Energy Business Group Investor Meeting

December 13, 2012

Mitsubishi Corporation
Energy Business Group
Contents
1. Overview of Energy Business Group
① Organizational Structure
② Business Performance (Positioning in MC)
③ Value Chain
④ Measures Focused on Future Growth
⑤ Global Expansion of Energy Resources Business
⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and
Reserves

2. Outline of Business Divisions — Natural Gas Business

① Outlook for LNG Demand by Country/Region
② Diversifying LNG Supply Sources
③ List of Existing LNG Projects
④ Outline of Projects in the Pipeline
• Donggi-Senoro LNG Project
• Shale Gas Development in Canada/LNG Canada
• Browse LNG Project in Australia
• Wheatstone LNG Project in Australia
• Natural Gas Development in Papua New Guinea
• SGU Project in Iraq
• Cameron LNG Project

1
Contents
3. Outline of Business Divisions—E&P Business
① Environment Surrounding the E&P Business
② List of Major Projects
③ Overview of Kangean Project in Indonesia

4. Outline of Business Divisions — Petroleum Business

① Organizational Chart for the Petroleum Business Division
② Environment Surrounding the Petroleum Industry
③ Key Initiatives

5. Outline of Business Divisions — Carbon & LPG Business

① Major Products in the Carbon Business
② Key Initiatives in the Carbon Business
③ LPG Business/Astomos Energy
④ LPG Business Value Chain

2
1. Overview of Energy Business Group

3
 4
No. of Group overseas sites: 28

Central and South America: 2

No. of business investees: 94
(including 48 secondees)
(including 54 secondees)

Business Investees
Group headcount: 591

Overseas sites

(including Oceania)
Headcount

North America: 2
Head Office: 392

Middle East: 7
Overseas: 99

Overseas: 53
Japan: 100

Japan: 41

Europe: 3
Russia: 1
Asia: 13

Namikata Terminal Business Unit

Carbon & LPG LPG Business Unit
Business Division Specialty Carbon & Graphite Business Unit
Petroleum Coke Unit
Carbon Materials Unit
Petroleum Feedstock Unit
Petroleum Business Utility Feedstock Unit
Division Industrial Petroleum Marketing Unit
Petroleum Supply & Marketing Unit
Shale Gas Business Unit
Energy Business Group
Organizational Chart
(As of October 1, 2012)

Donggi-Senoro Project Unit

Natural Gas Business Global Gas Unit
Division B New Business Development Unit
Sakhalin Project Unit
Middle East Natural Gas Business Unit
Indonesia Project Unit
Natural Gas Business Australia Unit
① Organizational Structure

Division A Malaysia Project Unit

Brunei Project Unit
E&P New Business Development Unit
Senior Vice President
Asia E&P Business Unit
Officer for E&P
Africa, Europe and America E&P Business Unit
New Business Development Office
Energy Business Group Administration Dept.
Energy Business Group CEO Office
② Business Performance (Positioning in MC)

(Billion yen)
5,000
500.0 グループ
Group 全社
Company-wide

4,500
450.0

4,000
400.0

3,500
350.0

3,000
250.0

2,500
200.0
464.5 452.3
2,000
200.0
371.0
330.0
1,500
150.0 275.8
1,000
100.0
120.6 130.0
500
50.0 82.8 94.0
71.9
00
Year Ended Year Ended Year Ended Year Ended Year Ending March
March 2009 March 2010 March 2011 March 2012 2013 (Forecast)

Oil price (Dubai) $81.8 $69.6 $85.7 $110.1 (Assumption) $108.2

Exchange rate 100.7 yen 92.9 yen 84.2 yen 79.1 yen ( 〃 ) 79.7 yen

Impact of changes in oil price on earnings (net income): for every $1/bbl increase (decrease) in the oil price,
net income will increase (decrease) approx. 1.0 billion yen on a full-year basis.

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③ Value Chain
Upstream Liquefaction/marketing Trading Transport
End users
・ Joint venture with TEPCO
・ Malaysia LNG 3 ・ Brunei LNG ・CELT Inc. ・ BST (Brunei)
・ MIMI（NWS/Browse） ・ Malaysia LNG (1 & 2 & 3) Power companies
・ IGTC（NWS）
・ Sakhalin Energy Investment ・ MIMI（NWS/Browse)
Natural ・ Sakhalin Energy Investment
・ MI Berau B.V. (Tangguh)
gas (LNG) ・ Tomori E&P (Donggi)
・ Oman LNG
Gas companies
・ MI Berau B.V. (Tangguh)
・Canada shale gas ・ DSLNG
Petroleum ・Papua New Guinea ・ PEW (Wheatstone LNG)
・Wheatstone Petroleum companies
・ LNG Canada/ U.S. LNG Export

Natural Gas Business Divisions Steelmakers

・ MCX ・ MCX USA
・ MCX DUNLIN * Blue text represents business investees
・ MPDC Gabon ・ MEDCO Aluminum
・ Angola Japan Oil ・EMPI E＆P manufacturers

International shipping Primary distribution / Domestic distribution Petrochemical

Trading Marketing / storage
fleet / terminals refining / trading industry
Crude oil ・Southeast Asia ・ Kanokawa
・Diamond Tanker
・Middle East Terminal Automakers
・West Africa ・ Onahama
・PDI
・Australia Petroleum ・Mitsubishi Shoji
Petroleum ・Showa Yokkaichi Sekiyu General industry
・PDS
Sekiyu
products ・PDI ・MC Energy
・Dia Shoseki Paper and pulp
Petroleum Business Division manufacturers
Supply of raw materials / Primary Secondary manufacturing /
Logistics / trading Logistics Electronics
manufacturing and processing processing / carbon products
manufacturers
・Coal coke ・Sekiyu Cokes Kogyo ・SG Chemicals
・Joint venture project in China ・MC Carbon Food manufacturers
Carbon ・Petroleum coke ・MC Carbon
・Coal tar ・Ryoshin Bulk Trans (MZAS/ Nanjing Baoning
Chemical Industries)
・Nihon Electrodes Industry Ceramics industry
Primary distribution /
Logistics / trading Storage
wholesaling
LPG Electrode
・Namikata Terminal manufacturers
・Astomos Energy ・ Astomos Energy
Carbon & LPG Business Division

New Business
Development ①Biomass fuel ②Fuel cell / hydrogen usage ③Power generation business ④ On-site power supply (co-generation) ⑤Geothermal business
Office

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④ Measures Focused on Future Growth

Management A unique and sustainable energy company

vision: (All in the name of creating an enriched society through energy)

・Petroleum and gas: Tight supply-demand over the medium and long terms
Business → intensified competition for resources
environment: ・Nuclear issue → increased demand for natural gas and petroleum
・Shale revolution → expanded use of gas (transport, electricity, petrochemicals)

① Build a structure that generates steady business earnings by

achieving balanced growth of resource businesses (natural gas, LNG
and E&P) and non-resource businesses (petroleum, carbon and LPG)

② Maintain and expand the Group’s industry presence by expanding

Aspirations: natural gas (LNG) business domains, which form the core of the
Group’s earnings

③ In non-resource businesses, maintain a strong presence in the

Japanese market, while promoting globalization of business centered
on Asia and emerging countries.

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 ⑤ Global Expansion of Energy Resources Business

U.K. North Sea

Development/ Canada Shale Gas
Production Development Projects
(Crude oil)

Sakhalin II LNG U.S. Gulf of Mexico

Development/
Production
Iraq SGU (Crude oil)

Oman LNG
Liberia
Exploration
(Crude oil) Gabon
Exploration/
Development/
Production Malaysia LNG
(Crude oil)) Venezuela
Brunei LNG Development of
Browse LNG Orinoco heavy oil
Donggi-Senoro LNG
(Crude oil)
Angola North West Shelf LNG Tangguh LNG
Development/ Kimberly
Production Wheatstone LNG Exploration
(Crude oil) (Crude oil/ Investment in
Natural gas) MEDCO Papua New Guinea
Kangean Exploration/
Development/ Development
Production (Natural gas)
(Crude oil/
Natural gas)

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⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and Reserves

(Million tons/year)
Equity Share of LNG Production
LNG持分生産能力
1200
12.00 タングー*
Tangguh*
1000 サハリンⅡ*
Sakhalin II*
10.00
Target: カルハット
Qalhat (Oman)
800
8.00 7.05 7.05 7.05 7.05 （オマーン）
10 million tons オマーン
Oman
6.00
600 4.97 4.97 5.34 Western Australia*
西オーストラリア*

Malaysia III*
マレーシア3*
4.00
400
Malaysia II
マレーシア2
2.00
200 Malaysia I
マレーシア1
Brunei
ブルネイ
00
2006
2006年 2007
2007年 2008
2008年 2009年
2009 2010年
2010 2011年
2011 2012年
2012 2013年
2013 2020年
2020

* Owns upstream working interest

Equity Share of Oil and Gas Production (Yearly Average)*1
(Thousand BBL/Day)
160 Crude il/condensate
146 141 0.22 Billion BBL
■ 天然ガス 原油・コンデンセート
Natural gas ■ Crude oil/condensate
140
120 116 47 39
100 90 84 49 Natural gas
80 76 84 82 90 84
76 0.91 Billion BBL
63 48 42
60 40
99 102
40
67
20 36 41 42
0
2006 2007 2008 2009 2010 2011 2012 MC’s Reserves
(est.) Total *1*2 1.13 Billion BBL
*1 Oil equivalent. Includes consolidated subsidiaries and equity-method affiliates
*2 Participating interest equivalent. Includes reserves based on original standards set by MC (As of December 31, 2011)

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2. Outline of Business Divisions —
Natural Gas Business

10
①Outlook for LNG Demand by Country/Region

LNG demand is projected to increase approximately 1.5-fold to 370 million tons in 2020,
from 240 million tons in 2011.

(million tons/year) 2010 2011 2012 2015 2020

Actual Actual Est. Est. VS 2011 Est. VS 2011
Asia-pacific region 135 154 171 187 32 238 83
Japan 70 79 86 80 2 93 15
Korea 33 37 36 37 0 37 0
Taiwan 11 12 13 15 3 20 8
China 9 12 16 26 13 45 33
India 9 11 16 13 2 20 9
Other Asia 0 1 1 11 10 16 16
Chile, Mexico (Pacific Coast) 3 3 3 6 3 6 3
Atlantic region 75 87 76 99 12 130 43
Europe 56 66 52 73 7 106 40
North America (Excl. Pacific Coast) 13 13 9 7 (6) 8 (5)
Others (Middle East, Central &
South America) 6 9 15 19 10 16 8

Worldwide total 210 241 247 285 44 368 127

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②Diversifying LNG Supply Sources
• LNG exporting regions, which are currently centered on Asia and Oceania, will
expand to North America, Africa and other regions.
(There were 20 supplying nations in 2011.)

East Siberia
West Siberia West Canada

Europe Sakhalin
ｻﾊﾘﾝ

U.S.
Qatar China

East Africa

East Australia (CBM)

Brazil

Existing supply regions

New supply regions

LNG importing regions

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③List of Existing LNG Projects
Start Project MC’s Role Shareholding

1969 Alaska LNG Sales to Tokyo Electric and Tokyo Gas; Negotiation support; Import agent －
＊First introduction of LNG to East Asia

1972 Brunei LNG Investment in liquefaction and sales; Negotiation support; Import agent; Shipping 25%

1983 Malaysia LNG Investment in liquefaction and sales; Negotiation support; Import agent 5-15%
* 3 Projects: Satu, Dua (FID 1992) and Tiga (FID 1999)

1989 North Wes Investment in upstream, in liquefaction and in sales; Negotiation support; 8.3%
Shelf LNG Import agent; Shipping
(Includes crude ＊First joint venture with Mitsui & Co., Ltd.
oil development)

2000 Oman LNG Investment in liquefaction and sales 2.8%

2004 Qalhat LNG Investment in liquefaction and sales; Import agent; Shipping 4%
(Oman） ＊ Global sales and arbitrage operations

2009 Sakhalin LNG Investment in upstream, in liquefaction and in sales; Negotiation support; Import 10%
(Includes crude agent
oil development)
＊Joint venture with Mitsui & Co., Ltd. (LNG FID 2003)

2009 Tangguh LNG Investment in upstream, in liquefaction and in sales; Negotiation support ＊Joint Approx. 9.9%
(Indonesia) venture with INPEX Corporation (FID 2005)
2010 Shale Gas Investment in upstream, and in development. Joint development with Japanese 30-40%
(Canada) utility and gas companies
＊North American natural gas business
2014 Donggi- Investment in upstream, in liquefaction and in sales - together with KOGAS (FID Approx. 45%
(Plan) Senoro LNG 2011)
(Indonesia) ＊Taking on operatorship of LNG plant
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④Project Pipeline: Donggi-Senoro LNG Project

MC’s first-ever LNG project that it leads through to

establishment of the plant
The Donggi-Senoro LNG Project has been started in Indonesia to produce and
sell liquefied natural gas (LNG). MC is the largest shareholder in this project,
which is the first to be led by MC from planning through to plant operation. From
2014, the project plans to produce approximately 2 million tons of LNG per year. Location of plant
Through this project, MC will build on the LNG business know-how and functions construction
it has cultivated over many years since its first operation in Alaska in 1969 to Suburban Luwuk, Banggai
ensure an even more stable supply to Japan and the East Asia region. Regency, Central Sulawesi
Province

With shareholders coming

from Japan, Indonesia and
South Korea, this is the first
all-Asian LNG project.

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 ④Project Pipeline: Shale Gas Development in Canada/LNG Canada
Cordova region
Period of Entry September 2010
540 km2 in Cordova
Exploration
Embayment, northeastern
Zone
British Columbia
5-8 trillion cubic feet (100-
Reserves
160 million tons)
MC’s share 30%
Penn West
Operator
（50%）
Peak Approx. 0.7 billion cubic
production feet/day (approx. 5 million
output tons/year, 2018)
Production
Over 50 years
Promoting LNG development (LNG Canada) through a Period
partnership represented by Shell (40%), along with
Japan, China and Korea (20% each) ･Chubu Electric, Tokyo Gas,
Osaka Gas, JOGMEC
(3.75% each), and KOGAS
(5%) are also participating
Cordova as partners.
Features ･Half (50%) of the gas
Montney produced will be sold in
North America through
CIMA Energy, a US gas
marketing company in
which MC has a 34% share.
Montney region
February 2012
1,667 km2 in Montney
Cutbank and Dawson, British
Columbia
35 trillion cubic feet (720
million tons) Equivalent to 9
years’ worth of Japan’s gas
consumption
40%
Encana
（60%）
Approx. 3.0 billion cubic
feet/day (approx. 5 million
tons/year, 2018)
Over 50 years
･Partnered with Encana,
Canada’s largest natural gas
producer
･As one of Canada’s largest
shale gas assets, this prime
project offers outstanding
productivity and cost
competitiveness.
･Immense contribution to
Canada’s economic growth
(project will create 14,000
new jobs)
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④Project Pipeline: Browse LNG Project in Australia

Japan Australia LNG (MIMI) Pty. Ltd. is a 50-50 joint

venture between Mitsubishi Corporation and Mitsui &
Gas and Condensate
Co., Ltd. In September 2012, its subsidiary officially
Fields
participated in the Browse LNG Project promoted by
Woodside Petroleum Ltd.

FID is planned for the first half of 2013.

Project Partners
LNG plant
Location of Gas and
Condensate Fields
Proposed LNG Plant Location
LNG Production
Reserve (estimated by
Woodside Energy)
FID
Woodside Browse, BHP Billiton Petroleum (North West Shelf)
Pty Ltd., BP Developments Australia Pty Ltd., Chevron
Australia Pty Ltd., Shell Development(Australia)Proprietary
Limited, Japan Australia LNG (MIMI Browse) Pty Ltd
Browse Basin, 425km off Broome in Western Australia
James Price Point in Kimberley, Western Australia
12 million tons per annum (4 million tons ×3 trains)
* Potential expansion to 25 million tons per annum
Gas: 15.5 trillion cubic feet
Condensate: 417 million barrels
Planned first half 2013

16
④Project Pipeline: Wheatstone LNG Project in Australia

17
④Project Pipeline: Natural Gas Development in Papua New Guinea

Exploration, appraisal and development of

Outline
natural gas in Papua New Guinea

Nine onshore licenses in Papua New

Licenses
Guinea’s Western Province

Licensed Talisman, MC and others’ licensed equity

Equity positions will average 40%, 20% and 40%,
Positions respectively in these nine licenses.

Approx. 3 million tons (period undetermined,

LNG pending confirmation of gas reserves)
Production * Equity interests in the LNG project have
yet to be determined.

By harnessing the complementary strengths of MC’s

LNG project development and execution capabilities
and Canada-based Talisman’s natural gas exploration,
development and production capabilities, MC is
considering developing LNG from natural gas
produced in Papua New Guinea.

18
 ④Project Pipeline: SGU Project in Iraq

Project to effectively utilize associated gas

(currently most of such gas is flared), which
is essential to Iraq’s economic recovery.

In the future, the project expects to export

LNG (FID: from 2015 / 4 million tons a year)

Collect and refine associated gas from three oil Syria

Outline fields in Basrah Province, and supply products Iran
domestically in Iraq and for export.
Operating Basrah Gas Company (South Gas Company 51%, Baghdad
company Shell 41%, MC 5%)
Handling 2 billion standard cubic feet/day (16 million
volume tons/year) Basrah province
Start of
2013
operations
Basrah
After sufficient domestic gas supplies are achieved, Saudi Arabia
LNG make a FID on LNG as soon as feedstock gas is
available.

19
④Project Pipeline: Cameron LNG Project

Cameron, Louisiana
Project operator Sempra LNG
FID 2013 4Q
Start of operations 2017 2Q
Liquefaction
capacity
4.0MTPA×3Train

Tolling Service (The three companies

GDFS, Mitsui & Co., and MC are
Marketing currently conducting negotiations as
tollers.)

Existing facilities 3Tanks、2Berths

Feed and EPC FEED: Foster Wheeler,
Contractors EPC: tender planned
【Tolling business scheme】
Cameron LNG JV
LNG purchasers
Tolling agreement
SPAs
U.S. gas producers Gas supply
agreement

Mitsubishi Corporation ⇒Against the backdrop of the

shale gas revolution, MC seeks
to achieve LNG exports from
Spot purchase the U.S., which has abundant
U.S. gas market Pipeline agreement
gas reserves, and sell part of
Cameron Interstate this gas to Japan.
Pipeline companies
Pipeline

20
3. Outline of Business Divisions—
E&P Business

21
① Environment Surrounding the E&P Business
Persistently high oil prices and continued firm Expectations for unconventional resources,
demand for crude oil and the opening of new frontiers
・In North America, development of unconventional resources has heated
・According to World Energy Outlook 2012, the IEA average crude oil
up. Recently, there have been high hopes for shale oil in response to
import price is expected to increase to $125 by 2035.
sluggish natural gas prices.
・Despite high oil prices, crude oil demand is projected to continue to
・Tackling the challenge of technically difficult regions, such as great
expand, mainly in Asian emerging countries such as China and India.
sea depths and the Arctic Ocean.

Trend and outlook for global crude oil demand and crude oil Trend and outlook for U.S. crude oil and natural gas
prices through 2035 production through 2035

Source: World Energy Outlook 2012 Source: World Energy Outlook 2012
Note: Crude oil prices represent IEA average crude oil import prices.

Energy policies are attracting attention

• The importance of fossil fuels, such as oil and natural gas, is being reaffirmed following the nuclear accident in Japan. In this context, the
energy policies of various countries are attracting attention.

MC’s Initiatives in the E&P Business

Obtain and provide stable Promote a growth strategy focused on the value chains (upstream) of the LNG and petroleum businesses
supplies of resources Contribute to earnings over the medium and long terms

22
②List of Major Projects

Equity interest Crude

Project Partners Status
(MC, net) oil/gas

Gabon (Baudroie Marine field,

50.00～ Exploration/development
Merou Sardine field, Nguma field Total/Perenco Crude oil
100.00% /production
and others)

Angola
10.20% Sonangol/ENI/ and others Development/production Crude oil
(Block 3/05, 3/05-A)

Anadarko/Eni/ConocoPhillips/
U.S. Gulf of Mexico (K2 project) 11.60% Development/production Crude oil
NOEX/Ecopetrol

U.K. North Sea Dunlin Oil Field 30.00% Fairfield Energy Development/production Crude oil

Kangean, Indonesia 25.00% JAPEX/EMP Development/production Gas/crude oil

PT. Medco Energi Internasional

19.97% Encore International Listed company -
Tbk.of Indonesia

Liberia (Block 10) 10.00% Anadarko/Repsol Exploration Crude oil

23
③Overview of Kangean Project in Indonesia

Overview
・In May 2007, MC and Japan Petroleum Exploration Co., Ltd. (JAPEX)
participated in the Kangean PSC by acquiring a combined 50% working interest.
・Through their management of Kangean Energy Indonesia Ltd., MC and JAPEX
are promoting this project as the de facto project operators.
・Production started in Terang gas field, the core project in Kangean, in late May
2012. (A gas volume of 300 Million Standard Cubic Feet per Day at the peak
period is planned to be produced and distributed across East Java Province.)
・MC plans to develop the Sirasun and Batur gas fields going forward. MC is also
conducting feasibility studies of the potential for additional exploration and
development within the Kangean PSC.

Structure of Partnership

24
4. Outline of Business Divisions —
Petroleum Business

25
 ①Organizational Chart for the Petroleum Business Division (November 2012)
Energy Business
Group
Group CEO Office
Upstream
Business Office
New Business
Development Office
Energy Business Group
Administration Dept.
Key Business Investments
-Petro Diamond Incorporated （PDI）
-Petro Diamond Singapore （PDS）
Petroleum Business Strategy
◇Planning and development of business division
strategies, personnel and general affairs, environmental
management
E&P
Petroleum Supply & Marketing Unit
◇Import, export and offshore trading of crude oil and
petroleum products
Petroleum Business ◇Management of petroleum refining and sales businesses
◇Responsible for business investees (PDI, PDS,
Div. Showa Yokkaichi Sekiyu, Mitsubishi Shoji Sekiyu Group,
Dia Shoseki Group)
Natural Gas Business Industrial Petroleum Marketing Unit
Div. A ◇Import and sales of heavy oil, lubricant oil and asphalt to
industrial firms
◇Responsible for business investees (MC Energy)
Natural Gas Business
Div. B
Utility Feedstock Unit
◇Trading in crude oil, heavy oil and ships for electric utilities
Carbon & LPG ◇Responsible for business investees (Onahama Petroleum,
Business Div. Kanokawa Terminal, Diamond Tanker)
-Showa Yokkaichi Sekiyu
-Mitsubishi Shoji Sekiyu
-Dia Shoseki Petroleum Feedstock Unit
-MC Energy ◇ Import and offshore trading of naphtha, condensate
-Onahama Petroleum and gasoline components, and ship freight transactions
◇ Responsible for business investees (Central Tanker)
-Diamond Tanker
26
② Environment Surrounding the Petroleum Industry

【 Japan 】
◆ Gradual decrease in petroleum demand due mainly to Japan’s declining
population and environmental measures.
◆ Reduction in refining capacity in line with the Act on Sophisticated Energy
Supply Structures.
◆ Clear demarcation of winners and losers among refineries, distributors
and sellers and further industry realignment.
◆ Unpredictable energy mix (restart of nuclear power plants) and uncertain
petroleum demand from electric utilities
【 Overseas 】
◆ Gradual decrease in petroleum demand in OECD countries due
mainly to declining populations and environmental measures
◆ Sharp increase in petroleum demand in emerging countries in step
with vigorous economic growth.
◆ Changes in commercial flows of petroleum triggered by the Shale
Revolution
◆ Consistently high crude oil prices

27
③ Key Initiatives

【 Japan 】
Relentlessly strive to maintain and increase share of the domestic market
by maintaining and strengthening MC’s outstanding sales network and
leveraging its competitive supply capabilities and capacity to adjust for
changes in supply and demand.

【 Overseas 】
Expand new business by capturing growth in buoyant demand for
petroleum products in the Asia-Pacific region, which is undergoing rapid
economic growth.

【 Electric power 】
Provide stable supplies to meet increased petroleum demand from
electric utilities amid suspended operation of nuclear power plants, and
revise MC’s petroleum supply structure in anticipation of future demand.

28
5. Outline of Business Divisions —
Carbon & LPG Business

29
① Major Products in the Carbon Business
The carbon business develops non-resource businesses involving raw materials and supplies essential to industry,
leveraging Company-wide resource businesses.
Petroleum Coke Unit
① Protect and expand
existing business
interests)
② Strengthen value chains
by securing new sources
of petroleum coke
③ Enhance existing
businesses by securing
new inventory sites and
promoting fuel conversion

Speciality Carbon BU
Promote the manufacturing,
development and
commercialization of anode
materials for lithium-ion
batteries

Aluminium-Related Carbon
Materials Office
① Promote the manufacturing
and sales of anodes for
aluminum smelting in
China
② Promote the manufacturing
and sales of pitch coke for
China
③ Expand business utilizing a
BF carbon block cathode
manufacturer
④ Establish a One-Stop
Service for every carbon
product for aluminium
smelting.

Carbon Materials BU
① Expand existing
businesses and develop
new businesses in such
fields as graphite
electrodes, carbon black
feedstock oil, needle pitch
coke, etc.
② Promote the needle pitch
coke manufacturing and
sales business in Korea

30
 ②Key Initiatives

Capture earnings in growing markets

Key Division Initiative I

Projected Demand for Aluminum (million tons)

 Demand for aluminum is projected to continue growing steadily over the 70

medium and long terms. (Year ended March 2012: 43 million tons → year 60

ending March 2021: 68 million tons) 50

 The Division is working with the aim of capturing growth in the aluminum 40

market as a One Stop Servicer for aluminum smelters. 30

20
 The Division is working to strengthen its presence in the aluminum
10
industry in collaboration with manufacturers of carbon materials for
0
aluminum smelters worldwide. To this end, measures also include
05 06 07 08 09 10 11 e12 e13 e14 e15 e16 e17 e18 e19 e20
overseas business investments.

Key Division Initiative II

Major fine carbon products

 The Division offers cutting-edge fine carbon materials, such as lithium-ion Anode Crucible for Carbon brush for Graphite materials
materials for
battery anode materials and crucibles for manufacturing silicon for solar
manufacturing wind power for high-
lithium-ion silicon for solar generation temperature gas
batteries cells furnaces
cells.
 The market for lithium-ion battery anode materials is expected to
experience significant expansion. (Year ended March 2012: approx. 60
billion yen → year ending March 2021: more than 500 billion yen)
 Having established a development and manufacturing company for anode
materials, the Division is working to commercialize the manufacturing and
sale of these materials, from the supply of raw materials to high-
temperature thermal treatment and other operations.

31
 ③LPG Business/Astomos Energy Astomos Energy’s bases (Branches and terminals)
[Supply structure]
Established an LPG operating company with one of the [Branches]
Domestic: 10 locations (Major cities) Import terminals: 10 locations)
world’s largest trading volumes and Japan’s largest Overseas: 2 locations Secondary terminals: 6 locations

share through a business integration in 2006.

Mitsubishi Liquefied
Gas Co.

* National LPG storage terminal based on a

subterranean rock storage system
Namikata Terminal a wholly owned
Features of Astomos Energy subsidiary of MC, is scheduled to operate the
Integrate and capture synergies between overseas operations (trading facility (storage of LPG, chemicals and
functions) and domestic operations (primary distribution functions) petroleum) under contract.
* 450,000 tons of LPG will be stored in a subterranean
Outline of Astomos Energy rock storage system 180m below the surface.

Established: April 1, 2006

Business activities: Import and sales of liquified petroleum gas (LPG), overseas
LPG trading (Ship ownership)
Shareholders: Idemitsu Kosan Co., Ltd. 51%, Mitsubishi Corporation 49%
Number of Employees: 347 (as of April 2012)
Sales: 643.9 billion yen (year ended March 2012)
Trading volume: Approx. 3.7 million tons in Japan; total global trading volume of
9.4 million tons (one of the world’s largest)
Overview of Liquefied Petroleum Gas (LPG)
 LPG is a gaseous fuel consisting primarily of propane and butane.
 LPG is utilized by around 50% (approx. 25 million households) of all Japanese
households as a fuel for residential and commercial use. LNG is used
extensively across roughly 95% of Japan’s land area.
 LPG is an environmentally friendly, distributed form of energy (used to address
the Great East Japan Earthquake).

32
 ④LPG Business Value Chain
 Demand for associated LPG is projected to increase
substantially in step with increased LNG production in the
Middle East and shale gas development in North America.
Astomos Energy has the advantage of a robust fleet of ships.
Leveraging this strength, the company aims to drive expansion
in overseas commercial flows of associated LP gas.
 Backed by its dominant procurement capabilities, Astomos
Energy will strive to strengthen its wholesaling and retailing
capabilities in Japan, with the view to rapidly addressing major
earthquakes and other emergencies by leveraging the features
of LPG. Looking ahead, the company will continue working to
upgrade its functions.
 By building an integrated value chain spanning LPG procurement to transport
and receiving terminal operations, along with wholesaling and retailing in
Japan, Astomos Energy is developing a stable business model as a non-
resource business.
 Astomos Energy is helping to ensure crucial aspects of energy security for
Japan. These include stable procurement and transport of LPG leveraging one
of the world’s largest fleets of ships, and fuel procurement and supply through
the operation of LPG receiving and transport terminals in Japan.
 Astomos Energy is developing business in fields close to consumers through
retail sales and related businesses (Enefarm, etc.). The company also
supplies LPG to electric utilities (for power generation) and gas companies (for
heating). In these ways, the company plays a role in providing crucial social
infrastructure.
33
Shale Gas Business

Source: theengineer.co.uk
 Impacts from the “Shale Gas Revolution”

Enormous Reserves

Proven Natural Gas Technically Recoverable

Reserves Shale Gas Resources

6,609 tcf + 6,622 tcf

＝ 13,231 tcf

Reserves-to-production
ratio: 63 years

Reserves-to-production
ratio: 127 years
Exploration and appraisal suggest resource base will expand going forward
(Source: US Energy Information Administration April 2011 “World Shale Gas Resources”)

2
 Conventional Natural Gas Reserves Shale Gas/Silt Gas
*Japan’s entire import volume consists of LNG
sourced from conventional natural gas.
Diffusion into Diffusion into
the air the air

Natural flow
under internal ③The cap rock acts
gas field as a lid, trapping
2,000～3,000m
pressure the gas.

① Due to low ② Hydraulic

Conventional ② Due to the low- permeability, gas fracturing
natural gas permeability of the cannot be recovered (fracking) of the
rock, the gas moves by vertical drilling rock enables
ガス移動 through fissures alone. Horizontal extraction of the
Cap rock
Shale drilling is also gas from the
required. resulting fissures.

シール
Reservoir rock
Source rock 30～100m
① Over many years
the gas rises (most Source rock
of it diffuses in the
air from the ground
surface)
1,000~2,000m

Mudstone and limestone,
etc. Cap rock has very low
permeability, preventing
upward migration of the gas.
 The key point is whether a gas field can be discovered or not
(exploration projects).
Silt and shale, etc. Gas formation and storage has completed in these
Sandstone, etc. This Mudstone and shale, etc.
rocks, but the gas remains dormant in them due to their low
rock is highly Source rock contains
permeability.
permeable, allowing the organic compounds that
gas to move through it. form the gas.  Seismic exploration and test wells provide sufficient data to ascertain the position,
depth, and amount of oil and gas reserves, so there is no exploration risk. The
main determining factor is how much can be recovered economically (similar to
coal extraction).
 Due to the low recovery rate from a single well and severe attenuation in
productivity, multiple wells must be drilled continually (by the same token, the
pace of excavation can be adjusted in line with demand, similar to the
manufacturing business).

3
 The “Shale Gas Revolution”
•Transforming the Energy Situation in the US (and the World)
The US is transforming itself from net importer of LNG to a net exporter (planned) (LNG receiving terminals for over 150
million tons now operate at around 10% capacity). This is one factor behind easing of global demand for natural gas, which
enabled Japan to step up procurement following the March 2011 disaster. (LNG project built to meet projected US demand
now had extra capacity to sell).

Projection for US Natural Gas Supply Sources

 The supply-demand gap that was previously to be filled by LNG is now filled by gas from unconventional resources.
 Unconventional resource gas currently supplies around 50% of demand, projected to increase to 75% by 2035. Shale gas plays a major role in this.
 US projected to be virtually self-sufficient by 2035.

Trillion 30 2009
cubic feet Unconventional: 75%
Unconventional: 50%
1%
25 Imported LNG
(510 million tons)

11%
20 46%
(410 million tons) 14% Shale gas

15 20%
Onshore conventional gas
8%
9% Offshore conventional gas 8%
10
28% Tight sand gas
22%
5
8% Coalbed methane
7%
0 2% 9% Gas associated with oil Alaska
7% 1%
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Source: US Energy Information Administration Energy Outlook 2011

4
 Canada LNG Export Scheme

Develop new reliable supply sources that can provide stable supply over the long term
(1) Stable government administration and relationship between Japan and Canada; federal,
provincial and territorial governments strongly support LNG exports
(2) Located relatively close to Japan
(about 10 days from western Canada) ⇔ (about 40 days from the US Gulf of Mexico;
reduced to 26 days after Panama Canal expansion completed)
(3) Enormous reserves but low domestic demand (population: 34 million ⇔ 300 million in the US)

5
 Canada LNG Export Scheme ”Private & Confidential”

Several green field projects for Canada’s western seaboard are currently being
examined, including new construction of LNG bases and pipelines.

Source:Kitmat LNG(2012)

6
 MC’s Shale Gas Business

Cordova Region Montney Region

Participation date September 2010 February 2012

Cordova Embayment, northeast British Columbia, Montney Cutbank and Dawson, British Columbia,
Exploration zone 2 2
Canada, 540 km Canada, 1,667 km

Recoverable shale 35 trillion cubic feet (720 million tons, equivalent to

5-8 trillion cubic feet (100 to 160 million tons)
gas resources approx. 9 years of annual consumption in Japan)

MC’s share 30% 40%

Acquisition cost C$450 million (approx. \36 billion) C$2,900 million (approx. \229 billion)

Operators Penn West Exploration(50%) Encana Corporation(60%)

Peak production
Approx. 700 million cubic feet per day Approx. 3,000 million cubic feet per day
volume
Production period Over 50 years Over 50 years

Operation cost Approx. C$2,200 million (Approx.\180 billion)
*MC's share
･Chubu Electric, Tokyo Gas, Osaka Gas,
JOGMEC (3.75% each), and KOGAS (5%) are
also participating as partners.
･Half (50%) of the gas produced will be sold in
Features
North America through CIMA Energy, a US gas
marketing company in which MC has a 34% share.
Approx. C$6,000 million (Approx.\480 billion)
*Project 100% baisis
･Partnered with Encana, Canada’s largest natural
gas producer
･As one of Canada’s largest shale gas assets, this
prime project offers outstanding productivity and
cost competitiveness.
･Immense contribution to Canada’s economic
growth (project will create 14,000 new jobs)

7
 LNG Exports from Canada: LNG Canada Project
Shell, KOGAS, CNPC and MC will transport feedstock gas from their respective shale gas assets in Canada’s
British Columbia and Alberta provinces via a pipeline. The gas is to be liquefied at a plant on the west coast
(Port of Kitimat, British Columbia) and LNG exports planned to commence from 2019.

Shale gas assets

Gas liquefaction plant

(Port of Kitimat)
- 6 million tons per year x 2 trains
- Consider to expand 2 additional trains
Partners Pipelines (approx. 700 km)
Shell, KOGAS, CNPC, MC Contracted building and operation of large diameter pipeline
=40%, 20%, 20%, 20% to TransCanada, a major pipeline company in Canada
Schedule
- Aim to make final investment decision
by 2015
- Plan to start production by 2019