As a Japan’s leading oil and gas exploration and production company, we undertake proactive exploration, development and production activities in order to fulfill our social duty of contributing to a stable and efficient supply of energy. We at the INPEX Group will continue to work to enhance our corporate value in a sustainable manner through medium- to- long-term maintenance and expansion of our reserves and production. This is our primary business goal. We pursue the three key strategies below, while taking care to conduct our operations based on appropriate management of costs and risks, and through prudent investment decisions. In this way, we aim to become an internationally competitive E&P company with further enhanced capabilities in the global competitive oil and gas industry.

As of June 2009, we are engaged in 74 projects in 26 countries around the world. We appropriately manage risks by undertaking different projects to achieve optimal balance, taking into consideration factors such as oil and natural gas ratios in production, geographical distribution, the business stages of exploration, development and production, and the type of petroleum contracts. We have a superbly well-balanced asset portfolio, with stakes in a number of large-scale oil and natural gas fields around the world. Our proven and probable reserves have been a particularly strong pillar of our corporate value. These reserves total approximately 4.8 billion barrels, with 2.1 billion barrels of that in natural gas reserves (as of March 31, 2009). Natural gas has less of an impact on the environment and is expected to contribute substantially to future growth. Moreover, we have a large supply of reserves and resources that fall outside the scope of these 4.8 billion barrels of proven and probable reserves. These reserve and resource inventories as the original corporate value are fully capable of leading us to attain sustainable growth.

1) Exploration and development for maintaining and expanding reserves

The reserves we hold constitute a crucial element of our corporate value. Through production, these reserves decrease and are eventually depleted. Therefore, in order to achieve sustainable growth, we must maintain a certain level of the reserves, and expand them, in addition to maintaining and expanding the production volume. This necessitates continued investment in exploration, development and acquisition for oil and natural gas assets. Amid fluctuations in the international oil market and intensifying competition for resources, it is necessary to work unceasingly to discover and secure additional reserves. Based on strategic and prudent investment decisions, we will continuously and proactively conduct exploration and development activities.

2) Materializing Large-Scale Overseas LNG Projects

We are conducting in two large-scale overseas LNG projects which are the first operator LNG project undertaken by Japanese company. These two are Ichthys project in Australia and Abadi project in Indonesia, both of which we independently explored and discovered in 2000. We are progressing these projects, the LNG production from which we expect to be equivalent approximately to 20 percent of current Japanese LNG imports. Materialization of these projects will help contribute to a more stable supply of LNG to Japan and an enhanced security of oil and natural gas as a result of Japanese involvement in E&P projects. But that’s not all. They will substantially contribute to enhancing medium- to long-term corporate value. We will continue to work toward the steady materialization of these projects. In addition, in order to meet increased Japanese demand for natural gas, we will expand our natural gas pipeline network and construct a new LNG receiving terminal. Thus, we will establish a natural gas supply chain that organically links the domestic gas infrastructure with our overseas LNG projects.

3) Unconventional Oil Resources, Development and R&D

The profitability of unconventional oil resources is increasing as oil prices are driven up by intensifying competition for acquisition of conventional oil and natural gas resources. Therefore, we consider it important to pursue targeted investment for acquisition of unconventional oil and natural gas resources, which are believed to have a reserve-production ratio of more than 200 years. These unconventional resources include oil sands, oil shale, heavy oil, coalbed methane and tight gas. In December 2007, we acquired a stake in the Joslyn oil sand project in Canada, where we plan to develop oil shale resources by open cut mining method. Furthermore, in order to address global environmental concerns, we continue to pursue carbon capture and storage (CCS) projects for underground storage of carbon dioxide (tested in Niigata, and scheduled for application in the Offshore Iwaki gas field), fuel technologies for liquefying natural gas to obtain liquid form of fuel such as gas-to-liquid (GTL) , and technologies for microbial restoration of methane deposit by sequestrating carbon dioxide into depleted oil fields. We will actively engage in R&D with a long-term perspective that will contribute to the creation of greater corporate value.

Through materialization our large-scale overseas LNG projects and production at our large-scale overseas oil fields, we will increase our production capacity from the current level of 405 thousand barrels a day* to 700 thousand barrels a day between 2015 and 2020. Achieving this first horizon in our growth stage is the important immediate management goal. In our next horizon of growth, we will continue to make efficient use of management resources and pursue more proactively and efficiently exploration and development to attain our target of increasing daily production from 800 thousand barrels to 1 million barrels.