ear ended march 31 annual report - jogmec · natural gas is increasing in japan for power...

Year ended March 31

Annual Report2012

ANNUAL REPORT

Relia

ble Partnership

Head OfficeToranomon Twin Building

2-10-1 Toranomon, Minato-kuTokyo 105-0001 JAPAN

TEL : +81-3-6758-8000 FAX :+81-3-6758-8008

Technology & Research Center1-2-2, Hamada, Mihama-ku, Chiba-city,

Chiba 261-0025, JAPANTEL : +81-43-276-9212 FAX : +81-43-276-4061

http://www.jogmec.go.jp/

JAPEX ResearchCenter

JOGMECTRC

Tokyo

Tokyo

Tokyo

ChibaJR Sobu Line

Keisei Chiba LineMakuhariHongoStation

Makuhari I.C.

Wangan I.C.

Makuhari CorpBus Stop

Wangan Avenue

DrivingLicence Center

MakuhariMesse

Keisei BusStation

KaihinMakuhariStation

Toranomon Twin Building

Ginza Line

Nan

boku

Lin

e

Toranomon sta.

Tameike Sanou sta.

Kamiya Cho sta.

Exit No.4

Exit No.3

Hotel Okura

METI

Toranomon Hospital

National Printing Bureau

Ministry of Education, Culture, Sports, Science & Technology

Embassy of the USA

Hotel Okura

Japan Post

TV Tokyo

Hib

iya

Line

ＪＯＧＭＥＣ

Japan Oil, Gas and Metals National Corporation

INDEX■Message from the President ･･･････････････ 2■JOGMEC's Activities ･･･････････････････････ 4■ Oil and Gas Upstream Investment　　　　　　　　and Research & Development ･･････････････ 6■Metals Strategy, Exploration, and Technology　　　　Development ･････････････････････････････12■Stockpiling ････････････････････････････････18■Mine Pollution Control ･････････････････････22■Financial Review　　　　　　　　　　　　　　　General Overview ･･･････････････････････26　　Balance Sheet ･･････････････････････････28　　Statement of Operations ･････････････････30　　Statement of Cash Flows ････････････････31　　Notes to Financial Statements March 31, 2011･･･32　　Report of Independent Auditors ･･････････36■Overview of JOGMEC ･･････････････････････37■Officers ･･･････････････････････････････････38■Organization Structure ･････････････････････39■Worldwide Network ････････････････････････40■Domestic Network ････････････････････････ 41

　Japan consumes considerably more oil, natural gas, and mineral resources than can be domestically produced.

To redress this imbalance, Japan depends mostly on importing these resources. Japan Oil, Gas and Metals National

Corporation (JOGMEC), an incorporated administrative agency established by the Japanese government, plays a key

role in ensuring a constant and stable supply of oil, natural gas, and mineral resources to support industries and citizens

in Japan through a wide range of activities relating these resources.

Securing a Stable Source of Oil, Gas, and Mineral Resources

Japan's reliance on overseas sources of oil, natural gas, and mineral resources （2011）

Copper100%

Natural Gas97.1%

Zinc100%

Crude Oil99.6%

Imports Domestic production

1Annual Report 2012

　First of all, I would like to express our sincere gratitude for your understanding and support for JOGMEC.Fiscal 2011 started amid the continuing impact of the Great East Japan Earthquake, which prompted us to reflect on the future of Japan’s energy situation. The Basic Energy Plan, formulated in 2010 by the Ministry of Economy, Trade and Industry, is to be revised based on Japan’s experiences during that time, and discussions about various possibilities are ongoing. Demand for natural gas is already increasing steeply, reminding us of the need to secure natural resources.

　As for the international natural resource situation, the impact of the Arab Spring continued in fiscal 2011. Due to instabilities in the Middle East, such as the civil war in Libya, WTI crude oil prices rose to US$113/barrel in May 2011, marking the highest level after the “Lehman Shock” of 2008. Since then, crude oil prices have continued to fluctuate wildly due to the international tension over the Middle East situation. Japan, which depends largely on foreign sources for the supply of energy, needs to keep a careful watch on the global situation. While demand for natural gas is increasing in Japan for power generation, gas prices in North America have dropped sharply. Japan needs to adapt to these circumstances and procure energy in a strategic manner. Prices of rare earth rose 10- to 30-fold in 2011, and although they have been stabilizing since then, it is necessary to reduce risks by diversifying supply sources as in the case of oil. As described above, the natural resource and energy situations in and outside Japan are constantly changing, so JOGMEC must analyze and flexibly respond to the changes.

　In the field of oil and gas upstream, during fiscal 2011, JOGMEC has started equity financing to newly-established four upstream project companies and undertaken liability guarantee assistance for one project company. Overseas geological and geophysical surveys were conducted in two new regions. Fiscal 2011 was a year of challenges for JOGMEC, as we conducted new activities such as engaging in unconventional energy development and exploring new geographical frontiers such as East Africa and the Arctic Circle. JOGMEC decided to provide equity capital and a liability guarantee for a shale gas development project in Canada, representing the first unconventional natural gas development project for JOGMEC. In an exploration project in Mozambique for which JOGMEC has been providing equity capital, a substantial amount of natural gas reserves was estimated. In Greenland, JOGMEC decided to provide equity capital to Greenland Petroleum Exploration Co., Ltd. for the purpose of considering exercise of the preferential posit ion under the l icensing round announced by the Government of Greenland. Such a right is consequent on 20 years of overseas geological and geophysical survey that had been conducted by JOGMEC, formerly known as Japan National Oil Corporation (JNOC) with foreign international oil companies.　As for domestic marine surveys, JOGMEC used “Shigen,” a 3D seismic vessel, to conduct 3D surveys covering areas totaling 4,295 square kilometers and 2D surveys covering

distances totaling 6,515 kilometers. An exploratory drilling survey is scheduled to be conducted in fiscal 2013 in waters southwest of Sado, regarding geological structures discovered as a result of the surveys conducted through the use of “Shigen” since 2008. The area is expected to hold oil and natural gas reserves. 　Regarding the development of technologies related to oil and natural gas, JOGMEC continued demonstration tests with a view to establishing an original JAPAN-GTL technology that is commercially viable. In fiscal 2011, JOGMEC achieved the objectives of the tests and made significant progress toward commercial use of JAPAN-GTL technology. In Vietnam, JOGMEC conducted a small-scale pilot test of the CO₂EOR-applicable technologies in an offshore oil field in cooperation with Petrovietnam, and succeeded in increasing oil production. This represented the first successful test of such technologies in an offshore oil field all over the world. Moreover, JOGMEC signed an agreement with Petroleo Brasileiro S.A. (“PETROBRAS”) of Brazil on a feasibility study concerning practical use of neo-flexible riser. This represented the second joint research project with PETROBRAS, following the research on MPSO. JOGMEC intends to further develop its cooperation with PETROBRAS in fields that are strategic for both sides. Regarding the development of methane hydrates, which are expected to be commercialized as a domestic energy source in the future, JOGMEC completed a preliminary drilling in preparation for an offshore production test scheduled to be conducted in Daini-Atsumi Knoll in fiscal 2012. JOGMEC plans to develop the technological infrastructure for future commercial production based on data obtained through the production test.

　Regarding metal resource development, JOGMEC provided equity capital for one project and liability guarantees for four projects. In addition, JOGMEC conducted initial-stage joint venture exploration before the participation of private companies in 40 regions of 18 countries, including three new regions, and identified promising mineralized zones in South Africa and Chile. In fiscal 2011, JOGMEC made active diplomatic efforts, in cooperation with the government, in order to diversify the supply sources of rare metals, including rare earth, in particular. In Vietnam, JOGMEC is implementing a cooperative project for the co-development of rare earth, and in Myanmar, JOGMEC is conducting a joint geological survey based on an intergovernmental agreement. Moreover, JOGMEC decided to participate in a rare metal project in South Africa, which is JOGMEC’s first equity capital for an exploration project in Africa. As for equity capital for asset acquisition, which has been enabled by the amendment of the JOGMEC Act in fiscal 2010, JOGMEC earned the first dividend income for the metals section from the niobium mine project in Brazil, the first asset acquisition for JOGMEC. The fact that the new system of equity capital asset acquisition has quickly delivered significant results gives impetus to JOGMEC’s future projects. As for surveys of sea-floor mineral resources, JOGMEC conducted resource surveys and development technology research regarding sea-

Message from the President

2 Annual Report 2012

floor massive sulphides and cobalt-rich ferro-manganese crusts based on the “Basic Plan on Ocean Policy”. A new sea-floor resource research vessel, “Hakurei,” was completed in late January 2012 and started surveys in February of the same year. By using state-of-the-art research vessel and survey devices, JOGMEC will accelerate surveys for sea-floor mineral resources.

　Regarding technology development related to metal resources, JOGMEC made progress in the development of technologies used in various stages, including exploration, production, and recycling. As for exploration-related technologies, JOGMEC completed SQUITEM3, which explores for metal resources by measuring conductivity and magnetism with a high-temperature superconducting magnetometer. Compared with SQUITEM 2, SQUITEM 3 is highly practical as it is smaller, lighter, and superior in precision, and is capable of obtaining detailed geological data at deeper points. SQUITEM 3 will be used in practical application after undergoing demonstration tests. JOGMEC is also developing processing and analysis techniques related to remote sensing data and next-generation hyper-spectral data concerning rare metal and other deposits, aiming to improve the precision of rare metal exploration. Regarding production technologies, JOGMEC is making steady progress in the development of an original bioleaching technology, and JOGMEC will conduct a field demonstration test in fiscal 2012. In addition, regarding the development of refining technology for low grade and refractory ores, JOGMEC acquired the capability to make efficient use of ores that have so far been difficult to process, moving to the demonstration stage. As for recycling technology, JOGMEC has established a recycling process for used polishes and discarded phosphors that include rare earth, aiming to reduce Japan’s dependence on foreign sources for the supply of rare earth elements.

　Regarding resource stockpiling, the Kamisu National LPG Stockpiling Base released LPG reserves for the first time since the establishment of the stockpiling program, in response to the Great East Japan Earthquake. Although the Kuji National Oil Stockpiling Base and the national stockpiling warehouse of rare metals were damaged, there were no human casualties and the operation of these facilities continued as a result of the implementation of appropriate countermeasures. Based on this experience, tsunami exercises, in addition to annual disaster exercises, were conducted at various bases in order to minimize damage in the event of earthquakes and tsunamis. In addition, in light of the unstable situations in the Middle East and North Africa, JOGMEC worked to strengthen its partnerships with foreign countries in the field of stockpiling. Construction of stockpiling bases in Kurashiki and Namikata made progress, with completion scheduled within fiscal 2012. These will be Japan’s first LPG stockpiling bases using water-sealing rock cavern tanks. The bases in Kurashiki and Namikata, both of which are huge underground facilities, will have a storage capacity of 400,000 tons and 450,000 tons, respectively of LPG.

　At the new neutralization plant at the abandoned Matsuo mine, JOGMEC kept stable management and operation even after the Great East Japan Earthquake. It has maintained the high water quality of the Kitakami River for 30 years. In fiscal 2011, JOGMEC conducted a disaster exercise for the occurrence of an inland-type earthquake with a seismic intensity of a strong 6 on the Shindo scale. As it was conducted based on lessons from the Great East Japan Earthquake, this exercise helped us to devise better anti-disaster measures and raise disaster awareness. JOGMEC also made progress in technological development related to mine pollution control, filing an application for an international patent on passive treatment technology, which enables drastic cost reduction. In addition, JOGMEC took advantage of Japan’s experience and expertise related to mine pollution control, holding seminars on mine pollution control in resource-rich countries such as Laos and Bolivia and other countries. JOGMEC extended the period of technical cooperation with Peru on mine pollution control at the strong request of the Peruvian government. Thus, JOGMEC has contributed to the strengthening of Japan’s relationship with resource-rich countries.

　In May of fiscal 2011, JOGMEC relocated its head office to Tokyo and started operation there, fulfilling its functions with a sense of urgency. For example, it is strengthening cooperation with the government and is accepting an increasing number of visits by senior foreign officials. Moreover, JOGMEC started the operations of development of coal and geothermal resources in 2012 in accordance with a legal amendment. Securing of resources and energy has direct implications in our everyday lives. Given the current domestic and overseas situations, activities in this field are attracting increasing attention and the public’s expectations for JOGMEC are growing. Cognizant of the gravity of its responsibilities, JOGMEC will continue working to ensure the stable supply of resources and energy necessary for Japan, and in this, I appreciate your continued understanding and support.

Hirobumi KawanoPresident, JOGMEC

3Annual Report 2012

Oil and Gas Upstream Investment and Research &Development　

●Multi-faceted approach to oil-producing countries　Conducting joint operations with oil- and gas-producing countries and training overseas 　technical experts●Provision of financial assistance　Providing equity capital and liability guarantees for exploration and development of oil and gas by Japanese companies●Geological & geophysical surveys　Conducting geological & geophysical surveys as a basis for exploration and production projects; also conducting marine resource surveys ●Collection, analysis, and provision of information　Collecting, analyzing, and providing information related to oil and gas●Research & development　Conducting R&D activities from the perspective of building and strengthening relations with oil and gas producing countries, satisfying Japanese companies’ needs, and securing resources●Dissemination of achievements and reinforcement of training of engineers　Demonstrating the results of JOGMEC’s activities at international exhibitions and implementing collaborative projects with universities

Metals Strategy, Exploration,and TechnologyDevelopment

●Multi-faceted approach to metal resource-rich countries　Conducting joint operations with metal resource-rich countries, exchanging information with them, and providing information with them●Provision of financial assistance to Japanese companies　Providing equity capital and loans for metal exploration by Japanese companies, providing equity capital for asset acquisition by Japanese companies and providing liability guarantees for mine development by Japanese companies●Geological structure surveys　Conducting geological structure surveys to help Japanese companies secure mineral resource interests and to support their exploration projects; also conducting Deep-sea floor resource surveys●Collecting, analyzing, and providing information, and developing human resources　Collecting, analyzing and providing information related to metal mining ●Developing human resources　Developing human resource in metal resource development●Technological development　Developing exploration techniques and production and recycling technologies

Stockpiling of Resources●Safe and efficient operation of national petroleum stockpiling　Overall management of national oil stockpiles and stockpiling facilities under integrated management, providing support to private-sector stockpiling, and engaging in international cooperation●Steady promotion of LPG stockpiling　Overall management of national LPG stockpiles including stockpiling facilities under integrated management, and constructing rock cavern underground stockpiling bases●Stockpiling and trend surveys of rare metals　Releasing and procuring stockpiled materials, and research of markets and industry trends

Mine Pollution Control●Providing technical support to entities implementing mine pollution control projects, conducting technology development, and providing information and extending financial support to private companies●Sharing technologies, know-how, and information related to mine pollution control

JOGMEC's Activities


Oil and GasUpstreamInvestment andResearch &Development

● Decided to participate in a shale gas development project in the Cordova Embayment of northeastern British Columbia, Canada, which is the first unconventional gas development project for JOGMEC (equity capital for asset acquisition : April; liability guarantee: June)

●Signed an agreement with PETROBRAS on a feasibility study concerning practical use of neo-flexible riser (May)● Decided to provide equity capital to Greenland Petroleum Exploration Co., Ltd for the purpose of considering

exercise of the preferential position under the KANUMAS project for the licensing round by the Government of Greenland and, if successfully awarded, subsequently participating in the challenging petroleum exploration to be carried out in certain license block(s) offshore Northeast Greenland (June)

● Implemented a successful small-scale pilot test of CO₂EOR-applicable technologies in an offshore oilfield in Vietnam (June)

● Estimation of the operator regarding to a substantial amount of gas reserves in a block of offshore Mozambique in the project in which JOGMEC has been providing equity capital (August)

● Decided to provide equity capital for four projects and a liability guarantee for one project, including the above-mentioned projects

●Successfully implemented a demonstration test of the GTL (Gas to Liquid) technology (December)●Conducted preliminary drilling related to offshore production testing of methane hydrate (February and March)● Used “Shigen,” a 3D seismic vessel, to conduct 3D surveys covering areas totaling 4,295 square kirometers

and 2D surveys covering distances totaling 6,515 kilometers

Metals Strategy,Exploration,and TechnologyDevelopment

● Decided to provide equity capital for exploration of rare metals in South Africa (August)● Implemented a cooperative project based on an intergovernmental document (October) on joint development

of rare earths with Vietnam● The governments of Japan and Myanmar agreed to implement a joint geological survey (January) based

on preliminary consultations between JOGMEC and the government of Myanmar, and the survey was implemented (February)

● Construction of a new research vessel, “Hakurei,” was completed and entered service (February)● Received dividend income from a niobium mine project in Brazil, the first asset acquisition project for JOGMEC.

This was the first dividend income for the metals section ● Conducted JV exploration in 40 regions of 18 countries and identified promising mineralization occurrences in

South Africa and Chile● SQUITEM 3 (an electromagnetic exploration system using superconductivity), which is small, light and highly

precise, was completed and entered the demonstration test stage● Established a process of recycling used glass polish and discarded phosphor composed of rare earth materials

Stockpilingof Resources

● Released LPG reserves as an emergency measure for the first time since the establishment of the stockpiling system following the Great East Japan Earthquake (April)● Construction of stockpiling bases in Kurashiki (Okayama Prefecture) and Namikata (Ehime Prefecture) made

progress toward the scheduled completion by the end of fiscal 2012● Introduced interest rate bidding for fund procurement through the largest domestic syndicated loan in 2011

(approximately 555.7 billion yen) and provided low-interest loans● Provided support for the review of the roadmap for the establishment of a petroleum stockpiling system under

the framework of ASEAN+3, allowed inspection tours of Japanese stockpiling bases by officials from major ASEAN countries, and provided information ● Continued to implement joint projects with Saudi Arabia and the UAE

MinePollution Control

●�A�new�neutralization�plant�at�the�abandoned�Matsuo�mine:�Have�maintained�the�high�water�quality�of�Kitakami�River�for�the�30�years●�Made�progress�in�research�on�passive�treatment,�intended�to�drastically�reduce�costs,�and�filed�an�application�for�an�international�patent�on�a�new�process●�Extended�technical�cooperation�on�mine�pollution�control�at�the�request�of�the�government�of�Peru●�Held�seminars�on�mine�pollution�control�in�four�countries,�including�Laos�and�Bolivia

Highlights of the Fiscal Year ended 31 March 2012（April2011〜March2012）

5Annual Report 2012

1CHAPTER

In order to promote independent development of oil and gas resources, JOGMEC supports the Japanese government to strengthen relations with oil and gas producing countries and Japanese companies to conduct oil and gas exploration and development by making the most of our own functions.

Oil and Gas Upstream Investment and Research & Development

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Building and strengthening relations with oil- and gas-producing countries

In order to contribute to ensuring a stable supply of energy resources to Japan, JOGMEC has been working to build and strengthen relations with oil- and gas-producing countries through the implementation of joint projects on technical studies and technology development, the provision of hands-on training in exploration, development and production engineering, and bilateral and multilateral exchanges, taking advantage of its unique position as a government agency with high technical capabilities. Moreover, JOGMEC strives to strengthen the presence of Japanese companies and itself by actively participating in international conferences and international oil and gas exhibitions.

　Oil and gas fields developed by Japanese companies are critical for Japan to ensure a stable supply of energy resources. Oil and gas exploration and development requires large-scale investments over extensive periods of time, involving extremely high risks. Consequently, diversified investment in a variety of projects is necessary for the oil and gas business to be successful. Since investment in such high-risk operations imposes a significant burden on companies, JOGMEC supports them by providing financial assistance. JOGMEC provides financial assistance to cover up to 75% of total costs of project companies by providing equity capital and/or liability guarantees. Equity capital is provided for oil/

gas exploration, asset acquisition, and gas development/liquefaction projects. Liability guarantees are provided for oil/gas development and gas liquefaction projects.

Collection, analysis, and provision of information

　As a specialist organization supplying data on upstream oil and gas operations, JOGMEC surveys and analyzes a wide range of issues, including the global resource and energy situation, regulations and tax regimes in oil-producing countries, information on newly opened exploration areas, and the activities of international oil companies, and shares the results of its surveys and analyses with private companies and other relevant entities. JOGMEC has also been expanding its human network of researchers and research institutions in Japan and overseas, so as to supply timely information to a wide range of parties, including Japanese companies, the government, and other relevant institutions.

Contributions in the field of technology

　JOGMEC provides various technical supports for the activities of oil and gas exploration and production companies in Japan. A broad range of activities are conducted including: geological surveys for E&P projects; technology development based on corporate and resource diplomacy needs; oil and gas field evaluation studies; collection of technical information; provision of training for both domestic and overseas technical staff; analysis of data on domestic oil and gas resources; and joint research with oil and gas producing countries.

Providing financial assistance for exploration and development activities by Japanese companies

Preparatory stage Exploration stage Development stage Production stage

Areastrategy

Preliminarystudies Negotiation

Geological surveyGeophysical survey Drilling

Feasibilitystudy

Production well drilling

Facilityconstruction

Productionoperation

Negotiation for extending petroleum

rights

Technical Assistance

Intelligence

Financial Assistance

支　援詳　細

Subsidies for AcquiringPetroleum Rights

Equity Capitalfor Exploration

Liability Guarantee

Equity Capital for natural gas liquefactionand Asset Acquisition

Overseas Geological Surveys

Technical Development /Technical Support

LNG Vessel

Collection, Analysis andOffering of Information

Geophysical survey

Assisting Exploration, Development and Production of Oil and Natural Gas

JOGMEC’s Oil Gas Exploration and Development Support

7Annual Report 2012


Fiscal 2011 AchievementsMulti-faceted approach to oil-producing countries

【Large-scale development projects】　In a joint study and training project with the Iraqi Ministry of Oil in oil fields in southern Iraq, joint research on corrosion started as Phase 3. The other important country Venezuela as much as Iraq, JOGMEC is maintaining and strengthening Japan’s relationship with the country and gathering geological and other information in preparation for the entry of Japanese companies into the country through continuation of a joint study on Orinoco heavy oil, based on an agreement concluded with PDVSA, the country’s state-run oil company.　Furthermore in Mexico, JOGMEC is implementing a joint study with PEMEX, the country’s state-run oil company, on deepwater areas in the northern part of the Gulf of Mexico, thus preparing for a future liberalization of foreign capital in the country.　

【Joint projects and basic agreements】　Establishment of joint projects and cooperative frameworks with oil-producing and gas-producing countries is an effective measure for building relationships with these countries, supporting government’s diplomatic efforts, and showing Japan’s technical capabilities.　In fiscal 2011, JOGMEC established three cooperative frameworks. In Vietnam, where the Japanese government is making active diplomatic efforts to obtain resources, JOGMEC signed a joint study contract on GTL with the Vietnam Petroleum Institute, which is under the control of Petrovietnam, the country’s state-run oil company. In addition, JOGMEC signed a joint study contract with Petrovietnam on exploration for oil in waters off southern Vietnam. In Brazil, JOGMEC signed a contract with PETROBRAS on a joint study on practical use of neo-flexible riser*.

*Flexible riser: Production pipes used to transport crude oil from the seabed to offshore crude oil production facilities

【Training of overseas technical experts】　Since 1989, JOGMEC has accepted over 2,500 experts from 46 countries as trainees, and its training programs have been highly valued by the trainees and the countries that send them. In fiscal 2011, a Geophysical Course and an Exploration Geology Course were offered, and these drew a total of 33 participants from 19 countries. JOGMEC also accepted 97 Iraqi experts in five courses as trainees in the third-year activity of a project to train 500 Iraqi experts based on an agreement between the Japanese and Iraqi governments. Moreover, JOGMEC supported training programs implemented by private companies for engineers and students invited from the UAE and Indonesia. Although the direct objective of these training programs is to transfer technology, the organizational and personnel exchanges that occur through the programs are expected to contribute to the smooth implementation of future joint projects between Japan and oil-producing countries.

■A training program for foreign engineers 　[Geophysical Course]

【Provision and collection of information at international exhibitions and conferences】　In fiscal 2011, JOGMEC participated in international exhibitions and conferences in five countries ― Mexico, Qatar, Abu Dhabi, Thailand, and Bahrain ― where we actively collected relevant information and promoted its and Japan’s technical capabilities through face-to-face interactions.　In addition, JOGMEC co-hosted Oil and Gas Saloon meetings with the embassies of Cameroon and the Democratic Republic of the Congo in Tokyo, thereby supporting the establishment of a network with oil- and gas-producing countries. Moreover, as part of industrial cooperation with oil-producing countries which is not limited to resource areas, JOGMEC supported the promotion of investment by Japanese companies in Saudi Arabia, dispatched a mission to conduct a field survey, and conducted surveys on the investment environment. So far, six projects (involving eight companies) have been decided to invest in.

Financia l ass istance for explorat ion and development activities by Japanese companies

　In Fiscal 2011, JOGMEC decided to provide equity capital to Shale Gas Investment B.V., Greenland Petroleum Exploration Co., Ltd., INPEX BABAR SELARU, LTD. JX Nippon Oil & Gas Exploration (Onshore Sarawak) Limited and to provide a liability guarantee to Cordova Gas Resources Ltd. As a result, the outstanding equity balance was equal to 104.2 billion yen and the outstanding liability guarantee balance came to 250.9 billion as of the end of March 2012. Since the foundation of JOGMEC, a total of four projects (involving six companies) have reached on stream. From one of the four projects, JOGMEC is earning dividend income.


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■Outstanding equity balance and the number of project companies at the end of each fiscal year

1,000

442 450500

567669 688

10 10 1014

2029

10 10 1014

2029

3636

40

800

600

400

200

0

836836

1,0421,042

2323

Fy10 Fy11Fy09Fy08Fy07Fy06Fy05Fy04

20

hundred million yen

number of project

companies

4,000

2,146

2,650

2,146

1115

9 9 913 1513

2,866

3,504

2,6502,370 2,445 2,440 2,509

1115 15

9 9 9 1010

40

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3,000

2,000

1,000

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number of project

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■Outstanding liability guarantee balance and the number of project companies at the end of each fiscal year

Geological and geophysical surveys

　In order to support Japanese companies in acquiring oil and gas upstream interests, JOGMEC conducts geological and geophysical surveys in the initial stage of oil and gas exploration.

【East Siberia】　East Siberia has large reserves of oil and gas and is geographically important for Japan’s diversification of supply sources. JOGMEC has been working to promote Japanese companies’ entry into East Siberia through the geological and geophysical surveys, the support for the government’s energy-related diplomatic efforts, and the provision of information and knowledge.　In regard to the geological and geophysical survey projects, JOGMEC is conducting joint exploration with a Russian company, including drilling of exploration wells and evaluation wells, and has engaged in the technical evaluation work in three blocks in Irkutsk, where oil production has been confirmed. JOGMEC also started preparations for the transfer of the project to Japanese private sectors. In addition, JOGMEC has entered into the joint study agreement to evaluate oil and natural gas potential in a block in Irkutsk that is owned by another Russian company. Moreover, JOGMEC has been actively supporting the government’s energy-related diplomatic efforts by cooperating in Japan-Russia intergovernmental consultations based on an agreement between Russian state-run companies and the Agency for Natural Resources and Energy. These achievements are expected to further stimulate entry into East Siberia and exploration and development activities in East Siberia by Japanese private sectors, which will promote the diversification of crude oil supply sources.

■Severo-Mogdinsky Block

【Southeast Asia (Onshore Cambodia and Offshore Southern Vietnam )】　JOGMEC completed a geological survey and sample analysis in northern onshore Cambodia in June 2011 and started a 2D seismic survey in February 2012. JOGMEC also signed a basic agreement with Petrovietnam, Vietnam’s NOC (National Oil Company), on a geological survey in the southern offshore Vietnam, and started a 2D seismic survey in October 2011. Through these overseas geological surveys, JOGMEC has obtained preferential negotiations rights related to the acquisition of blocks for Japanese companies.

【Oil and gas exploration in offshore Japan】　JOGMEC is responsible for oil and gas exploration program in Japan by government as “Kokunai Kiso-Chosa”, using “Shigen,” a 3D seismic vessel. In fiscal 2011, though the survey plan was affected by the Great East Japan Earthquake, JOGMEC still conducted 5 seismic surveys. The survey areas are, the northern part of the Sea of Japan, offshore Yamaguchi, offshore northwest of Sado, offshore Esashi, and offshore Amami-Okinawa. The total area of seismic acquisition is 4,295 square kilometers as 3D seismic survey and 6,515 kilometers as 2D seismic survey. JOGMEC has completed 5 reports of geological interpretation for evaluation oil and gas potential in five offshore areas from Shigen’s surveys conducted before fiscal 2011.

■3D seismic vessel “Shigen”

9Annual Report 2012


Collection, analysis, and provision of information

【Dissemination of information through briefings and printed publications】　Through monthly briefings and the bimonthly publication of the specialty journal Oil and Gas Review, JOGMEC regularly provides information to related industries and Japanese government authorities in charge of energy policy. Moreover, JOGMEC actively provided information through television, newspapers, magazines and other such media outlets in fiscal 2011. 　In addition to the above regular dissemination of information, JOGMEC holds conferences to provide timely information to many participants.

【Holding seminars】　JOGMEC holds seminars on themes in which Japanese companies are thought to have strong interest and invites internationally known experts. The following are examples of the seminars held in fiscal 2011:・“New Order in Global Oil and Natural Gas Markets Brought by Shale Gas and the Arab Spring”・“Energy Strategies of Russia and Central Asia as Viewed by India”

【Priority area committees】　JOGMEC has established committees consisting of experts, local business professionals, etc. to conduct regional analyses in priority areas for oil and gas exploration and development, contributing to the formation of networks between regional experts. The following committees held meetings in fiscal 2011:・ Middle East Committee・ Russia and Central Asia Committee

Technological development

　Having defined maximizing oil recovery, oi l and gas reservoir characterization, well drilling and field development, unconventional hydrocarbon exploitation, oil and gas utilization, and environment-conscious oil and gas exploitation as priority areas, JOGMEC is working on a technological development that will contribute to success in government negotiations and to the resolution of technical problems of Japanese companies, as well as working on underlying studies based on a medium-and long-term perspective.

【Gas to liquid (GTL) technology】　JOGMEC and the Nippon GTL Technology Research Association, which consists of six Japanese companies, have jointly conducted technological development with a view to putting GTL technology into practice. JAPAN-GTL is the first ever GTL technology capable of using natural gas containing carbon dioxide.　Following the construction of a GTL demonstration plant in Niigata, JOGMEC conducted demonstration operations for about three years until fiscal 2011, and achieved the targets of 10,000 total operating hours and 3,000 hours of continuous operation (November 2011), thereby successfully completing

the demonstration test. JOGMEC is capable of designing, constructing and operating a commercial plant (capacity of 15,000 barrels/day). In a project using carbon dioxide content of natural gas at around 20%, JOGMEC established competitive GTL technology compared with rival technologies, enabling a price reduction of 10-20% compared with competitors.**The demonstration research conducted jointly with the Nippon GTL Technology Research Association received the Distinguished Contribution Award from Japanese Association for Petroleum Technology (June 2012).　With a view to commercializing the JAPAN-GTL technology following the completion of the demonstration test, we verified that the JAPAN-GTL Products can be used for actual services, without any problems, as a clean fuel through the demonstration test runs using 100% JAPAN-GTL Diesel by city buses of Bureau of Transportation, Tokyo Metropolitan Government for around three months.

【Methane hydrate survey and technological development】　Japan’s research and development on methane hydrate has been proceeding according to Japan’s Methane Hydrate R&D Program, which was formulated by the Ministry of Economy, Trade and Industry in 2001. Phase I, which continued until fiscal 2008, achieved satisfactory results, such as the world’s first success in a continuous on-land production test by depressurization. 　JOGMEC has been implementing Phase II, which started in fiscal 2009, as a member of the Research Consortium for Methane Hydrate Resources in Japan, a public-private joint group.　In fiscal 2011, JOGMEC made various preparations for the first offshore production test of methane hydrate, scheduled for fiscal 2012, including preliminary drilling in an area of methane hydrate concentration in Daini-Atsumi Knoll as a test site (February and March 2012).

【Joint research on CO₂EOR with oil-producing countries】　CO₂ enhanced oil recovery (CO₂EOR)* is one of JOGMEC’s priority technologies highly valued by oil-producing countries, with a wide range of achievements ranging from basic studies to field applications. In fiscal 2011, JOGMEC conducted a study on the application of CO₂EOR to an offshore oilfield in Vietnam based on an agreement with Petrovietnam, and successfully conducted the first small-scale offshore pilot test in the world and succeeded in increasing oil production. 　Additionally, upon the request of ADONOC, JOGMEC conducted joint studies with an operating company on CO₂EOR in huge offshore oil fields. Furthermore a variety of EOR technology application studies are being continued with PEMEX E&P.


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*Technology for increasing oil recovery by CO₂ injection into oil reservoirs

【Multiple uses of component technologies－environment-conscious oil and gas exploitation】　JOGMEC has been conducting promotional activity to propose feasibility studies to oil-producing countries dealing with the combination of technologies on which JOGMEC has been developing through fundamental studies and joint studies with oil-producing countries, such as EOR, GTL and unconventional resource deve lopment techno log ies, and Japanese environmental technologies (environment protection, energy conservation, new energy, etc,). The combination of these component technologies will enable effective use of associated water, associated gas, and emissions, etc. and, reduce the amount of emissions. And at the same time it will enable the optimization (maximization) of oil and gas production. In fiscal 2011, JOGMEC was continuingd to make its efforts for the implementation of joint studies with PEMEX and Libya’s NOC and other entities. JOGMEC will extend similar activities to other countries in the future.

Technology transfer and training

　JOGMEC, as part of technology transfer, conducts various activities to train oil development engineers in Japan and to promote intercommunication among engineers, as well as utilizing its intellectual properties.　The following are examples of activities conducted in fiscal 2011:・JOGMEC provided lectures on oil and natural gas development technology at Chiba University, the University of Tokyo, Waseda University, Shinshu University, Kyoto University, and Kyushu University, as well as lectures on energy economics and other themes at Teikyo University and the Graduate School of Asia University.・JOGMEC held JOGMEC-TRC Week 2011, the annual technology conference of JOGMEC Oil & Gas Upstream Technology Unit, with a view to reporting on the technological achievements made by the TRC, providing experts with an opportunity to exchange views and building a network of engineers. Forums on GTL, oil/gas fields water treatment technology, and unconventional resources attracted a total attendance of 448 people.

・JOGMEC earned 410 million yen in royalties in fiscal 2011 from Oil & Gas Upstream Technology Unit’s intellectual properties, which represent the fruits of its research.*

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JOGMEC provides various and respective stages of support in the formation of exploration projects, development and production in order for Japanese companies to secure the interests of resources and to expand their own developments in mineral resource-rich countries.

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Building and strengthening relations with resource-rich countries

　JOGMEC supports the government’s diplomacy with metal resource-rich countries, while actively making its own efforts to build and strengthen relations with these countries. Moreover, JOGMEC strives to strengthen its presence by aggressively participating in international conferences and exhibitions.

Providing financial assistance to support exploration and development by Japanese companies

　JOGMEC supports Japanese companies in the development of metallic mineral resources, by providing equity capital/loans for exploration, equity capital for asset acquisition, and liability guarantees for the development.

Promoting private-sector exploration activities through initial JOGMEC exploration

　In joint venture (JV) exploration projects with overseas organizations such as public mining companies and private companies, JOGMEC processes and analyzes satellite images and conducts geophysical exploration, geological surveys, and drilling surveys. After identifying the presence of resources, JOGMEC transfers promising projects to Japanese companies. JOGMEC supports overseas exploration activities of Japanese companies at the relatively early stages by conducting geological surveys and subsidizing such activities. In addition, JOGMEC conducts surveys on sea-floor massive sulphides hydrothermal and cobalt-rich ferro-manganese crusts in waters close to Japan based on the government’s “Basic Plan on Ocean Policy.” The construction of “Hakurei,” a new research vessel equipped with the world’s most advanced technology, was completed in January and entered service and started survey activity in February.

Collecting, analyzing, and providing information

　JOGMEC collects and analyses information useful for overseas

mining activities conducted by Japanese companies, such as the status of geology, ore deposits, exploration, development, and production; individual countries’ mining policies and regulations; supply-and-demand trends of metals; activities of overseas mining companies; and environmental issues related to mining activities. Then we provide such information widely and in a timely fashion by means of email magazines, websites, seminars and periodicals. JOGMEC owns the Mineral Resources Information Center, the only specialist library for mineral resources in Japan. The library holds a collection of approximately 50,000 books and geological maps, which are open to the public.

Developing human resource

　JOGMEC hosts seminars on resource development and sends staffs as lecturers to the universities or other organizations in order to encourage university students and workers to acquire knowledge, which is for dealing with the recent labor shortages in the resource development sector.

Supporting the technological development most needed by the resource industry and policy

　From among the various production technologies used in developing metallic mineral resources, JOGMEC selects those that are the most important for meeting the needs of Japanese companies and the government, and assists in their development. Specifically, we are conducting research and development projects on metallurgical technologies that use bacteria technologies for recovering rare metals from used products and processing technologies for refractory mineral ores at domestic nonferrous smelters.　JOGMEC also publicly invites proposals for the research and development projects that are required for Japanese companies to secure and procure new resources in Japan and overseas, and selects from among the proposed projects, considering whether their purposes are consistent with the government’s policy and whether they are expected to be technically feasible. JOGMEC provides financial and technical support for the implementation of the selected projects.

Preparatory stage & Basic exploration stage Explorat ion stage Development stage Production stage

Investment environmental evaluation

Geologicalpotentialevaluation

Geological surveyGeophysical survey

Drilling

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Technical Assistance

Intelligence

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Assisting Exploration, Development and Production of Non-ferrous Metals and Minerals

Satellite image analysis

Geological survey Drilling survey

Equity Capital and Loans for Exploration

Equity Capital Contributionfor Asset Acquisitions

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Subsidies forOverseas Field Surveys

Collection, Analysis andOffering of Information

Overseas Geological Survey

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Fiscal 2011 AchievementsMulti-faceted approach to resource-rich countries

【Securing rare earth and rare metals】　In fiscal 2011, rare earth prices rose steeply right from the beginning of the year. Although prices stabilized somewhat later, they remained at high levels, so JOGMEC worked with the government to make active efforts to secure stable supply of rare earth.　In Vietnam, JOGMEC implemented cooperation projects, such as human resource development related to resource exploration technology and joint studies on separation and refining of rare earth, based on intergovernmental documents signed by the prime minister of Japanese and Vietnamese leaders to promote joint development of rare earth. In Kazakhstan, JOGMEC signed a MOU to facilitate the development of rare earth resources, aiming to diversify the supply sources of rare earth. 　In addition, we are considering providing financial assistance in order to secure an interest in metal development projects, especially rare metals, in India and Argentina etc.

【Joint projects and cooperation frameworks with resource-rich countries】　Four cooperation frameworks in total were established, including a MOU with Natural Resources Canada to facilitate mutual cooperation in the sustainable development of mineral and metal resources, and MOUs with Lesotho’s Ministry of Natural Resources and the Democratic Republic of Congo’s Ministry of Mines to strengthen the relationship in the resource development field, including the implementation of geological surveys and development of mineral resources.

【Providing information, exchanging information and strengthening relations with resource-rich countries】　JOGMEC supports companies’ activities by providing information and holding seminars. 　In fiscal 2011, two “Metal Saloon” meetings were held to provide opportunity for industry and government officials of Japan and resource-rich countries to mingle with each other for the purpose of strengthening Japan’s relationship with such countries. One of the meetings was co-hosted by JOGMEC and the Botswana embassy in Japan. The other was held to coincide with the relocation of JOGMEC’s head office to Tokyo. The latter meeting was attended by a total of 150 people from 17 countries, including Japanese nationals involved in mining as well as embassy officials in Tokyo. These activities were taken up by the European Parliament’s Committee on Industry, Research and Energy and were highly evaluated.　In fiscal 2011, JOGMEC also collected information and strengthened its relationships with people involved in mining in resource-rich countries through participation in international academic meetings and conferences as follows:・Participated in 55 international meetings and conferences・Exchanged views with senior officials from resource-rich countries and executives from public mining companies・Held seminars in Tokyo on investment in mining projects

in Argentina (62 participants), Australia (111 participants), Mozambique (137 participants), and Laos (80 participants)・Held a seminar in Peru on the Japanese and Peruvian economies and mining industry (131 participants including 67 from Peru and 64 from Japan)

Providing financial assistance for exploration and development by Japanese companies

　JOGMEC has provided financial assistance for various types of mineral resources and various regions based on Japan’s strategy for acquiring mineral resources*.* Japan’s strategy for acquiring mineral resources:・Second revision of the Basic Energy Plan (cabinet decision of June 2010)Aiming to raise the self-sufficiency ratio of base metals (copper and zinc) to 80% or higher and that of strategic rare metals to 50% or higher by 2030.・Strategy for securing rare metal resources (adopted and announced in July 2009 by the Ministry of Economy, Trade and Industry)Featuring four pillars: (i) Securing overseas resources; (ii) recycling; (iii) development of alternative materials; and (iv) stockpiling. JOGMEC provided financial assistance toward (i).

■Loan balance for overseas exploration projects and 　number of projects implemented in each fiscal year

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【Providing equity capital for exploration and asset acquisition】　As for the provision of equity capital for exploration projects, JOGMEC decided to provide equity capital for a rare metal project in South Africa (4.2 billion yen), which is JOGMEC’s first such project in Africa. This is expected to contribute to the diversification of supply sources. JOGMEC earned dividend income from a niobium mine development project in Brazil, which was the first project for which JOGMEC provided equity capital for asset acquisition in fiscal 2010. This was also the first dividend income for JOGMEC’s metal resource development section. The provision of equity capital for asset acquisition has been made possible by the amendment of the Japan Oil, Gas and Metals National Corporation Act in 2010.

【Liability guarantees for development】　JOGMEC decided to provide liability guarantees for three new projects (totaling around 34 billion yen), including the Caserones project in Chile, a large-scale copper mine project in which Japan has a 100% interest. JOGMEC also decided to provide a liability guarantee for the expansion of


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the Gibraltar copper mine project in Canada (about 12 billion yen). Moreover, in connection with the Esperanza copper mine project in Chile, for which JOGMEC decided in 2009 to provide liability guarantee, a mine-opening ceremony was held in April 2011 and production is proceeding smoothly.

■Caserones copper mine in Chile

【Providing loans for overseas exploration】　With a view to securing a variety of metallic mineral resources with a focus on the Pan-Pacific Region, which has a great potential for metallic mineral resources, JOGMEC provided loans of 3.3 billion yen for a total of seven exploration projects, including a new rare metal project in the U.S., two existing base metal projects – one in Australia and the other in Fiji – three existing rare metal projects – one in the U.S. and the other two in the Solomon Islands, and an existing iron ore project in Australia.

【Providing loans for exploration in Japan】　JOGMEC provided a loan of 730 million yen for exploration at the Hishikari mine*.* The Hishikari mine is a gold mine discovered in 1981 by the Metal Mining Agency of Japan (MMAJ), the predecessor to JOGMEC. The cumulative amount of gold produced at the Hishikari mine is approximately 170 tons.

Geological surveys

【Supporting Japanese companies to secure interests through JV exploration】　In fiscal 2011, JOGMEC conducted joint venture (JV)　exploration with public and private mining companies in 40 regions of 18 resource-rich countries. JOGMEC supports Japanese companies’ efforts to acquire interests in resources by transferring the favorable results of JV exploration to Japanese companies.　Through JV exploration conducted in South Africa and Chile, JOGMEC discovered promising mineralized zones, and through JV exploration conducted in Argentina, JOGMEC confirmed promising mineralized zones and provided information with a view to transferring the results to Japanese companies.

【JOGMEC Botswana Geologic Remote Sensing Center】　In relation to the activities of JOGMEC Botswana Geologic Remote Sensing Center, in fiscal 2011, JOGMEC signed MOUs with Lesotho and the Democratic Republic of the Congo on a joint satellite image analysis project with member countries of the Southern African Development Community (SADC). As a

result, the number of countries which JOGMEC conducts these activities has increased from eight (Botswana, South Africa, Zambia, Mozambique, Angola, Malawi, Namibia, and Tanzania) to 10. In these countries, JOGMEC transfers its remote sensing technologies to local entities, conducts joint analyses, and identifies favorable areas for mineral resources on an ongoing basis.

■Rare metal drilling in South Africa

【Supporting exploration and development by private companies through geological surveys】　In fiscal 2011, JOGMEC conducted two geological projects, including new one in Chile, and subsidized a total of 8 exploration projects implemented by private companies, including new projects in Chile and Canada. These projects target at base metals and rare metals, and subsidization of these projects is expected to lead to the development of mines by Japanese companies and the stable supply of resources to Japan.　Some of the projects in Chile were transferred from JOGMEC to Japanese companies, and those projects are being continuously subsidized by JOGMEC. Moreover, JOGMEC continued an F/S support scheme concerning the infrastructure related to resource development projects intended to promote overseas projects by Japanese companies, conducting two surveys relating to assessment, oversight, and follow-up activities.

【Deep sea-floor resource surveys and procurement of a new research vessel】　JOGMEC is conducting surveys for seafloor massive sulfides, whose existence in waters around Japan has been confirmed, under the Ocean Energy and Mineral Resources Development Program (the first term: from fiscal 2008 to fiscal 2012) established by the government. The surveys for seafloor massive sulfides, which have been consigned to JOGMEC by the government, consist of a resource evaluation, an environmental impact assessment, and studies on technology of exploitation, separation, and refining. JOGMEC is concurrently performing these activities. In fiscal 2011, JOGMEC conducted surveys in preparation for resource volume evaluation and environmental impact assessment in candidate sea areas for demonstration tests. JOGMEC also manufactured small-scale equipment to test component technologies and made conceptual designs of an ore dressing pilot plant. 　JOGMEC conducted a drilling survey and a micro-topography survey using ROV for the extent of cobalt-rich crusts in a promising seamount located in waters around Minami-Torishima. JOGMEC also surveyed for the extent of rare metal resources, including rare earth, and considered a recovery plan. In addition, in fiscal


2011, JOGMEC resumed a survey on manganese nodules which had been suspended since fiscal 1996. Based on the exploration contract signed with the International Seabed Authority, JOGMEC conducted a detailed survey on resource volume and an environmental survey in a Japanese-owned concessions in waters southeast of the Hawaiian Islands, conducted analysis on the extent of manganese nodules as well as rare metal resources, including rare earth, and assessed the recovery of marine life following seabed disruption tests conducted in the past.　Hakurei, a marine resource research vessel which is equipped with the world's most advanced technology and which had been under construction as a successor to Hakureimaru No. 2, was completed in January 2012, and conducted a survey on the reserve volume of deep-sea mineral resources using large survey equipment in waters around Okinawa, starting in February. In late March, Hakurei was displayed and opened to the public at Ports of Tokyo and Funabashi.

■Hakurei

Collecting, analyzing, and providing information

　Regarding the provision of information on mining*, JOGMEC provides information helps to form a basis for decision-making on business investment through the periodical distribution and publication of "Newsflashes", "Current Topics", email magazines, bimonthly Metal Resource Reports, etc. In addition, we held 12 seminars to report on the trends of mining and exploration and 5 seminars on the investment environment in resource-rich countries, and these attracted the participation of a large number of companies and students. Meanwhile, we are continuing to its efforts to enhance the quality of the information transmitted. Such efforts include the introduction of a publication evaluation process by experts from private companies and other entities, and the improvement and feedback of reports.The following are examples of reports published in fiscal 2011:・Surveys on investment environment in resource-rich countries (4 countries)・Surveys on global mining trends (basic country-by-country information on 56 countries)・Surveys on movements of resource majors (11 companies)・Mineral resource material flows (46 mineral commodities)In addition to providing the above information, JOGMEC published "the Metal Mining Data Book 2011" and "the Rare Metal Handbook 2011", which summarize current mines, policies of different countries, supply and demand trends in resource-rich countries, etc.　Moreover, to strengthen its capacity to provide information to

general users, JOGMEC redesigned its website updated information on metal resources information in fiscal 2011, improving convenience by (1) creating a database, (2) categorizing publications by country and mineral commodity and (3) indicating updated information on the top page.*Periodical publications, survey reports, and other materials are made available as needed on JOGMEC’s website for information on metal resources (http://mric.jogmec.go.jp/) (most are only available in Japanese).

Developing human resources

　JOGMEC is engaged in on-site training and lectures on resource development for university students and workers, in human resource development projects. In fiscal 2011, JOGMEC conducted the following lectures and training programs:・Basic Resource Development Course: Three sessions (August 2011: Current status of tungsten resources, etc. (103 participants); January 2012: The most advanced mining technologies (108 participants); March 2012: Development of infrastructures related to mines (90 participants)・Special lectures based on a comprehensive partnership agreement (at the University of Tokyo, Kyushu University, and Waseda University) and a co-organized symposium at Akita University, which newly signed the agreement (July 2011).・ Lectures and speeches (13 in total) at the International Institute for Mining Technology (resource development training), and other universities and organizations given by lecturers sent by JOGMEC.

■Basic Resource Development Course

Technological development

　JOGMEC is developing technologies for the purpose of enhancing international competitiveness through the selection of and focus on technical issues.

【Developing exploratory techniques】　An electromagnetic exploration system using superconductivity (SQUITEM) has been utilized in field surveys, such as for identifying drilling targets. In fiscal 2011, the development of SQUITEM 3, which can collect high precision underground data at a deeper point, and which is compact, light, and of superior operability, was completed.



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　Regarding remote sensing, JOGMEC is developing technology that will be effective in areas of vegetation such as tropical rainforests, where existing technology could not be fully applied, through the use of global advanced digital topographic data and the global data base.　In addition, JOGMEC is developing analysis techniques for pegmatite and magmatic deposits, which have been difficult to survey by remote sensing., JOGMEC is using these remote sensing techniques for exploration ; for example, to evaluate new projects and to identify promising areas for ore deposits. 　Moreover, regarding exploration technology using data obtained through a next-generation satellite sensor (hyper-spectral sensor), JOGMEC created a spectral database of rocks and minerals related to rare metal deposits, and developed techniques for analyzing rare metal deposits, in addition to making effort to improve its capacity for recognizing specific minerals.

【Developing mining and metallurgy technologies】　JOGMEG has moved to the field demonstration stage in its original study on bioleaching technology, which extracts required metals from ores through the use of the power of microorganisms. JOGMEC has confirmed leaching process by conducting a 4-ton mini-plant test at the Metals Technology Center, and JOGMEC is constructing a facility for a 200-ton field demonstration test at the Atacama mine in Chile and making preparations for practical use testing.　In addition, as an increasing volume of low-grade ores and ultra-fine concentrates are circulating in the market, effective use of such materials is essential. JOGMEC aims to achieve a drastic reduction in Japan’s energy consumption and strengthen its competitiveness in mineral resource procurement by establishing technology to refine such low-grade and refractory ores in a stable manner. In fiscal 2011, JOGMEC confirmed that the modification of a boiler enables the 90% use of zinc concentrate fines and that the introduction of granulation equipment enables 100% use of such fines, and it moved to the demonstration test stage.　Moreover, using supplementary budget allocations for fiscal 2010, JOGMEC invited proposals from companies and universities and adopted and implemented a total of 14 technology development projects. In one of the projects, JOGMEC established a Research and Technology Transfer Center (RTTC) in Hanoi, Vietnam, which serves as a Japan-Vietnam joint rare earths　R&D center.

■RTTC’s calcination test facility in Vietnam

　JOGMEC contributed to the removal of concerns about the risk of ground water depletion among local residents, by evaluating the impact of water pumping at the San Cristobal mine in Bolivia, based on a ground water survey that began in fiscal 2010.In addition, JOGMEC conducted mine wastes surveys in Bolivia and Peru to identify the rare metal contents of such tailing resulting from ore dressing at operating and abandoned mines. JOGMEC also formulated plans for base metal recovery coupled with environmental protection at two abandoned mines in Bolivia.

【Metal recycling technology development】　Polishes used for the precision polishing of the glass surfaces of optical lenses and liquid crystal displays, and phosphors used in phosphorous lamps, use rare earth as a raw material. As Japan now depends on imports for the supply of rare earth elements there are concerns that supply disruption could pose a serious impediment to Japanese industry. Therefore, JOGMEC is striving to establish a mechanism that avoids excessive dependence on imports for the supply of rare earth elements by developing recycling technology. In fiscal 2011, JOGMEC developed a technology for removing impurities from used glass polishes and reuses them as polishes. In addition, regarding recycling of phosphors contained in discarded phosphorous lamps, JOGMEC established a technology for separating various rare earth materials individually, and commercialization is underway as a joint project among a local government, private companies and a university.

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Stockpiling

JOGMEC is responsible for the safe and efficient operation of petroleum, LPG, and rare metals stockpiling programs, construction of national LPG stockpiling bases, and provision of financial support for private-sector stockpiling.JOGMEC maintains a system that enables it to operate stockpiles safely and efficiently in ordinary times and to release reserves expeditiously in the event of an emergency, thereby contributing to the stable supply of resources and the smooth management of the national economy.

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Overall management of national petroleum stockpiling and support for private-sector stockpiling

　Japan started its private-sector petroleum stockpiling program (in accordance with the Oil Stockpiling Act since 1975) and national petroleum stockpiling program in 1972 and 1978, respectively. As of the end of March 2012, the strategic government reserves consist of 113 days’ worth of crude oil and oil products stored in ten national petroleum stockpiling bases and in tanks leased from the private sector. Private-sector reserves comprise 84 days’ worth of crude oil and oil products stored in private-sector tanks.　In re lat ion to the nat ional stockpi l ing, JOGMEC is commissioned by the government to keep national petroleum stockpiles and stockpiling bases under overall management. JOGMEC conducts surveys, research, and technological development, and engages in international cooperation related to stockpiling. JOGMEC also contributes to the reliability of private-sector stockpiling by providing loans for the purchase of oil to private companies that are obligated to hold stockpiles.

Increasing national LPG stockpiles to 1.5 million tons

　Japan’s strategic stockpi l ing of LPG has also been implemented through a two-pronged program consisting of national stockpiling and stockpiling by the private sector. As of the end of March 2012, private-sector stockpiles were equivalent to approximately 56 days’ imports of LPG, compared with the mandatory stockpile of 50 days’ imports. Regarding

national LPG stockpiling, JOGMEC is operating and constructing stockpiling bases on commission from the government in order to achieve the target stockpile of 1.5 million tons, which is equivalent to about 40 days’ imports. JOGMEC manages and operates national LPG stockpiling bases located in Nanao (Ishikawa Prefecture), Fukushima (Nagasaki Prefecture), and Kamisu (Ibaraki Prefecture), which together stably and safely hold LPG 20 days’ worth of stockpiles. Construction of stockpiling bases is underway in Namikata (Ehime Prefecture) and Kurashiki (Okayama Prefecture) (scheduled for completion in fiscal 2012).

Stockpiling of rare metals essential to industry

　Rare metals are indispensable for manufacturing electronic components and as raw materials for steel, and most of them are deposited in the limited countries. In recent years, concern about the instability of the rare metal market is rising due to increasing demand protective to polices, particularly a resource nationalism-oriented policy, in some resource-producing countries. Under these conditions, there has been an increasing focus on the importance of stockpiling rare metals as a short-term countermeasure against supply disruptions, as well as on the importance of emphasizing overseas exploration, promoting recycling, and developing substitute materials as medium to long-term measures to ensure stable supplies. JOGMEC stores and manages rare metals at a national stockpiling warehouse, and releases and purchases as needed.

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Stockpiling in fiscal 2011

Oil Stockpiling

National Stockpiling47.74million kl

(product equivalent)

Private Stockpiling35.69 million kl

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113days 84days

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LPG Stockpiling

National Stockpiling635 thousand tons

Private Stockpiling1,772 thousand tons

20.1days 56.0days

Rare Metals Stockpiling

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as of March 31, 2012 imports level


Fiscal 2011 Achievements

Response to the Great East Japan Earthquake

【First Release of LPG reserves】　At the instruction of the Minister of Economy, Trade and Industry to release reserves (March 31, 2011), 40,000 tons of propane gas reserves were released from the Kamisu National LPG Stockpiling Base to the neighboring base of the Kashima L.P.G. Joint Stockpiling Co., Ltd. in order to contribute to the supply of LPG to bases which were unable to receive LPG due to the impact of the Great East Japan Earthquake. This represented the first release of LPG reserves from a national stockpiling base since the establishment of the national stockpiling program. The amount of released reserves is equivalent to the combined capacity of 5,000 (8-ton tank lorries).

【Support for damaged oil refineries】　Kashima Oil Co., Ltd.’s Kashima refinery (Ibaraki Prefecture), which suspended production due to the damage caused by the Great East Japan Earthquake, restarted production in June. However, the wharf facility for large vessels remained damaged, making crude oil delivery difficult for a time. As JOGMEC judged that production of this refinery was important for the recovery of disaster areas, it decided to sell national oil reserves stored within the refinery.　In addition, a high-capacity foam jet system installed at the Akita National Petroleum Stockpiling Base was mobilized at the request of JX Nippon Oil & Energy Corporation’s Sendai refinery, which was damaged by the Great East Japan Earthquake. The high-capacity foam jet system has been used in disaster exercises at neighboring refineries in preparation for emergencies.

【Restoration of damage at stockpiling bases】　Although most of the onsite facilities of the Kuji National Petroleum Stockpiling Base (Iwate Prefecture) in the northern part of the Sanriku region were destroyed by the tsunami, human casualties and the leakage of crude oil were prevented thanks to appropriate evacuation and the emergency halting of operations. In order to prevent secondary disasters such as crude oil leakages while the onshore facilities were incapacitated, facilities essential to the water sealing function of the rock cavern tank (e.g., emergency power generators) were restored as an emergency measure. In addition, in order to maintain the water sealing function under freezing, wintertime conditions, power receiving facilities, boilers, etc. were restored and their stable operation was ensured. The work to restore the onshore facilities is underway with a view to completion by the end of fiscal 2013.　Although the national rare metal stockpiling warehouse also suffered damage, such as collapse of stockpiles and destruction of warehousing structures, there were no human casualties. Restoration work was completed by the end of December.

Safe and eff icient operation of national petroleum and LPG stockpiles

　There are 13 national oil and LPG stockpiling bases across Japan, and these are in place for emergencies. JOGMEC is working to improve safety and efficiency through active cost reduction while safely storing dangerous materials such as oil and LPG.

【Safe management of petroleum and LPG stockpiles】　In order to ensure safe operation of stockpiling bases, JOGMEC conducts various disaster exercises and safety checks. At national petroleum stockpiling bases, practical exercises involving checks on people’s safety and the establishment of an anti-earthquake task force and cooperative firefighting activity with local firefighting units are conducted to prepare for a tank fire caused by an earthquake. Listed below are major exercises conducted in fiscal 2011: ・Comprehensive petrochemical complex exercises, exercises for the operation of the high-capacity foam jet system, and oil pollution control exercises were conducted at various stockpiling bases. ・In addition to exercises and other activities at each base, JOGMEC sponsored training programs for fire fighting and marine pollution control. ・Based on lessons from the Great East Japan Earthquake, tsunami evacuation exercises were conducted at nine stockpiling bases in preparation for earthquakes and tsunamis. ・A JOGMEC employee was appointed as a member of the Study Group on Earthquake and Tsunami Countermeasures at Facilities Storing Dangerous Materials Based on the Lesson of the Great East Japan Earthquake, which was established under the Fire and Disaster Management Agency, and JOGMEC provided expert information and its opinions to the group, thereby contributing to improving the safety of the entire oil industry.

■Comprehensive petrochemical complex exercises: Kushikino base

【Increasing efficiency of the overall management of national petroleum stockpiles】　In order to further increase the efficiency of the management of stockpiling bases, efficiency improvement plans formulated by operating companies themselves are being continuously implemented. The plans include the introduction of general competitive bidding, rationalization of construction work, cost reduction through energy conservation, and improvement of operational efficiency through the use of computer systems.Listed below are major measures implemented in fiscal 2011. ・Increased use of general competitive bidding for operations contracted out by operating companies (Fiscal 2011 results: 182 orders, up 23 orders from the previous year).・Reviewing the contents and specifications of construction work, reviewing the maintenance methods (shift from time-based maintenance to condition-based maintenance, implementation of maintenance in accordance with the seriousness of the risk).・Drastically reduced facility-related costs by confirming the safety of existing tanks through the use of a program to extend the cycle of overhaul inspection of individual onshore tanks, thereby extending the period of

Stockpiling

■When damaged by the tsunami: March 2011

■Status of restoration: February 2012


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usage. ・Prepared basic materials for future reduction of maintenance costs by clarifying the prospects for a cost increase resulting from the aging of facilities.・Improved the quality and efficiency of operations through the use of a monitoring system that links JOGMEC and entities commissioned with operating bases through the Internet. ・Facilitated the sharing of information regarding various procedures based on contracts for commissioning operations by enabling several entities connected with the computer system to read the contracts simultaneously. ・Improved the efficiency of operations, including the operation of a computer system that reports on inventories of stored crude oil and manages the facilities of national stockpiling bases. ・Participated in the management of national LPG stockpiling at onshore bases starting at the stages when specification of construction work was determined, thereby ensuring appropriate burden sharing for individual construction works. Also continuously reviewed the sharing of facility usage fees, and at the Nanao base, conducted a wholesale review of the burden sharing related to neighboring facilities (confirmation of disposal of old facilities and development of new ones).・Made efforts to reduce contruction costs and operational expenses regarding the management of national LPG stockpiling at underground tanks by conducting various studies.

Enhancing emergency response capabilities

　While proceeding with the stockpiling of oil and LPG, JOGMEC is strengthening its ability to deal with emergencies through cooperation with oil-producing countries. JOGMEC leases eight tanks (with combined capacity of around 800,000 kl) at the Okinawa petroleum stockpiling base to Saudi Arabia (Saudi Aramco), which is the largest crude oil supplier for Japan. It leases five tanks (about 600,000 kl) at the JX Kiire base to the U.A.E. (ADNOC), which is the second largest supplier. In the event of an emergency, Japan is given precedence in receiving the supply of crude oil stored in these tanks. In addition, reserve release exercises are conducted at each base in preparation for emergencies. The first release of LPG reserves, from the Kamisu base, following the Great East Japan Earthquake was carried out smoothly as a result of the exercises.

International cooperation in petroleum stockpiling

　In the event of an emergency, cooperation with neighboring countries will also be important for a stable supply of energy. JOGMEC is building cooperative relationships with a focus on other Asian countries and the United States, by actively exchanging information with them about stockpiling strategies. Listed below are major cooperative activities conducted in fiscal 2011.・Actively conducted such activities as supporting and cooperating in the holding of workshops intended to develop and promote stockpiling programs in ASEAN countries and accepting officials in charge of stockpiling in the governments and state-run oil companies of ASEAN countries for inspection tours of national stockpiling bases.・Officials from JOGMEC, Korea National Oil Corporation, and the National Petroleum Reserve Center of China visited head offices and petroleum stockpiling bases in each country and exchanged information on the status of petroleum stockpiling.・Held a technical meeting with the Strategic Petroleum Reserve, the U.S. Department of Energy (DOE/SPR).・Contributed to the improvement of safety management systems for times of disaster in various countries by explaining the government’s handling of oil supply following the Great East Japan Earthquake, the situation of the damaged Kuji National Petroleum Stockpiling Base and the handling of the damage there at multilateral and bilateral

meetings, thereby sharing the experience of dealing with emergency situations.

Response to the tense international situation

　JOGMEC is establishing a system to deal with emergencies while strengthening communications with the government, oil and gas companies, enhancing relationships with ASEAN and other neighboring countries, collecting information from relevant organizations, including the IEA, and promoting internal information sharing.　In particular, in dealing with the situations in the Middle East and North Africa, JOGMEC established the Liaison Council on the Situation in the Middle East and the Trend of Crude Oil and provided information (held weekly meetings in February through May 2011).

2012.Providing financial support for petroleum and LPG stockpiling by private companies

　JOGMEC procured funds through one of the largest domestic syndicated loans (about 555.7 billion yen) in 2011 through interest rate bidding with increased competitiveness and provided low-interest rate loans. In addition, it lent funds needed for facility upgrades implemented by joint venture stockpiling companies.

Construction of underground LPG stockpiling bases

　JOGMEC smoothly implemented the construction plan for fiscal 2011, completing planned construction work at bases in Kurashiki and Namikata. In fiscal 2012, JOGMEC will conduct the first air-tightness test of a rock cavern in Japan regarding LPG stockpiling at these two bases, after filling the tunnel with water. Both bases are scheduled to be completed in fiscal 2012.　Based on the lessons from the Great East Japan Earthquake, JOGMEC calculated what the estimated height of a tsunami big enough to hit the bases in Kurashiki and Namikata would be, and started considering tsunami countermeasures.

■Namikata natinal LPG storage cavern tank

Promotion of rare metal stockpiling

　JOGMEC procured rare metals in light of the trends in supply, demand, and prices, in line with its policy of building up or releasing reserves flexibly.　In addition, JOGMEC continues to conduct investigation and deliberation concerning “strategic rare metals,” which are regarded as important for Japanese industries. JOGMEC conducts investigations concerning supply-side problems involving rare metal materials and components from the viewpoint of users. At the same time, it assesses the global flow of revenues and expenditures on rare metal materials used by major Japanese industries by investigating the flow of the procurement of rare metal materials by those industries, and uses the results to identify problems hampering their stable supply. Moreover, JOGMEC continues to investigate the situations and activities in other countries by exchanging information with the United States and South Korea.

Business Overview


4CHAPTER

JOGMEC provides technical and financial support to ensure that local governments and private companies are able to implement appropriate mine pollution prevention measures.

Mine Pollution Control

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Technical support to ensure the implementation of mine pollution control measures

　JOGMEC is engaged in activities to provide technical support to local governments and entities that are obligated to implement mine pollution control measures (referred to as “mine pollution controlling entities,” below).　At the request of mine pollution controll ing entit ies, JOGMEC offers consulting and provides information related to construction work for mine pollution control and the formulation of mine pollution control policy. JOGMEC also provides technical assistance related to designing construction work for mine pollution control on commission from mine pollution controlling entities, and has undertaken the operation and management of a new neutralization plant at the abandoned Matsuo mine (Iwate Prefecture).　Additionally, JOGMEC collects and organizes data on abandoned mines, offers technical guidance and training courses, and provides support for mine control measures taken by the government, in order to increase the efficiency of mine pollution control in Japan. To reduce the cost of mine pollution control measures, JOGMEC conducts surveys on technologies

related to effective measures against sources of mine pollution and mine drainage treatment, and develops such technologies in light of the needs of relevant parties.

Financial assistance to ensure the implementation of mine pollution control

　JOGMEC provides loans to private companies implementing mine pollution control projects, and it also manages reserve funds set aside by private companies for construction work for mine pollution control and funds set aside for continuing drainage treatment.

Technical support for governments of resource-rich developing countries

　Japan has world-leading technologies and systems for mine pollution control which have been developed through many years of efforts to control mine pollution. JOGMEC contributes to the promotion of environment-friendly mine development by sharing information and knowhow related to mine pollution control to resource-rich countries.

Government

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Municipal Governments (1/4)

Abandoned Mines

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Operating mines Suspended or Abandoned Mines

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Technical & Intelligence Support

Deposits

FundsFinancial ＆TechnicalSupport

Implementation of Mine Pollution Control

Subsidies (3/4)

Technical Support

Grants for Administrative Services Subsidies Interest Subsidy

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Project flow of support for Mine Pollution Control


Fiscal 2011 Achievements

Technical support for Mine Pollution Control

【Technical support for mine pollution controlling entities】　In Japan, drainage treatment is said to be necessary at 80 abandoned mines. Primarily, entities which have exploitation rights have the obligation to implement mine pollution control programs in accordance with the principle that polluters should bear the cost of cleanup. However, local governments implement such programs at abandoned mines when there is no business operator with the obligation to do so. The central government provides subsidies to local governments, while JOGMEC extends technical support. Listed below are major activities conducted in fiscal 2011:・According to the request for technical consulting (survey guidance) from local government in japan, JOGMEC assessed the risk of the collapse of the tailing dam which has local scour at the toe of its slope and reported the result to the local government.・At a total of nine mines in Hokkaido, Iwate, Yamagata, and Miyazaki Prefectures, JOGMEC provides technical consulting and other services concerning mine pollution control work.・When earthquakes with a seismic intensity of a weak 5 or higher on the Shindo scale occurred, JOGMEC drew up a map of abandoned mines incorporating seismic intensity information provided by the Meteorological Agency and submitted it to the Ministry of Economy, Trade and Industry.・JOGMEC created an electronic database of information concerning water systems related to 19 mines that was newly obtained through research and survey activities on mine pollution control technology at abandoned mines.・JOGMEC shared information on the status of mine pollution control in Japan and abroad through meetings for exchanges of information on mining pollution status and the environment, and through academic conferences.

【Developing mine pollution control technologies】　Drainage treatment, which must be continued at abandoned mines on a semi-permanent basis, imposes a considerable burden on entities obligated to implement mine control pollution programs and local governments. In order to take more effective and efficient mine pollution control measures, JOGMEC is developing passive treatment technology and a technology to remove heavy metals. Listed below are major achievements in fiscal 2011.・JOGMEC discovered the effectiveness of “rice hulls” as nutrients for sulfate-reducing bacteria in neutral drainage and a process that is effective in removing heavy metals, and applied for international as well as domestic patents for the process. ・For the purpose of research regarding measures to control sources of mine pollution, JOGMEC assessed the pollution status of groundwater at dumping sites by monitoring the groundwater levels, water quality, and rainfall, and conducting water balance surveys in areas near dumping sites. JOGMEC also estimated the impact of rainfall on the water that penetrated into dumping sites.・To consider the possibility of introducing passive treatment

technology, JOGMEC collected data on the water flow volume and water quality in areas around mines and downstream areas, including irrigation points and environmental reference points to which the technology may be applied, and conducted environmental assessments. ・JOGMEC continuously conducts column testing using drainage from six model mines that discharge acidic drain water, in order to assess how effective the sulfate-reducing process is in removing heavy metals.

【Providing training and developing human resources for Mine Pollution Control】　To secure the human resources necessary for taking mine pollution control measures, JOGMEC provides training sessions for personnel at private companies who work in mine pollution control programs. In addition, in order to ensure understanding of the importance of both resource development and environmental protection, JOGMEC organizes eco-tours for high-school students at schools near drainage treatment facilities. Listed below are major activities conducted in fiscal 2011:・Basic training in mine pollution control technology: JOGMEC held training sessions for personnel at private companies who work in mine pollution control programs in Akita Prefecture (November) and in Fukuoka Prefecture (February). The training sessions were highly evaluated by mining companies.・JOGMEC produced video learning materials about mine pollution control technology for use in education about basic technology.・Meetings for exchanges of information on mining pollution status and the environment: JOGMEC held meetings for personnel in local government and at private companies who work in mine pollution control programs in Fukuoka and Nagasaki Prefectures (August) and in Miyagi and Akita Prefectures (November), thereby promoting personnel exchanges in mine pollution control and surveying their needs. ・JOGMEC accepted visitors to the new neutralization plant at the abandoned Matsuo mine in Iwate Prefecture, including officials of administrative organizations, students, and company officials from within and outside the prefecture, in order to promote an understanding of mine pollution control activities (118 officials from administrative organizations, 119 university students, 249 students from elementary and high schools, and 581 other people).

■An eco-tour



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【Operating and managing the New Neutralization Plant at the Abandoned Matsuo Mine】　For the 30 years since 1982, JOGMEC has managed and operated the new neutralization plant at the abandoned Matsuo mine, which discharges the largest amount of treated drain water among treatment facilities for abandoned mines, on commission by the Iwate prefectural government. Over the past 30 years, JOGMEC has improved the water quality of the Kitakami River and has made sure to keep the quality of treated water in accordance with the standard.　In addition, JOGMEC conducted an exercise to prepare for largest-scale earthquakes with a seismic intensity of a strong 6 on the Shindo scale, in cooperation with the Iwate prefectural government; the Ministry of Economy, Trade and Industry; and the Ministry of Land, Infrastructure, Transport and Tourism; among other organizations, based on lessons from the Great East Japan Earthquake. In the exercise, which assumed that the treatment facility had been incapacitated, a drill to use a jet-pack vehicle to inject calcium carbonate was implemented. Based on the results of the exercise, JOGMEC revised the manual for dealing with disasters and accidents.

■A disaster exercise

Providing financial assistance for mine pollution control work by Japanese companies

【Providing loans for mine pollution control】　　JOGMEC provides stable financial support for mine　pollution control. In fiscal 2011, JOGMEC provided a total of　130 million yen in loans to two private companies for mine　pollution control work and drainage treatment at two mines.　In addition, JOGMEC lent 120 million yen to two companies to support the implementation of soil pollution control measures on agricultural land.

【Managing mine pollution control reserve funds and project funds】　JOGMEC contributes to ensuring the implementation of sustainable mine pollution control projects by appropriately managing reserve funds*1 and project funds*2 accepted from private companies that undertake mine pollution control based on the Act on Special Measures for Pollution Caused by the Metal Mining Industry, etc.

*1 A system of setting aside reserve funds to ensure that construction work for mine pollution control is implemented for mining facilities that have been shut down.*2 A system in which private mining companies that implement mine drainage treatment contribute money to an investment fund and the investment gains are used to cover the cost of the treatment.　Reserve funds accumulated by the end of fiscal 2011 amounted to a total 5.3 billion yen for 97 mines. In part of this amount, 3.5 billion yen had already been withdrawn to implement mine pollution control measures, bringing the outstanding balance down to 1.8 billion yen. Regarding projects funds, 22 mines completed fund contribution by the end of fiscal 2011, with the outstanding balance totaling 5.1 billion yen.

Technical support for the governments of metal resource-rich countries

　JOGMEC provides technical support for resource-producing countries by taking advantage of its experience in mine pollution control. It contributes to environmental protection in resource-producing countries by holding seminars, dispatching personnel, and providing training, and has been building friendly relationships with such countries. Listed below are major activities conducted in fiscal 2011.・Dispatched a mine pollution control policy advisor to theMinistry of Energy and Mines in Peru and provided support for the formulation of measures and the establishment of an implementation system for mine pollution control in Peru.・Provided field training in mine pollution control for visiting engineers from the Mining Bureau at the Ministry of Energy and Mines in Peru, the Mining Bureau at Laos’s Ministry of Energy and Mines, and the Geological Bureau at Laos’s Ministry of Natural Resources and Environment.・Held seminars on the mining industry and the environment in Laos (October), Peru (November), Bolivia (November), and Cambodia (February).・Strengthened relationships with resource-producing countries by giving lectures to JICA participants on social systems and technologies for Mine Pollution Control.

■A training session for participants from Peru

Business Overview


General Overview

Financial Review

Approval, Audit, and Disclosure of Financial Statements

　The management of JOGMEC is carried out in accordance with the Act on General Rules for Incorporated Administrative Agencies (“General Rules”), enacted in 1999, and the Japan Oil, Gas and Metals National Corporation Act (“Specific Act”), enacted in 2002.　JOGMEC’s accounts are settled in accordance with the requirements of the General Rules. Accounts are settled for each fiscal year and JOGMEC’s financial statements are submitted to the Minister of Economy, Trade and Industry by June 30, after being audited by internal and independent auditors. The financial statements are then scrutinized by the Evaluation Committee for Incorporated Administrative Agencies within the Ministry of Economy, Trade and Industry (METI). Based on the advice of this committee, the METI minister approves JOGMEC’s financial statements.　JOGMEC’s financial statements are disclosed promptly after approval. Methods of disclosure include the JOGMEC corporate website and official gazettes, as well as a disclosure room set up within JOGMEC to allow members of the public to view the statements.

Capital Structure 　

　For JOGMEC, funds equivalent to the accounting term “capital” for private-sector companies are provided by the Japanese government. These national government investments, which constitute JOGMEC’s financial base and were provided to the amount of 92.2 billion yen at the time of JOGMEC’s establishment, are supplied in an expeditious manner based on the corporation’s requirements for each business, as detailed in the medium-term management plan, and amounted to 408.9 billion yen at the end of fiscal 2011.　In addition to national government investment, which was 47.0 billion yen in fiscal 2011, JOGMEC procures funds from a number of external sources, including revenues from grants for administrative services (18.1 billion yen), subsidies (4.1 billion yen), revenues from entrusted activities (109.4 billion yen), and loans from financial institutions (590.5 billion yen). Methods of fund procurement are determined by how JOGMEC plans to use the funds.

Earnings Structure 　

　The operation of JOGMEC is basically dictated by the amount of grants for administrative services that is received from the government to cover operating expenses, which were 18.1 billion yen in fiscal 2011. JOGMEC adopts cost-based income realization criteria. Therefore, grants for administrative services are first regarded as liabilities, and then turned into revenues with expenditure limits along with the progress of projects. Revenues from other grants received are paid by subvention to support private companies. These grants represent the amount JOGMEC receives for providing support on behalf of the government for a portion of

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state-sponsored surveys and development projects (through subvention or other financial aid) in the specific sector that private companies handle. Revenues from entrusted activities represent the amount paid by the government to cover the cost of other specific activities (management of national petroleum stockpiles, domestic geological surveys of oil and gas, etc.) requested by the state. 　In fiscal 2011, JOGMEC posted a current gross loss of 15.3 billion yen. The main factor in this loss was the fact that JOGMEC posted 19.6 billion yen in losses on write-offs of investment in subsidiaries for the current fiscal year which are related to investment in oil and natural gas exploration projects. This amount substantially exceeded earnings such as the dividend income and guarantee fee income received. Half of the investment balance is assessed as the fair value based on JOGMEC’s bylaws and in accordance with the practical guidelines for financial instrument accounting standards established by the Japanese Institute of Certified Public Accountants. This is because it is difficult to objectively judge the collectability of stock for investment in the exploratory stage, and because the Accounting Standards for Incorporated Administrative Agencies are not applicable to such a case. In general, extended periods are required for oil exploration development projects, making it difficult to assess their success. Therefore, JOGMEC follows accounting procedures that reflect the characteristics of the projects, by conservatively evaluating the investments in companies prospecting for resources.

Finance and Liability Guarantees 　

　JOGMEC, together with private-sector companies, provides equity finance for operations related to oil and gas E&P, natural gas liquefaction, and other activities. It also grants liability guarantees for these same activities.　In fiscal 2011, JOGMEC decided to provide equity capital for three new exploration projects and one new asset acquisition, and provided a total of 38.1 billion in equity capital to 27 companies. Equity finance is recorded as investment in stocks of affiliates and investment securities (outstanding balance of 104.3 billion yen at of the end of fiscal 2011) in the fixed investment column. Currently, none of these subsidiaries and affiliates is publically listed.　JOGMEC decided to provide a liability guarantee for one company, bringing the total number of companies to which guarantees are provided to 10 (outstanding balance of 250.9 billion at of the end of fiscal 2011). 　In oil and LPG stockpiling-related activities, JOGMEC invested 19.5 billion yen at the end of fiscal 2011 in joint-venture stockpiling firms that will be operated jointly by oil companies to construct and manage stockpiling bases. JOGMEC also provides funds required for the construction of joint stockpiling sites, amounting to 0.9 billion yen at the end of fiscal 2011. In addition, the corporation supplies financing to private-sector companies, which are required to meet certain stockpiling obligations by law, to help them purchase the necessary petroleum and LPG for stockpiling. The amount of these finances was 555.7 billion yen at the end of fiscal 2011. The resources for these loans were raised by syndicated loans from private financial institutions, booked as loans payable for funding private-sector stockpiling activities, and

amounted to 555.7 billion yen at the end of fiscal 2011.　Regarding development of metal resources, JOGMEC provides equity capital for exploration and asset acquisition as well as loans and liability guarantees as the risk money financing necessary for overseas exploration projects. It decided to provide equity capital for one new exploration project and provided a total of 24.3 billion yen to two companies, including for asset acquisition (outstanding balance of 41 billion yen at the end of fiscal 2011). It also provided loans totaling 4.1 billion yen to six companies for overseas exploration projects (outstanding balance of 30.1 billion yen at the end of fiscal 2011 ). In addition, JOGMEC decided to provide liability guarantees to four companies, bringing the total number of companies to which liability guarantees are provided to six (outstanding balance of 57.4 billion yen at the end of fiscal 2011). JOGMEC also provide loans for mine pollution control (outstanding balance of 3.7 billion yen at the end of fiscal 2011).

Stockpiling

　JOGMEC is responsible for constructing national LPG stockpiling bases. After completing construction, JOGMEC hands over the facilities to the government. Funds received from the government during construction are recorded under liabilities as advances for uncompleted construction, while funds used to pay for construction are recorded under assets as payments for construction in progress, and these amounted to 231.4 billion yen at the end of fiscal 2011. Consequently, advances for uncompleted construction and payments for construction in progress related to this work were transferred to revenues from entrusted activities and expenses for entrusted activities, respectively.　In addition, JOGMEC is responsible for operating petroleum and LPG stockpiling bases. Certain equipment and materials associated with these sites are owned by JOGMEC and recorded on its financial statements under assets as part of machinery and equipment, etc.　JOGMEC also stockpiles rare metals. These rare metals and mineral stockpiles are booked under assets, which amounted to 34.9 billion yen at the end of fiscal 2011.


　As part of its mine pollution control activities, JOGMEC is responsible for managing two funds for mining rights holders.　One is the Reserve for Mine Pollution Control, which was created to meet mine remediation costs after mine closure. Interest earned on funds paid into the reserves by mining right holders is returned when costs are incurred for remediation work.　The other is the Mine Pollution Control Fund. Income from the management of this fund is exclusively used to maintain mine drainage treatment facilities at abandoned mine sites. Expenses incurred for this work are recorded as mine pollution control costs, and these were 0.07 billion yen in fiscal 2011.

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Balance Sheet (March�31,2012)

(Yen) (U.S. dollars)(Note 1)

Assets　I Current assets　　　　Cash on hand and in banks 110,534,394,485 1,345,846,761 　　　　Marketable securities 37,699,171,710 459,018,285 　　　　Trade accounts receivable 5,913,078,278 71,996,570　　　　Inventories 63,174,582,023 769,202,265　　　　Disbursements for work in process 231,400,325,208 2,817,488,436　　　　Advance payments 16,742,277 203,851　　　　Suspense payments 1,109,790 13,513　　　　Prepaid expenses 4,201,618 51,158　　　　Accrued income 642,136,475 7,818,537　　　　Short-term loans receivable 4,583,035,000 55,802,204　　　　Loans receivable for subsidiaries and affiliates 77,674,000 945,745　　　　Loans receivable for funding private-sector stockpiling activities 555,746,800,000 6,766,672,349　　　　Accounts receivable 4,260,625,584 51,876,605　　　　Advances 1,070,782 13,038　　Total current assets 1,014,054,947,230 12,346,949,315

　II Fixed assets　　1. Tangible fixed assets　　　　　Buildings 6,617,724,398 80,576,213　　　　　　Less : accumulated depreciation (1,948,263,888) (23,721,708)　　　　　　Less : accumulated impairment loss (88,164,340) (1,073,473)　　　　　Structures 1,013,146,779 12,335,892　　　　　　Less : accumulated depreciation (751,884,311) (9,154,807)　　　　　　Less : accumulated impairment loss (95,733,603) (1,165,635)　　　　　Machinery and equipment 25,249,480,492 307,433,100　　　　　 Less : accumulated depreciation (14,531,100,178) (176,928,043)　　　　　　Less : accumulated impairment loss (2,573,121,901) (31,329,866)　　　　　Vessels 19,312,310,249 235,143,191　　　　　　Less : accumulated depreciation (323,123,542) (3,934,294)　　　　　Vehicles 561,381,880 6,835,284　　　　　　Less : accumulated depreciation (527,676,404) (6,424,892)　　　　　Tools, furniture and fixtures 3,279,512,215 39,930,747　　　　　　Less : accumulated depreciation (1,936,776,873) (23,581,844)　　　　　　Less : accumulated impairment loss (757,500) (9,223)　　　　　Land 3,370,730,362 41,041,402　　　　　Rare metals 34,931,519,828 425,319,857　　　　Tangible fixed assets, net 71,559,203,663 871,291,899　　2. Intangible fixed assets　　　　　Patents 499,956,086 6,087,375　　　　　Software 13,651,783 166,222　　　　　Telephone rights 3,587,000 43,675　　　　　Mining right in progress 55,653,400 677,626　　　　Total intangible fixed assets 572,848,269 6,974,897　　3. Investments and other assets　　　　　Long-term deposit 33,493,299,729 407,808,349　　　　　Investments in securities 48,803,186,249 594,218,754　　　　　Investments in subsidiaries and affiliates 163,371,855,680 1,989,186,116　　　　　Long-term loans receivable 29,229,660,000 355,895,044　　　　　Long-term loans receivable from subsidiaries and affiliates 805,326,000 9,805,503　　　　　Security deposits 24,547,937 298,891　　　　Total investments and other assets 275,727,875,595 3,357,212,658　　Total fixed assets 347,859,927,527 4,235,479,454　Total assets ¥1,361,914,874,757 $16,582,428,769


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Liabilities and Net assetsLiabilities　I Current liabilities　　　　Grants received in advance for administrative services 13,695,185,862 166,750,102　　　　Current portion of long-term borrowings 43,994,237,694 535,665,867　　　　Loans payable for funding private-sector stockpiling activities 555,746,800,000 6,766,672,349　　　　Trade accounts payable 5,802,594,624 70,651,341　　　　Accounts payable-other 1,626,873,262 19,808,514　　　　Accrued expenses 440,535,955 5,363,886　　　　Accrued consumption tax 194,673,635 2,370,311　　　　Advances received 61,779,808,725 752,219,758　　　　Advances received for work in process 231,400,325,208 2,817,488,436　　　　Deposits received 3,260,422,337 39,698,312　　　　Allowance　　　　　Accrued bonuses 7,287,632 88,733　　　　Asset retirement obligations 311,927,000 3,797,967　　Total current liabilities 918,260,671,934 11,180,575,575

　II Long-term liabilities　　　　Contra accounts for services and assets　　　　　Contra account for assets funded by grants for administrative services 2,514,715,293 30,618,718　　　　　Contra account for assets purchased with other grants 645,749,641 7,862,531　　　　Long-term borrowings 9,588,254,000 116,744,844　　　　Allowances　　　　　Allowance for retirement benefits 222,989,167 2,715,076　　　　Long-term accounts payable 284,385,288 3,462,624　　　　Reserve for prevention of mine pollution 1,823,464,000 22,202,167　　　Total long-term liabilities 15,079,557,389 183,605,959　　Total liabilities 933,340,229,323 11,364,181,533

Net Assets　I Capital　　　　National government investments 408,906,674,928 4,978,773,590　　Total capital 408,906,674,928 4,978,773,590

　II Capital surplus　　　　Capital surplus 30,340,128,402 369,415,907　　　　Accumulated depreciation charged to capital surplus (4,023,958,608) (48,994,991)　　　　Accumulated impairment loss charged to capital surplus (2,322,000) (28,272)　　　　Accumulated accretion expense charged to capital surplus (36,000) (438)　　　　Fund for prevention of mine pollution 5,117,410,831 62,308,667　　Total capital surplus 31,431,222,625 382,700,872

　III Accumulated deficits　　　　Accumulated reserve carried over from first mid-term target period (17,378,809,936) (211,601,241)　　　　Accumulated reserve (1,641,366,385) (19,984,980)　　　　Undisposed accumulated deficit (30,932,621,673) (376,629,997)　　　　　　（Total loss for the year ￥15,313,101,129)　　Total accumulated deficits (11,912,445,352) (145,043,776)

　IV Unrealized holding loss on securities 149,193,233 1,816,550

　Total Net assets 428,574,645,434 5,218,247,235　Total liabilities and Net assets ¥1,361,914,874,757 $16,582,428,769


Financial Review


Ordinary expenses　　　Operating expenses:　　　　Operating expenses 21,541,216,249 262,281,946　　　　Operating and administrative expenses 5,518,547,867 67,192,839　　　　Depreciation 3,762,683,424 45,813,752　　　　Accrual for bonuses 5,981,043 72,824　　　　Loss on write-offs of investments in subsidiaries and affiliates 19,646,081,100 239,207,124　　　Expenses for entrusted activities 33,320,569,116 405,705,213　　　General and administrative expenses:　　　　Payroll expenses 1.173,317,808 14,286,105　　　　Depreciation 24,224,574 294,954　　　　Accrual for retirement benefits 8,697,032 105,893　　　　Accrual for bonuses 1,306,589 15,909　　　　Administrative expenses 373,741,840 4,550,613　　　Finance costs:　　　　Interest expense 1,213,753,440 14,778,442　　　　Other finance cost 97,976,389 1,192,943　　　Interest on reserve for prevention of mine pollution 16,370,105 199,319　　　Operating expenses relating to mine pollution prevention activities 71,155,124 866,372　　　Miscellaneous losses 578,673,331 7,045,822　Total ordinary expenses 87,354,295,031 1,063,610,070

Ordinary revenues　　　Revenue from grants for administrative services 19,704,038,530 239,912,803　　　Operating revenues:　　　　Interest on loans receivable 1,468,218,560 17,876,763　　　　Guarantee fee income received 2,565,782,165 31,240,499　　　　Dividends received 1,025,160,520 12,482,169　　　　Revenue from rental of vessels 63,503,960 773,213　　　Revenues from other grants received:　　　　State subsidies 4,479,946,169 54,547,013　　　　Compensation received 143,496,263 1,747,185　　　Revenues from grants for facility improvement 1,517,130,913 18,472,311　　　Revenues from entrusted activities:　　　　Revenue from activities entrusted by national government 32,535,176,597 396,142,416　　　　Revenue from activities entrusted by local governments 462,426,847 5,630,426　　　　Revenue from activities entrusted by others 32,194,658 391,996　　　Financial revenues:　　　　Interest income 265,964,881 3,238,340　　　　Interest income on securities 562,501,157 6,848,912　　　Reversal of contra account for assets funded by grants for administrative services 3,528,726,357 42,965,133　　　Reversal of contra account for assets purchased with other grants 335,577,091 4,085,926　　　Miscellaneous income 1,171,538,515 14,264,441　Total ordinary revenues 69,861,383,183 850,619,544

Ordinary loss 17,492,911,848 212,990,525

Extraordinary loss　　　Loss on sales of fixed assets 210,200 2,559　　　Loss on disposal of fixed assets 146,265,917 1,780,907　　　Loss on contribution 55,085,524 670,711　Total extraordinary loss 201,561,641 2,454,178

Extraordinary income　　　Gain on sales of fixed assets 26,138,953 318,263　　　Reversal of contra account for assets funded by grants for administrative services 96,905,050 1,179,898　　　Reversal of contra account for assets purchased with grants 103,435,355 1,259,410　Total extraordinary income 226,479,358 2,757,572

Net loss for the year 17,467,994,131 212,687,132Withdrawal of accumulated reserve carried over from previous mid-term target period 2,154,893,002 26,237,587Total loss for the year ¥15,313,101,129 $186,449,545

Statement of Operations (For�the�year�ended�March�31,�2012)


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I Cash flows from operating activities　　　　Payments for raw materials, goods and services purchased (133,940,946,121) (1,630,840,693)　　　　Payroll expenses (4,432,872,664) (53,973,854)　　　　Loans receivable made (560,349,081,000) (6,822,708,888)　　　　Refund of reserve for prevention of mine pollution (1,376,000) (16,754)　　　　Expenses related to mine pollution prevention activities (71,770,895) (873,869)　　　　Purchases of investments (62,402,935,698) (759,806,839)　　　　Consumption tax paid (310,577,749) (3,781,538)　　　　Other operating expenses paid (703,162,575) (8,561,580)　　　　Rental fees received for leased vessels and facilities 66,679,158 811,873　　　　Guarantee fees received 1,350,698,399 16,445,859　　　　Reserve for prevention of mine pollution received 13,350,000 162,547　　　　Grants received for administrative services 18,146,312,000 220,946,207　　　　Revenues received from entrusted activities 110,787,428,033 1,348,927,652　　　　Other grants received 3,096,146,435 37,698,118　　　　Collection of loans receivable 423,414,171,000 5,155,414,234　　　　Consumption taxes refunded 31,672,549 385,639　　　　Other operating revenues received 5,541,011,161 67,466,348　　Subtotal (199,765,253,967) (2,432,305,540)　　　　Interest and dividends received 3,764,211,374 45,832,356　　　　Interest paid (1,501,161,518) (18,277,871)　Cash flows from operating activities (197,502,204,111) (2,404,751,055)

II Cash flows from investing activities　　　　Purchases of time deposits (383,868,143,888) (4,673,908,972)　　　　Proceeds from time deposits upon maturity 390,208,738,949 4,751,110,909　　　　Purchases of securities (55,533,734,426) (676,168,689)　　　　Proceeds from securities upon maturity 50,693,440,861 617,234,151　　　　Purchases of tangible fixed assets (13,103,890,528) (159,550,597)　　　　Proceeds from sales of tangible fixed assets 85,401,381 1,039,832 　　　　Grants received for facility improvement 8,211,154,507 99,977,530 　　　　Purchases of intangible fixed assets (197,357,205) (2,402,986)　Cash flows from investing activities (3,504,390,349) (42,668,822)

III Cash flows from financing activities　　　　Proceeds from long-term borrowings 34,790,296,322 423,600,345　　　　Repayments of long-term borrowings (35,093,036,583) (427,286,455)　　　　Proceeds from fund for prevention of mine pollution 32,844,000 399,903　　　　Proceeds from loans payable for funding private-sector stockpiling activities 555,746,800,000 6,766,672,349　　　　Repayments of loans payable for funding private-sector stockpiling activities (419,740,400,000) (5,110,683,063)　　　　Proceeds from national government investments 46,950,000,000 571,654,694　　　　Payments of transfer of unnecessary propaerties to government (492,413,680) (5,995,540)　　　　Repayments of lease obligations (110,597,177) (1,346,611)　Cash flows from financing activities 182,083,492,882 2,217,015,620

IV Effect of exchange rate changes on cash and cash equivalents 1,271,186 15,478V Net increase in cash and cash equivalents (18,921,830,392) (230,388,779)VI Cash and cash equivalents at beginning of year 28,020,360,284 341,170,830VII Cash and cash equivalents at end of year ¥9,098,529,892 $110,782,052

Statement of Cash Flows (For�the�year�ended�March�31,�2012)


Notes to Financial Statements�（March�31,�2012）

Ⅰ．Significant Accounting Policies　Effective for the year ended March 31, 2012, JOGMEC adopted the “Accounting Standards for Incorporated Administrative Agencies” (“Revision of Accounting Standards for Incorporated Administrative Agencies”[Study Group of Accounting Standards for Incorporated Administrative Agencies and Working Subcommittee of Legal and Public Accounting Systems, Fiscal System Subcommittee, Fiscal System Council, June 28, 2011]), and the

“Q&A on Accounting Standards for Incorporated Administrative Agencies and Notes to Accounting Standards for Incorporated Administrative Agencies” (Administrative Management Bureau of the Ministry of Internal Affairs and Communications, Budget Bureau of the Ministry of Finance, and Japanese Institute of Certified Public Accountants, finally revised in March 2012).1. Basis of Preparation　The accompanying financial statements of Incorporated Administrative Agency Japan Oil, Gas and Metals National Corporation (“JOGMEC ”) consisting of the balance sheet, and the statement of operations and cash flows have been prepared in accordance with “Accounting Standards for Incorporated Administrative Agencies” and accounting principles generally accepted in Japan. These are a portion of the financial statements prepared by JOGMEC as required by Article 38 of “Act on General Rules for Incorporated Administrative Agency.”　The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation only, at ¥82.13 =US$1.00, the exchange rate prevailing on March 31, 2012. This translation should not be construed as a representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any other rate.2. Revenues from Grants for Administrative Services　Revenues from grants for administrative services are recognized as the related expenses are incurred.　This is because the relationship between the revenues from grants for administrative services and each project is not clear, or the revenues from grants for administrative services do not relate to the passage of time, which makes it difficult to adopt the completed-contract method or the percentage-of-completion method.　In addition, grants for administrative services in the previous fiscal year are considered to be recognized first. 　This is because the budget of grants for administrative services in the previous fiscal year and in the current fiscal year is allocated on a combined basis.3. Depreciation(1)Tangible fixed assets　Depreciation of tangible fixed assets is calculated by the straight-line method.　The estimated useful lives of the major fixed assets are summarized as follows:　　　Buildings: 2 to 50 years　　　Structures: 2 to 43 years　　　Machinery and equipment: 2 to 17 years　　　Vessels: 15 years　　　Vehicles: 2 to 6 years　　　Tools, furniture and fixtures: 2 to 25 years(2)Intangible fixed assets　Amortization of intangible fixed assets is calculated by the straight-line method.　Amortization of software for internal use is calculated based on an estimated useful life of five years.　Depreciation of certain specific depreciable assets (as defined in

“Accounting Standards for Incorporated Administrative Agencies, No. 87”) and certain specific removal costs of asset retirement obligations added to the book value to the relevant fixed asset (as defined in “Accounting Standards for Incorporated Administrative Agencies, No.91”) are directly deducted from capital surplus and are presented as accumulated depreciation charged to capital surplus.4. Allowance(1)Allowance for doubtful receivables　The allowance for doubtful receivables is provided at an amount

determined based on the historical experience of bad debts with respect to ordinary receivables, plus an estimate of uncollectible amounts determined by reference to specific doubtful receivables from customers which are experiencing financial difficulties.(2)Accrued bonuses　An accrual for bonuses is provided for the payment of bonuses to directors and employees at the amount estimated to be incurred except for the portion to be covered by grants for administrative services.(3)Allowance for losses on guarantees　Allowance for losses on guarantees is provided for future losses on the execution of a guarantee given and is stated at the amount estimated based on the guarantee’s financial position and the fair value of the assets pledged as collateral, as well as other relevant factors.5. Allowance for Retirement Benefits　Allowance for retirement benefits is provided at an amount calculated based on the retirement benefit obligation and the fair value of the pension plan assets as of the balance sheet date except for those costs covered by grants for administrative services.　Actuarial gain or loss is being amortized by the straight-line method over eight years, a period which is shorter than the average remaining years of service of the employees, from the year following the year in which the gain or loss is recognized.6. Valuation of Securities(1)Held-to-maturity securities　Held-to-maturity securities are stated at amortized cost calculated by the straight-line method.(2)Investments in subsidiaries and affiliates　Investments in subsidiaries and affiliates are stated at cost determined by the moving-average method. Where there has been a permanent decline in the value of such investments, JOGMEC has written them down.　For investments in subsidiaries and affiliates, if their business is exploration, it is difficult to judge the outcomes of such business. Therefore, until the outcomes become available, based on the internal notification, the fair values of the investments are computed as half of the amount invested by JOGMEC in each company.(3)Other securities1) Marketable securities classified as other securities are carried at fair values with changes in an unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets section. Cost of securities sold is determined by the moving average method.2) Securities without fair market value are stated at cost determined by the moving average method.7. Valuation of Inventories(1) Work in process 　Work in process is stated at the lower of cost or market, cost being determined by the specific identification method.(2) Merchandise and supplies　Merchandise and supplies are stated at the lower of cost or last purchase price, cost being determined by the first-in, first-out method.8. Valuation of Disbursements for Work in Process Disbursements for work in process are stated at the lower of cost or market, cost being determined by the specific identification method.9. Foreign Currency Translation　Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. The resulting exchange gain or loss is credited or charged to income.10. Leases　Noncancelable leases with aggregate lease payments of three million yen or more that transfer substantially all risks and rewards associated with the ownership of assets are accounted for as finance leases; however, the impact of the interest portion included in the lease payments has been omitted from this lease accounting because of its immateriality.　All other leases are accounted for as operating leases and related payments are charged to income as incurred.11. Consumption Taxes　Transactions subject to consumption taxes are recorded at


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amounts exclusive of consumption taxes. However, noncredited portions of consumption taxes paid for purchase of assets are charged to income in the fiscal year in which the consumption taxes are paid.Ⅱ． Notes to Financial Statements1. Balance Sheet

March 31, 2012(Yen) (U.S.dollars)

(1)Estimated amount of bonuses not recorded as accurd bonuses:

¥280,784,644 US $3,418,783

(2)Est imated amount of ret i rement benefits to be covered by grants for administrative services:

¥7,029,773,297 US $85,593,246

(3) Guarantees given for loans: ¥308,289,043,134 US $3,753,671,535

2. Statement of OperationsYear ended March 31, 2012(Yen) (U.S.dollars)

(1) Loss on sales of fixed assetsMachinery and equipment: ¥210,200 US $2,559

(1)

Loss on disposal on fixed assetsBuildings:Structures:Machinery and equipment:Tools, furniture and fixtures:Patents:Rights for use of facilities:

¥123,306,293¥14,554,169¥3,077,520¥4,218,049

¥47,379¥1,062,507

US $1,501,355 US $177,209 US $37,471 US $51,358

US $577 US $12,937

(2)

Gain on sales of fixed assetsMachinery and equipment:Vessels:Tools, furniture and fixtures:

¥6,135,182¥19,816,999

¥186,772

US $74,701 US $241,288

US $2,274

３. Statement of Cash Flows(1) Reconciliation between accounts reported in the balance sheet and cash and cash equivalents:

Year ended March 31, 2012(Yen) (U.S.dollars)

Cash on hand and in banks: ¥110,534,394,485 US $1,345,846,761 Time deposits: ( ¥101,435,864,593) (US $1,235,064,710)Cash and cash equivalents: ¥9,098,529,892 US $110,782,052

　

(2)Significant non-cash transactionsYear ended March 31, 2012(Yen) (U.S.dollars)

Payment in kind of unnecessary properties to Govemment ¥139,749,696 US $1,701,567 Assets acquired through finance leases:Vehicles:Tools, furniture and fixtures:

¥2,958,000¥214,519,440

US $36,016 US $2,611,950

Asset retirement obligations: ¥199,427,000 US $2,428,187

4. Leases(1)Future lease payments for finance lease transactions


Due within one year from the balance sheet date:

¥116,168,219 US $1,414,443

Due after one year from the balance sheet date:

¥168,217,069 US $2,048,181

Total: ¥284,385,288 US $3,462,624

　The above lease obligations have not been classified and presented by current and noncurrent portion in the balance sheet because of their immateriality.(2) Future lease payments for operating lease transactions


Due within one year from the balance sheet date:

¥414,000 US $5,041

5. Financial Instruments(1)Overview1) Policy for approaching financial instruments　JOGMEC is engaged in financing services, such as loan and investment business. To provide such services, JOGMEC raises funds from investments or loans by national government, or borrows funds from financial institutions.2) Type of financial instruments and related risk　JOGMEC owns financial assets, mainly comprising loans to corporations inside and outside Japan. These loans are exposed

to credit risk that could accrue upon breach of contract by borrowers, etc. Its marketable securities and investments in securities, primarily consisting of debt securities and stocks, have been held until maturity and for implementing its policy. These securities and stocks are exposed to issuers' credit risk, and risks of interest rate and market price fluctuations. Borrowings are exposed to liquidity risk that could lead to failure on the due repayment date, including cases which would leave JOGMEC unable to use the market under certain circumstances.3) Risk management for financial instruments(i) Managing the credit risk　JOGMEC, v ia the respect ive departments in charge, manages risks pursuant to its internal policies concerning credit management and credit risks. For loans receivable, JOGMEC has developed and implemented a credit exposure management system that examines credits, sets credit limits, controls credit information, sets guarantees and collateral, and tackles bad debts on a per-project basis in deciding whether to approve projects and in carrying out regular valuations at the end of fiscal years. JOGMEC has also managed the credit risk of issuers’ marketable securities by regularly obtaining information concerning their credits and market values.(ii) Managing market risksi) Managing the interest risk　Interest rates are determined pursuant to the methods predefined in the statement of operation procedures or other rules.ii) Managing the price fluctuation risk　Shares of projects are owned for political purposes. JOGMEC monitors the market environments and financial conditions of the companies in which it has invested.iii) Managing liquidity risk relating to fundraising　JOGMEC has raised funds pursuant to its borrowing plans approved by the state minister in charge.(2)Estimated fair value of financial instruments　Carrying value of financial instruments in the balance sheet, their estimated fair value and difference as of March 31, 2012 are stated in the table below. However, insignificant financial instruments and financial instruments for which it is extremely difficult to determine the fair value are not included in the table. (Refer to (Note 2).)　 March 31, 2012

Carrying value Estimated fair value Difference

(Million yen)

(Million U.S.dollars)

(Million yen)


(Million yen)


(1)Cash on hand and in banks

110,534 1,345 110,534 1,345 - -

(2) Marketable securities and investments in securities1) Held-to-maturity securities 36,735 447 37,016 450 280 3

2) Other securities 49,766 605 49,766 605 - -

(3)Short-and long-term loans receivable

33,812 411 34,658 421 846 10

(4)Loans receivable for funding private-sector stockpiling activities

555,746 6,766 555,746 6,766 - -

(5)Long-term deposits 33,493 407 33,717 410 223 2

Total Assets 820,089 9,985 821,439 10,001 1,350 16

(1)Current portion of long-term borrowings and long-term borrowings

53,582 652 53,753 654 171 2

(2)Loans payable for funding private-sector stockpiling activities

555,746 6,766 555,746 6,766 - -

Total Liabilities 609,329 7,419 609,500 7,421 171 2

(Note) Amounts less than one million yen and one million U.S. dollars are rounded down.

(Note1)Methods to determining the estimated fair value of financial instruments and other matters related securities transactions.

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Assets(1)Cash on hand and in banks　Since cash on hand and in banks is settled in the short-term at a value almost similar to the book value, it is posted at the book value.(2)Marketable securities and investments in securities　The market value of securities is the price presented by the stock exchanges or financial institutions concerned.(3)Short- and long-term loans receivable　The fair value of loans receivable is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new loans were entered into.(4)Loans receivable for funding private-sector stockpiling activities　Since these loans are settled in the short-term, the carrying value approximates fair value.(5)Long-term deposits　The market values of these deposits are determined by striking deposit interest rates supposed on new similar deposits based on their classification of periods.Liabilities(1)Current portion of long-term borrowings and long-term borrowings　These borrowings have been obtained at fixed interest rates. Their market values are determined by striking interest rates supposed on new similar borrowings from the total of the principal and interest, based on the borrowing type.(2)Loans payable for funding private-sector stockpiling activities　Since these loans are settled in the short-term at values almost similar to their book values, they are posted at the book value.(Note 2) It is extremely difficult to determine the fair value of nonlisted stocks of 163,371 million yen (1,989 million U.S. dollars) included in investments in subsidiaries and affiliates in the balance sheet, because no quoted market price is available and it is difficult to estimate the future cash flows under contract. Therefore, they are not included in 2) Other securities of (2) Marketable securities and investments in securities in the table shown above.　Furthermore, the reserve for prevention of mine pollution (1,823 million yen (22 million U.S. dollars) posted in the balance sheet) must be repaid upon demand. Since it is extremely difficult to specify the time for such repayment demand, the reserve is not included in the table shown above.6. Impairment of Fixed Assets　Fixed Assets with impairment losses　Assets with impairment losses charged to capital surplus(1) Telephone rights

March 31, 2012

Carrying Value Amount not charged to income

(Yen) (U.S dollars) (Yen) (U.S dollars)

Telephone rights: ¥78,000 US$950 ¥384,000 US$4,676

　The impairment losses were measured at the excess of the book values over the net realizable values. The net realizable values were estimated as an assessed amount of inheritance tax for the telephone rights. The impairment losses were charged to capital surplus as accumulated impairment loss charged to capital surplus in the balance sheet.(2) GTL demonstration plant

March 31, 2012

Carrying Value Amount not charged to income

(Yen) (U.S dollars) (Yen) (U.S dollars)

Buildings: ¥17 US$0 ¥88,164,340 US$1,073,473

Structures: ¥8 US$0 ¥95,733,603 US$1,165,635

Machinery and equipment: ¥50 US$1 ¥2,573,121,901 US$31,329,866

Tools,furniture and fixtures: ¥2 US$0 ¥757,500 US$9,223

Total ¥77 US$1 ¥2,757,777,344 US$33,578,197

　With the termination of the GTL demonstration project in the fiscal year ended in March 31, 2012, dismantling and removing the GTL demonstration plant was started. Therefore, its carrying amount was reduced to the memorandum value.

7. Asset Retirement Obligations(1)Asset retirement obligations recognized on balance sheet(i) Outline of asset retirement obligations　The asset retirement obligations are the obligations to restore the mooring facil it ies of the deep seabed mining exploration vessels to their original condition in accordance with the permission to use the administrative properties by local governments, and the obligations to restore the site of the GTL demonstration plant to its original condition under the land lease contract.(ii) Method for estimating the asset retirement obligations　The total estimated amount of the obligations to restore the mooring facilities of the deep seabed mining exploration vessels to their original condition is recognized based on the amount recorded as “allowance for restoration costs” in the fiscal year ended March 31, 2010 and, therefore, is not discounted. In addition, the discount rate of 0.109% was applied for calculating asset retirement obligation of the GTL demonstration plant as the removal costs is expected to be paid in half a year.(iii) The following table indicates the changes in asset retirement 　obligations for the year ended March 31, 2012

March 31, 2012

(Yen) (U.S.dollars)

Balance at April 1, 2011: ¥112,500,000 US$1,369,780

Liabilities incurred due to the acquisition of property, plant and equipment: ¥199,391,000 US$2,427,749

Accretion expense: ¥36,000 US$438

Liabilities settled: - -

Balance at March 31, 2012 ¥311,927,000 US$3,797,967

(2)Asset retirement obligations not included in the balance sheet　Obligations to restore the Metals Technology Center to its original condition　JOGMEC is obliged to restore the land of the Metals Technology Center to its original condition according to the land sublease contract with local governments.　The Metals Technology Center is, as a part of facilities operated by local governments, engaged in technological research and development activities in cooperation with other institutions. The determination of removal of the Metals Technology Center shall be made based on the opinions of the local governments, as well as that of JOGMEC, and the time of such removal is not yet determined.　As a result, it is difficult to reasonably estimate the amount of asset retirement obligations.　Therefore, the asset retirement obligations for the Metals Technology Center are not recorded on the balance sheet.8. Transfer of Unnecessary Properties to Government　The description of the transfer of unnecessary properties to the government is as follows:

Notes to Financial Statements�（March�31,�2012）


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(1)

Outline of type, book value, etc. of assets transferred to government as unnecessary properties

Machinery and equipment (Facility acquired through support project for development of high efficiency recovery system of rare metals)

Cash on hand and in banks(Redemption money for security deposits)

Land, buildings and structures(Facility of training in Hakone)

Book value:52,500,000(yen) 639,230(U.S.dollars)

Book value:462,246,840(yen) 5,628,234(U.S.dollars)

Book value:139,749,696(yen) 1,701,567(U.S.dollars)

(2)Reasons for which assets became unnecessary

With the termination of the support project for research and development of technology to efficiently recover and recycle rare metals and precious metals from discarded small electronic and electrical products and cemented carbide tools which contain rare metals, the facilities acquired through this project became unnecessary.

The security deposits redeemed as a result of the relocation of the head office was not and is not expected to be disbursed for the new office.

Basic Policy on Review of the Administrative Work and Projects of Incorporated Administrative Agencies (Cabinet decision made on December 7, 2010) stipulated that the assets should be transferred to government.

(3) Method of transfer to government

Payment in cash in accordance with paragraph (2) of Article 46-2 of Act on General Rules for Incorporated Administrative Agency

Payment in kind in accordance with paragraph (1) of Article 46-2 of Act on General Rules for Incorporated Administrative Agency

(4)

Amount of capital gains from sale of assets in connection with which transfer was made by way of cash payment

25,000,000(yen)304,395(U.S.dollars) - -

(5)

Amount of costs deducted from amount of capital gains to be transferred to government

- - -

(6) Amount of transfer to government

25,000,000(yen)304,395(U.S.dollars)

442,413,680(yen)5,386,749(U.S.dollars) Payment in kind

(7) Date of transfer to government August 17, 2011 March 19, 2012 March 30, 2012

(8) Amount of reduction of capital - 442,413,680(yen)

5,386,749(U.S.dollars)804,013,659(yen)

9,789,525(U.S.dollars)

(1)

Outline of type, book value, etc. of assets transferred to government as unnecessary properties

Machinery and equipment(Facility acquired through the project for research and development of petrochemicals production from dimethyl ether as a raw material)

Machinery and equipment(Facility acquired through the

project for development of a real-time reservoir monitoring system by

４-D geoelectrical techniques)

Book value:2,082,608(yen) 25,357(U.S.dollars)

Book value:587,302(yen) 7,151(U.S.dollars)

(2)Reasons for which assets became unnecessary

With the termination of the project for research and development of petrochemicals production from dimethyl ether as a raw material, the facilities acquired through this project became unnecessary.

With the termination of the project for development of a real-time reservoir monitoring system by ４-D geoelectrical techniques, the facilities acquired through this project became unnecessary.

(3)Method of transfer to government

Payment in cash in accordance with paragraph (2) of Article 46-2 of Act on General Rules for Incorporated Administrative Agency

(4)

Amount of capital gains from sale of assets in connection with which transfer was made by way of cash payment

4,204,524(yen)51,194(U.S.dollars)

881,000(yen)10,727(U.S.dollars)

(5)

Amount of costs deducted from amount of capital gains to be transferred to government

- -

(6)Amount of transfer to government

4,204,524(yen)51,194(U.S.dollars)

881,000(yen)10,727(U.S.dollars)

(7)Date of transfer to government

April 13, 2012 April 13, 2012

(8)Amount of reduction of capital

- -

III. Actions Resulting in Significant Financial Obligations　Based on the construction contract of National LPG stockpiling bases in accordance with Article 5-1 of the Supplementary Provisions of the Specific Law, the amount for actions resulting in significant financial obligations scheduled to be paid after the following fiscal year is 40,188 million yen (489 million U.S. dollars).

IV. Definitions of Terminology　“Loans receivable for funding private-sector stockpiling activities” and “Loans payable for funding private-sector stockpiling activities” 　JOGMEC provides loans to crude oil refining companies and oil and gas importers, which are required to maintain certain level of stockpiling to cover consumption for a certain number of days. The loans receivable are provided to finance the purchase of oil and gas stocks, while the loans payable represent borrowings of the same amount to source these loans. JOGMEC classifies both types of loans as current assets and current liabilities because all related loans receivable and payable are restructured at the end of April every year. Because these loans are material, they are presented separately in the balance sheet.V.Material Subsequent Events　Not applicable.

Financial Review


Financial ReviewIndependent Auditor's Report

Audit of Financial Statements

　Pursuant to Article 39 of “Act on General Rules for Incorporated Administrative Agency,” we have audited the financial statements by account (except for the proposal for appropriation of retained earnings and disposal of execution costs for administrative services by account, significant accounting policies, notes to financial statements and the related supplementary schedules by account of Japan Oil, Gas and Metals National Corporation (“JOGMEC”) for the 2011 fiscal year from April 1, 2011 to March 31, 2012. We have also audited the combined financial statements consisting of the combined balance sheet, the combined statements of operations, cash flows and the execution costs for administrative services, significant accounting policies, notes to financial statements and the related combined supplementary schedules.

President’s Responsibility for the Financial Statements and the Related Supplementary Schedules

　President is responsible for the preparation and fair presentation of these financial statements and the related supplementary schedules (except for the proposal for appropriation of retained earnings and disposal of accumulated deficits) in accordance with “Accounting Standards for Incorporated Administrative Agencies” generally accepted in Japan, and for designing and operating such internal control as president determines is necessary to enable the preparation and fair presentation of the financial statements and the related supplementary schedules that are free from material misstatement, whether due to frauds, errors or illegal acts.

Auditor’s Responsibility

　Our responsibility is to express an opinion on these financial statements and the related supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards for incorporated administrative agencies generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the related supplementary schedules are free from material misstatement. We plan the audit considering the possibility that frauds, errors or illegal acts committed by president or other personnel within JOGMEC’s organization may result in material misstatements of the financial statements.

　An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the related supplementary schedules. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements and the related supplementary schedules, whether due to frauds, errors or illegal acts. The purpose of an audit of the financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by president, as well as evaluating the overall presentation of the financial statements and the related supplementary schedules.　We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. This basis includes the fact that, during the course of our audit, we did not identify any frauds, errors or illegal acts committed by president or other personnel within JOGMEC’s organization which would result in material misstatements of the financial statements and the related supplementary schedules. However, our audit was not designed for the purpose of expressing an opinion on whether or not there were any frauds, errors or illegal acts committed by president or other personnel within JOGMEC’s organization which would not result in material misstatements of its financial statements.

Opinion

　In our opinion, the financial statements and the related supplementary schedules by account of the Account for Oil and Natural Gas, the Account for Metal Mining Stockpiling, Exploration Loans and Others, the General Account for Metal Mining, the Reserve for Prevention of Mine Pollution Account, and the Fund for Prevention of Mine Pollution Account, as well as the combined financial statements referred to above present fairly, in all material respects, the financial position by account and on a combined basis of JOGMEC, and results of operations, its cash flows and its execution costs for administrative services by account and on a combined basis in conformity with “Accounting Standards for Incorporated Administrative Agencies” generally accepted in Japan.

Opinion on the Proposal for Appropriation of Retained Earnings and Disposal of Accumulated Deficits and the Financial Reports

　Pursuant to Article 39 of “Act on General Rules for Incorporated Administrative Agency,” we have audited the proposal for appropriation of retained earnings and disposal of accumulated deficits for each account as well as the financial reports for each account and on a combined basis of JOGMEC from April 1, 2011 to March 31, 2012.

President’s Responsibility for the proposal for appropriation of retained earnings and disposal of accumulated deficits and the financial reports

　President is responsible for the preparation and fair presentation of these proposals for appropriation of retained earnings and disposal of accumulated deficits in accordance with the related regulations and the financial reports in accordance with the budget classification.

Auditor’s Responsibility

　Our responsibility is to express an opinion on whether the proposal for appropriation of retained earnings and disposal of accumulated deficits is presented in accordance with the related regulations and whether the financial reports present properly JOGMEC’s financial affairs in accordance with the budget classification.

Opinion on the proposal for appropriation of retained earnings and disposal of accumulated deficits and the financial reposts

Our opinion is as follows:(1) The proposal for appropriation of retained earnings and disposal of accumulated deficits for each account is presented in accordance with the related regulations.(2) The financial reports for each account and on a combined basis of JOGMEC present properly JOGMEC’s financial affairs in accordance with the budget classification established by 　　　president.

Report on Business Report　Pursuant to Article 39 of “Act on General Rules for Incorporated Administrative Agency,” we have audited the accounting matters stated in the business report by account of JOGMEC for the 2011 fiscal year from April 1, 2011 to March 31, 2012. The accounting matters which we audited in the business report were derived from the accounting books and records of JOGMEC.

Report on Business Report

　In our opinion, the accounting matters stated in the business report present properly the financial position and the results of its operations of JOGMEC.

　The U.S. dollar amounts in the accompanying financial statements with respect to the year ended March 31, 2012 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion; such translation has been made on the basis described in Note 1.

Conflicts of Interest　We have no interest in JOGMEC which should be disclosed in compliance with the Certified Public Accountants Act.

Ernst & Young Shin Nihon LLCJune 20, 2012

Tokyo, Japan

Independent Auditor's ReportMr. Kawano HirobumiPresidentJapan Oil, Gas and Metals National Corporation


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Overview of JOGMEC General Overview

●Name　 Japan�Oil,�Gas�and�Metals�National�Corporation�(JOGMEC）

●President　 Hirobumi�Kawano

●Capital　 408.9�billion�yen�(as�of�31�March,�2012)

●No,�of�employees� 459�people�(as�of�31�March,�2012)

●History Japan�Oil,�Gas�and�Metals�National�Corporation�(JOGMEC)�was�established�as�an�incorporated�administrative�

agency�on�29�February�2004,�with�the�integration�of�the�former�Japan�National�Oil�Corporation�(JNOC)�and�

Metal�Mining�Agency�of�Japan�(MMAJ)

●Purposes The�purposes�of� the�JOGMEC�are�to�supply�the�necessary� funds�for�exploring� for�petroleum�and�combustible�

natural�gas,�coal,�geothermal�energy�as�well�as�metallic�minerals�or�others�and�to�conduct�other�operations�

necessary� for�promoting� the�development�of�petroleum,�combustible�natural�gas� resources,�coal� resources,�

geothermal�resources�and�metallic�mineral�resources�as�well�as�operations�necessary�for�stockpiling�petroleum�and�

metallic�mineral�products,�thereby�contributing�to�a�stable�and�low-price�supply�of�petroleum,�etc.,�coal,�geothermal�

energy�and�metallic�mineral�products,�as�well�as�to�loan�the�necessary�funds�for�controlling�mine�damages�caused�

by�metal�mining,�etc.�and�other�operations,�thereby�contributing�to�the�protection�of� the�nation’s�health,� the�

preservation�of�the�living�environment�and�the�sound�development�of�metal�mining,�etc.�(as�of�October�2012)

*JOGMEC�has�started�operations�of�coal�and�geothermal�resource�development�in�2012�in�accordance�with�

a�legal�amendment�in�September�2012.

●Location　 Headquarters

　Toranomon-twin-buildings,�2-10-1�Toranomon,�Minato-ku,�Tokyo�105-0001,�Japan

　Tel�:�+81-3-6758-8000�/�Fax�:�+81-3-6758-8008�

Technology & Research Center

　1-2-2�Hamada,�Mihama-ku,�Chiba-city,�Chiba�261-0025,�Japan

　Tel�:�+81-43-276-9212�/�Fax�:�+81-43-276-4061

What is an Incorporated Administrative Agency?

　An incorporated administrative agency is an agency that is responsible for a certain subset of administrative and business duties that are handled by the division charged with executing government policy. It has been separated from the administrative activities of the various ministries and awarded independent corporate status and constitutes a system designed to stimulate and improve the quality of services, enhance efficiency, provide for independent management, and promote greater transparency. The competent authority governing the incorporated administrative agency conducts a thorough evaluation of all aspects of the agency’s business performance at the end of the period for the medium-term objectives, including a review of the necessity for continuing the services offered by the incorporated administrative agency in question, the state of the organization, and other organizational and business factors. The requisite steps are then taken based on those results. The role or mission of JOGMEC as the primary institution for resource and energy development, as the institution bearing the responsibility for accumulating reserves as the last resort for security, and as the institution upholding one part of environmental conservation was clearly delineated in the second medium-term objective period beginning in April 2008.


Officers

Position Name Term Previous History

President Hirobumi Kawano2008.4.1

～

2016.2.28

- Senior Vice President, JFE Steel Corporation, - Director General, Agency for Natural Resources and Energy, Government of Japan- Director General, Basic Industries Bureau, Government of Japan- Director General, Petroleum Department, Agency for Natural Resources and Energy, Government of Japan

Executive Vice

PresidentFumiaki Fujita

2008.4.1

～

2016.2.28

- Director, Senior Vice President, General Manager of Negishi Refinery, Nippon Petroleum Refining Co., Ltd.- Executive Officer and General Manager of Sendai Refinery, Nippon Petroleum Refining Co., Ltd.- Deputy Managing Director, Thai Paraxylene Co., Ltd.- Assistant General Manager, Engineering Planning Group, Engineering Department, Mitsubishi Oil Co., Ltd.

Executive Director

Hisanori NeiInternal Audit (Office), General Coordination, Financial Management andAccounting, & Evaluation

2012.4.1

～

2014.3.31

- Director, Petroleum Refining and Reserve Division, Natural Resources and Fuel Department, Agency for Ntural Resources and Energy, Ministry of Economy, Trade and Industry- Director, Technical Cooperation Division, Trade and Economic Cooperation Bureau, Ministry of Economy, Trade and Industry- Director, Nuclear Power Inspection Division, Nuclear and Industrial Safety Agency, Ministry of Economy, Trade and Industry- Director-General, Tohoku Bureau of Economy, Trade and Industry, Ministry of Economy, Trade and Industry- Deputy Director-General, Nuclear and Industrial Safety Agency, Ministry of Economy, Trade and Industry

Executive Director

Hironori WasadaOil & Gas Upstream Business Unit

2009.6.29

～

2014.2.28

- Councilor, Oil & Gas Upstream Business Unit, JOGMEC- Director General, Project Group, JOGMEC- Director General, First Project Department, Japan National Oil Corporation

Executive Director

Yoshihiro TsujiOil & Gas Upstream Technology Unit

2012.3.1

～

2014.2.28

- Director, Exploration Research Division, R&D Promotion Department, JOGMEC- Director-General, Technical Research Department, JOGMEC- Director-General, Exploration Department, JOGMEC

Executive Director

Hideyuki UedaMetals Strategy & Exploration Unit

2012.3.1

～

2014.2.28

- Manager, Matsuo Mine Pollution Control Project Support Office, Metal Mining Agency of Japan- Director,Metal Mining Loan Group, JOGMEC- Director-General,Matals Mining Technology Department, JOGMEC

Executive Director

Hitoshi AraiStockpile Unit

2010.4.1

～

2014.3.31

- Senior Executive Officer, Member of the Board,General Manager of Sales Division and Engineering Division,Tokyo Gas Engineering Co., Ltd.- Senior Executive Officer, Member of the Board,General Manager of Sales Division, Tokyo Gas Engineering Co., Ltd.- General Manager of Sodegaura LNG Terminal, Tokyo Gas Co., Ltd.

Executive Director

Tetsuji Nagatomo Metals & Coal Finance andEnvironment Unit

2012.4.1

～

2014.3.31

- Director, Audit Department, Deposit Insurance Corporation- Director-General, Hiroshima Regional Taxation Bureau, Ministry of Finance- Counselor, Minster's Secretariat, Ministry of Finance- Concurrent Posts:Counsellor, Cabinet Secretariat, Cabinet Affairs OffiCe, member of National Policy Unit, Cabinet Secretariat

Auditor Masaru Namura 2012.4.1

～

2014.3.31

- Executive Officer in charge of Engineering, DOWA Holdings Co., Ltd.- Executive Director in charge of engineering and intellectual properties, DOWA Holdings Co., Ltd.- Auditor, Akita Zinc Co., Ltd.

Auditor Hiroshi Kubota2011.7.1

～

2014.2.28

- Deputy Director General, Projetct Department, JOGMEC- Director, Public Relations Team, Corporate Strategy & General Affairs Group, JOGMEC- Director, Accounting Divisin, General Administration Department, JNOC- Director, Project Evaluation Department, JNOC- General Manager, Paris Office, Japan National Oil Corporation（JNOC）

As�of�Oct�2012


President

Executive Vice President

Executive Directors

Organization Structure

Internal Audit Office

Genaral Coordination Department

Financial Management & Accounting Department

Evaluation Department

Technical Coordination and Integration Department

Exploration Department

Technical Department

Seismic Vessel Project Group

Stockpile Planning Department

Petroleum Stockpile Management Department

LPG Stockpile Management Department

Rare Metals Stockpile Department

Metals Environment Management Department

Metals Finance Department

Coal Development Department

Geothermal Resource Development Department

Business Strategy Department

Project Department

Research and Analysis Department

Metals Strategy Department

Metals Exploration Department

Metals Mining Technology Department

Oil & Gas Upstream Technology Unit

Metals Strategy & Exploration Unit

Stockpile Unit

Metals & Coal Finance and

Environment Unit

Oil & Gas Upstream Business Unit

Auditors

Auditors' Office

As�of�Oct�2012


Woldwide Network

Office Address TEL FAX

Beijing Office (China)Room�1421,�5�Hao,�Dong�Sanhuan�Bei-Lu,�Chaoyang�District,�Beijing,�100004�CHINA

+86-10-6590-9520 +86-10-6590-8366

Jakarta Office (Indonesia)5th�Floor,�SUMMITMAS�II,Jl�Jend,Sudirman�Kav,61-62,�Jakarta�12190�INDONESIA

+62-21-522-6640 +62-21-522-6650

Sydney Office (Australia)Level�23,�BT�Tower,�1�Market�Street,�Sydney�NSW�2000�AUSTRALIA

+61-2-9264-9611�+61-2-9264-2493

'+61-2-9264-4914

Washington Office (U.S.A.)1233�20th�Street,�N.W.�Suite�206�Washington,D.C.�20036U.S.A.

+1-202-775-0602 +1-202-775-0605

Houston Office (U.S.A.) One�Riverway,�Suite�450�Houston,�Texas�77056,�U.S.A. +1-713-622-0204 +1-713-622-1330

Vancouver Office (Canada)1710-400�Burrard�Street,�Vancouver,�B.C.�V6C3A6�CANADA

+1-604-685-1282 +1-604-685-4123

Mexico Office / Oficina en Mexico (Mexico)

Goldsmith�No.�37,�Oficina�401,�Col.�Chapultepec�Polanco,C.P.11560�MEXICO,�D.F.,�MEXICO

+52-55-5280-1099 +52-55-5280-0214

Lima Office / Oficina en Lima (Peru)

Av.�Camino�Real�348,�Torre�El�Pilar,�Piso�7,�Offcina�704,�San�Isidro�Lima-27,�PERU

+51-1-221-5088 +51-1-221-1871

Santiago Office/ Oficina en Santiago (Chile)

World�Trade�Center,�Torre�Norte�1005,�Av.�Nueva�Tajamar�481,�Las�Condes,�Santiago,�CHILE�

+56-2-2203-6130 +56-2-2203-6121

Moscow Office (Russia)Room�650,�Hotel:Mezhdunarodnaya-2Krasnopresnenskaya�Nab.12�Moscow�123610�RUSSIAN�FEDERATION

+7-495-967-0405 +7-495-967-0407

London Office (U.K.)Carrington�House,�126-130�Regent�Street,�London�W1B5SE�U.K.

+44-20-7287-7915+44-20-7287-7916

+44-20-7287-7917

Middle East Office (U.A.E.)P.O.BOX�6270Al-Masaood�Tower�#904,�Sheikh�Hamdan�Street,�AbuDhabi,�U.A.E.

+971-2-6330366+971-2-6217704

+971-2-6330280

Botswana Geologic Remote Sensing Centre (Botswana)

Geologic�Information�Centre�1st�Floor,Plot�No.�1734,�Khama�1�Avenue,�Lobatse,�BOTSWANA

+267-530-1503 +267-530-1501

Hanoi Representative Office (Vietnam)

6F,�Sun�Red�River�Building,�23�Phan�Chu�Trinh�Street,�Hoan�Kiem�District,�Hanoi,�VIETNAM

+84-4-3944-9912 +84-4-3944-9915


Domestic Network

Office AddressMetals Technology Center 9-3 Furudate, Kosakakozan, Kosaka, Akita 017-0202 JapanTomakomai Site Management Office 308 Aza-Shizukawa, Tomakomai-shi, Hokkaido 059-1363 Japan

Mutsu-Ogawara Site Management Office525-2 Aza-Futamata, Oaza-Obuchi, Rokkasho-mura Kamikita-gun, Aomori 039-3212 Japan

Akita Site Management Office 219 Aza-Ashizawa, Funakawa, Funakawa Minato, Oga-shi, Akita 010-0511 JapanKuji Site Management Office 8-105-2 Heinokuchi, Natsui-cho, Kuji-shi, Iwate 028-0001 JapanFukui Site Management Office 1 Aza-Rinkai, 38 Ishishinbo-cho, Fukui-shi, Fukui 910-3133 JapanKikuma Site Management Office 4642-1 Tane, Kikuma-cho, Imabari-shi, Ehime 799-2302 JapanKikuma Site Management Office 1-108 Hibiki-machi, Wakamatsu-ku, Kitakyushu-shi, Fukuoka 808-0021 Japan

Kamigotou Site Management Office818-411 Aza-Orishima, Tsuzukihamanouragou, Shinkamigoto-cho, Minamimatsuura-gun, Nagasaki 857-4415 Japan

Kushikino Site Management Office 1 Seisatsu-cho, Ichikikushikino-shi, Kagoshima 896-0046 Japan

Shibushi Site Management Office5024-1 Aza-Shinsuzaki, Kawahigashi, Higashi-Kushira-cho, Kimotsuki-gun, Kagoshima 893-1615 Japan

Kamisu Site Management Office 6225-40 Okunoya, Kamisu-shi, Ibaraki 314-0116 JapanNanao Site Management Office 165-1 Mimuro-machi, Nanao-shi, Ishikawa 926-0007 JapanKurashiki Project Management Office 6-6-5 Minamise, Kurashiki-shi, Okayama 712-8055 Japan600Namikata Project Management Office 600 Ko, Miyazaki, Namikata-cho, Imabari-shi, Ehime 799-2104 JapanFukushima Site Management Office 58-2 Shiohamamen, Fukushima-cho, Matsuura-shi, Nagasaki 848-0403 JapanHokkaido Mine Pollution Control Project Support Office

30-31 Umemoto-cho, Date-shi, Hokkaido 052-0022 Japan

Tohoku Mine Pollution Control Project Support Office

2-5-17 Matsunami, Yamagata-shi, Yamagata 990-0023 Japan

Chugoku-Kinki Mine Pollution Control Project Support Office

Toranomon Twin Building, 2-10-1 Toranomon, Minato-ku, Tokyo 105-0001 Japan

Kyushu Mine Pollution Control Project Support Office

1-5 Tashima Hon-machi, Hita-shi, Oita 877-0026 Japan

Kashiwazaki Test Field Office 690 Oaza-Hirai, Kashiwazaki-shi, Niigata 945-1353 JapanMatsuo Mine Pollution Control Project Support Office

1-3-1 Kashiwadai, Hachimantai-shi, Iwate 028-7303 Japan

★Head Office　　★Technology & Research Center（TRC）●Oil Stockpile Site Management Office　　　LPG Stockpile Site Management Office or Project Site Management Office●Kashiwazaki Test Field Office　　■Mine Pollution Control Project Support Office　　■Metals Technology Center


Year ended March 31

Annual Report2012

ANNUAL REPORT

Relia

ble Partnership

Head OfficeToranomon Twin Building

2-10-1 Toranomon, Minato-kuTokyo 105-0001 JAPAN

TEL : +81-3-6758-8000 FAX :+81-3-6758-8008

Technology & Research Center1-2-2, Hamada, Mihama-ku, Chiba-city,

Chiba 261-0025, JAPANTEL : +81-43-276-9212 FAX : +81-43-276-4061

http://www.jogmec.go.jp/

JAPEX ResearchCenter

JOGMECTRC

Tokyo

Tokyo

Tokyo

ChibaJR Sobu Line

Keisei Chiba LineMakuhariHongoStation

Makuhari I.C.

Wangan I.C.

Makuhari CorpBus Stop

Wangan Avenue

DrivingLicence Center

MakuhariMesse

Keisei BusStation

KaihinMakuhariStation

Toranomon Twin Building

Ginza Line

Nan

boku

Lin

e

Toranomon sta.

Tameike Sanou sta.

Kamiya Cho sta.

Exit No.4

Exit No.3

Hotel Okura

METI

Toranomon Hospital

National Printing Bureau

Ministry of Education, Culture, Sports, Science & Technology

Embassy of the USA

Hotel Okura

Japan Post

TV Tokyo

Hib

iya

Line

ＪＯＧＭＥＣ

Japan Oil, Gas and Metals National Corporation

ear ended march 31 annual report - jogmec · natural gas is increasing in japan for power...

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