We have formulated an HSE Medium-term Plan covering the period from fiscal 2010 to 2012 to ensure that, by operating the HSE Management System, occupational health and safety and environmental measures are implemented and the principles of our HSE Policy are put into action.

The HSE Medium-term Objectives have been set based on the premise that we will conclude the introduction phase of our HSE Management System by 2012. Corporate and Operational Organizations will set annual HSE objectives as they seek to achieve these targets. Each Operational Organization will formulate its own HSE Objectives and Plan according to its own circumstances and based on the corporate HSE Objectives.

In addition to carrying out the activities listed below, in fiscal 2010 we also conducted an annual HSE audit, presented HSE awards, and conducted a risk assessment of the safety of employees posted overseas and health management in project operations. We also finished designing the outline of an HSE data collection and analysis system now under development, aiming to bring the system online in 2011. Additionally, by participating in and contributing to International Association of Oil & Gas Producers (OGP) activities, we gained useful insights and information.

HSE Medium-Term Plan and Corporate Objectives and Programs in FY2010

Ratings    : Implemented as planned     : Partially implemented     : Not implemented; significantly behind schedule

HSE Documentation

Medium-term target: Finish creating HSE documents and educating employees on their content at both the corporate and operational level.Ensure that all HSE managers have a uniform understanding of such content.
Action Item in FY2010		Rating	Performance Evaluation, Issues, and Future Actions
1-1	Formulate corporate HSE policies		Corporate HSE documentation is going forward as planned, set to finish by end of 2012; formulated 26 manuals and policies in fiscal 2010; also assisted documentation at Teikoku Oil (Suriname) Co., Ltd. as planned Will update existing documents as they age past three years since last issuance; will continue to provide assistance related to HSE management system development
1-2	Formulate operational HSE documents

HSE Organizational Development

Medium-term target: Identify the minimum level of resources needed to execute the HSE Management System, and develop those resources at corporate and operational levels.
Action Item in FY2010		Rating	Performance Evaluation, Issues, and Future Actions
2-1	Add HSE personnel		Restructured group organization and employed three personnel members, dispatching one to the Domestic Project Division Will continue to dispatch corporate HSE personnel to projects in and outside Japan at opportune times; further additions and flexible and quick mobilization of external experts is a future goal
2-2	Exchange ideas with Operational Organizations

Promote Environmental Management Activities

Medium-term target: Identify environmental management parameters and create an annual environmental management plan that includes management policies, numerical targets, and actions for continuous improvement.Refer to the IFC EHS Guidelines1, an international standard, as a guide for setting voluntary targets when formulating the plan.
Action Item in FY2010		Rating	Performance Evaluation, Issues, and Future Actions
3-1	Evaluate environmental management plan		Discussed the environmental management plan at the HSE Annual Meeting and other meetings and decided on the future direction of environmental management; performed a gap analysis of the Nagaoka Field Office with the IFC EHS Guidelines, and reported the results at the Corporate HSE Committee and HSE Annual Meeting Gas analysis results need to be used for formulating the environmental management plan of each Operational Organization and in sharing environmental information across the Group; will also explain the IFC EHS Guidelines and performance standards to each Organization to deepen their understanding
3-2	Perform gap analysis with IFC EHS Guidelines

Set HSE Numerical Targets

Medium-term target: Reduce the number of accidents. Use LTIF, TRIR2, and other parameters as numerical targets, and strive to reach targets.
Action Item in FY2010		Rating	Performance Evaluation, Issues, and Future Actions
4-1	Set numerical targets for the HSE Management System		Start date of the HSE Cultural Maturity Survey for Operational Organizations was delayed, and the goal to set numerical targets for HSE management systems was not reached, so this program will be carried over to fiscal 2011; will set numerical targets in fiscal 2011 based on the survey results Reached HSE numerical target KPI (LTIF, TRIR) in fiscal 2010; LWDC and MTC3 results both exceeded targets for fiscal 2009—2010; particularly notable is the Domestic Project Division, where not one LWDC occurred and MTC also declined significantly
4-2	Establish targets for occupational health and safety and monitor performance

Promote HSE Activities

Medium-term target: Enhance HSE training. Prepare 400 hours of HSE-related courses (80 five-hour courses) a year by fiscal 2012. Ensure operational safety in the design phase. To that end, periodically implement HSE reviews for large-scale projects in the design phase, and establish processes to incorporate review results into design work. Implement integrity maintenance measures for production facilities (e.g., production field offices, pipeline networks), and make sure that major accident risks have been reduced to their As Low As Reasonably Practicable (ALARP) levels Make HSE risk management, contractor HSE management, health management, security management, and environmental management activities consistent across the Group.
FY2010 HSE Objectives: I—IV Strengthen HSE Communication In light of the current status of development and implementation of the HSE Management System, strengthen two-way communication throughout the Group and promote establishment of the System.
Action Item in FY2010			Rating	Performance Evaluation, Issues, and Future Actions
5-1	Strengthen HSE Communication
	1)	Hold the HSE Annual Meeting, HSE Managers Meeting, and HSE Liaison Meetings		Held the HSE Managers Meeting and HSE Meeting once in the year each, and discussed HSE Management System development and issues, key measures to implement going forward, global standards, oil spill measures, environmental management, and corporate HSE objectives and HSE programs for fiscal 2011; in fiscal 2010, held five HSE Liaison Meetings with overseas project divisions Tried to strengthen HSE-related communication with Operational Organizations through the HSE Annual Meeting, HSE Managers Meeting, and HSE Liaison Meetings; however information sharing and two-way communication is still insufficient: a new system for sharing information among the Group is needed
	2)	Plan and execute HSE training programs		HSE training programs implemented in fiscal 2010 totaled approximately 220 hours, inadequate in terms of both quantity and quality compared to the 400 hours planned In fiscal 2011, will revise the entire training program from a medium- to long-term perspective, devise programs in accordance with the HSE Training Procedures, and implement programs
	3)	Conduct HSE management reviews		Management reviews were conducted at the corporate level and at each Operational Organization, and HSE managers confirmed the results; corporate review results were reported to the Corporate HSE Committee and the Management Committee; by compiling the results of all management reviews, the action plan for the next fiscal year and major goals have been condensed into three points: build and execute the HSE Management System, manage HSE in contractor operations, and strengthen communication. Issues raised by the corporate and operational reviews will be factored into corporate and operational HSE objectives and programs for fiscal 2011 and addressed through program implementation
	4)	Conduct HSE reviews in the design phase		Conducted an HSE review in the design phase of the Masela Project as planned; also participated in a technical review of the Ichthys Project It is important to incorporate HSE requirements into design phases by conducting HSE reviews of the Masela Project, Ichthys Project, and Japanese projects at a high priority level
	5)	Conduct HSE reviews related to facilities maintenance and management		Currently exploring review methods; actual implementation of reviews is running behind schedule Will continue HSE reviews related to facilities maintenance and management in programs for fiscal 2011 and will make sure the reviews are conducted
Enhance Contractors’ HSE Management For HSE management of contractor operations, introduce best practices from inside and outside the Group and make progress in standardizing management methods, including those for preliminary risk assessment. For managing work aimed at preventing spill accidents during well drilling operations in particular, strive to unify guidelines and work instruction architectures and implement documents under strict rules.
5-2	Enhance Contractors’ HSE Management
	1)	Conduct HSE reviews of contractor selection and management methods		Issued the Corporate Guidelines on Contractor HSE Requirements and conducted a contractor management review at the Domestic Project Division; at the HSE Managers Meeting, exchanged ideas on contractor HSE management at Operational Organizations Enhance activities for contractor HSE management by raising awareness of guidelines related to contractor management and strengthen communication with contractors
	2)	Prevent spill accidents		Held drilling workshops and reviewed Well Control Guidelines to prevent spill accidents Will continue to conduct reviews of manuals and related documents as measures to prevent spill accidents
	3)	Develop an HSE risk assessment system		Held a workshop on the “Bow Tie Methodology,” a risk management methodology Failed to materialize a Group-wide scheme for HSE risk management; development of an HSE risk assessment system is running behind schedule; will give risk assessment activities higher priority in fiscal 2011
Reduce the Number of Accidents Achieve a 25% and 15% reduction from fiscal 2009 levels for Group-wide LTIF (1.17) and TRIR (2.73), respectively, while promoting HSE activities to achieve zero accidents at Operational Organizations as a basic policy.
5-3	Reduce the Number of Accidents
	1)	Confirm that accident surveys and measures to prevent recurrences are implemented		As no major accidents have occurred, there are no corporate survey results to report Continue to implement this program in fiscal 2011 and thereafter
	2)	Send HSE alerts		HSE alerts include an overview of the accident, causes, and recurrence prevention measures; 15 alerts were sent in fiscal 2010; Safety Highlights was issued every month since September Continue to implement this program in fiscal 2011 and thereafter
Promote GHG Emissions Reductions and Environmental Management Practices that are Compliant with International Standards Continue to monitor GHG emissions and take effective actions to reduce them. Pursue best practices in environmental management that are compliant with the IFC EHS Guidelines, an international standard.
5-4	Promote GHG Emissions Reduction and Energy-Conservation Measures
	Group-wide activities to reduce GHG emissions and conserve energy			Promoted GHG emissions reduction and energy-conservation measures by carrying out activities related to the Nippon Keidanren’s Commitment to a Low-Carbon Society and the amended Energy Conservation Law and Global Warming Law Will formulate an Environmental Management Plan, hold an environmental meeting attended by corporate and Operational Organizations, and promote Group-wide activities to reduce GHG emissions
	Japan	Promote GHG emissions reduction by carrying out activities related to the Nippon Keidanren’s commitment to a low-carbon society
Other HSE activities
5-5	Others
	1)	HSE audits		Conducted audits at three sites in fiscal 2010: Domestic Project Division (Teiseki Drilling Co., Ltd.), Egypt, and Venezuela The audits planned for Suriname and the Pipeline Construction Division were postponed along with the work plans for each project; audits at these sites will be included in the audit program for fiscal 2011.
	2)	Develop an HSE data collection and analysis system		Finished selecting an HSE data collection and analysis system developer and designing the outline of the system; the system is currently under development and slated for completion in July 2011. Will start operating the system in fiscal 2011. Will need to resolve problematic areas to achieve smooth operation.
	3)	HSE Awards		Presented one HSE Award for Excellence, one Group Award for HSE Achievement, and one Individual Award for HSE Achievement, and held an award ceremony and awardee presentations at headquarters. The HSE Awards are helping to raise awareness of HSE and will continue to be a part of our HSE program.
	4)	Security risk surveys		Working with consulting companies, conducted security risk surveys of Venezuela and Ecuador as planned.
	5)	Health risk assessment		The health risk assessment originally planned for the Masela Project was cancelled because the project hired a health adviser and conducted its own assessment. In fiscal 2011, will review current activities and create health management activity plans in line with established procedures and guidelines.
	6)	OGP activities		Attended OGP general meetings; also currently translating OGP guidelines into Japanese; have submitted three guideline documents and finished translating seven other guideline documents to date. Will strive to acquire useful knowledge and exchange information with the major oil companies by continuing to submit HSE data, attend specialist committees, and attend the general meetings in fiscal 2011; will also focus on Global Industry Response Group (GIRG) activities and participate as appropriate.