Fiscal Year 2004

Management Policies
Strategic Overview
Nobuo Seki
President and Chief Executive Officer
May 18, 2004

Contents
1. Positioning for Fiscal 2004
2. Priority Issues
3. Issues for Sustainable Growth
4. Plant Lifecycle Engineering (PLE) andGroup Management
5. Principal Markets and Our Response
6. Summary

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1. Positioning for Fiscal 20041)

As a result of promoting the Project Super X (PSX),
it is certain that the new Restructuring Plan throughfiscal 2005 is moved up by a year.
(1) Elimination of accumulated deficit
moved a year ahead(2) Restore dividends(3) Resolve management issues: Implement Priority
Initiatives2) Develop and launch new management plan forsustainable medium- to long-term growth.

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2. Priority Issues
Viewpoint

Priority Initiatives

Action Plans

Financial

Stabilize profitability

Comprehensive budget system

CustomerLong-term relationship

Increase CS level

Strengthen competitivenessPLE and Group management

Thorough risk management

Promote Smart EPC

99Complete
Complete control
controltoto
achieveachievethe
thetargets
targets

99CSCSanalysis
analysisand
andfollowup
follow up

4Business
Process

99Strengthen
Strengthen
project
projectaudits
audits
Personnelandreform

Human asset development /proper assignment¾ Strengthen management capabilities

Career development program /Success Support

EnhanceEnhanceability
abilityfor
for
99construction
construction supervision
supervision(constructionIT)(construction IT)
99procurement
procurement
99engineeringengineering technology
technology(leveragingLCE)(leveraging LCE)

PLE： Plant Lifecycle Engineering
LCE： Low Cost Engineering Center¾Use Balance Score Card (BSC) to set numerical targets¾ Use BSC to assure that targets are passed down from corporate todivisions and on to individual
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3. Issues for Sustainable GrowthBusinessInnovation

NaturalNaturalGas/
Gas/
Gas
ChemicalGas Chemical

Win and build on recognition as the mostreliable project firm in the world

Provision
Provisionofoffastest,fastest,mostmostefficient,efficient,highest-quality
highest-qualityservice
service

Petroleum/
Petroleum/
Petrochemical
Petrochemical

Integrateadvanced technology

Fine Industry
Fine Industry

Excellent
ExcellentCompanyCompanyPLE
PLE(Plant Lifecycle Engineering)(Plant Lifecycle Engineering)

Energy/Energy/Environmental Conservation
Environmental Conservationfor entytmibil age
ag anron s mt
S essinbu
Perfect risk management/
Perfect risk management/
Ability for management through figures
Ability for management through figures

Asset management

EPC
EPC

…
…
…
…

Integrate !
Integrate highly
value-added business
Competitive
advantage !

CHIYODACHIYODA

LNG
LNGplant
plant

Cutting-edge technology
Cutting-edge technology（for more complicated/（for more complicated/larger-scale projects）
larger-scale projects）

Expanding toward upstream and downstream

Remarkable
RemarkableIT,IT,deepening
deepeningproject
projectmanagement
managementability
ability

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Technology
Innovation

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4. PLE and Group Management
Cost

Establish
Establishprojectprojectimplementation
implementationand
andmanagement
systems
facilitating
management systems facilitating
contributions
contributionstotoall
allindustrial
industrialsectors
sectorsatat
all-added
alltimes
timesthroughthroughhighhighvalue
value-added
plants.
plants.

9Challengetotonew
newtechnologies
technologies
9Challenge
9Provision
ofstate-of-the-artsolutions
9Provision of state-of-the-art solutions

CapitalCapitalInvestmentInvestment
PlanPlan

Lifecycle Cost
Initial Cost

Running Cost
Time PeriodFeasibility
Feasibility
Studies
StudiesPlanning
Planning

Asset ManagementService• Investment planning• Cash planning• Assts valuation
Chiyoda Corporation

Engineering
Engineering(FEED/Detail)(FEED/Detail)

Test
Test

Procurement
Procurement Construction
Construction Operations
Operations

Consulting Service

EPC Service• Engineering/ Procurement• Plant concept proposal/ Construction• Plant operation proposal• Project Management• Plant evaluation/• Design/ Construction
Simulated inspection• Operation plan for existing plants supervision• Budget-making

Operation
Operation && MaintenanceMaintenanceO&M Service• Engineering document maintenance (EDM)• Equipment/piping maintenance• Electric/instrumentation maintenance &calibration• Air-conditioning equipment O&M• Building maintenance

Revamping
Revamping/Expansion/Expansion

AdvancedEngineering
Solutions Service• Computerized Maintenance Management
System (CMMS)• Structural, Fluid dynamics, Acoustic andSeismic Analysis

Chiyoda Corporation

Chiyoda Corporation
Chiyoda Corporation

ChAS

Chiyoda Techno Ace Co., Ltd.

Chiyoda Advanced
Solutions Corporation

Overseas Group companies,
including LCEs

Chiyoda Kosho Co., Ltd.
IT Engineering Limited
Overseas Group companies,
including LCEsDecommissioning
Decommissioning

Chiyoda Keiso Co., Ltd.
Chiyoda Techno Ace Co., Ltd.

Establish PLE system, information storage, and commoditize systems with partners
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65. 1 Principal Markets and Our Response5(Overseas: Gas Shift)¾ Gas Value Chain (GVC)
GasGas-producing
countries[LNG liquefaction Plant]

GasGas-consumingHighcountries
Highdemand
demandininthe[LNG receiving terminal]
theUS,
US,Europe,Europe,China,
China,
Indiaandotherareas
India and other areasStorage

Larger-scale
Larger-scale
LNG
LNGPlantsPlants

Storageterminal

Gas
Gas
processing
processing
plantsplantsNatural gas

Gas
Fieldsterminal

LNG Tanker

Liquefaction
Liquefactionplant
plant(cooling(coolingsystem)system)

LNG

PowerPowergeneration
generation

Ethylene
Ethylene
Associated gas

Methanol
Methanol
GTL
GTL
Fertilizer
Fertilizer

PowerPowergeneration
generation

Evaporation
Evaporation

Additional
Additionalethylene
ethyleneplants
plantsandpetrochemicalcomplexes
and petrochemical complexes
areareplaned
planedinin
gas-producing
gas-producingcountries.
countries.
The market of new energy
The market of new energy
project is going into high gear
project is going into high gear

LPG/NGL

From petrochemical to gas chemical

Promotion of high value-added
Promotion of high value-added
products and overseas presence
products and overseas presence
supportsupportinindomestic
domesticmarket
marketCity gas
Chiyoda provides total
engineering services for all
stages of the gas value chain
from upstream to thedistribution level, adding value
to natural gas, an energy
resource found in abundant
quantities throughout the world.

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5. 1 Principal Markets and Our Response5(Overseas)¾ Unrivalled track record in LNG plant construction
2005

2000

1995

1990

1985

1980

As the leading LNG plant engineering company, Chiyoda continues tomeet the challenges of implementing large-scale LNG projects.
At least, Chiyoda succeeded in7.8 mtpa project.
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5. 1 Principal Markets and Our Response(Overseas)¾

Natural gas projects and forecasts announced at LNG14 (March 2004, Doha Qatar)
Æ Exxon Mobil: One-third of growth in energy demand will come from gas.
Æ Shell, BP, Chevron: Rush of LNG projects announcements
Æ Qatar: Plans to boost LNG exports to over 60 million tons/year by 2010
Sasol-Chevron, Shell, etc.: Gas to Liquid (GTL) projects

Global Gross Supply Transition & Forecast of Primary Energy
LNG Export Plan in Qatar
80

Million Ton Oil Equivalent

Petroleum

70
Natural Gas

OthersNuclear power

Water energy

Million Ton/ year

Coal

60
50403020100Source: IEA (International Energy Agency)

2003

2004

2005

2006

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955. 2 Principal Markets and Our Response(Pinpointing changing requirements of domestic customers )¾ Energy and Environment

Petroleum, power and gas companies are aggressively investing inclean energy facilities.
¾ Market expansion by promoting integrated energy and chemical plant
projects.
¾¾ Fine Industries¾Focus on high value-added process plants, including electronicmaterials, pharmaceuticals and speciality chemicals plants.

¾ New Energy¾Focus on potential growth areas: National GTL project; develophydrogen-based energy technology; bring cutting-edge technologies toenergy conservation for entire industrial complexes.

¾ Support for domestic clients investing overseas projects

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66. Summary¾¾¾¾

Sales and earnings are prospected to continuously increase.
Develop and implement a new management plan for future goals.
Win recognition as the most trusted project firm in the world;
Transform Chiyoda into an excellent company capable ofcontributing at all times to all industrial sectors through high valueadded plants with superior project management andimplementation capabilities.
Place greater emphasis on fulfilling Chiyoda’s social obligations(CSR) and become a respected corporate citizen.

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Please address inquiries to: Takuhiro Murata, IR Manager, Corporate Communications OfficeTel: 045-506-7538 Fax: 045-506-7085 Cell: 090-3348-3484
e-Mail: tamurata@ykh.chiyoda.co.jp URL： http://www.chiyoda-corp.com/
Forward-looking Statements
The forecasts and plans in this presentation are based on information available to management on May
18, 2004, the date these materials were prepared. Actual results may differ significantly from theseforecasts for a number of factors, including but not limited to changes in economic conditions andoperating environment in Japan and overseas.

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