Domestic Natural Gas Overview
Producing: Total oil and gas fields (FY 2010 average)	Natural gas: Approx. 3.4 million m3/d Crude oil and condensate: Approx. 4 thousand bbl/d
Natural gas sales (FY 2010)	Approx. 1.72 billion m3

Discovered in 1979 and in production since 1984, Minami-Nagaoka is one of the largest gas fields in Japan. Even after more than 25 years of continuous output, Minami-Nagaoka still accounts for approximately 40% of Japan‘s total natural gas production. After being processed, the natural gas is transported through a 1,400-km trunk pipeline network stretching across the Kanto and Koshinetsu regions that surround the greater Tokyo metropolitan area, and delivered to city gas companies and industrial customers along this network.
INPEX has experienced substantial sales growth over recent years, due to sharp rises in the prices of competing fuels as well as the highly environmentally friendly attributes of natural gas. The medium- to long-term projection is in annual demand to the 2.5 to 3.0 billion m3 range, reflecting further active expansion of the supply network into new regions such as Toyama region where we decided to construct Toyama Line (extending from Itoigawa City, Niigata Prefecture to Toyama City, Toyama Prefecture) in May 2011.
Supply capacity and reliability have been dramatically enhanced through dynamic reinforcement of production facilities, pipeline network expansion and the introduction of LNG from Shizuoka Gas Co., Ltd. in 2010. To boost the overall scale of this business, INPEX has decided to build an LNG receiving terminal at Naoetsu, Joetsu City in Niigata Prefecture on the Japan Sea coast. The operational start target is in 2014.
INPEX also produces natural gas dissolved in water at the Naruto Gas Field in Chiba Prefecture. Natural gas dissolved in water is contained in underground “brine water.” We pump up the brine water, extract natural gas and supply the gas to surrounding areas. The brine water also contains high levels of iodine. We refine and export the iodine to Europe, the U.S. and elsewhere.

Naoetsu LNG Receiving Terminal Overview
Location:	12 Yachiho, Joetsu City, Niigata Prefecture
Lot area:	Approx. 25 ha
Gas production capacity:	750 million m3/day (LNG 240 tons/hour)
LNG tank:	180 thousand kl × 2 (upgrade possible)
Operational start target:	in 2014

We expect domestic demand for natural gas to rise steadily and continue to be firm due to factors such as the switch to natural gas from oil as consciousness about the environment and energy conservation increases, higher oil prices.
To ensure stable supply to the domestic natural gas market over the medium to long term, INPEX has been engaged in constructing an LNG receiving terminal in Joetsu City (the port of Naoetsu) in Niigata Prefecture on the Japan Sea coast since 2009. The target operational start-up date is in 2014. Afterwards, we plan to receive LNG from our overseas projects at the Naoetsu terminal, and by combining that supply with existing domestic supplies from Minami-Nagaoka and other fields we will be able to enhance the capacity and stability of our supply structure.

We will establish a gas supply chain by organically connecting the overseas LNG with the domestic natural gas infrastructure, so as to meet natural gas demand in Japan, which is expected to continue to be firm. What this means is that we will receive supplies of LNG from verseas sources, such as Ichthys and Abadi, at our Naoetsu LNG Receiving Terminal, and employ the pipeline network to supply natural gas to all of our customers. This will enable us to flexibly combine three supply sources– 1) domestic natural gas, 2) regasified LNG from Shizuoka Gas Co., Ltd. (which we began receiving in January 2010), and 3) regasified LNG received at Naoetsu.
We believe that this will result in improved supply capacity and enhanced supply stability, allowing us to meet future demand increases.
Until now, there had been no company in Japan equipped with a complete natural gas infrastructure, from development and production through liquefaction, transport and regasification, and supply. Building a total gas supply chain covering upstream and downstream processes is one of the benefits of business integration, and it will be our base of support in developing an energy business suitable to the coming era of natural gas use.