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Ryuta KITAMURAJOGMEC

International LNG Congress 201614th March, 2016

Upstream investment trends for Japanese LNG buyers and developers

1

Metals Strategy & Exploration, and

Technology Development

Mine Pollution Control

StockpilingOil & Gas UpstreamInvestment and

Research & Development

MissionSecuring Stable Supply of Oil, Natural Gas, Coal and Mineral Resources for Japanese Industries and Citizens

Established: February 29, 2004 [succeeded the functions of Japan National Oil Corporation(JNOC)]

President: Keisuke KurokiCapital: 751 Billion Yen (As of January, 2016) = around 6.83 Billion US$ (110US$/Yen)

Activities

Coal Strategy & Exploration, andTechnological

Support

GeothermalResources

Development

Japan Oil, Gas and Metals National Corporation (JOGMEC)

2JOGMEC Oil & Gas Upstream Projects (Natural Gas)

(As of Jan, 2015)

Equity Capital (50)

Liability Guarantee (12)

Tangguh LNG Project(Indonesia)

Abadi LNG Project(Indonesia)

PNG LNG Project(Papua New Guinea )

Wheatstone LNG Project(Australia)

Rovuma Offshore Area 1 Project

(Mozambique)

Sakhalin I Project(Russia)

Ichthys LNG Project(Australia)

Block B(Vietnam)

Cordova Shale Gas Project(Canada)

Cutbank Dawson Shale Gas Project(Canada)

North Montney Shale Gas Project(Canada)

Horn River Shale Gas Project(Canada)

(Source: JOGMEC)

3Electricity Mix in Japan

(Source: The Federation of Electric Power Companies of Japan)

Fukushima Daiichi nuclear disaster

29.3

43.242.5

28.6

1.7 0.0

10*8kWhNo nuclear plant in operation in 2014FY

Sendai plant in Kyushu has been restarted in Aug. 2015

2 reactors in operation (Sendai) and 1 more (Takahama) under preparation at the moment

4LNG Imports in Japan

(Source: MOF Japan)

70.078.5

87.3 87.5 88.5

MMtontrillionJPY

Fukushima Daiichi nuclear disaster

85.0

LNG imports at record high LNG Spot Price in Japan

(Source: METI Japan)

Month LNG WTI

2014.03 18.3 100

2014.06 13.8 105

2014.09 13.2 93

2014.12 11.6 59

2015.03 8.0 48

2015.06 7.6 60

2015.09 7.4 45

2015.12 7.4 37

(US$/MMBtu) (US$/bbl)

5Long Term Energy Supply and Demand Outlook

(Source: METI Japan, “Long Term Energy Supply and Demand Outlook”, July 2015)

6Japanese LNG Import Outlook

(Source: BREE Resources and Energy Quarterly, Mar 2014)

OSAKA GAS

7Upstream Investment by Japanese Utility Companies in Australia & PNG

StanleyProducing• Darwin LNG (FID : 2003)

(First LNG in 2006)

• Pluto LNG (FID : 2007)(First LNG in 2012)

• QC LNG (FID : 2010)(First LNG in 2015)

Under Construction• Gorgon LNG (FID : 2009)• Wheatstone LNG (FID : 2011)• Ichthys LNG (FID : 2012)

LNG Planning Stage• Sunrise & Evan Shoal• Crux• Stanley

(Source: JOGMEC Sydney Office)

ProducingConstructionPlanning

OSAKA GASSunrise / Evans Shoal

OSAKA GASCrux

OSAKA GAS

TOKYO GAS

CHUBU Electric

Gorgon LNG

TOKYO GASQueensland Curtis LNG

TOKYO GAS

OSAKA GAS

CHUBU E/P

TOHO GAS

KANSAI E/P

Ichthys LNGTOKYO E/P

TOKYO GAS

Darwin LNG

TOKYO GAS

KANSAI E/P

Pluto LNG

TOKYO E/P

KUSHU E/P

Wheatstone LNG

8Upstream Investment by Japanese Utility Companies

• Osaka Gas acquired WI for Sanga-SangaBlock in Indonesia in 1990.

• Osaka gas invested in Snorre oil field offshore Norway from 2005.

• Utility companies are expanding into North America (2012-14).

(Source: JOGMEC Sydney Office)

ProducingLNG Planning / ConstructionUpstream (Potential LNG source)

OSAKA GAS

CHUBU E/P

OSAKA GASSnorre Oil Field

TOKYOGASBarnett (Shale)

OSAKA GASPearsall (Shale)

TOKYOGASCove Point LNG

Freeport LNG

TOKYO GAS

OSAKA GAS

CHUBU E/P

Cordova (Shale)

OSAKA GAS

Qalhat LNG

OSAKA GAS

Sanga Sanga(Bontang LNG)

9Upstream Investment by Japanese LNG Buyers(Tokyo Gas “Challenge 2020 Vision” )

(Source: Tokyo Gas “Challenge 2020 Vision”, Nov. 2011 )

10Upstream Investment by Japanese LNG Buyers(Osaka Gas “Mid-term Business Plan 2014-2016 ”)

(Source: Osaka Gas “Catalyze Our Dreams”, Mar. 2014 )

11Upstream Investment by Japanese LNG Buyers(TEPCO and Chubu E/P established new company “JERA”)

(Source: JERA “JERA Business Plan”, Feb. 2016 )

Tokyo Electric Power Company, Incorporated and Chubu Electric Power Co., Inc. have jointly established JERA Co., Inc. (“JERA”) on April 30, 2015 to materialize a comprehensive alliance covering the entire energy supply chain, from upstream investments and fuel procurement through power generation.

12

• Understanding Upstream BusinessConventional -> Unconventional (CSG, Shale)

• Risk Hedge (Seller / Buyer)

• Equity Lifting

Key Words for Investing in Upstream Projectsfor Utility Companies

13• MIMI is Japan Australia LNG

Pty Ltd, 50:50 joint venture between Mitsubishi & Mitsui.MIMI was established for the North West Shelf LNG project in 1985.

• Trading houses are active in exploration projects as well as development projects.Mitsui and Mitsubishi hold some other exploration licenses offshore WA.

(Source: JOGMEC Sydney Office)

Upstream Investment by Japanese Trading Housesin Australia & PNG

NWS LNG

Casino/HenryGas Field

Surat Basin CSG

ProducingConstructionPlanning

MITSUBISHI

Talisman Gas Project

MITSUBISHI

Canning Basin Exploration

MITSUI

Enfield/VincentOil Field

MITSUIMeridian CSG

MITSUI

MIMI

MIMIBrowse FLNG

MARUBENIPNG-LNG

TOYOTA Tsusho

TOYOTA Tsusho

TOYOTA Tsusho

Otway Gas Project

Bass Gas Project

14• Starting in SE Asia,

Middle East and Australia 70’s to 80’s

– Brunei 1972 (1st Cargo)

– Abu Dhabi 1977– Malaysia 1983– North West Shelf 1989

• In Middle East 90’s to early-00’s

– Qatargas 1996– RasGas 1999– Oman 2000– Qalhat 2005

• Then, diversify globally– Africa– Latin America– North America

(Source: JOGMEC Sydney Office)

Upstream/LNG Investment by Japanese Trading Houses

ProducingLNG Planning / ConstructionUpstream (Potential LNG source)

MITSUBISHI

MITSUI

Cameron LNG

MARUBENIPeru LNG

MITSUBISHI

LNG Canada(Cordova/Montney) TOYOTA Tsusho

Alberta (CBM)

SUMITOMO SUMITOMOCove Point LNGBarnett (Shale)

SUMITOMO

MITSUI

Marcellus (Shale)

MITSUIEagle Ford (Shale)

MITSUBISHIBrunei LNG

MITSUBISHIDonngi Senoro LNG

MITSUBISHI

MITSUI

Sakhalin 2 LNG

MITSUBISHI

MITSUI

ITOCHU

Oman/QalhatLNG

MITSUIAbu Dhabi LNG

MITSUI

MARUBENI

ITOCHU

SUMITOMO

SOJITZ

Qatargas / RasGasLNG

MITSUBISHIMalaysia LNG

MITSUI

MozambiqueLNG

MITSUI

MARUBENI

Equatorial Guinea LNG

SUMITOMO

SOJITZ

Sanga Sanga(Bontang LNG)

MITSUBISHI

MITSUI

SUMITOMO

SOJITZ

Tangguh LNG

15Upstream Investment by Japanese LNG Buyers(Mitsubishi Corporation)

(Source: Mitsubishi Corporation “New Strategic Direction”, May. 2013 )

16Key Words for Investing in Upstream Projectsfor Trading Houses

• LNG Value ChainProduction -> Liquefaction -> Shipping -> Marketing

• Tolling vs Upstream/Liquefaction Packaging(Especially in North America)

• Conventional / UnconventionalPotential asset for LNG project

17Emerging Japanese LNG Players

(Source: Wood Mackenzie “Emerging Japanese LNG Players”, March, 2014 )

• Producing & Developing LNGINPEX - Tangguh, Darwin LNG, Ichthys,

PreludeJX Nippon - PNG LNGJAPEX - Sanga Sanga (Bontang LNG)

• Potential projects for LNGINPEX - Abadi FLNGINPEX & JGC - BC Shale w/NexenJAPEX - Pacific NorthWest LNG

• Liquefaction & Export project (Tolling)IDEMITSU - Triton LNG

• LNG off-takeINPEX - Ichthys, (Abadi)JX Nippon - GorgonJAPEX - MLNG 3, PNW-LNGTOSHIBA - Freeport LNG

JAPEX

IDEMITSU INPEX

JGC

TOSHIBAJAPEX

INPEX

INPEX

JX Nippon

• LNG Terminal by Japanese E&P companiesINPEXNaoetsu terminal (Cap: 1.5mpta)

Completed in 2013Will receive Ichthys LNG (0.9mtpa) from 2016(SPA with Chubu for 1.0MMton in 2013-2018)

JAPEXSoma terminal (Cap: NA)

Under construction (Complete in 2018)Will receive PNW LNG (1.2mtpa) from 2018

JX Nippon Hachinohe terminal (Cap: 1.0mpta)

Completed in 2015Will receive Gorgon LNG (0.3mtpa) from 2016

18Emerging Japanese LNG Player

(Source: Tokyo Gas “LNG Terminals in Japan”, Jul 2013 )

LNG Terminal (Operating)

LNG Terminal (Constructing or Plan)

JAPEX

INPEX

JX Nippon

19Conclusion

• LNG demand in Japan will remain high over the next 5years. Almost half of the supply will come from Australia in 2019.

• Utility companies and Trading houses continue to be active investing in upstream LNG projects to secure a stable and diversified supply of LNG.

• E&P companies and other new players may enter the LNG industry not only as a developer but also as a off-taker as well.

Back up

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21Strategic Energy Plan

Strategic Energy Plan (revised in) 2010 Strategic Energy Plan (revised in) 2014

Zero-emission Power Source(Nuclear + Renewable)

Yr 2020: >50%, Yr 2030: =70%

Energy Independence Ratio:38% (Yr2010) to 70% (Yr2030)

Nuclear will remain an important source of electricity.

Ratio :As low as possible

(Source: METI Japan)