provided support including
provision of better facilities for Japanese team activities.
We received the Group Award for Outstanding Support for Top
Athletes, which was newly created in FY2004 under the JOC
Sports Award, sponsored by the Japanese Olympic Committee(JOC). This was in recognition for our cooperation in creating a sports society uniting
regional governments, local residents, andcorporations through our holding of thebasketball clinic and our exchange activities
with Kashiwa City, Chiba, the base for the
JOMO Sunflowers.

● JOMO Basketball Clinic

The 35th JOMO Children’s Story
Award Presentation Ceremony

The 35th Bouquetof Children’s Stories

The JOMO Children’s Story Fund /JOMO Scholarship Grant
The sales networks dealing with JOMO brand products, theNationwide JOMO Association, the Nationwide JOMO LP Gas
Association, and Japan Energy jointly run the JOMO Children’s
Story Fund with the objective of using the Bouquet of Children’s
Stories to aid social welfare. Dealership of our sales network
purchase the Bouquet of Children’s Stories books, as do affiliated companies and employees, and the proceeds are includedin the Fund and are made available in the JOMO Scholarship
Grant to children in nationwide children’s homes and mothers
and children’s homes through the social welfare organization,
Japan National Council of Social Welfare. In FY2004, the Grant
assisted 246 children (including some who were alreadystudents) who entered universities, junior colleges, and vocational schools.
To allow people who find it difficult to read, such as visually
impaired people, to enjoy the Bouquet of Children’s Stories
books, the Company also provides voice data to the Bouquet of
Voices homepage operated by the Japan Philanthropic Association. The work of reading the stories aloud, called transliteration,is done by employees and their families.
■ Japan Philanthropic Association’s
Bouquet of Voices Homepage
http://www.koetaba.net/index.html

24

The JOMO Basketball Clinic was started in 1995 with ourbasketball team players and coach deepening communication
with local people through basketball, aiming to contribute to the
popularization and advancement of basketball.
In FY2004 we held four clinics in May and June in Hokkaido,
Kagoshima and other cities, as well as encouraging children in
the earthquake-hit areas by setting up the “JOMO Basketball
Clinic in Niigata, Niigata Chuetsu Earthquake Recovery Support
Clinic” in Kashiwazaki City and Nagaoka City in December, theareas that were hit by the Niigata-Chuetsu Earthquake.
With the passing of the 10th year since beginning the clinic, thisfiscal year, we have decided to meet the expectations ofbasketball fans across the nation by expanding the basketballclinic in frequency and content, as part of our strengthening ofsocial action programs. We formed a full-time team madeprimarily of retired players, and in addition to the clinic we havebeen holding up until now, we held reinforcement courses that
repeatedly guide particular teams and 1-day courses without
restrictions on the age and sex of participants. We plan to holdabout 60 to 70 clinics year-round and current players will also
participate in the off-season.
■ JOMO Basketball Clinic Homepage
http://www.j-energy.co.jp/jomo_clinic/

The Niigata Chuetsu Earthquake Recovery Support Clinic held in Nagaoka City

● J-League Official Sponsor
The Company has been cooperating in the development of theJapanese soccer world as a J-League Official Sponsor since
1994, and as the special support company for the JOMO Cup JLeague Dream Match between 1995 and 2001, and the JOMOAll Star Soccer since 2002.

Supporting Disabled People’s Sports● Athens Paralympics – Click Donation to support the Japane Team

Presentation of the Click Donation

Aiming to financially support Japan Team competing in the Paralympic Games held in Athens,
Greece, in September 2004, Japan Energy carried out Click Donation on the Company’s
website between April and August 2004. We received the support of many people, and got
1,092,228 clicks. We donated one yen for each click, amounting to 1,092,228 yen, to the NPO,the Japan Paralympic Support Council, and through this organization we were able to support
163 Japanese Paralympic team members. The Japan team at the Athens Paralympic Games
displayed enormously energetic efforts equal to those of the Olympics itself.
From April this year, we have been conducting Click Donation to support the Torino Paralympic
Games to be held in March 2006.
■ Click Donation Homepage
http://www.j-energy.co.jp/cp/society/click_tp.php● Support for the 2005 Special Olympics World Winter GamesFor 8 days from February 26 to March 5 this year, the Special Olympics World Winter Games,
held once every 4 years, was held in Nagano. To support these Games, where the people withintellectual disabilities demonstrate their achivement, we helped by supplying fuel to the official
cars at Nagano Prefecture’s JOMO stations, and by setting up Click Donation. The Click
Donation was conducted between November 2004 and the end of the Games, March 5, 2005,
and we received 1,265,389 clicks. We donated one yen for each click, amounting to 1,265,389
yen, to the NPO, the 2005 Special Olympics World Winter Games, Nagano (SONA).
The crew of JOMO station supplying fuel tothe official cars of the 2005 Special
Olympics World Winter Games, Nagano

Disaster Assistance● Emergency support fund raising and the Matching Gift (add-on donation)
In April 2002, Japan Energy institutionalized employee fund-raising and the matching gift,
wherein the Company donates a fixed amount in addition to the funds raised, for emergency
support in times of disaster.
Since 2002 we have undertaken fund raising in support of the Afghanistan earthquake victims,
the Iraq post-war recovery, and the Iran earthquake victims.
At the time of the Niigata Prefecture Chuetsu Earthquake that hit on October 23, 2004, we sent
employees to the area to deliver support materials such as food and water provisions andportable cooking stoves, and conducted fund-raising among employees, raising 1,327,570 yen
and equaling this with a matching gift of the same amount, we donated 2,655,140 yen to the
Niigata Prefecture Red Cross.
During the Sumatra earthquake that hit on December 26 of the same year, Nippon Mining
Holdings Group donated 10 million yen to the Japanese Red Cross, and also raised funds
among employees totaling 798,973 yen, and added this same amount again with a matching gift
to donate 1,597,946 yen to the NPO Japan Platform.

● Support of the Japan Rescue Dog Association
The NPO Japan Rescue Dog Association was formed after the Great Hanshin-Awaji
Earthquake and raises rescue dogs with the help of volunteers.
Since December 2003, Japan Energy has opened its facilities and sites in Chigasaki City,
Kanagawa Prefecture, for use by the association as training grounds. The association conducts
training that simulates discovery and rescue of victims caught in the site in hypotheticaldisasters.

25

Social Contribution Activities

Forest Conservation Activities
Japanese Red Pine Forest Conservation Activities

Volunteers in Japanese red pine forest
conservation activities

The Nakajo Field (Niigata Prefecture) of the Group company, Japan Energy Development Co.,
Ltd., began activities to conserve Japanese red pine forests in 1998 due to the fact that insect
damage, worsened in the Japanese red pine forest, maintained as erosion control forest. Taking
the initiative as a familiar example for environmental education, Japan Energy conducted forest
conservation activities over two days between October 23 and 24, 2004, with 22 employee
volunteers participating. We carried out thinning of Japanese red pines in our premises,
undergrowth removal, and tree planting in the neighboring town park.

The Hara-mura-JOMO Ayumino-Mori Forest

The Hara-mura-JOMO Ayumino-Mori
Forest tree-planting volunteers

In April this year, we endorsed the objectives of Nagano Prefecture’s Adopt-a-Forest Operation,and concluded an Adopt-a-Forest contract with Hara-Village, Suwa-District in Nagano
Prefecture. Based on this contract, Japan Energy will cover Hara-Village for forest conservation
expenses over the next five years, and undertake forest conservation activities run by our
employees. On the 28th and 29th of May, employees and their families totaling 43 people
participated in planting approximately 600 saplings in the Hara-mura-JOMO Ayumino-Mori
Forest.

Contributing to Communities
Cleaning Activities / Let’s Clean
Community cleaning activities have long been carried out at Japan Energy sites by employees.
In FY2004, a total of approximately 800 people participated in cleaning activities at Mizushima,
Chita, Funakawa, Sodegaura, Kawasaki, Toda (laboratory), and Kashima refinery (Kashima Oil
Co., Ltd.).
In May this year, Toda City’s (Saitama Prefecture) Toda 530 Movement Promotional Liaison
Meeting awarded us with the prize for distinguished service to the 530 Movement (division fororganizations) for our cleaning activities (The phonetic abbreviation of 53 in Japanese equates
to the word for garbage, or waste, so 530 is short for “zero waste”).
530 Movement’s award
for distinguished service

Science Class
In November 2004, we invited about 100 6th grade elementary school students from the local
Toda City Niizo Elementary School to a science class at the Toda (research laboratory) in Toda
City, Saitama Prefecture. In addition to explaining to them the fundamentals of petroleum in aquiz-format, we carried out experiments in fuel cells and environmental protection technologies.

Participation and Cooperation in Regional Disaster Prevention Activities

Science class

The Company cooperates with regional and surrounding corporations in disaster prevention
activities at its refineries and factories.
The Funakawa Works concluded the Support Agreement Relating to Extinguishing of LargeScale Fires in the Funakawa Region of Oga City, Akita Prefecture.

Participation in Minato-Net
The Company participates in the network of person in charge of social contribution activities
from companies and organizations located in Minato-Ward, Tokyo, and is involved in collaborative events with the objective of contributing to the community, and is also undertaking
exchange activities with different types of industrial organizations.

Opening of Facilities to the Public
The Company has opened the gymnastic facilities in its head office building for the use ofpeople in the community as a kendo training place.
The Funakawa Works has kept its Japanese archery field open to the community since 1986,
and in 2004 received a letter of gratitude from the local Oga City Sports Association.

26

Support for Employee Volunteer Activities
Volunteer Events● Second-hand book charity market
Collaborating with other companies and an NGO, we run a charity second-hand book market tosupport developing countries.
In August 2004, we held a second-hand book market in parallel with a short cooking course incollaboration with Kikkoman Corporation and Key Coffee Inc. The proceeds from the event were
donated to the Ethiopian water aid project of the NGO, Christian Child Welfare Association(CCWA) International Sponsorship Program (currently Child Fund Japan, NPO).
Charity second-hand book market● English conversation charity
We are conducting charity English conversation classes in collaboration with the NGO, Minsai
Center Japan, which assists children in Thailand, Laos and Cambodia to enter school.
Employees and their families participated in English conversation classes conducted byAmerican teachers, and the fees charged were donated to the NGO as grant. Four such eventswere held in FY2004 at head office and Toda.

● Tochigi Guide Dog Center cleaning volunteers
The Company has been doing employee volunteer cleaning activities at the Tochigi Guide Dog
Center since the fall of 2003. In 2004, this was conducted twice, in spring and fall, and a total of
40 people participated. We have also set up donation boxes in our offices to support guide dog
training at the Tochigi Guide Dog Center.
Charity English conversation classes for Kids

● Donating blood in the workplace
We facilitate workplace blood donations twice a year, and in addition to supporting initiatives by
the Red Cross in every region to secure safe blood, we provide our employees with theopportunity to contribute to society. In FY2004, a total of approximately 400 employees cooperated in blood donations at 5 of our sites.

Volunteer Leave System

Tochigi Guide Dog Center cleaning volunteers

We recognize up to 3 days of leave a year for participation in social action programs. Only two
people took this leave in FY2004 but in future we plan to encourage use of this system for
instance by planning volunteer activities on weekdays that are easy for employees to participatein.

International Volunteer Leave System
For employees with over 3 years of service to the company who participate in internationalsocial action programs, we recognize between 6 months and two years of temporary leave. No
one has done this to date.

JOMO Volunteer Network
This was launched in June 2004 with the objective of supporting directors and employees inautonomous volunteer activities. About 20 people are registered, and working actively at thecore of our volunteer activities.

Volunteer Information Service
The Company provides information to employees on volunteer events planned in-house as well
as social action programs sponsored by NPOs, etc., and actively supports employee participation in social action programs for instance by encouraging employees to participate in volunteer
activities.

Collections for Volunteer Activities
As a social action program in which anyone can easily participate, since 1997 the Company has
been collecting used stamps, used telephone cards, etc., and donating them to NGOs.
Between January and May this year we collected unused stamps and post cards ruined bywriting mistakes and donated them to the NPO, Hunger Free World, for its anti-hunger project.
In March this year the Company collected unused telephone cards and donated them to the
Darunee Scholarship Fund project run by the NGO, Minsai Center Japan. Through this we wereable to provide student grants to 7 Laotian primary school students for 3 years.
The Company and four corporations participating in the Minato-Net collect PET bottle caps
(polypropylene) and sell them to recycling companies, and donate the proceeds to the NGO,
The Japan Committee For “Vaccine For The World’s Children”.

27Society

For the Customers
The shift in consciousness among customers from valuing simple materialistic richness
towards valuing spiritual richness, that finds value in effective use of time, comfort, andconvenience, is becoming stronger. Also, in addition to simply searching for high quality
products, customers are also demanding total performance quality, such as service,technological capability, and customer service that can be relied on, as well as provisionof comfortable space.
Japan Energy captures its thoughts toward customers with the words “smile life with
JOMO”, and is developing attractive service stations only Japan Energy can provide.

Product Safety & Quality Assurance* ISO(International Organization for Standardization)
ISO9001: The international standard for quality
management systems

Japan Energy Group has established the Quality Subcommittee, made up of quality personnels
from every Group company and relevant people from research laboratories. The Subcommittee
sets the yearly policy direction on quality and strives to work with the entire Group to assure andimprove quality levels that satisfy our customers.
The policy direction for FY2005 is presented in 4 statements: eradication of quality-related
problems; proactive response to quality regulations for improvement of atmospheric environment; improving quality-competitiveness; and proactive initiatives toward new fuels.
All refineries and factories have acquired ISO9001(*) certification and we expect flawless quality
control.
Current state of ISO9001 certification
Mizushima

Chita

Funakawa

Sodegaura

Kashima

Date of certification

1996.1.10

1994.2.9

1997.2.11

1996.10.8

1995.11.17

Certifying institution

LRQA

JQA

LRQA

LRQA

JQA

Certification number

0941885

JQA-0400

0957130

0955550

JQA-1042

The Company has established rules relating to quality management, quality assurance, and PL
prevention activities and regularly holds liaison meetings of quality assurance personnels inorder to prevent and to cope with quality-related problems. The system is as follows.

President

Executive
Committee

Liaison meetings ofquality assurance personnels

Information fromevery department

Quality assurance personnels
in every division

Deployment toevery department

Cordination Dept.:
Petroleum Refining Dept.

Protection of Personal Information

The Personal Information Protection
Law Response Guide

In April this year, the Law Relating to Protection of Personal Information (below referred to as
the Personal Information Protection Law) came into full effect, raising the bar of rigorous
information management for companies that handle personal information.
As a result of these circumstances, in March this year, Japan Energy established its Personal
Information Protection Policy and Fundamental Rules for Personal Information Protection, andset up a management system for personal information handled within the company. We haveconducted basic education programs on the Personal Information Protection Law through elearning for all employees, and also worked for understanding and rigorous legal compliancewith the law by holding explanation sessions at head office and other business sites.
We prepared the Personal Information Protection Law Response Guide for JOMO stations anddistributed it as a set of guidelines to correctly understand all the different types of personal
information handled by the service stations, and to comply with the Personal Information
Protection Law.
The Company’s personal information protection policy can be seen in the privacy policy on thecompany website.
■ Privacy Policy Homepage
http://www.j-energy.co.jp/guide/privacy/policy.php

28

The Pursuit of Customer Satisfaction
Japan Energy is considerate of customer satisfaction (CS) as well as the employee satisfaction(ES) levels of station crews, and strives to improve ES in order to provide high-quality service tocustomers, while working on strategies to further heighten CS. As part of this endeavor, theCompany established the JOMO Group TACS(*1) Program, which includes the dealership andsales companies around the country, with whom we do business. At TACS2005, the 11th yearly
TACS event we adopted the motto of “Face Up!” (Creating stores with the best faces and bestcompetitiveness in each region), indicating the spirit to face the challenges of today’s businessenvironment front on. Three basic policies were adopted, as follows:
Developing stores supported by loyal customers
Evolution and realization of the Value Style concept
Creating profitable stores
Proposing back up plans to improve profitability
Strengthening employee development initiatives
Promoting JOMO personnel training programs(*1) TACS“This is an acronym for Top of Area toCustomer’s Satisfaction, meaning storesthat provide top-level customer
satisfaction in each region.”(*2) CS Survey
A study of customer satisfaction that has
been carried out since 1994.The
researchers visited JOMO stations andevaluated field service, cleanliness, etc.
We have a numerical target to achieve
150 points out of a possible 200.

With these basic policies we have been strongly supporting the development of stores that aresupported by loyal customers and the construction of a highly competitive sales system bydeveloping measures to improve cost competitiveness and our marketing capability, pursuingcustomer satisfaction by improving customer service and cleanliness, proposing plans toimprove car maintenance profits including body care and car care, and establishing Break Even
Point (BEP) indicators for service station management.
We have also been striving to improve CS through training in cleanliness and customer service
manner, as well as in-store surveys and customer surveys. Most store research consists ofcontinued CS Surveys(*2) that independently address JOMO station customer satisfaction, andthe Club JOMO survey on the Internet. The CS Survey involves conducting studies on about
2,000 stores twice a year with the objective to improve service levels and customer satisfaction.
The Club JOMO Survey is a study using the Internet that is conducted regularly on about 5,000
Club JOMO members, striving for a broad understanding of customers’ evaluations and needs.
In 1998 Japan Energy opened the JOMO Customer Center as a tool for communicating withcustomers to obtain a broad array of opinions, and set up a system whereby customers cancontact us directly with a free call and express their opinions on improvement that could bemade to our services, enquiries, etc.

JOMO Card PlusThe JOMO Card Plus is a partnership card with Toyota Finance featuring cash back for points
gained through its use, as well as the ability to exchange points for frequent flyer points withairlines, many kinds of gift certificate and gift cards, vehicle accessories, and other broad arrayof attrractive products. Since January this year we have cancelled annual membership fees forthe accompanying ETC Card permanently.
JOMO Card Plus is a driver support card full of discount bonuses for customers.
JOMO Card Plus

ETC Card29For the Customers

Developing Stores Supported by Loyal Customers – Value Style* Ms. Yoko Shibata
CEO of Shibata Yoko Office.
Born 1971.
She has produced many
popular restaurants including
Rainbow Roll Sushi and the
Pork Cutlet and Pork Cuisine
Hirata Farm. Winner of
Nikkei Woman magazine’s
Woman of the Year prize for
the Hit-Maker division.

This fiscal year marks the real beginning of the Value Style Initiative for service stations. Thisinitiative will revamp stores with a new style, aiming to make them places where customers canenjoy their time comfortably.
Rather than a gasoline stand that you use just because you have to, we aim to create storessupported by more loyal customers who come back again and again. We developed this withthe concept of making them want to have a look, to want to come in, to want to come again. To
ensure we are not restricted by the framework of thought of the petroleum industry, we
commissioned Ms. Yoko Shibata(*) to join in this project. We plan to roll out JOMO stations thatare attractive from the perspective of customers, and by 3 years’ time, we plan to have increased the Value Style stations to 1,000 stores.
With the catch phrase of the Value Style stations, “smile life with JOMO”, our focus is to gaincustomer loyalty particularly among women in their 20s and 30s who value lifestyle highly.
Basically, with themes of smiles, fun, kindness, abundance and naturalness, shop designs are
stylish and coherent inside and out will be adopted and we can provide a space for relaxationand enjoyment to the customers. More than just the exterior, we seek to improve the service
quality of station crews through training in customer relations and cleanliness, aiming to create
stations customers can use with peace of mind.
The main characteristics of the Value Style stations are as follows.

Coherent Design with Heightened Visibility
We are cutting down on excessive symbols inside and out of buildings, and standardizing easilyrecognized symbols by making good use of the familiar characters.
We are standardizing sales rooms with sophisticated interior designs where each shop chooses
one keynote color from among the four colors that make up the JOMO logo (red, blue, yellow,
and green).

Value Style station

Setting up Space for Relaxation and Enjoyment
Sales rooms will have pleasant-feeling interior designs with the furniture and fragrance setting
the stage for peace of mind.
We have set up café corners, magazine corners, kids’ corners (coloring books), relaxation
corners (equipped with free massage chairs), Bouquet of Children’s Stories corners, nonsmoking and partitioned-smoking corners, and so on.

Creating Top-Quality Customer Service and Cleanliness
Station crews will wear uniforms based on the Value Style concept giving an impression ofcleanliness, and will provide high-quality customer service based on the Value Style training,
focusing on customer service and cleanliness.

Value Style station
Sales room

We want to bring more abundance and value to our customers’ lives
The Value Style logo shows 2 little birds perched on a branch and a leaf
The names of the birds are “happiness birds” – the two birds are always together
They are a symbol of happiness, and are always wishing for the happiness of our customers
The leaf represents naturalness and consideration of the environment
This expresses the wish of the Value Style concept,
for customers to be able to call by our stores with peace of mind

Value Style station
Kids’ corner (coloring books) and magazine corner

30(Note) “Value”, “Value Style”,, “smile life”, and “smile life with JOMO”, are all registered trademarks of Japan
Energy Corporation and their unauthorized use is prohibited.

Barrier Free Design
The Company is striving to develop service stations with universal design so that all customers
can use them with peace of mind.
The main initiatives
Steps

Ramps have been constructedStore entrance doors

Changed to automatic doors or sliding doors

Toilets

Space extended and railings fixed(Note) There are 19 JOMO stations that provide full wheelchair access. (As of March 31, 2005)

Since the removal of the ban on self-service stations in April 1998, we have continued toincrease the number of self-service stations to meet the needs of customers. We are pushing
forward with the creation of attractive stations only provided by JOMO with the view toconverting self-service stations to a barrier-free model that also includes refueling assistance.

Inter-Industry Annexing
Japan Energy is promoting collaboration with various industries in a way that utilizes the conditions imposed on the location of service stations to its advantage.
Continually pursuing customer satisfaction, the Company is proactively developing moreconvenient service stations.
Inter-industry annexed shops (as of March 31, 2005)
Beauty salons:Annexedbeauty salon

11

Beef bowl shops:

1

Coin laundries:

3

Restaurants:

1

Hamburger shops:

1

Lunch box shops:

1

Annexed coin laundry

Field Service Contest
In 1993, we held the first JOMO Field Service Contest National Games, and have continued
holding with the aim to improve the quality of service at JOMO stations on a nationwide scale.
The station crew are responsible for the safe handling of fuel oil and engine oil, which are
dangerous substances, and also looking over the customer’s vehicle thoroughly and offering
suitable advice as diagnosticians. 28 reference points have been established upon which tograde the performance of on-site work in the contest from meeting the customer through tosending them off. Due to the increase in numbers of self-service stations in recent years, thedistinction between customer service at full-service stations and self-service stations has
become an important issue.
Also, starting in 2003, in addition to field service contests, we have been increasingly inviting
professional customer service teachers to give special lectures and training sessions incustomer service manner (including cleanliness training), and we have been striving to provide
a broader range of service improvement programs for self-service stations.

The LPG Sales Talk Contest
A contest of marketing proposals for gas appliances is held with the aim to expand demand forand penetration of LPG, which is so convenient in our lives.
In FY2004, we held the National Games with the 10 people who won the regional contests,
under the theme “comfortable and healthy lifestyles with floor heating”. Proposals that captured
the customers’ perspectives, proposals that astutely capitalized on the characteristics of theregion, and others, vied with one another.

31

Society

With the Employees

The Human Resource System – aiming to build a transparent, fair system of evaluation –In October 1999, we introduced a new human resource system that is more strictly based on
employees’ performance aiming to evaluate and treat them fairly.

Fundamental Policies
1. Establishment and implementation of a system of treatment that matches responsibility andperformance
2. Establishment of a transparent, fair system of evaluation
3. Nurturing excellence at work

Evaluation System
The evaluation system is based on two central pillars. First one is the competency-based
evaluation system that evaluates an employee’s performance based on a distinctive
competency model required to produce good results. The second is the outcome evaluation that
evaluates an employee’s performance (annual challenge & result declaration system) that
evaluates performance results based on yearly work achievement targets set by the employees
themselves.
In these evaluation systems, workers hold substantial, frank discussions with their superiors ininterviews as part of the system and through this arrangement the transparency and fairness ofevaluation is heightened, leading to the employees’ future skill development.

Self-Declaration System
A system where employees regularly (once a year) voice their own ideas on the specialist skills
they have cultivated and the future career ambitions they hold. This information is then used topromote effective staff allocation and education.

Education System
The Company carries out on-the-job training and collective education for each category of
employee, in order to promote employee skill development. As a voluntary participation programfor self-development, we have also prepared a menu of independent correspondence courses
to support employees in obtaining the knowledge, skills and qualifications necessary to theircareers. In addition we run personnel education programs such as the head office study system(study at domestic universities), the study abroad system, and the Management College system
for selected employees to nurture future business leaders.
In FY2001, we introduced training sessions on our Mission and CSR activities into the education
programs for each level of employee.
Japan Energy Education System Diagram
Training by job category
Executive
Officers
Level 5

Life plan seminars

Financial analysis course

Level 3

Project management course

Level 1

Training for new managers

Inter-industry
exchange training

Level 7
Level 6

Study abroad

Level 4
Level 3

Level 1

Life plan seminars
Training for immediatedecision-making skill
development
Cross-cultural business
communication training

Level 5

Level 2

Self-development
supportTraining by type of job

OA
education

Correspondence
coursesIn-house language
lessons & in-house
English examination

Education for
employees in chargeof marketing
Education for
employees in chargeof addministration
Education for
employees in chargeof enginieering

Scheduled training 3 years
after joining the company
New employee training
New employee training

Study at head office(Held by the Human Resources Dept.)

32

IT

Japan Energy Management College
Management levelOverseas
employees business school business school

Level 4

Level 2

General
OfficeEmployees

Open college (for voluntaryor selected applicants)

Training sessions
for corporate officers
Level 6

Management
Level
Employees

Nurturing of business leaders (for selected employees)(In-house)(External)(Held by each department)Employment of Disabled People
Japan Energy currently (as of March 31, 2005) employs 27 disabled people (1.5% of the all
employees), which is an increase of 4 people (0.4%) since last year, and is below the legal limitof 1.8%. We will strive to meet the legal standard and actively recruit more disabled people thisfiscal year.

Labor-Business Relations
Under the union shop system, Japan Energy has concluded an agreement with the Japan
Energy Labor Union (1,988 members as of March 31, 2005) based on the spirit of mutual
dependence and mutual trust. In accordance with this basic sentiment, the company is devoted
to improving the working conditions of union members, and the labor union has proactively
cooperated in solving management problems. These kinds of smooth labor-business relations
are the foundation of the company’s development.

A Good Working Environment for Women
The indicators as of March 31, 2005 are as follows.
Number of female employees:

225

Length of continuous service:16.3 years for women (22.3 years as a whole)

Proportion of employees who are women:

8.60%

Proportion of women among new recruits:

12.5%

Proportion of women among management level employees: 0.17%

In accordance with the stipulations of the Equal Employment Opportunity Law, Japan Energy
works proactively to prevent sexual harassment. Specifically, this has involved raising employee
understanding by educating employees on topics they should heed in order to prevent sexual
harassment, as well as the Company has a phone consultation hotline in place regulary.

Child Care and Nursing Care Leave
At present, the Company’s child care and nursing care leave systems comply with laws.
The number of employees who have taken leave for FY2004 is as follows.
Child care leave:

7 peopleNursing care leave:

0 people

Initiatives to Support Fostering Next Generation Youths
As the Law to Promote Measures to Support Fostering Next-Generation Youths was enacted in
April this year, companies are required to set up action plans to allow workers to find a balance
between work and childcare in order to change the momentum of declining birthrates.
The Company has established the following action plan based on this law, with the plan tocontinue actively implementing a range of measures. We plan to achieve these targets andobtain the approval of the head of Tokyo Labour Bureau.
Action plan to support fostering next generation youths(Period covered by plan: April 2005 to March 2007)
Target 1 Utilization of child care leave will be kept above the following minimum levels
Male employees

At least one male must use the leave during the plan’s period of implementation

Female employees

The utilization rate will be at least 70%

Target 2 By March 2007, we will revise the present Rules for Child Care and Nursing Care
Leave, and upgrade and expand measures such as the child care leave system andshortening of working hours.

33Society

Health and Safety/ Risk Management

Safety Initiatives
As the Company handles large amounts of dangerous substances and high-pressure gases in
its operations, in addition to expending all the measures in disaster prevention, we haveestablished crisis management rules and an appropriate response system in preparation for the
possibility of emergency situations including natural disasters such as typhoons and earthquakes, and terrorist attacks. Particularly for our response to accidents and disasters at
refineries and plants, delivery terminals, when transporting products in tank trucks, at filling
stations and service stations, we have compiled the outline for the emergency system in timesof disaster that sets up ways of emergency notification and gives the instructions for damage
prevention so that we can promptly implement appropriate damage prevention measures, andwe regularly check that this system is functioning.
Occurrence of accidents or disasters at refineries or plants, delivery terminals,
during transportation, at filling spots, or at service stations
Emergency response
headquarters

Initial measures(Crisis response, prevention of escalation)
Notification of relevant people

Establishment of on-site
response headquarters

Implementation oforganized damage
prevention activities

Status of asbestos use
We are carrying out investigations into the usage of products that contain asbestos in our production facilities and our structures, as well as any
harmful effects to the health of employees.
At the present time health effects have not been witnessed, but there are some packing materials and gaskets that use asbestos. There is also
the possibility that some boards, slates, etc., used in structures contain asbestos. We have confirmed that none of these display dustability.
We plan to continue pushing forward with detailed investigations and measures to be taken.

Occurrence of Work-Related Accidents
The Company’s history of industrial accidents requiring a work absence or not is as follows.
Number of industrial accidents
Year
Industrial Accidents requiring a work absence
Industrial Accidents without any work absence

2000
0
1

2001
1
3

2002
0
6

2003
0
2

2004
1
3

(Note) Industrial Accidents without any work absence are those where, despite suffering injury or illness caused by industrial
accident, the scale of the accident is such that employees resume work the following day.

Initiatives Addressing the Problem of Passive Smoking
The Company adopts a policy of division of the workplace into smoking and nonsmoking areas.
Since February 2003, we have banned smoking in work space at the head office, preceding
enactment of the Health Promotion Law. Following this, the Mission Consultation Office received
comments regarding smoking outside of working hours and in conference rooms, and we madeefforts to ensure compliance with the rule of division of smoking and nonsmoking areas.
The FY2005 Companywide Health and Safety Policy instructs every work site and Branch office
to rigorously enforce passive smoking countermeasures.

Risk Management* HAZOP (Hazard and Operability Study)
A procedure for process safety analysis.

Risk management is divided into risk assessment, risk control, and risk communication, andJapan Energy places particular importance on prevention. Particularly at the refineries, which
are the most risky of our operations, we have introduced the HAZOP(*) procedures starting thisfiscal year.

The Accident at the Kashima Refinery of Kashima Oil Co., Ltd.
We would like to take this opportunity to offer our deepest apology again for the great trouble and concern caused to local residents,
government, and many others by the fire that broke out at Kashima Refinery’s Number 1 Heavy Fuel Oil Desulfurization Unit on April 21, 2004.
The cause of the accident was the caulking of the furnace. To prevent future reoccurrence, we are improving the facilities and the operational
management techniques. For details please refer to our website (Japanese Only).
■ The fire at the Kashima Oil Refinery
http://www.kashima-oil.co.jp/1rdfu201/fu201_idx.html

34

Data
Site Data

S
o
c
i
a
l
&
E n v ir onm e nt a l

REPORT
2005

Site Data

Data

Environmental loads are generated during a variety of petroleum operation processes
ranging from production and transportation of crude oil to production, transportation andmarketing of final products.
All kinds of initiatives to reduce environmental loads are discussed in the Environment
section, but the chart below collates the environmental loads resulting from ouroperations and corresponding countermeasures.
This collection of site data reports environmental performance of our refineries and plants.

Initiatives to Reduce the Environmental Loads of Operational Processes

Exploration, development and production
Exploration, development andproduction of crude oil

Transportation
Transportation of crude oilusing tankers

Storage and refining
Storage and refining at refineries

Transportation
Transportation to delivery terminals
and service stations

MarketingReceiving and oil fillingat service stations

36

Environmental load

Countermeasures

Air pollution

Zero gas flaring

Water pollution

Wastewater treatment
Prevention of oil spills

Waste

Waste treatment
Recycling

Environmental load

Countermeasures

Oil spills

Double hull tunker

Evaporation ofhydrocarbons

Inert gas system

Environmental load

Countermeasures

Air pollution

Floating roof tanks
Energy conservation
Desulfurization, denitration

Water pollution

Wastewater treatment

Waste

Reduction and recycling

Soil contamination

Removal and backfilling of soil

Environmental load
Air pollution

Environmental load

Countermeasures
Reducing fuelconsumption

Countermeasures

Air pollution

Recovery of vapors

Water pollution

Wastewater purification

Waste

Appropriate management

Soil contamination

Contamination studies

Mizushima Oil Refinery
Name
Location
Site land area
Date operations commenced
Number of employees
Refining capacity

Mizushima Oil Refinery
2-1 Usiodori, Kurashiki-shi, Okayama, Japan
1,647,800m2
June 1961
388 (as of March 31, 2005)
200,200 barrels per day

An integrated refinery that produces various petroleum products ranging from petroleum based
fuel oils to normal paraffin, solvents, benzene, xylene, and other petrochemicals and lubricatingoils.
As the center of the advanced industrial complex, we are heavily-equipped with pollution control
facilities and we have outperformed strict emission regulations. At the neighboring Mizushimaplant of Petrocokes Ltd., Japan Energy’s heavy fuel oil is used to produce petroleum coke, andsince April 1999, we have jointly managed the operations.

NOxRegulatory
limit
J Energy
149.6
25.9
Regulation of Petrocokes Ltd.
total emissions
J Energy
187.8
Petrocokes Ltd.
28.7

Pollution
prevention
agreement

Air
SOx
Particulate
MatterDetails of
regulation

Regulatory
laws, etc.

Substance

The Air
Pollution
Prevention Law

Coverage

Measured value
Maximum
Average
95.7
73.9
18.1
11.43
66.5
37.4
9.5
4.7

Units

Nm3/hour

Regulation of
For each facility 0.04 – 0.20 < 0.01 – 0.13 < 0.01 – 0.092
concentration

g/Nm3(Note) The maximum values of SOx and NOx exclude the period of ceased operations in August 2004 due to Typhoon 16.

Regulatory
limit
365
J Energy
COD
7
Petrocokes Ltd.
Pollution
430
J Energy
Regulation of
Nitrogenprevention
total emissions Petrocokes Ltd.
9
agreement
30.5
J Energy
Water Phosphorous
0.9
Petrocokes Ltd.
quality15 (10)COD
Regulations of
40 (30)SS
the prefectural
2 (1)Oil content government
For each
Regulation of
0.5
Phenols
concentration discharge point
Substance

Regulatory
laws

Details of
regulation

Coverage

The Water
Pollution
Phosphorous Prevention Law120(60)

Nitrogen

16 (8)

Measured value
Maximum
Average
172.5
103.2
0.5
0.3
272.2
126.1
0.5
0.3
16.4
2.3
0.02
0.01
3.0 – 9.9
2.7 – 4.3
5.8 – 14.0
3.0 – 4.0
< 0.5
< 0.5
< 0.1
< 0.1
0.9 – 4.7

0.7 – 2.2

< 0.1 – 0.4< 0.1 – 0.3

Units

kg/daymg/

Figures in brackets ( ) are daily averages

Results of PRTR study
Amount transferred
Waste
0.0
0.0
0.0
0.0
0.0

Emissions

Substance

Air
0.2
1.3
5.9
0.8
0.5

Ethylbenzene
XyleneTolueneBenzeneDioxins

Water
0.0
0.0
0.0
0.0
0.0

• Rounded to the nearest tenth.

Sum total
0.2
1.3
5.9
0.8
0.5

Units

Tons/year
mg-TEQ/year• Substances with no emissions or transfer are not included.

Green procurement
Segment

Paper

Stationery
Uniforms

Item
Copier paper
Paper for forms
Toilet paper
Tissue paper
Cardboard
Stationery
Envelopes for offices
Window envelopes
Work uniforms (overalls)
Working gloves

TargetOver 90%of the total
amount procured

Result
100%
100%
100%
100%
100%
99%
100%
100%
100%
100%

Difference
+10%
+10%
+10%
+10%
+10%
+9%
+10%
+10%
+10%
+10%

(Note) The standards of judgment used are from the Okayama Prefecture Green Procurement Guidelines.

37

Site Data

Chita Oil Refinery
Name
Location
Site land area
Date operations commenced
Number of employees

Chita Oil Refinery
25 Kitahama-cho, Chita-shi, Aichi , Japan
1,293,086m2
October 1973
105 (as of March 31, 2005)

A petrochemical oriented refinery producing fuel oils such as gasoline, etc., as well as aromatic
products such as paraxylene, cyclohexane, benzene, etc., and many kinds of solvents.
One of the newest refineries in Japan, we created expansive green space all around therefinery and we are striving to maintain the landscape.

Air

Measured value

Substance

Regulatory
laws, etc.

Details of
regulation

Regulatory
limit

Maximum

Minimum

Average

Average amountof sulfur
in fuel used

Pollution
prevention
agreement

Amountcontained

0.17

0.066

0.021

0.032

Substance

Regulatory
laws, etc.

Details of
regulation

Regulatory
limit

Maximum

Minimum

Average

78.97

32.25

11.22

24.89

Nm3/hour

Pollution
prevention
agreement

Regulationof totalemissions

81.43

11.10

4.80

8.39

Nm3/hour

2.44

0.36

NOx

Air

SOx
Particulate Matter

210

1,609

Details of
regulation

Units

Tons/year
0.97

kg/hour

Measured value

Regulatory
limit

Minimum

Average

880

641

277

Nm3/hour

195

64.0

29.6

kg/day

317

39.5

12.7

kg/day

21

5.3

3.2

kg/day

21

9.5

0.98

kg/dayMaximum 20

8.8

—

mg/

Daily average 14

—

3.7

mg/

Maximum 20

5.0

—

mg/

Daily average 15—

mg/

Maximum 1.0

0.5

1.8
<= 0.5

Phenols

Maximum 1.0

0.9

mg/

Nitrogen

Daily average 20

1.7

Phosphorous

Daily average 2.0

0.4<= 0.10.6<= 0.1Substance
Wastewater volume
COD

Pollution
prevention
agreementSS
Oil content

Regulationof totalemissionsPhenols
Water
quality

COD
SS

Pollution
prevention
agreement

Oil content

Regulation ofconcentration

Units

mg/
mg/
mg/

Regulatory laws, etc.

Regulatory limit

Measured value

Units

Noise

Pollution prevention agreement

55

49 – 54dB (A)

Vibration

Pollution prevention agreement65

30 – 30dB

Results of PRTR study
Substance

Units: Tons

Amount transferred

Emissions

Sum total

Air

Water

Waste

Ethylbenzene

0.02

0.0

0.0

0.02

Xylene

2.1

0.0

0.0

2.1

1,3,5-trimethylbenzene

0.1

0.0

0.0

0.1

Toluene

3.1

0.0

0.0

3.1

Benzene

0.6

0.0

0.0

0.6

• Rounded to the nearest tenth.

38%

Measured value

33.95

Regulatory
laws, etc.

Units

• Substances with no emissions or transfer are not included.

Funakawa Works
Name
Location
Site land area
Date operations commenced
Number of employees

Funakawa Works
162-1 Aza-ashizawa, Funagawa-Minato-Funagawa, Oga-shi, Akita, Japan
280,608m2
March 1939
65 (as of March 31, 2005)

Produces top-grade, high-value added petroleum based lubricating oils. Our petroleum refining
operations has originated here. We have been actively engaged in environmental problem
solving.
Substance

Regulatory laws, etc. Details of Regulation

Regulatory limit

Measured valueUnits

180 – 200

90 – 130

ppm

NOx

Pollution prevention
agreement

Concentration
regulations
for each facility

SOx

The Air Pollution
Prevention Law

K-value regulations
for each facility

8.76

1.04 – 6.07—

Particulate
MatterPollution prevention
agreement

Concentration
regulations
for each facility

0.15 – 0.3

0.007 – 0.023

g/Nm3

Air

Substance

Regulatory
laws, etc.

pH
Water quality

COD
SS
Oil content

Pollution
prevention
agreement

Phenols

Regulatory
limit

Measured value

Units

Maximum

Minimum

Average

5.0 – 9.0

8.4

7.2

7.8

—

160

13.5

3.3

7.7

mg/

200

25.5

2.5

5.9

mg/

5

3.4
< 0.2

0.3
< 0.2

1.2
< 0.2

mg/

2

mg/

Sodegaura Lubricants Plant
Name
Location
Site land area
Date operations commenced
Number of employees

Sodegaura Lubricants Plant
1 Kitasode, Sodegaura-shi, Chiba, Japan
55,735m2
April 1969
11 (as of March 31, 2005)

In 1969, as the supply base for lubricating oils, in Eastern Japan. Produces all kinds of lubricating oils for automobiles, ships, and industry, using advanced blending technology. Obtained
ISO14001 certification at the early stage of 1998.
Substance

Regulatory
laws, etc.

pH
Water quality

COD
SS
Oil content
NitrogenPhosphorous

Pollution
prevention
agreement
withSodegaura City

Measured value

Regulatory
limit

Maximum

Minimum

Average

6.5 – 8.6

8.3

7.3

7.8

—

10

6.5

4.9

mg/

20

8

3.4
<4

1

<1

4.3
<1

mg/

1
—

9.4

2.8

5

mg/

—

0.77

0.21

0.4

mg/

Units

mg/

39

Site Data

Kawasaki LP Gas Terminal
Name
Location
Site land area
Date operations commenced
Number of employees

Kawasaki LP Gas Terminal
5-1, Mizue-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa, Japan44,441m2
March 1968
20 (as of March 31, 2005)

We have been pushing forward with automation of the facility since the 1980s, and despite thesmall number of workers, the site ranks 3rd in Japan in annual output using tank trucks, which
stands at 640,000 tons. We are striving toward five environmental targets. It has been six years
since we obtained ISO14001 accreditation, and we have achieved consistent environmental
improvements through devoted efforts in management and work improvement including cuttingback on power and exhaust gas. As a local environmental activity, we have been carrying out
regular cleaning activities in the region for 12 years in collaboration with 14 neighboring
companies.

Water
quality

Measured value

Regulatory
limit

Maximum

Minimum

Average

COD

130

20

17

19

mg/

BOD

130

9

2

5

mg/

SS

120

8

4

5

mg/

Less than 38°C, and not
more than 10°C over the
existing water temperature
where released.

27

9

17

°C

Water temperature
where released

26

9

18

°C

Substance

Wastewatertemperature

Regulatory
laws, etc.

Kanagawa
Prefecture
regulations

Units

Toda (Research Laboratory)
Name
Location
Site land area
Date operations commenced
Number of employees

Toda (research laboratory)
3-17-35 Niizominam, Toda-shi, Saitama, Japan
49,721m2
April 1959
139 (as of March 31, 2005)

While striving to strike harmony with the surrounding environment, we are researching nextgeneration clean fuels and other energy- and environment-related subjects.
Measured value

Regulatory
limit

Maximum

BOD

600

12

SS

600

Substance

Regulatory
laws, etc.

Average
11

mg/

<5
<1

6.8
<1

mg/

5

12
<1

240

14

< 0.1

3.7

mg/

Phosphorous

32

0.6

< 0.1

mg/

Phenols5< 0.02< 0.020.19< 0.02

Water quality(sewagewastewater)

Oil content
NitrogenToda City
regulations

Results of PRTR study
Substance

mg/

mg/

Units: Tons

Emissions

Amount transferred

Sum total

Air

Sewerage

Waste

Toluene

0.0

0.0

0.5

0.5

Xylene

0.0

0.0

0.1

0.1

• Rounded to the nearest tenth.

40

Units

Minimum< 10• Substances with no emissions or transfer are not included.

Kashima Oil Refinery of Kashima Oil Co., Ltd.
Name
Location
Site land area
Date operations commenced
Number of employees
Refining capacity* Petrochemical Complex Renaissance Project
The aim of this project is for petroleum refining
and petrochemical companies to gaininternational competitiveness and reduce
environmental loads by overcoming intercompany obstacles and rivalry, increasing
efficiency through organic link-ups, andbuilding a highly-competitive foundation basedon an advanced system of united
management.

Kashima Oil Refinery
4 Touwada, Kamisu-machi, Kashima-gun, Ibaraki, Japan
2,730,000m2
April 1970
338 (as of March 31, 2005)
190,000 barrels per day

An integrated refinery that produces a range of products from petroleum products to petrochemicals such as paraxylene. As the central refinery in the industrial complex, it has developed thePetrochemical Complex Renaissance Project(*) in recent years, and is carrying out mutualadjustment of materials and fuels with other petrochemical companies.
The Kashima industrial complex is an environmentally friendly design where utility service
facilities and waste treatment facilities are shared, and final treatment facilities for wastewater,
and convenient green space are also owned by the companies.
Substance

Regulatory laws, etc.

NOx
Air

Pollution
prevention
agreement

SOx
Particulate
MatterSubstance

Regulatory
laws, etc.

COD

SS

Regulationsof the Ibaraki
prefectural
government
Pollution
prevention
agreement

Substance
Hydrogen sulfide
Xylene10101

Oil content

Offensive
odors

Regulatory
limit

5.8 – 8.6

pH

Water
quality

Details of Regulation
Regulation of
total emissions
Regulation of
total emissions
Concentration
regulations
for each facility
Point ofemission
1GB
2GB
Central RoadWest No.2 Road
3CW
1GB
2GB
Central RoadWest No.2 Road
3CW
1GB
2GB
Central RoadWest No.2 Road
3CW
1GB
2GB
Central RoadWest No.2 Road
3CW

Regulatory laws, etc.
Regulations of the Ibaraki prefectural government
Pollution prevention agreement

Regulatory limit

Measured value

Units

132

44.9 – 71.9

Nm3/hour343

48.2 – 163.4

Nm3/hour

0.04 – 0.05

0 – 0.031

g/Nm3

Maximum
8.2
8.2
8.3
8.2
8.2
1.9
4.2
3.4
5.9
2.0
8.4
8.5
6.7
9.5
8.9
0.9
0.7
0.6
0.8
0.8

Measured value
Average
Minimum
8.1
8.0
8.1
7.8
8.1
7.9
8.1
7.7
8.0
7.8
1.0
0.3
1.0
0.3
1.6
0.7
1.6
0.4
1.2
0.4
1.9
0.3
1.7
0.2
2.4
0.6
2.5
0.6
2.3
0.2
< 0.5
0.6
< 0.5
0.5
< 0.5
0.6
< 0.5
0.6
< 0.5
0.6

Regulatory limit
0.06
2

Results of PRTR study

Units

—

mg/

mg/

mg/

Measured value< 0.001
< 0.1

Units
ppm
ppm
Units: Tons

Substance
Ethylbenzene
Xylene1,3,5-trimethylbenzene
TolueneNickelPhenols
Cobalt and its compounds
Molybdenum and its compounds
BenzeneEmissions
Air
1.8
17.3
0.1
17.6
0.0
0.0
0.0
0.0
3.8

Amount transferred
Sewerage
Waste
0.2
0.0
1.9
0.0
0.0
0.0
6.0
0.0
0.0
1.4
5.4
0.0
0.0
1.9
0.0
20.4
1.9
0.0

• Rounded to the nearest tenth.

Sum total
2.0
19.2
0.1
23.5
1.4
5.4
1.9
20.4
5.7

• Substances with no emissions or transfer are not included.

41

Third Party Opinions
To improve the quality of our CSR activities and our Social & Environmental Report, which is a tool of communication, we received comments on them from two people.

Mr. Hiroji Tanaka
Professor at the Rikkyo University Graduate Schoolof Economics Graduate Division
Board Member on the Japan Society
for Business Ethics Study

Personal history
1954: Joined the Bank of Japan. Sent to Michigan
State University, USA, in 1970.
1990-1995: Served successive posts as vicepresident, compliance officer, etc., at the US Chemical
Bank.
From 2002 to present: serving as professor at the
Rikkyo University Graduate School of Economics
Graduate Division.
The Ministry of Economy, Trade and Industry &Japanese Standards Association’s CSR Standards
Committee
Continues actively working as a committee member
and committee chairperson in committees including
the ISO/SR Domestic Committee, the Cabinet Office’s
Research Group on Guidelines for the Private Sector
in Relation to the Whistleblower Protection Act, etc.

Ms. Yoko Takahashi
Chief Director of the Japan Philanthropic Association

Personal history
After graduation from Tsuda College and working as ahigh school teacher, she received accreditation as acounselor from Sophia University, and then worked
as a psychological counselor at Kanto Gakuin Junior– Senior High School.
From 1991 she worked at the Japan Philanthropic
Association.
She worked as secretary-general and managing
director, and since June 2001 has been in her present
position.

42

This report succeeds in exposing the Company’s characteristics by organizing a well-balanced selectionof information judged to be important within 41 pages.
Firstly, the Message from the President transmits relevant information inside the company and externally,
based on the Company’s social mission and corporate prociples. The Company’s participation in andinternalization of the UN’s Global Compact is the best evidence that Japan Energy is developing its
operations from an advanced, global perspective.
Secondly, economic reporting is restricted to the sections on financial highlights and the medium-term
management plan, and the remainder is dealt with in the business reports and annual reports.
Thirdly, the environment, that Japan Energy prioritizes the highest of all, receives superior coverage
including the details of the Company’s environmental protection policies and environmental management
system.
Fourthly, there are highly detailed, substantial descriptions of the Company’s relations with society,including compliance, policies for purchasing deals, social contribution programs, as well as sections titled“for our customers”, and “with our employees”.
The main issues for improvement are as follows.
Firstly, there was little explanation of communication and dialogue with stakeholders. This supposed to becaused by the company’s industry-specific characteristics, however, in order for the company to fulfill its
CSR, it is important that it enriches its communication and dialogue with customers, suppliers, shareholders, employees, and the local community notwithstanding. Thus, the company will be able to gain thetrust of society.
Secondly, it would be desirable for the company to explain the common principles, CSR policies andcharter, supplier guidelines, etc., of the Group as a whole, as might be expected of the core operatingcompany of Nippon Mining Holdings Group.
The third point concerns the overall structure. While the cover is clean-cut and succinct, as a symbol thatwill determine the first impression of a well-known company, more innovation is required. Because thecompany’s corporate mission is to contribute to the development of society by maintaining a stable andefficient supply of petroleum products, energy and raw materials, it would be desirable to convey concrete
information on health & safety, and risk management. Finally, understanding would be deepened if there
was a glossary on specialist terminology.

Reading this report reveals it to be, on the whole, very easily digestible with abundant use of diagrams.
The report clearly indicates that the company’s leaders and all of its employees are fully devoted to theimplementation of the Mission, We Create Energy. I suspect the issue of the future shall be how thecompany devotes itself to holding dialogue with its stakeholders.
Japan Energy’s Mission contains the three elements of “the energy in people”, “the energy of the earth”,
and “the energy of society”, among these, I suspect, its relations with “people”” form the vitality of Japan
Energy’s employees. From this perspective, I would like to see employees who work on site appearing in
the report, with their impressions from participating in volunteer activities, and other ways where we cansee the faces and hear the voices of the people who work at Japan Energy.
I think the environmental initiatives are easy to understand due to the presentation of figures spanningover several years. If there were innovative ideas championing the cause of the concrete initiatives andpositive points, it would lead to a deeper understanding and further education.
With regard to social initiatives, the report presents concrete figures on indicators such as the workenvironment from a female perspective and the employment rate of disabled people, allowing one to
make an evaluation of these things. Going further, if concrete targets for 2010 were presented, forinstance, this might show a clear direction to the company and enhance the significance of the report.
The details of social contribution programs are presented in a matter-of-fact way and the company’s
sincerity is conveyed, but the final impression gained is weak. I would like to see comments from thestakeholders and participants in each activity presented, showing its outcome and making a case to urge
more participation.
I believe it is regrettable that the initiatives in the service stations were presented separately as
environmental and service-oriented ones. Even though the operators are separate entities, in the eyes of
the customers it is the same JOMO brand. If the customers could feel that environmental initiatives, aswell as social action programs like the Bouquet of Children’s Stories, were the product of all service
station operators working together, and pouring their positive energy into society together, I think it would
lead to the 3 energies growing stronger in a synergistic way.
In future I look forward to seeing the 3 aspects of the main business, the environment, and social action
merging together organically, and if this could be done, I think a more integrated corporate image would
come into view, and the report would become an even richer source of information.

Social & Environmental Report 2005
Published October 2005
Publisher: Japan Energy Corporation,
Corporate Social Responsibility Department
2-10-1 Toranomon, Minato-ku, Tokyo, Japan 105-8407
TEL: 03-5573-6089 (CSR Department)
FAX: 03-5573-6773
Free Dial
0120-150-106 (JOMO Customer Center)
URL http://www.j-energy.co.jp/

Social & Environmental Report 2005

2-10-1 Toranomon, Minato-ku, Tokyo, Japan 105-8407
TEL: 03-5573-6089 (CSR Department)
http: //www.j-energy.co.jp/

2005.10