It is imperative to create an environment in which employees are encouraged to reach their fullest potential, especially when two companies with different histories and policies are merged. We have established the following basic policy based on a human resources management system that contributes to a sustainable development of the company in an attempt to create an organization capable of competing in the global arena.

Basic Policy on Human Resources Management System

1. A system that encourages all employees to play their part and work as a team to achieve higher organizational goals, contributing to the growth of the company.
2. A system that encourages all employees to gain a broader perspective on work duties so as to identify issues, come up with solutions on their own initiatives, and act responsibly.
3. A system that assists all employees in their determined efforts to continue to pursue self-development through work over an extended period of time.
4. A system that is transparent and straightforward in recognizing the individual contribution of employees to achieving corporate objectives and in making them feel that they are rewarded fairly.

Fair and Accurate Employee Evaluation

It is important to establish a credible employee evaluation system in order to reward employees fairly based upon the basic policy on human resources management system.

Therefore, in our human resources management system, we evaluate employees from the following three perspectives: (1) Performance evaluation to evaluate an employee’s goal achievement, including the means and methods used, and the time spent; (2) Competency evaluation to evaluate an employee’s utilization of her/his ability in setting out and achieving individual performance objectives; and (3) Value evaluation to evaluate an employee’s behavior and attitude toward the values that the Company strives to instill. In fiscal 2008, we added business ethics to the criteria for value evaluation, and stated that an employee has a moral obligation to carry out the Company’s Corporate Social Responsibility Policy and HSE Policy, and to have high moral standards as a member of the Company that contributes to society. This, coupled with the Compliance Manual, is intended to foster greater awareness and appreciation of CSR among our employees.

The three-tiered evaluation is not simply something that supervisors perform on subordinates; it is a self-evaluation by an employee that constitutes an integral part of the system. At an evaluation meeting, a supervisor shares with a subordinate how the former evaluates the latter, and the employee discusses how he or she evaluates himself/herself; through this process, both parties can identify any gap between the two evaluations so that they can work out a plan to develop and improve the employee’s skills and knowledge.

Under this employee evaluation system, employees can submit requests for new assignments and transfers. Although we cannot accommodate all requests, this gives the company a better understanding as to what extent employees think they are fit for their current assignments, and what career path they wish to pursue, both of which are helpful for the company in developing plans for recruiting and allocating human resources.

To ensure that these systems perform as intended within the company, we first provided line managers with training on corporate standards of value in September 2008, immediately preceding the inception of the new company; managers with evaluation roles received practical training on the evaluation process in January 2009, immediately prior to its implementation. Finally, all employees received a briefing on how the new evaluation system works in February 2009.

Company management meets regularly with representatives of the INPEX Labor Union to exchange views and ideas on a broad range of issues including the challenges that the Company faces and the business outlook.

In December 2008, the new Company held the first labor-management council, during which both sides went over the Company’s financial performance and an overview of each project, and discussed what could be done to curb excessive overtime.

We provide a variety of training programs to employees with leadership potential to develop global perspectives and learn to contribute to greater corporate values as well as to employees on the whole, to improve their competency.

The training programs are tailored to each rank of employees within the company—senior management, middle management and new employees. For instance, we have a mentor system for new employees, where a senior member of a section is assigned to provide one-on-one, on-the-job training and mental support to a new employee for the first 12 months of employment. We also provide employees with compliance training to foster higher business ethics among them. In addition, to enable employees to improve their international communication skills, we provide them with opportunities to study English in Great Britain to participate in on-the-job training programs at our overseas offices such as those in Perth and Libya, and to continue higher education abroad. We also encourage employees to pursue self-learning through correspondence courses.

As our CSR policy states, we strive to provide our employees with a worker-friendly work environment and opportunities for them to develop competencies as we value the diversity of employees, their individualities, and their personal qualities Accordingly, we have been proactive in hiring the physically challenged. As of March 31, 2009, 24 physically challenged employees, which represents 1.72% of the total number of employees, are engaged in clerical and support work.

We have instituted more generous childcare-leave programs than required by law, in an ongoing effort to provide childcare assistance to our employees. In addition to allowing employees to take childcare leave until their children are 18 months old, we partially exempt employees with small children from overtime and night shifts. We also pay employees on childcare leave 20% of their salaries on top of the statutory childcare leave benefit.

Furthermore, we have the following programs to accommodate employees who have childcare challenges: Reduced work hours that permit them to work two hours less per day until their children reach the fourth grade; a program to subsidize such employees with some of the expenses for nurseries, day-care centers and babysitters; and a flextime arrangement that allows them to set their own schedule until their children reach school age. We will develop a general action plan as an employer as required by Japan’s Law for Measures to Support the Development of the Next Generation in an effort to help employees maintain a balance between their work and childcare.