annual report - 独立行政法人石油天然ガス ... · annual report year ended march 31 ......

Japan Oil, Gas and Metals National Corporation

ANNUAL REPORT

Year ended March 31 2016Annual Report

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

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

INDEX■Message from the President ･････････････････････････ 2■JOGMEC's Activities ･････････････････････････････････ 4■Oil and Gas Upstream Investment　　　　　　　　and Research & Development ･･･････････････････････ 6■Coal Resource Development ････････････････････････ 12■Geothermal Resource Development ････････････････ 16■Metals Strategy, Exploration, and Technology　　　　Development ････････････････････････････････････････ 20■Stockpiling ･･････････････････････････････････････････ 26■Mine Pollution Control ･･･････････････････････････････ 30■Financial Review　　　　　　　　　　　　　　　General Overview ･････････････････････････････････ 34　　Balance Sheet ････････････････････････････････････ 36　　Statement of Operations ･･････････････････････････ 38　　Statement of Cash Flows ･････････････････････････ 39　　Notes to Financial Statements ･･･････････････････････ 40　　Report of Independent Auditors ･･･････････････････ 44■Overview of JOGMEC ･･･････････････････････････････ 45■Officers ･････････････････････････････････････････････ 46■Organization Structure ･･････････････････････････････ 47■Worldwide Network ･････････････････････････････････ 48■Domestic Network ･･････････････････････････････････ 49

Copper100%

Imports Domestic production Domestic production

Natural Gas97.67%

Zinc100%

Crude Oil99.70%

0.30% 2.33% 0.66%

2.26%

Geothermal97.74%

Coal99.34%

Imports Undeveloped Developed

Imports

　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, coal, geothermal energy 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

1Annual Report 2016

Message from the President

In commemoration of the issue of the “Annual Report

2016” summarizing the achievements JOGMEC made

during fiscal 2015, I would like to extend my deep

gratitude for your understanding and support for JOGMEC.

In the global resources market, despite short-term

fluctuations, prices have fallen significantly from the

high levels of the early 2010s, and investment in

resource development is starting to decline, due to the

combination of slowing economic growth in many of

the newly emerging economies (particularly within Asia)

and recent advances in exploration and development

technology. The extent and rapidity of change in the

global resources and energy sector has been further

exacerbated by uncertainties associated with geopolitical

risks and the rising tide of resource nationalism. This

underlines the ongoing need for a comprehensive and

multi-faceted resources and energy strategy including

coal and geothermal energy.

In 2015, JOGMEC has taken the following actions in

order to properly respond to the changing circumstances

surrounding resources and energy and to fulfill its mission

of providing a stable supply of resources and energy to

Japan.

In terms of Oil and Gas Upstream Investment and

Research & Development, JOGMEC has decided to

provide financial assistance to three new projects (four

companies), including the equity financing for the asset

acquisition regarding the world–class oil fields in onshore

Abu Dhabi which produce 1.6 million barrels of oil per

day in total, and for the Japanese company’s leaded

exploration project in offshore southwest Vietnam.

We continue to support strongly for exploration and

development activities of Japanese companies.　JOGMEC

has also been active in Geological and Geophysical

survey (mostly the early stage of oil and gas exploration),

as exemplified by the key agreement on a project in

Uzbekistan signed during a recent visit by Prime Minister

Shinzo Abe to Uzbekistan. Further, JOGMEC is closely

involved in joint international research projects with oil

and gas producers. A highly successful joint research

program on Enhanced Oil Recovery (EOR) systems in Abu

Dhabi, which includes personnel exchanges, has helped

to promote Japanese interests there. Moreover, JOGMEC

had signed a Memorandum of Understanding (MOU) with

the National Energy Technology Laboratory (NETL) in the

United States to pursue joint research in relation to long-

term trials of methane hydrate onshore production test.

In the area of Coal Resource Development, JOGMEC

was involved in two joint geological surveys with foreign

governments and five JV surveys, including the first

ever JV to feature marketing rights. JOGMEC provided

subsidies to three coal development feasibility survey

projects undertaken by Japanese firms overseas, as part

of our ongoing commitment to promoting development of

overseas coal resources. JOGMEC works to strengthen

ties with coal-producing countries such as Vietnam,

China, Indonesia and Mozambique through technical

transfer initiatives in mining, resource development and

security technology, including training programs in Japan

and trainer dispatch programs in recipient countries to

promote coal development technologies.

For Geothermal Resource Development, JOGMEC held

a number of briefings and discussion meetings about

financial assistance and subsidy programs, surveyed the

expectations of private-sector investors and areas of

funding demand, and finalized a key new investment. We

also provided grants for 26 high-risk preliminary surveys,

11 of which were new this year. We used helicopters

to conduct aerial geophysical exploration surveys in

five areas with a view to identifying new resources

with development potential. We also pursued technical

research in three areas: surveying, evaluation and

management, and drilling technologies.

In the area of Metals Strategy, Exploration and

Technology Development, JOGMEC supported private-

sector exploration and development projects by providing

financial assistance towards three new projects with

total value in excess of 4 billion yen. Meanwhile, two

ongoing projects moved to the commercial production

phase, marking a significant contribution to stability of

supply in mineral resources. JOGMEC also conducted

35 JV survey and other projects at the stage prior

to exploration and development in partnership with

overseas national mining corporations and private-

sector interests in 21 different countries, including ten

new projects in eight different countries. The value of

the Waterberg JV project in South Africa increased as

estimated platinum group metal reserves rose from

693 tons to 1,189 tons through consolidation with an

adjacent mining concession and reevaluation of reserves.

JOGMEC also worked to strengthen ties with resource

providers through “resource diplomacy” involving senior

JOGMEC officials, and this yielded five new partnership

2 3Annual Report 2016Annual Report 2016

Message from the President

agreements. Looking at surveying of marine resources,

the estimated volume of resources at the Izena Hakurei

site in the seas off Okinawa was revised upward by more

than 100% to 7.4 million tons, while new submarine

hydrothermal deposits were identified at Dana and

Higa. JOGMEC is currently assembling machinery and

equipment for upcoming exploration and excavation pilot

surveys. On the R&D front concerning terrestrial resource

production technologies, JOGMEC was successful

in developing resource production technologies with

substantially improved leaching rates by bioleaching, as

well as recovery of tantalum capacitors from used small

household appliances.

For Stockpiling, JOGMEC managed national petroleum

and gas stockpiling bases safely and efficiently and

also conducted safety measures and drills simulation of

disasters.

JOGMEC continues to work on strengthening ties

with key oil suppliers such as the United Arab Emirates

and Saudi Arabia through joint oil stockpiling initiatives,

while at the same time pursuing partnerships, training

programs and a range of other stockpiling initiatives

with ASEAN nations. JOGMEC also monitors supply and

demand trends and price levels in rare metals and makes

strategic purchases for stockpiling purposes.

For Mine Pollution Control, JOGMEC provided guidance

on basic policies for measures for two surveys as part

of mine pollution control projects carried out by local

governments. JOGMEC also handled survey design for

one project as part of mine pollution control work, and

provided on-site consultation and other support services

for three projects involving pollution control work.

JOGMEC has been working to enhance safety and

emergency systems at The Matsuo New Neutralization

Plant in Iwate prefecture, by conducting emergency

response dril ls predicated on a major earthquake

occurring at night and installing a lightning protection

system designed to mitigate facility damage caused

by lightning strikes. The Matsuo New Neutralization

Plant has operated for 34 years without a single major

incident. In the last year JOGMEC obtained two patents

for commercialization of a passive treatment system for

mine water featuring naturally occurring bacteria, and

conducted research on plant-based mine water treatment

methods as part of a comprehensive research program

geared towards minimizing the costs associated with

mine water treatment. In addition to hosting forums to

exchange information about mine pollution environments

with local governments and private companies, JOGMEC

provided technical advice and assistance to resource-

own countries through dispatching specialists to Peru

and holding mine pollution control technology seminars in

Peru, Laos, Botswana and Zimbabwe. Through these and

other technical transfer initiatives, JOGMEC continues

working to strengthen ties with resource providers.

Ensuring stable resource and energy suppl ies

is inextricably linked to industry and people’s lives

throughout Japan. That is why JOGMEC is keenly aware

of its mission in that regard, in response to conditions at

home and overseas.

By reaffirming the significance of our responsibility,

JOGMEC is determined to continuously make every

effort to secure the stable supply of resources and

energy for Japan. Your continuous support will be greatly

appreciated.


Oil and Gas Upstream Investment and Research & Development

●Multi-faceted approaches to oil and gas producing countries　Conducting joint operations with oil and gas producing countries and training overseas for technical experts●Provision of financial assistance　Providing equity capital and liability guarantees for exploration and development of oil and gas by Japanese companies●Geological surveys　Conducting geological surveys as a basis for exploration and production projects; also conducting marine resource surveys●Collecting, analyzing, and providing 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

Coal resource development

●Multi-faceted approach to coal-producing countries　Conducting joint operations, information exchanges and training programs with coal-producing countries●Provision of financial assistance 　Providing equity capital and liability guarantees to coal exploration and development by Japanese companies●Geological surveys　Conducting geological surveys as a basis for exploration and development projects●Collecting, analyzing, and providing information　 Collecting, analyzing, and providing information related to coal resources●Technology transfer　 Transferring coal mining technologies of production and safety and so forth●Technological development and support　 Developing a production technologies and improving low rank coal utilization

Geothermal resource development

●Promotion and support for geological surveys　Providing subsidies for geothermal resource development surveys by Japanese companies, conducting geological surveys, etc.●Provision of financial assistance to Japanese companies　Providing equity capital and liability guarantees for exploration and development of geothermal resource by Japanese companies●Gathering and providing information　Gathering and providing information related to geothermal resources.

Metals Strategy, Exploration, and Technology Development

●Multi-faceted approach to metal resource-rich countries　 Conducting geological surveys to help Japanese companies secure mineral interests and to support their exploration projects ; and also conducting Deep-seafloor resource surveys●Provision of financial assistance　Providing equity capital, loans and liability guarantees for metal exploration and development by Japanese companies●Geological surveys　Conducting geological surveys as a basis for exploration and production projects; also conducting Deep-seafloor resource surveys●Collecting, analyzing, and providing information　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 petroleum 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●Stockpiling and trend surveys of rare metals　Releasing and purchasing materials, and research for rare metals 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●Technical support for governments of resource-own developing countries


JOGMEC's Activities


●Japanese Companies entered into PSC in Vietnam by utilizing exclusive negotiating right obtained through Geological and Geophysical survey in offshore southern Vietnam.

●Provided the equity capital for a Japanese company which has acquired a 5% participating interest in the massive-scale ADCO Onshore Concession in the Emirate of Abu Dhabi producing 1.6 million barrels of oil per day; equivalent to 40% of total oil production in the United Arab Emirates.

●Set up seven MOUs and other collaboration agreements including MOUs with state-owned companies in Turkmenistan and Uzbekistan that were formally signed during a recent visit by Prime Minister Shinzo Abe to Central Asia, contributing to a high-level diplomatic initiative.

●Provided three highly successful training programs on custom course with new themes for geoscientists and engineers from oil and gas producing countries.

●Provided training programs for overseas geoscientists and engineers and CO₂EOR joint research programs of long term with the Abu Dhabi National Oil Company (ADNOC) helped to acquire interest in group of major onshore oilfields in Abu Dhabi.

●Provided technical support for Japanese shale oil businesses in the United States and helped reducing produced water treatment costs under the low oil price environment.

●Provided technical assistance for four on-site support projects and contributed to the development of important national resources.

Coal Resource Development

●Set up first ever JV with marketing rights in the Boss and PB areas of Indonesia.

●Issued grants for four overseas coal development feasibility surveys.

●Set up a technical support system for coal mining projects and identified two schemes for potential diversification of coal sources.

●Restarted training program for Indonesian mining engineers in Japan after six-year hiatus in response to strong request from Indonesian government.

Geothermal Resource Development

●Issued 26 grants (including 11 new projects) to encourage new entrants in the sector.

●With respect to financing, the Matsuo-Hachimantai subsidiary project successfully migrated to the exploration stage as the first ever geothermal exploration project financed by JOGMEC; commenced operation of binary geothermal power stations at Tsuchiyu Onsen and Sugawara, both projects continually conducted in the form of a liability guarantee.

●Conducted aerial geophysical surveys by helicopter at five sites in Japan with a view to identifying potential new resource sites.

●Made genuine progress in the commercialization of technology for evaluation and management of geothermal fluid reservoirs.

●Signed a MOU with the New Zealand Crown Research Institute as a framework for pursuing technical partnerships

Metal Strategy, Exploration and Technology Development

●Estimated platinum group metal reserves at the Waterberg JV project in South Africa increased from 693 tons to 1,189 tons, primarily through consolidation with the adjacent mining concession to the north and reevaluation of reserves; confirmed ore intersection with potential to yield high-grade copper at the JV projects at Cobar Superbasin in Australia and Sagay in the Philippines

●Approved financing for a zinc exploration study in Mexico in response to concerns about supply stability following the closure of a number of key mines, and provided financing for an exploration study in Alaska.

●Commercial production commenced at two mines supported financially by JOGMEC.

●The estimated volume of resources at the Izena Hakurei site in the seas off Okinawa was revised upward by more than 100% to 7.4 million tons and new submarine hydrothermal deposits were identified at Dana and Higa.

●Concluded five new partnership agreements with resource-rich countries and government agencies

Stockpiling ●Continued working to boost the resilience of national petroleum stockpiling bases against phenomena such as liquefaction, earthquakes and tsunamis

●Provided the Training Program to Support Establishment of Petroleum Security for ASEAN Countries for high-ranking officials of ASEAN nations

●Continued to build up oil and gas reserves at national oil and gas stockpiling bases at Kurashiki and Namikata through measured purchasing in line with nationally mandated supply levels

●Purchased rare metals, which have been deemed to be vital to industry in Japan and are subject to concerns regarding securing supplies.

Mine Pollution Control

●Conducted mine pollution control projects in response to requests from local governments and other such organizations, and reached 34 years with no accidents at the Matsuo New Neutralization Plant.

●Conducted trials of a low-cost passive mine water treatment system using sulfate-reducing bacteria and took out new patents for its metal removing process.

●Organized mine pollution control technology seminars in four countries – Peru, Laos, Botswana and Zimbabwe – and dispatched specialists to Peru in order to provide support for resource-own countries through technical assistance, human resource development and technology transfer in relation to mine pollution control.

Highlights of the Fiscal Year ended 31 March 2016 (April 2015 to March 2016)


In order to promote development of oil and gas resources by Japanese companies, JOGMEC supports the Japanese government to strengthen the relationships 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.

CHAPTER

1Oil and Gas UpstreamInvestment and Research & Development

Production facility at the ADCO Onshore Concession, in which INPEX owns a participating interestSource: INPEX CORPORATION

Oil and Gas Upstream Investment

and Research & Development C

oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM

ine Pollution ControlFinancial R

eviewM

etals Strategy, Exploration, and

Technology Development

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 Assistance

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

Building and strengthening the relationships with oil and gas producing countries

　The mission of JOGMEC is to secure stable and consistent energy supplies for Japan. To this end, JOGMEC utilizes its technical expertise as a government agency to pursue joint technical studies and technical development projects, to provide practical training programs in exploration, resource exploitation and production systems, and to promote strong partnerships with oil and gas producing countries through ongoing bilateral and multilateral relationships. JOGMEC also plays an active role in international conferences and exhibitions with the aim of highlighting the presence of Japanese oil and gas companies and JOGMEC itself.

Providing financial assistance for exploration and development activities by Japanese companies

It is significant for energy security in Japan to ensure Japanese companies to engage oil and gas exploration and production activities.

Since oil and gas exploration and development activities are required large scale investments over extensive periods of time and involves extremely high risks, it should be necessary to diversify investments in various projects, in geographical location, with foreign business partners and of progress status of the project. It is true that investments in such high risk operations could impose a significant burden on companies, thus, JOGMEC provides financial assistance to cover up

to 75% of total costs of project companies by providing equity capital and/or liability guarantees.

Collecting, analyzing, and providing 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 and gas producing countries, information on newly opened exploration areas, and the activities of international oil companies, and shares the results of its surveys and analysis 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.

■Workshop at JOGMEC-TRC Overseas Training Program

JOGMEC’s Oil and Gas Development Support

7Annual Report 2016

Business Overview

Overseas geological surveys　JOGMEC conducts Overseas Geological and Geophysical survey for the early stage of oil and gas exploration to secure future opportunities for Japanese companies.

【Africa: Seychelles (offshore) and Kenya (onshore)】JOGMEC conducted seismic and geochemical survey offshore Seychelles, and obtained the preferential right of the area for Japanese companies. JOGMEC extended the survey term until February 2018. Meanwhile, the Kenya onshore survey has likewise been extended to December 2017.

【Uzbekistan】　During the visit by Prime Minister Shinzo Abe to Uzbekistan, JOGMEC agreed with Uzbekistan national oil company “Uzbekneftegas” to carry out joint survey and initiated the survey.

【Vietnam】　In August 2015, 2 Japanese companies entered into Production Sharing Contract in Vietnam by utilizing exclusive negotiating right obtained through JOGMEC’s Geological and Geophysical survey in offshore southwest Vietnam from October 2011 to August 2013. This may contribute to diversify the Oil and Gas supply sources of Japan and to increase the number of oil and gas fields operated by Japanese companies. JOGMEC continues to provide equity capital for this exploration project.

【Other】　JOGMEC conducts scoping studies on behalf of Japanese companies in southeast Asia, Europe, Africa, central and south America, and the North Pole to identify potential sites for new geological surveys and/or excavation operations.

Financial assistance for exploration and development activities of Japanese companies

　In fiscal 2015, we promoted diversification of supply sources by providing equity capital for a large asset acquisition as well as an exploration project operated by a Japanese company. 　Specifically, the equity capital to JODCO Onshore Ltd. for their asset acquisition of a 5% participating interest in world’s foremost ADCO Onshore Concession in the Emirate of Abu Dhabi, which produces 1.6 million barrels of oil per day in total (this volume is equivalent to 40% of total oil production in the United Arab Emirates); the equity capital for the Idemitsu and Sumitomo’s exploration project in offshore southwest Vietnam, conducted by Idemitsu as an operator, which is originated from our geological and geophysical survey and

successfully handed over to such the Japanese private company.　Elsewhere, we decided to provided liability guarantee to Sakhalin Oil and Gas Development Co., Ltd. for their stage-2 development of the Odoptu field in the continental shelf offshore Sakhalin Island, followed by our former supports by liability guarantee to the previous development phases (“Chayvo”, “Arukton-Dagi” and “Odoptu First Stage Production”).　Summarizing the above, we adopted three new projects (four companies; one company for equity capital for the asset acquisition, two companies for equity capital for exploration and one company for liability guarantee) in fiscal 2015. As a result, the amount of our total equity capital was 511.8 billion yen with an outstanding liability guarantee balance of 829.8 billion yen as of the end of March 2016. Since JOGMEC was established, eight companies that have received our financial assistance have gone on to reach the production and operation stages. Of those, we have received dividend income from five companies.

■The total equity capital and the number of companies at the end of each fiscal year

hund

red

mill

ion

yen

the

num

ber o

f com

pani

es

442 452 511 638 840 942 1,213

1,594 2,454

3,600 3,985

5,118

10 10 10 14

20 23

30

37 40

45

50 53

0

10

20

30

40

50

60

0

1,000

2,000

3,000

4,000

5,000

6,000

Fy04 Fy05 Fy06 Fy07 Fy08 Fy09 Fy10 Fy11 Fy12 Fy13 Fy14 Fy15

■The outstanding balance of liability guarantees and the number of companies at the end of each fiscal year

hund

red

mill

ion

yen

the

num

ber o

f com

pani

es

27

2,866

3,504

2,6502,3702,4452,4402,509

5,254

6,879

8,2348,298

1

11

14

15

9 9 9 10

13 13 13 13

0

20

40

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Fy04 Fy05 Fy06 Fy07 Fy08 Fy09 Fy10 Fy11 Fy12 Fy13 Fy15Fy14

Oil and gas exploration in offshore Japan

【Exploration activities】　We were entrusted by the government with the task of exploring the reserves of oil and natural gas resources under the Japanese offshore areas with the 3D seismic vessel Shigen. 　During fiscal 2015, JOGMEC continued to explore resources in the seas of Japan, successfully completing some 6,160 km2 of 3D geophysical surveying in three ocean areas off the coast of Nishitsugaru, Kushiro, and Ibaraki, well in excess of the initial target. As a result of subsequent processing and analysis of the data obtained over years, we identified a number of promising structures based on the data analysis on the four

Fiscal 2015 Achievements

■2D seismic survey in onshore Kenya



offshore regions. The surveying work also constituted a successful training exercise where on-board survey engineers acquired new technical skills and knowledge.

【Methane hydrate research and development】　Methane hydrate is thought to be a potential future energy resource. However, we are yet to find a safe and economically viable technique for extracting methane gas from methane hydrate deposits in unconsolidated formations below deep oceans and secure stable supplies over the long term. Japan currently leads the world in research on gas production technologies from methane hydrates. The research program in our nation is directed by the objectives of “Japan’s Methane Hydrate R&D Program” released in 2001 by the Ministry of Economy, Trade and Industry. During the Phase 1 of the Program that covered the period until fiscal 2008, some substantial accomplishments including in an onshore gas production system, which lead the world first successful continuous production attempt from methane hydrates. JOGMEC is leading the Phase 2 of the program, which began in fiscal 2009, as a key member of the MH21Research Consortium drawn from the public, private and academic sectors.　In fiscal 2015, JOGMEC entered into a contract with Japan Methane Hydrate Operating Co., Ltd. (JMH) as the operator by the tender procedure for the methane hydrate second offshore production test. JOGMEC’s role involves the development of equipment and systems for the methane hydrate second offshore production test; site characterization and selection of optimal candidates based on analysis of reservoirs data; preparation of monitoring devices for the analysis of reservoir responses during gas production; and surveys of the marine environment at the test sites.　Under the terms of the Memorandum of Understanding (MOU) with the National Energy Technology Laboratory (NETL) in the United States on research into long-term trials of methane hydrate onshore production test, JOGMEC has conducted geological evaluations at the leases for methane hydrate joint research and produced long-term behavioral predictions based on reservoir simulations.　JOGMEC is involved in ongoing researches on the distribution of methane hydrate occurrences in the seas around Japan as well as on into the underlying conditions that produce methane hydrate deposits. JOGMEC also provides technical support for the survey of seafloor and shallow methane hydrates conducted by the National Institute of Advanced Industrial Science and Technology (AIST), such as providing ship-board researchers on survey vessels.

Multi-faceted approaches to oil and gas producing countries

【Implementation of Joint projects and signing of basic agreements】Establishment of joint projects and cooperative frameworks with oil and

gas-producing countries is an effective measure for building relationships

with those countries, supporting the government’s diplomatic efforts and raising the profile of Japan’s technological strength.

In fiscal 2015 JOGMEC set up seven MOUs and other collaboration agreements. These include agreements signed during the Central Asia visit by Prime Minister Shinzo Abe: an MOU with the Turkmengas and basic agreements with Uzbekneftegaz on joint geological survey and joint study of Japan-GTL.

【Provision and collection of information at international exhibitions and conferences】

In fiscal 2015, we continued to gather information through direct dialogue, and actively promote Japan’s technical capabilities, through displays at major international exhibitions in locations such as Mexico, Abu Dhabi and Qatar.

In addition, at the LNG Producer-Consumer Conference hosted by Japanese government, our president had meetings with the top leaders and ministers of resource producing countries and the managers of oil development companies, and strengthened our relationships.

【JOGMEC-TRC Overseas Training Program】JOGMEC provided two regular courses in fiscal 2015: “Exploration

Geology”, which received 19 participants from 16 countries, and “Geophysics” which received 23 participants from 20 countries. JOGMEC also ran custom courses targeted at supplier countries with extensive reserves of oil and natural gas as well as countries where Japan hopes to either obtain or extend its rights and interests in relation to oil fields. JOGMEC held one course in LNG for Mozambique and received 8 participants. For UAE, we provided four courses and 43 participants in total attended. We also carried our one course in LNG/LPG for Mexico with 16 participants. Acceding to specific requests from the beneficiary countries, we improved the previous course and also redesigned new themes.

The main purpose of these training programs is to transfer technology. At the same time however, we are also focused on facilitating projects between Japan and oil and gas producing countries for the future, based on organizational and personal connections developed through such training programs. We have provided training for 3,380 participants from 48 countries since we launched the program in 1989, and have continued to receive glowing feedback from participants and their respective governments.

【Technical Solution Project/ Technical Development】 In order to reinforce the relationship with oil and gas producing

countries, JOGMEC have worked closely with Japanese companies and have been presenting the oil and gas producing countries with technical solutions designed to address their key technical challenges. JOGMEC has launched Technical Solutions Project in fiscal 2013 to enhance the relationship with these countries by accommodating cutting-edge Japanese technology.

【Technical Solution Project】JOGMEC adopted two small-scale pilot plant trials of Japanese cutting-

edge technologies (Phase 2), and also promoted the technology development of two trials which was approved in fiscal 2014. These are means of utilizing Japanese cutting-edge technology to propose technical solutions for oil and gas producing countries. JOGMEC also pushed forward the technology development of ongoing eight technical development projects at the preliminary stage approved in fiscal 2014.

【Needs-Seeds Matching】JOGMEC held 86 meetings with Japanese companies on 65 specific

issues to gather Japanese cutting-edge technologies for future development. We have also dispatched technical missions to 14 countries (including four new countries) to provide briefings on these Japanese

■3D seismic vessel Shigen




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM



Business Overview

cutting-edge technologies and investigate their technical needs that they face.

JOGMEC Techno Forum 2015 provided an opportunity for matching the technical challenges of oil producing countries (needs) with the Japanese cutting-edge technologies (seeds). The event attracted 1,854 attendees, including senior managements from oil and gas producing countries and Japan, as well as special guests Dr. Daniel Yergin (IHS Vice Chairman) and the Director-General of the Natural Resources and Fuel Department at the Agency for Natural Resources and Energy at the Ministry of Economy, Trade and Industry. The Forum addressed the major technical developments and strategies in the resources sector and facilitated 20 meetings between oil and gas producing country representatives and Japanese businesses. There was a proactive debate on the possibility of working together with the NOCs/IOCs. The participants and the companies clearly were able to use the Forum as a valuable opportunity to get together and do business.

【Technical Solution Training Program】Through this training program, we exchange opinions about needs

(technical challenges in oil and gas E&P projects) and seeds (applicable Japanese cutting-edge technologies) with engineers of oil and gas producing countries. The final goal is to conduct technical transfer training programs for engineers especially after the seeds actually turned into technical solutions for oil and gas producing countries.

In fiscal 2015, JOGMEC hosted a Technical Solutions Training Program [Workshop: EOR and Sustainability with Zero Emission Technology] to 16 engineers from five countries (the UAE, Qatar, Mexico, Indonesia and Oman). The training program helped strengthen relationships, which several trainees showed interest engaging in specific joint research projects.

Technology developmentWith a particular emphasis on Enhanced Oil Recovery (CO₂EOR),

unconventional oil and gas field development technology, offshore development technology (arctic region and deep water) and environmental measures technology as the highest-priority technical areas, we are performing technical development that contributes to Japanese resource development companies acquiring and extending interests and expanding the amount of resources, and are also performing mid- and long-term research that forms the foundations for such technical developments.

【Enhanced Oil Recovery ：Joint research on CO₂EOR with oil producing countries】

CO₂ Enhanced Oil Recovery (CO₂EOR)* is one of the JOGMEC’s priority technologies highly acclaimed by oil and gas producing countries, with a wide range of achievements ranging from basic studies to field applications.

JOGMEC contributes to the acquisition of rights and interests. Since 2003, JOGMEC has been involved in a joint research project with the Abu Dhabi National Oil Company (ADNOC) on CO2EOR, an enhanced oil recovery (EOR) method that involves injecting carbon dioxide into oil reservoir in order to boost crude oil production. As part of an ongoing joint research program with Abu Dhabi, JOGMEC discussed monitoring technologies of EOR method in connection with the interest in a massive group of onshore oil fields obtained in April 2015.

Meanwhile, JOGMEC conducted a pilot test of CO2EOR monitoring for ACROSS seismic source in Canada under a joint research agreement with the Petroleum Technology Research Centre (PTRC). JOGMEC discussed to execute the front-end engineering design (FEED) for a CO2EOR pilot test, based on technologies and expertise of Japanese companies, in the Abu Dhabi Lower Zakum Field. In response to a request from ADNOC, JOGMEC

has launched a new joint study on wellbore stability analysis in Abu Dhabi oilfields. In this way, JOGMEC is working to strengthen relations with ADNOC and other related parties in Abu Dhabi with a view to maintaining Japan’s rights and interests in major offshore oilfields owned by Japan.

Other new projects launched in 2015 include joint research with a national research institute under the umbrella of the Vietnam Oil and Gas Group on a low salinity water flooding technique that is economically viable in a time of low oil prices and has low environmental impact, and a joint study with Japanese companies on a feasibility of reservoir monitoring through repeated seismic surveys in the gas condensate fields in Australia.

* Technology for increasing crude oil production and recovery by CO₂ injection into oil reservoirs.

【Unconventional Oil and Gas Field Development Technology, Shale Gas】

In North America, where there is extensive shale gas development, the industry is impeded by a combination of low gas prices and difficulties with production forecasting. JOGMEC is working on advanced technology in areas such as core analysis, sweet spot evaluation and hydrofracturing optimization that will improve productivity and reduce costs in shale gas and oil development. The aim is to apply this technology to four projects at Japanese companies and to extend it to other oil producing countries as well. JOGMEC has been asked to undertake this research by Japanese companies. The research outcomes will be utilized by Japanese companies under the low oil price environment. The research is facilitating the implementation of the projects.

【Offshore Development Technology 】In recent years, exploration and development of oil and gas is

increasingly moving towards deep water and arctic regions. JOGMEC is involved in technical development in these areas, which is designed to provide results to Japanese companies in order to facilitate project implementation and encourage the acquisition of interests in mining concessions. At the same time, JOGMEC works to boost the standard of technical review and evaluation. We are summarizing the results of ice analysis in the north-eastern Greenland, as a project of development technology in ice-covered water, and providing these to Japanese companies to help facilitate the implementation of projects. We are also maintaining ongoing research into safety and availability evaluation in relation to development concepts, as part of our efforts for deep sea development technology.

【Environmental technologies】Environmental technologies are one of the important technologies in

oil and gas development fields. When NOCs and development companies produce oil and gas from this reservoir, they need to consider the reduction of environmental effects. JOGMEC conducted the joint study with PEMEX. In this joint study, we applied a flocculation and magnetic-separation produced water treatment system (FMS) and a magnetite recycle unit (MRU) for produced water treatment. The combination with FMS and MRU was possible to reuse magnetite from sludge recovered by flocculation and magnetic-separation. JOGMEC also conducted a field test by FMS and MRU in a domestic oil field. The results indicated that magnetite recovery rate was over 70% as well as running cost of water treatment was reduced by 50%. This technology contributes sustainable oil and gas development.

【Assistance for Resource Development in domestic field】JOGMEC provides on-site operational assistance for resource

development in domestic field. As part of “Tight Oil resources of the Onnagawa Formation (Multistage Fracturing)” research project, we performed the first successful pilot test in Japan of horizontal drilling combined with hydrofracturing, a basic technology of shale development.



In the current fiscal year, we approved three new research projects. The first one involves evaluation of the water injection layer reservoir in the Minami Kanto gas field (which is a water-soluble natural gas field) in a bid to develop a sustainable natural gas development regime with minimal environmental impact. The second research project involves sinking pilot bore holes in a low-permeability reservoir field and using the data thus generated to optimize production systems to maximize the recovery rate with a view to application to domestic resource development. The third research project is a feasibility study of development and commercialization of coal bed methane (CBM) reservoirs in abandoned coalfields using gas samples taken from exploration wells. JOGMEC provides technical assistance for these initiatives as a way of contributing to the development of our precious domestic resources, including both the discovery of new resources and boosting production of existing resources.

【Other】JOGMEC held a technology conference in the form of separate

discussion sessions with 25 Japanese companies, composed of 12 oil development companies and 13 engineering service providers. Participants were asked to nominate key technical challenges under the low oil price environment as well as their requirements and expectations of JOGMEC. JOGMEC will use this information to determine what is needed for solutions and identify research areas that will contribute to supporting Japanese companies.

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. Some of the achievements we made for fiscal 2015 are as shown below.　• We gave lectures on oil development-related technology at

Chiba University, Kyoto University, Kyushu University and Waseda University, and contributed to nurturing human resource in the field of domestic resource development.

　• We provide domestic petroleum engineers with an introductory course that introduces the basic technical principles of petroleum development and specialized courses designed to equip participants with specialized expertise. As there is an increasing likelihood of Japanese companies having operatorship and actively operating oil and gas fields around the world, including in the Japanese offshore area, we set up the courses during fiscal 2015 in key areas such as drilling and logging technology with our specialist grounding. We contributed to improving skills of resource development of Japanese companies through these successful courses.

　• JOGMEC-TRC Week 2015 provided a forum to present the achievements of researches and studies undertaken by Oil and Gas Upstream Technology Unit, to discuss and make relationship with experts. This forum included the annual report of the Oil and Gas Upstream Technology Unit in 2015, six cutting-edge research topics, and poster sessions.

　• In fiscal 2015 JOGMEC earned 510 million yen in patent fees from intellectual property associated with TRC research outcomes. JOGMEC also filed four new patent applications during this period, two of which belong solely to JOGMEC.


【Dissemination of information through briefings and printed publications】　JOGMEC regularly provides information for relevant industries, energy policy agencies, etc., by holding a monthly briefing session, and issuing the journal “Oil and Natural Gas Review” bimonthly. 　While offering information on a regular basis as described above, we are holding seminars to provide information for many participants.　The following list gives selected examples of analytical reports and TV interviews aired during the fiscal year 2015.　Analytical reports　• A series of newly started LNG supply projects – outlook for market

expansion and relaxing supply-demand balance.　• Insights on recent oil market situations including crude oil price

drop.　• Technological innovation in oil exploration and development and

upstream industry.TV interviews　• Split views by market participants on oil supply-demand balance 　• Record high crude oil production in Iraq　• Sings on changes in oil supply-demand balance　• Indonesia’s return to OPEC　In addition to these regular information releases, we hold seminars and provide timely information to our many participants.*We post updated briefing materials and reports at JOGMEC’s website “Oil and Gas Resource Information http://oilgas-info.jogmec.go.jp/”

【Priority Area Committee】　We organized special committees consisting of experts and business persons who have experience in local business with a focus on the priority areas of oil and natural gas exploration development. Through these committees, we conducted area analysis and contributed to the establishment of networks among area experts. In fiscal 2015, we held meetings for the following committees.　• The Middle East Committee　• Russia and Central Asia Committee

【Holding seminars】　With regard to the topics in which Japanese companies are supposed to be interested, we are holding seminars by inviting globally renowned, knowledgeable experts. Some of the topics we handled in seminars for fiscal 2015 are as shown below.　• Growth in the Chinese gas marketplace and the role of China-

Russia cooperation　• Investment in distressed assets upstream in the oil, natural gas and

metals sector　• Impact of the current energy climate on the coal and natural gas

sectors and the future outlook

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM



JOGMEC’s activities include conducting geological surveys, providing assistance for surveys, strengthening relationships with coal-producing countries, gathering and providing information, providing technical support in areas such as coal mining, and offering financial assistance with equity capital and liability guarantees. Activities such as these enable JOGMEC to contribute to the stable supply of coal resources to Japan.

CHAPTER

2 Coal resource development

Conducting and supporting geological surveys

　We conduct joint geological surveys with the government organizations of coal-producing countries and private companies to promote the coal development of Japanese companies abroad. We also contribute to securing a stable coal supply to our country by supporting the exploration surveys conducted by Japanese companies abroad.

Providing financial assistance

　In fiscal 2012, JOGMEC has established a financial assistance system for providing equity capital in coal exploration and liability guarantees for development to secure such a structure as to provide financial assistance for the exploration and development activities of Japanese companies. Through the foundation of this financial assistance system, JOGMEC can provide consistent

corporate assistances for initial exploration through development and production.

Strengthening relationships with resource producing countries

　Based on agreements with governments and other such bodies, JOGMEC demonstrates, disseminates and provides information on Japanese coal-related technologies in an effort to strengthen relationships with coal-producing countries. As well as helping to maintain stable coal production, and alleviate the balance of supply and demand, by transferring coal mining and safety technologies to coal-producing countries, particularly in Asia, JOGMEC is also committed to building multi-layered cooperative relationships with such companies in order to contribute to stable coal supplies.

Gathering and providing information

　The global energy situation is constantly changing and evolving. As such, ensuring access to the latest and most accurate information about energy policies and markets is vital to ensure the success of development of high-volatility assets.　JOGMEC supports Japanese companies which are engaged in coal development by comprehensively gathering, analyzing and, providing information on the coal policies of coal-producing countries and the trends in resource developing countries, as well as coal development technologies.

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

Investment environmental evaluation

Geologicalpotentialevaluation

Geological surveyGeophysical survey

DrillingDrillingTunneling

Feasibilitystudy

Underground miningOpen pit mining

Producing plantconstruction Production




Development PossibilitySurvey

Equity Capital

Liability Guarantee


Overseas Geological Survey

Joint Venture Exploration

Technical SupportDrillng survey

Airborne geophysical surveys

Geological survey

Assisting Exploration, Development and Production of Coal

■A geological survey in progress (Bac Suoi Lai area in Vietnam)

JOGMEC’s Coal Resource Development Support

Business OverviewOil and Gas

Upstream Investment and Research & Development

Coal R

esource D

evelopment

Geotherm

al Resource Developm

entStockpiling


Financial Review

Metals Strategy,

Exploration, and Technology Developm

ent

13Annual Report 2016

Geological Surveys and Assistance for Surveys

【Geological Surveys】　In order to encourage coal development by Japanese companies operating overseas, JOGMEC conducts geological surveys overseas in the form of joint investigations with government agencies in coal-producing countries, overseas companies and other organizations as appropriate. 　In fiscal 2015, JOGMEC conducted joint studies under MOUs with coal-producing countries, as well as JV surveys that involve a joint exploration study with an overseas company on the basis that the interests or marketing rights options subsequently acquired will be transferred to a Japanese company.

　Through joint surveys, we increased our chances of discovering new

coal beds in the future, in particular by confirming the existence of coal deposits in an unexplored area of Mozambique and identifying potential new coal deposits to be explored. In Vietnam, we initiated boring surveys at the end of 2015 after quickly reaching agreement with the local counterpart on a surveying program, and located an excellent coal bed at a viable depth for excavation within the mine. Resource volumes from JV surveys rose by 70% in annual terms, with three ongoing JV surveys as well as boring surveys conducted at two prime locations in Clifford, Australia. Two new JV surveys were launched in the Palisades area in Canada and the Boss/PB project area in Indonesia. The Palisades survey is the first involving metallurgical coal and the first in Canada, and holds considerable promise with respect to diversification of sources of metallurgical coal. The Boss/PB survey represents the first JV involving marketing rights. The winning tender was selected in June 2016 and was taken over by a Japanese company. JOGMEC will continue to contribute financially to exploration expenses and this is expected to lead to an increase in resource volumes and expansion of development scope. It should also generate sales commitments to Japanese companies which will contribute to stable and consistent coal supplies.

【Assistance with surveys】In fiscal 2015 JOGMEC provided grants to four projects involving

confirmation of coal reserves overseas, analysis of geological surveys and development feasibility studies on overseas coal resources to evaluate the feasibility of development. The Drummond coal mine in Colombia, Revuboe area in Mozambique and GDM coal mining area in Indonesia are all expected to transition to the production stage within the next few years, which will contribute to improved stability and consistency of coal supplies and diversification of supply sources.

【Providing financial assistance】A system for investment in coal exploration and financial assistance in

the form of liability guarantees for development was set up by JOGMEC

in fiscal 2012. This provides effective and appropriate financing that minimizes the financial risks experienced by Japanese companies engaging in exploration and development projects. With the advent of this system, JOGMEC is now able to provide a consistent business support stream from the initial exploration stage through development and production. In fiscal 2015, in the midst of a general unwillingness in the private sector to commit to investment in new projects due to a prolonged drop in coal prices, JOGMEC continued to provide briefing sessions and discussions to coal developers, steelmakers, trading houses and other interested parties on the system for investment in exploration and liability guarantees for development. These resulted in three inquiries about investment in exploration and seven inquiries about liability guarantees. For specific development liability guarantee inquiries, we provided overseas financial advisors with an early launching option of the finance scheme guaranteed by JOGMEC in order to conclude project finance contract as quickly as possible. Overall, we moved proactively onto efforts geared towards use of our financial assistance system. Meanwhile, in order to stimulate exploration activity by Japanese companies, which is flagging, we expanded business matching opportunities designed to promote use of the exploration investment system. We can eliminate temporary loans and allow the companies to find environmentally-friendly coal mines with high corporate demand. We also help set up JV arrangements with marketing rights, which helps companies built mutual relationships of trust through trading of products with contracted producers, and develop a new joint exploration project in unexplored mining concessions.

Strengthening relationships with resource producing countries

As an organization responsible for implementing national mining policy, JOGMEC promotes stronger relationships with key organizations in coal-producing countries, based on Japan’s national strategy for securing resources.

In fiscal 2015 JOGMEC set up a new cooperation partnership with Indonesia while strengthening the six existing partnerships.

JOGMEC also organized an investment promotion seminar as part of its existing cooperative framework with the government of Queensland in Australia, the largest exporter of coal to Japan, as well as running a training program for coal-producing countries based on Japanese coal-related technology.

【Strengthening resource diplomacy】JOGMEC is working to foster stronger relations with coal producing

countries through training programs and other forms of human resources support, which in turn helps to ensure stable and consistent coal supplies and promote diversification of supply sources. In Mozambique, we are steadily working through a five-year plan for the coal industry that includes overseas geological surveying, training and development programs, and preparation of a master plan. This has made a significant contribution to the formation of personal networks and cooperative relationships. In March 2016 we held a workshop in Maputo on outcomes for the current fiscal year, for the benefit of engineers in Mozambique, to share the results and other activities that led to human resource strengthening. JOGMEC’s work in Mozambique provides ancillary support for projects in which Japanese companies have invested or are planning to invest, promotes the coal industry in Mozambique, and contributes to the diversification of metallurgic coal sources used by Japan.

Also in 2015, JOGMEC was involved in promoting friendly relations with Australia, which is Japan’s biggest importer. When the Premier of the state


Foreign JV partner

②JV survey

①Conclusion of JV contract JOGMEC

Exploration cost

Tenement holder

④Continuance of the JV

Acquisition of Interest

Operator

Japanese company

③Bidding

Farm-in style

Foreign company/ National Corporation

Transfer of Interest

JV調査の概要 0�

■Outline of JOGMEC’s JV survey scheme


Coal Resource Development

of Queensland visited Japan, we held a series of meetings, seminars and investment seminars, which helped to promote friendly relations and deepen cooperation between the two countries.

【Harnessing technical capabilities to strengthen relationships with resource-producing countries】

JOGMEC has continued to carry out coal mining technology transfer projects to encourage coal mining engineers and safety administrators in Asian coal-producing countries (China, Vietnam and Indonesia) to improve production volumes and efficiency, and to reduce accidents through safety measures designed to harness Japanese companies’ accumulated expertise in underground coal mining technology.

In response to a strong request from the Government of Indonesia expressed during the course of the Japan-Indonesia Coal Policy Dialogue, JOGMEC resurrected the dedicated training program in Japan tailored to the mining industry in Indonesia following a six-year hiatus. During fiscal 2015 JOGMEC provided various courses in Japan: five courses for 84 trainees from 24 different institutions in Vietnam, three courses for 56 Chinese trainees from 23 institutions in China and one course for ten trainees from the same institution in Indonesia. Outside of Japan, JOGMEC provided technical training courses at two coal mines and mine specialization school in Vietnam; technical training courses at two coal mines and universities and mine bureau in Indonesia; and seminar training at two locations in China, to a total to 9,594 trainees.

Meanwhile in Mozambique, in March JOGMEC signed off on an annual program based on a memorandum on personnel training and development in the coal industry with the Ministry of Minerals, Resources and Energy (MIREME), and provided joint training courses in conjunction with MIREME. JOGMEC also provided a training course in Japan for ten engineers and technicians from Mozambique, and sent Japanese instructors to Mozambique to train 25 local engineers and technicians, thus boosting skill levels while at the same time contributing to stronger bilateral relations.

【Support for much-needed technical development in the private sector 】

In fiscal 2015, JOGMEC started a new program to publicly invite proposals for the research and development projects that are required for Japanese companies to secure and procure new resources in Japan and overseas, and select 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. Two proposals were adopted and implemented in fiscal 2015. These were called Brown coal blend design and Brown coal co-production reforming. Both proposals are designed to promote new coal mine development by Japanese companies while also contributing to the stability and consistency of coal supplies and the diversification of sources.

Gathering and providing information

As a public intelligence and information center, JOGMEC provides information about exploration, development and technological development of particular interest to Japanese companies, and information that is necessary for the Japanese government to examine and plan its national resource diplomacy strategy. In fiscal 2014, JOGMEC conducted the following surveys to find new coal sources, reflecting companies’ needs based on information obtained from questionnaires and other sources.

In June 2016, JOGMEC held a reporting meeting to present all of the collected information and survey findings. JOGMEC also utilized the information-gathering ability of overseas offices to monitor the progress of coal exploration and development projects and track developments in the mining industries in coal-producing countries. In addition, JOGMEC released a range of updates and reports on coal development via a mail magazine and the JOGMEC website, based on information sourced by overseas offices and head office in Japan. JOGMEC also hosted seminars featuring leading experts and industry figures as a means of providing insights into coal markets and promoting investment in key coal- producing countries such as Indonesia and Australia. The JOGMEC website, a key source of information, was overhauled to enhance the user experience including improved search functionality.

Website: http://coal.jogmec.go.jp/

(1)Global coal survey (2) Recent trends in global and Asian coal markets and response to

commoditization of coal(3) China’s transition away from coal and survey of coal supply-

demand balance and export-import trends(4)Survey of supply-demand trends in India(5) Survey of supply-demand and import trends for thermal coal in

South Korea, Taiwan and Southeast Asia(6) Coal development in Mozambique and market competitiveness of

Mozambique coal(7) Survey of environmental protection, forest conservation, post

rehabilitation and re-use strategies associated with coal resource development projects in Indonesia

(8)Survey of investment environment in Queensland, Australia(9)Survey of investment environment in New South Wales, Australia(10)Survey of investment environment in British Columbia, Canada (11)Survey of investment environment in Alberta, Canada (12)Survey of investment environment in Indonesia (13)Coal resource development and production trends in Australia

■Offering placements for trainees from Mozambique and sending over experts

■Reporting meeting

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM



CHAPTER

3 Geothermal resource developmentJOGMEC conducts geological surveys, grants subsidies, provides financial assistance, and gathers, analyzes and provides information on geothermal resource development

Support for geological surveys

The Great East Japan Earthquake brought to light major challenges with respect to the stability of Japan’s energy supplies and the fragility of the energy supply-demand structure, prompting a shift in policy towards greater reliance on renewable energy. Geothermal energy, for example, can generate consistent energy supplies all year round and is touted as a baseload energy source.

JOGMEC provides support in the form of subsidies for geological surveys carried out by companies and other organizations for the purpose of generating power. The aim is to ensure that Japan’s geothermal resources are used effectively and to encourage further efforts to develop geothermal resources.

In terms of surveys to assess the potential of geothermal resources, JOGMEC carries out wide-area studies, including air-borne geophysical surveys, and publishes and provides the resulting data in order to help companies and other organizations carrying out geothermal resource development surveys.

Providing financial assistance

Huge costs are incurred in the exploration part of geothermal resource development projects. Even if a promising reserve of geothermal resources is found at the exploration stage, major risks remain, such as the long period of time between completing the construction of a power station and its being brought on stream.

JOGMEC helps to mitigate these risks by investing in geothermal exploration projects where private-sector financial institutions are unwilling to provide funds. JOGMEC has considerable experience and technical expertise in the field of geothermal resource development and as such is in a better position to assess projects for funding purposes. JOGMEC also provides liability guarantees at

the construction stage in cases where a Japanese company takes out a loan with a private-sector financial institution, to help mitigate the risk on both sides. Through the provision of funds in this way, JOGMEC actively promotes geothermal resource development by Japanese companies.

Technology development

　As geothermal power generation is a form of clean energy that generates minimal carbon dioxide emissions during generation and is not affected by the weather, it promises to be a stable source of electricity.　However, geothermal reserves are located deep underground and this poses uncertainties associated with determining the precise location and quality of the reservoir. JOGMEC is working on new systems and technologies for exploration, evaluation, management, and excavation in a bid to promote further exploitation of geothermal resources.

Gathering, analysis and provision of information

　JOGMEC collects the related data and provides comprehensive technical reports and general updates on the latest developments in the geothermal sector in Japan and around the world, along with the findings of previous surveys of geothermal resources in Japan. Through promotional campaigns designed primarily to educate people about geothermal resource development, JOGMEC is supporting the work of Japanese companies conducting geothermal resource development surveys.

Preparatory stage & Basic exploration stage Exploration stage Development stage Operation stage

Land surface survey

Stracture survey drilling

Environmental surveyMonitoring

Survey drillingFumarolic test

Reservoirevaluation

Production wellFeedback well

Power stationconstruction Operation




Subsidies for Geothermal Energy Development Survey

Equity Capital

Liability Guarantee


Geological Survey

Technical Development/Technical Support

Assisting Exploration, Developmentof Geothermal Energy

Drilling survey

Geological survey

Geothermal power station

JOGMEC’s Geothermal Resource Development Support



Coal R

esource D

evelopment

Geotherm


entStockpiling


Financial Review

Metals Strategy,


ent


Support for geological surveys【Support for surveys】

　JOGMEC operates a subsidy program for the development of geothermal resources, in order to grant subsidies for high risk initial studies, lower the barriers to commencing geothermal resource development studies, and help to expand geothermal resource development activities. As well as large-scale projects, JOGMEC also provides subsidies in support of small scale geothermal power projects with close links to local communities.　During fiscal 2015, JOGMEC held presentations at nine locations around Japan to promote the subsidy program as well as countless consultations on specific projects. This led to 26 projects being approved, including 11 new ones. Meanwhile, the Matsuo-Hachimantai project, a previous subsidy recipient, moved to the exploration phase during 2015.

【Geothermal resource potential study project】　JOGMEC conducted aerial electromagnetic surveying of the Hachimantai region from a helicopter to evaluate the potential of the geothermal resources. The aerial surveying was closely coordinated with the local community and related parties. JOGMEC also conducted aerial gravimetry and airborne electromagnetic surveying of the

Yuzawa-Kurikoma, Daisetsuzan, Musadake and Niseko areas. 　These surveys have enabled JOGMEC to ascertain the underground structure of mountainous regions and other areas that are of particular interest to Japanese companies, including national and quasi-national parks, and make underground data accessible with minimal impact on the surface. JOGMEC has established survey techniques that yield more detailed and homogenous geological data over a wider area than conventional techniques, in an effort to help promote geothermal development.

Providing financial assistanceDuring fiscal 2015 JOGMEC promoted our assistance for projects

in a number of ways. We held 19 presentations on the financial assistance program at various locations around Japan as well as one-on-one interviews with 24 businesses, and fielded 45 inquiries about investment and liability guarantees. The Matsuo-Hachimantai area, building on successful outcomes achieved with financial assistance to date, transitioned to the exploration stage during 2015, becoming the first ever investment in geothermal resource exploration adopted by JOGMEC. JOGMEC supplied equity capital on three occasions in response to operator funding demand.

Fiscal 2015 saw steady progress in the development of geothermal resources. Two geothermal power generation started operations: the Tsuchiyu Onsen binary geothermal power station, an existing project in the form of liability guarantee, that is the first commercial binary


HigashiHachimantai Area

Hakkoudaseibu Jougakura Area

Hakkoudahokusei Area

Musadake Area

Bandai Area

Geothemal Resource Development Operator

Shimogamo Area

Minamikayabe Area

Soubetsu-cho bankei Area

Oyasu Area

Kijiyama・Shitanotai Area

Local Geothermal-related Corporation etc.

Esan Area

Mutsu Hiuchidake Area

Naruko-onsen Area

Yakumocho-Namarikawa Area

Sakamaki-onsen Area

Hiijidake-hokubu Area

Minamiasomura Asosanseibu Area

Yunotani Area

Ibusuki Area

Key

【Operator Type】

【New/ongoing】

New project in FY2015

Ongoing project

Iwakisandake Area

Amemasudake Area

Housenji-onsen Area

Kaike-onsen Area

Itoigawa-ono Area

Tsuchiyu-onsen Binary Geothermal Power Project

Wasabizawa Geothermal Power Project

Sugawara Binary Geothermal Power Project

Liability Guarantees Project Operator

Funding for Exploration Project

Toyoha Area

Ibusukishi-higashikata Area

Matsuo Hachimantai Exploration Project

■Subsidies, equity capital and liability guarantees provided in fiscal 2015

■Subsidized project in the Matsuo-Hachimantai area

■Aerial geophysical exploration by helicopter

Geothermal Resource Development


power generation project to be undertaken in eastern Japan, and the Sugawara binary geothermal power generation project, the largest commercial binary geothermal power generation project in Japan. In Japan, a ground-breaking ceremony was held at the new Wasabizawa geothermal power station, a major geothermal power generation project that has been revived after a delay of nearly 20 years, marking the beginning of construction with a view to commencing operation.

Projects are approved on the basis of comprehensive technical evaluations that make maximum use of JOGMEC synergies and incorporate multi-faceted viewpoints that utilize, among other things, expertise in relation to resource volume evaluation and other areas from the petroleum division and the metals division of the organization.

Technology DevelopmentJOGMEC conducted three technology development projects:

geothermal reservoir exploration technology, geothermal reservoir evaluation and management technology and geothermal reservoir excavation technology with the aim of raising the standards of geothermal exploration technology and excavation technology and enhancing output stability from existing power stations.

The geothermal reservoir exploration technology project aims to improve the accuracy of estimating the location and size of geothermal reservoirs. Working closely with the local community and related parties, we selected suitable sites to conduct validation trials of elastic wave exploration, a common technique used in oil exploration. We obtained 3D elastic wave exploration data from around 5,000 locations in the vicinity of the Yamakawa geothermal power station. Analysis of the data indicated potential ruptures in the geothermal reservoir. The exercise points to the potential for improved visualization of geothermal reservoirs, which constitutes a major step towards the commercialization of this technology. Meanwhile, we conducted an experiment using the SQUITEM electromagnetic exploration system developed by JOGMEC to generate electromagnetic exploration data for evaluating the suitability of the system for geothermal exploration.

The geothermal reservoir evaluation and management technology study involved validation testing of an artificial recharging technique designed to provide better evaluations of underground steam and thermal water in order to improve the long-term consistency of power supplies at geothermal power stations, where output tends to decline over time. In fiscal 2015, the recharging location was determined on the basis of simulations, and in close consultation with the local community and related parties, and artificial recharging was commenced. A total of 167,000 tons of water was injected. Tracer tests indicated that the injected water was spreading through the geothermal reservoir. It was also found that steam volumes had increased temporarily (relative to pre-recharging) at a number of production wells. Together with other results, this suggests that the artificial recharging technique is effective, and represents a significant step towards commercialization.

The geothermal reservoir excavation technology development is designed to improve excavation performance. New PDC cutters and bits were produced, and these were compared with PDC cutters from overseas in a bench test evaluation. The Japanese-made PDC cutters were found to be superior to several of the foreign cutters in terms of durability, while the PDC bits delivered cutting speeds in excess of the target values.

In addition to technology development, JOGMEC produced educational materials for engineers and distributed them to about 100 universities, local government bodies and private-sector companies, in a bid to address the shortage of engineers working in geothermal resource development. JOGMEC also held technical presentations as part of training programs at geothermal operators and universities

including Waseda University, Kyushu University and the International Institute for Mining Technology (MINETEC) in Japan. At Kumamoto University, JOGMEC provided opportunities to experience 3D seismic exploration in the field.

Gathering, analysis and provision of information【Latest overseas technological trends】

　JOGMEC has been an enthusiastic participant in international conferences and agreements including the World Geothermal Congress, the International Energy Agency – Geothermal Implementing Agreement (IEA-GIA) and the U.S. Department of Energy—Geothermal Conference. These events provide excellent opportunities for international networking with operators working in the geothermal sector in Japan and around the world.　Meanwhile, the framework MOU with the New Zealand Crown Research Institute for a technical cooperation p a r t n e r s h i p w i l l b u i l d relations that will contribute to the strengthening of the information gathering system.

【Publicity activities】JOGMEC provides information at every level, including organizing

public seminars, engaging in a wide range of publicity activities across all media, and supplying information to specialists and operators alike, with the aim of improving people’s understanding of geothermal resource surveys and development.

The National Summit of Local Governments on Geothermal Energy in Yuzawa in fiscal 2015 was the first time that the eight heads of local government with major geothermal power stations had come together in the one venue. As such it was a valuable opportunity to discuss the local economic benefits as well as the challenges of geothermal development, and to promote closer ties between JOGMEC and local government bodies.

In a bid to promote general public awareness and understanding of geothermal energy, particularly in younger generations, and to promote a proper understanding and awareness of geothermal development, JOGMEC had a presence at five major exhibitions including the Renewable Energy Exhibition and Chinetsu Marche, which was sponsored by the Ministry of Economy, Trade and Industry.

Illustration of geothermal reservoir exploration technology development Illustration of geothermal reservoir evaluation and management technology development

Production W

ell

Geothermal

Power Statio

n

Reinjection W

ell

Recharging W

ell

Production Well

Geothermal Power Station

Reinjection Well

Stratum impermeable to fluid

Geothermal Reservoir

Magma Chamber

Pinpoint cracks

Geothermal Reservoir

Magma Chamber

Ascertain the flow of steam and hot water　

■Illustrations of each technological development

■MOU signing ceremony with GNS

■National Summit of Local Governments on Geothermal Energy in Yuzawa

■Eco-Products 2015

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM



CHAPTER

4 Metals Strategy, Exploration and Technology DevelopmentJOGMEC 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.

Supporting private-sector exploration activities through the promotion of initial JOGMEC exploration

JOGMEC conducts JV surveys with mining authorities in resource producing countries as well as with overseas companies, and evaluates resource reserves using analysis of satellite images, geophysical exploration, geological surveying and drilling surveys. Projects deemed to have the most potential are then transferred over to Japanese companies.

As well as conducting overseas geological surveys with Japanese companies, JOGMEC also provides support through its subsidy program for overseas uranium mining, in an effort to minimize risks during the initial stages and promote overseas mining and development.

Meanwhile, JOGMEC evaluates reserves of sea-floor massive sulphides and cobalt-rich ferro-manganese crusts, etc. distributed in the sea areas surrounding Japan based on the government’s “Basic Plan on Ocean Policy” and “Ocean Energy & Mineral Resource Development Plan,” by the use of marine resource research vessel “Hakurei” and so on, and considers the development of production technologies.

Providing financial assistance to support exploration and development for Japanese companies

JOGMEC provides financial assistance in the form of equity capital and financing for exploration operations, asset acquisition investment, and liability guarantees for development funds. Financial assistance from JOGMEC is designed to assist Japanese companies in acquiring rights and interests in metallic mineral resources while also developing their own mines.

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.

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

JOGMEC conducts technological developments, selecting subjects of study from among the various production technologies used in developing metallic mineral resources, in order to meet the needs of Japanese companies and the governmental policy. Specifically, we are carrying out research and development projects on metallurgical technologies that use bacterial leaching, 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.


JOGMEC sources useful and up-to-date information for the benefit of Japanese companies with mining operations in other countries in areas such as: geology; mineral deposits and exploration; development; production levels; mining policies, laws and regulations in different countries of the world; supply and demand trends for key metals; updates on international mining companies; and environmental issues associated with mining operations. This information is subject to analysis and then released in a variety of formats including the email magazine and JOGMEC website, as well as seminars, presentations, and periodicals.

JOGMEC operates the Metal Resources Information Center, the only library in Japan dedicated to metal resources, with some 50,000 geologic maps and publications. The Center is open to the public.

Developing human resource

　JOGMEC hosts seminars on resource development and sends staff as lecturers to 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.

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

Investment environmental evaluation

Geologicalpotentialevaluation

Geological surveyGeophysical survey

Drilling

DrillingTunneling

Feasibilitystudy

Underground miningOpen pit mining

Producing plantconstruction Production




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

Liability Guarantee

Subsidies forOverseas Field Surveys


Overseas Geological Survey

Joint Basic Exploration Scheme

Technical Development/Technical Support

Satellite image analysis

s

Drilling surveyyGeological survey/

ey

n

JOGMEC’s Metals Resources Development Support



Coal R

esource D

evelopment

Geotherm


entStockpiling


Financial Review

Metals Strategy,


ent


Geological surveys

【Support for securing interests through joint surveys】JOGMEC conducted JV exploration activities with overseas

national corporation and private metals companies in 35 regions of 21 countries, including a newly adopted 10 regions of 8 countries.

JOGMEC was able to increase the value of the Waterberg JV project in South Africa by boosting platinum group metal production from 904 tons to 1,189 tons, mainly via consolidation with an adjacent mining concession to the north and reevaluation of reserves. At the Cobar Superbasin JV project in Australia, JOGMEC confirmed an ore intersection of 21.8% copper, 46 g/ton silver and 0.62 g/ton gold across a three-meter section. And at the Sagay JV project in the Philippines, JOGMEC identified a standard porphyry mineralization effect and an ore intersection with 0.48% copper and 0.04 g/ton gold across a section of 202 meters.

【Supporting exploration and development by Japanese companies】

JOGMEC conducted “Overseas Geological Survey” with Japanese companies in 4 regions of 3 countries, including a newly adopted 3 region of 2 country. And also, JOGMEC conducted “Grant Delivery Program” for uranium exploration projects conducted by Japanese companies in 3 regions of 2 countries.

Providing financial assistance for exploration and development by Japanese companies

　JOGMEC supports Japanese companies for their own metal mining development in accordance with Japan’s strategy for acquiring mineral resources*.*Japan’s strategy for acquiring mineral resources　• Basic Energy Plan, 2nd Rev. (approved by the Cabinet in June

2010)　Aiming to increase Japan’s self-sufficiency rate for base metals (copper and zinc) to 80% or greater by 2030, and strategic rare metals to 50% or greater by 2030　• Strategy for securing natural resources (formulated and

published by the Ministry of Economy, Trade and Industry in July 2012)

Financial assistance from JOGMEC is mentioned under “strengthening of financing functions for the acquisition of resource rights,” one of five “pillars” underpinning the strategy

【Providing equity capital and loans for overseas exploration】

JOGMEC provided over 3.5 billion yen in additional financial assistance in fiscal 2015 towards two exploration projects undertaken by Japanese companies, Los Gatos in Mexico and Palmer in Alaska (which is part of the United States). In both projects the main target is zinc. In light of the closure of a number of large zinc mines over the last few years, these projects are expected to make a significant contribution in developing new sources of zinc ore.

【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 total amount of mined gold exceeded 200 tons.

【Providing liability guarantees for overseas development】

JOGMEC supports a variety of schemes from the exploration stage onwards. The Salar de Olaroz lithium mine in Argentina, which was supported by a liability guarantee from JOGMEC in fiscal 2012, commenced commercial production in April 2015. The mine is expected to produce 17,500 tons of lithium carbonate annually for about 40 years. With the advent of electric vehicles, demand for lithium to use in lithium ion secondary batteries is rising sharply, and the Salar de Olaroz mine features prominently as a promising new source of lithium.

【Providing equity capital for asset acquisition】JOGMEC invested in asset acquisition to enable acquisition

of rights and interests by a private-sector business, Lynas Corporation, which has operations in Australia and Malaysia. This is the only full-scale rare earth production project by non-Chinese company. Lynas currently meets the bulk of Japanese demand for neodymium and praseodymium (or didymium), magnetic materials that are regarded as indispensable in many cutting-edge industries. Thus JOGMEC’s investment has made a significant contribution to providing a consistent supply of metal resources for Japan.

【Other】Between 1982 and 1991, JOGMEC (then known as the Metal

Mining Agency of Japan or MMAJ) provided exploration funds to


■Core samples from Cobar Superbasin JV project in Australia

■Saltwater evaporation pond at Salar de Olaroz



the Cigar Lake mine. September 2015 finally saw the beginning of commercial production at the Cigar Lake mine, which now boasts the fifth largest volume of recoverable reserves in the world, and is ranked second in the world for annual uranium production (in terms of both quality and quantity) when operating at full capacity. The Cigar Lake mine makes an important contribution to the future stability of uranium supplies.

Deep-sea mineral exploration and development of production technologies

In terms of sea-floor volume surveying, JOGMEC conducted a resource volume survey at the Izena Depressing Hakurei site in the Okinawa trough that involved more efficient implementation of surveys geared towards boosting resource volumes, in particular by modifying the boring survey methodology and making maximum use of geophysical exploration data, and captured 55 deep ore bodies including boring from the previous fiscal year. The resulting data was used to derive, for the first time in the world, detailed estimates of resource volumes not only at surface level but also at depth. The estimated volume of reserves at the Hakurei site was revised upwards to 7.4 million tons, more than double the previous figure.

In terms of volume surveying of reserves discovered in the previous fiscal year, ore bodies were identified at all nine bores sunk at the Gondo site, including a continuous mineral deposit rich in copper reaching up to 42 meters wide in the depth direction. Similarly, an ore body of depth 22.4 meters was identified at the Noho site. New submarine hydrothermal fields were discovered at the Dana and Higa sites in the Okinawa trough.

These four new reserves include mineral deposits that are at least as large as those at Hakurei and feature high-grade copper, and as such are expected to be the next target for resource volume evaluation of sea-floor polymetallic sulphides.

In terms of mining technology, JOGMEC is currently preparing for preliminary excavations ahead of the planned mining and lifting pilot testing program in fiscal 2017. With respect to ore selection, the ongoing test program for ore dressing by flotation is designed to boost recovery rates for zinc and lead in particular by improving our understanding of optimum flotation conditions for ore selection. The zinc recovery rate improved substantially from 48% last year to 71%, which is above the target figure of 70% and on a par with onshore deposits. JOGMEC also continued with studies on the environmental impacts of mining operations.

In the cobalt-rich crust area, JOGMEC conducted resource volume evaluation survey voyages to exploratory mining concessions in the open seas and used seabed excavators to extract samples at 20 sites. The samples yielded data on strata thickness, quality and distribution among other attributes.

In terms of rare earth elements bearing sediments, JOGMEC carried out a sampling survey using a piston corer in the EEZ surrounding Minami-Tori Shima and understood the distribution. JOGMEC also carried out surveys into production technologies, including harvesting, lifting, processing and refining, in order to evaluate the potential of rare earth elements as resources for the future.

Multi-faceted approach to resource-rich countries

【Joint ventures, partnerships and collaboration with resource producing countries】

In fiscal 2015, JOGMEC signed three agreements during Prime Minister Shinzo Abe’s visit to central Asia with the Kazakhstan National Exploration Company Kazgeology and the State Committee of the Republic of Uzbekistan on Geology and Mineral Resources. The government of Uzbekistan in particular has been very impressed with previous surveying work by JOGMEC, and this led to a new agreement and the commencement of initial surveying in a new mining concession. We also signed an MOU and set up a collaboration framework with Zimbabwe, the culmination of five years of negotiation with the Ministry of Mines and Mining Development, and signed a Memorandum of cooperation with the Geological Survey of Ethiopia. Zimbabwe and Ethiopia represent exciting new frontiers in resource development, and it is very important that we work to strengthen relationships with these countries as a means of securing future resources.

【Providing information, exchanging information and strengthening relations with resource-rich countries】

JOGMEC continues to build relationships with resource-rich countries and provide support for companies’ activities through activities such as providing information and organizing seminars. In fiscal 2015, JOGMEC exhibited at international events such as PDAC (Canada) and Mining Indaba (South Africa), in an effort to showcase its activities and raise JOGMEC’s profile around the

■Sea-floor hydrothermal mounds confirmed at the Gondo site

■Marine resource research vessel Hakurei

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM




world.JOGMEC continues to work with African countries where

Japan has an important stake in resource development. In fiscal 2015, JOGMEC put in place a process for working towards concrete partnership agreements by taking part in the Second Japan-Africa Ministerial Meeting for Resources (JAMM2) and co-sponsoring the J-SUMIT2 business seminar involving ministerial-level meetings with African nations. In this way, JOGMEC contributed to strengthening relations with these countries and helped to set up opportunities for meetings between Japanese company management and African government officials.

【Projects in the Geologic Remote Sensing Centre in Botswana】

At the Geologic Remote Sensing Centre in Botswana, we designed an instructor training accreditation scheme and promptly awarded Remote Sensing Instructor accreditation to nine successful trainees from three countries. In addition to promoting sustainable development in these countries, the accreditation scheme has also provided a significant boost to Japan’s resource diplomacy efforts.

【Strengthening relationships with resource-rich countries through technical support】

JOGMEC contributes to strengthening relationships with resource-r ich countries through support for technology development. In fiscal 2015, JOGMEC provided three separate support packages in the area of rare metal recovery technology. In Morocco, a flotation trial with tin deposits delivered a significant improvement in ore selection performance and enhanced the prospects for development of the tin deposit. In South America, tests designed to recover useful metals from tailings of polymetallic deposits were incorporated into a commercialization study.

Meanwhile, at rare metal mines that have received surveying and financial assistance from JOGMEC, we provided technical support such as setting up ore selection processes that deliver significantly improved metal recovery rates, and in this way helped to substantially boost the economic efficiency of the operations.

Technological development

JOGMEC sorts and prioritizes technologies issues by identifying corporate needs, and develops technologies aimed at helping Japan secure resources interests and boost its self-sufficiency rate.

【Developing exploratory techniques】In geophysical exploration, JOGMEC made modifications to

the SQUITEM3 metal exploration electromagnetic device* to improve the user experience and boost accuracy, particularly in the area of simultaneous measurement of three components. SQUITEM3 is used for geothermal exploration, mine evaluation and disaster response surveying as well as for metal exploration. With mine evaluation, for instance, SQUITEM3 can be used to evaluate the spread of the ore body and formulate an optimized medium to long-term extraction program.

In remote sensing, JOGMEC conducted analysis of remote sensing data from optical sensors (Aster and Landsat), synthetic aperture radar (SAR), digital elevation model (DEM) and other sensors located in and around the mining concession of the JV project currently underway in Africa, in conjunction with field surveys, and used the results to identify potential new sites for exploration. JOGMEC also provided technical training sessions on remote sensing analysis in response to a request from a leading company, along with joint analysis sessions that were used to identify potential new sites in the vicinity of the JV project that JOGMEC is currently pursuing together with the large company in Sagay in the Philippines. In this way, through technology collaborations JOGMEC strengthened relations with leading companies and other organizations. * SQUITEM3 uses superconductor elements (magnetic sensors) to generate highly accurate readings of electrical conduction properties in deep regions.

【Mining and metallurgy technology development】With regard to the development of bioleaching technology

which utilizes the metabolism of microorganisms to extract copper from low-grade ores, in fiscal 2012, JOGMEC commenced demonstration testing at a mine in Chile.

In fiscal 2015 JOGMEC conducted pilot tests on 200 tons of copper ore at Copiapo in Chile. Notwithstanding delays due to torrential rain, the tests showed that the copper leaching rate improved substantially from 7% on the second attempt to 35% (around 250 days) on the third attempt.

JOGMEC is working on technology to reduce the power consumption of the energy-intensive copper electrolysis process as part of the development of energy-efficient refining processes. We fabricated a full-size copper anode and used it for strength testing and pilot scale testing including electrolysis experiments using the actual device.

During tests undertaken in fiscal 2015, the passivation time (the time until copper dissolution ceases when an oxide film forms on the anode) was successfully extended from the current 52 hours to over seven days. As a result, it should be possible to transition from electrowinning, with power consumption of 2,200 kWh/t, to electrorefining, which uses only 300 kWh/t. JOGMEC also continued to undertake rare metal recovery technology studies and provide development support.

【Recycling technology development】JOGMEC is working on rare metal recovery technology for

■Using SQUITEM for metal exploration



recycling materials from discarded small household appliances and by-products of smelting processes. Validation testing to extract tantalum from capacitor and cobalt from lithium ion batteries in discarded small appliances yielded results of 95.8% for tantalum (well in excess of the target of 75%) and 78% for cobalt (also exceeding the target of 72%). This represents a viable new form of recycling technology, particularly for tantalum recovery, where the demonstrated economic viability augers well for commercialization.

JOGMEC has since fiscal 2013 also been working on a new recovery process that will deliver higher rates of antimony recovery from smelting by-products. In fiscal 2015, we achieved arsenic content of 50 ppm or smaller (the target was less than 1,000 ppm) and cadmium content of 10 ppm or smaller (the target was less than 100 ppm) at the stage prior to reduction to antimony metal. This is consistent with product quality standards and augers well for the antimony recovery target of 30%. JOGMEC will continue developing this sort of recycling technology as part of our efforts to reduce Japan’s excessive reliance on overseas sources of rare metals.

Collecting, Analyzing and Providing Information

【Collecting information on strategic mineral resources】JOGMEC supplied the government with background materials

to inform its mine products strategy, including material flow studies of 32 mine products. For each mine product JOGMEC studied the supply-demand balance, price movements and import-export trends as well as other factors such as recycling rates and material flows, and conducted in-depth interviews to get a clearer picture of the supply-demand balance and recent developments in the industry. The information was analyzed and summarized then presented to the Ministry of Economy, Trade and Industry. JOGMEC presented the Ministry of Economy Trade and Industry with the findings of a self-sufficiency study that constitutes the sole source of information for a comprehensive assessment of progress towards targets for self-sufficiency in mineral resources in relation to a variety of mine products as set out in the Energy Basic Plan approved by cabinet in June 2010, including minimum 80% self-sufficiency in base metals by 2030

and 50% self-sufficiency in rare metals. JOGMEC also analyzed information from a range of sources in relation to supply chains and raw material procurement for eight mine products (Cu, Pb, Zn, Ni, Li, Co, PGM and Zr) for the purpose of identifying key issues and challenges around consistency of supply for important mine products. This information was then used to prepare supply-demand forecasts and identify supply issues in supply chains.

【Disseminating Mining-related Information】JOGMEC is proactively supplying information* on the mining

industry, based on which companies may make investment decisions, by regularly delivering and issuing reports such as “News Flash,” “Current Topics,” email magazines, a bimonthly “Metal Resources Report,” etc.

In fiscal 2015, JOGMEC held a total of 11 seminars and briefing sessions on topics such as general trends in base metals and rare metals, demand fluctuations in China, the latest news on overseas resource development and operating reports from various divisions of JOGMEC. These were well attended by corporate personnel and university students. Meanwhile, based on ongoing evaluations provided by a committee composed primarily of leading figures from private industry, JOGMEC worked to enhance the standards of the information provided in its publications by providing more timely information, enhancing the content of reports and providing feedback to production teams. A selection of the reports published during fiscal 2015 is presented below.　• State of the global mining industry—based on national data

from around the world　• Metal Mining Databook 2015 (updates on mines, government

policy and supply-demand trends in resource producing countries)

　• Material flows for mining resources (32 mine products)　• Trends in metal divisions of leading resources companies

2015　 The JOGMEC website (http://mric. jogmec.go. jp/) is

constantly being updated with new material on metal resources such as periodicals and survey reports (note: normally these are only available in Japanese).

Human resources development

As human resource development projects in the area of mineral resources, JOGMEC is providing on-site training and lectures on resource development for university students and working population. Some of the lectures and training sessions we offered during fiscal 2015 are shown below.　• Presenting special lectures at Tokyo University, Waseda

University, Kochi University, Akita University and Kyushu University based on comprehensive partnership agreements

　• Providing instructors for training courses in resources development at the International Institute for Mining Technology and for JICA group training sessions

■Pilot Plant for bioleaching at a mine in Chile

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewM




CHAPTER

5 StockpilingJOGMEC is responsible for the safe and efficient operation on petroleum, LP Gas and rare metals stockpiling programs.At ordinary times, JOGMEC maintains the system that enables to operate stockpiles safely and efficiently, and in the event of an emergency, JOGMEC would release the reserves expeditiously. In this way, JOGMEC contributes to the stability of citizens’ lives as the last stronghold of Japan’s energy security.

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

　In 1972, Japan started its private-sector petroleum stockpiling program (in accordance with the Oil Stockpiling Act since 1975) and in 1978, national petroleum stockpiling program commenced. As of the end of March 2016, the strategic government reserves consist of 122 days’ worth of crude oil and petroleum products stored in 10 national petroleum stockpiling bases and in the tanks leased from the private sectors. Meanwhile private-sector reserves comprise 81 days’ worth of crude oil and petroleum products in their tanks.　In relation to the national stockpiling, JOGMEC has a contract with the government to manage national petroleum stockpiles and stockpiling bases. JOGMEC also conducts surveys, research and development and engages in international cooperation related to stockpiling issues. Furthermore JOGMEC contributes to the reliability of private-sector stockpiling by providing loans for the purchase of crude oil and LP Gas to private sectors that are required to hold compulsory stocks.

Increasing national LP Gas stockpiles to 1.5 million tons

　Japan’s strategic stockpiling of LP Gas 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 2016, private-sector stockpiles were equivalent to approximately 61.7 days’ imports of LP Gas, compared to the mandatory stockpile of 50 days’ imports. Regarding national LP Gas stockpiling, JOGMEC is

operating 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 LP Gas stockpiling bases located in Nanao (Ishikawa Prefecture), Fukushima (Nagasaki Prefecture), and Kamisu (Ibaraki Prefecture), which together which two bases in Kurashiki (Okayama Prefecture) and Namikata (Ehime Prefecture) whose construction was completed in March 2013, stably and safely hold LP GAS 40.8 days’ imports level worth of stockpiles.

Stockpiling of rare metals essential to industry

　Rare metals are indispensable for manufacturing electronic components alloy steels, and most of them are deposited in the limited countries. In recent years, concern about the instability of the rare metals markets is rising due to increasing demand and protective policy, 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 reserves and manages rare metals in the national stockpiling warehouse, and purchases and releases as needed.

Oil Stockpiling

National Stockpiling

47.34 million kl（product equivalent）

Private Stockpiling 31.30 million kl

（product equivalent）

122 days 81 daysAs of March31,2016 Domestic consumption level

LPG Stockpiling

National Stockpiling

1,150 thousand tons

Private Stockpiling 1,738 thousand

tons

40.8 days 61.7 daysAs of March31, 2016 import level

Rare Metals Stockpiling

National Stockpiling Target

Private Stockpiling Target

42 days 18 daysDomestic consumption level



Coal R

esource D

evelopment

Geotherm


entStockpiling


Financial Review

Metals Strategy,


ent


JOGMEC is committed to improving the capacity of stockpiling facilities to withstand natural disasters. Five national petroleum stockpiling bases (Tomakomai East, Mutsuogawara, Fukui, Kuji and Kikuma) were provided with additional earthquake protection in accordance with the road map for earthquake and tsunami protection. Anti-liquefaction measures were deployed at the Hakushima base. We are currently considering deploying similar measures at the Mutsuogawara and Fukui bases, as well as tsunami protection at the Mutsuogawara and Shibushi bases.

Investigations and associated works at Fukui, Hakushima, Kamigoto and Kuji bases were all completed during fiscal 2015.

Rust-resistant, anti-earthquake polyethylene pipes were installed on the foam fire extinguishing system for crude oil tanks at the Mutsuogawara base. Given that the pipes are slower to deteriorate, this saves money over the entire life cycle while also improving the overall resilience of the facility.　

Safe and efficient operation on national petroleum and LP Gas stockpiles

　There are 15 national petroleum and LP Gas stockpiling bases across the nation, and these are in place for emergencies. JOGMEC has been working to improve safety and efficiency through the activities on cost reduction as well as safely storing petroleum and LP Gas that are called hazardoussubstance.

【Safe management on petroleum and LP Gas stockpiles】　To ensure a safe stockpiling bases’ operation, JOGMEC has been conducting disaster control trainings and safety inspections in cooperation with relevant local agencies, etc. Listed below are major exercises implemented in fiscal 2015.　• Safety evaluations were conducted at all 15 national petroleum

and LP gas stockpiling bases in Japan by the respective facility managers, based on accurate assessment of employee awareness, skill levels and competencies with respect to safety management, with the ultimate objective of improving and enhancing safety procedures. In addition, the director of the Stockpile Unit conducted safety and environmental inspections at three petroleum stockpiling bases (Akita, Kuji and Kikuma) and three LP gas bases (Nanao, Fukushima and Namikata), with the objective of strengthening and improving safety programs.

　• We confirmed safety and emergency response procedures and processes to contain damage in the event of a fire or other incident at stockpiling bases. We participated in emergency response training drills conducted by prefecture authorities. In addition, individual bases also conducted their own voluntary emergency response drills.

　• Regular safety check meetings with individual facilities was a new initiative introduced in fiscal 2015. These meetings are used to ensure that the principles of risk management are properly applied to procedures such as loading and unloading, and for the development and implementation of associated strategies designed to boost safety awareness.

　Through these initiatives, JOGMEC is working to boost safety awareness from the management level down to the factory floor, while also ensuring that concrete strategies are properly implemented.

[Balancing safety management and increased management efficiency regarding the national stockpiling system]　In order to further increase the efficiency on the management of stockpiling bases, efficiency improvement plans formulated by operating companies themselves are being continuously implemented. The plans include the introduction of competitive bidding system, rationalization of construction work, cost reduction through energy conservation and improvement of operational efficiency utilizing computer systems. 　Listed below are major achievements in fiscal 2015.

　• JOGMEC used ordinary competitive tendering for the majority of construction work commissioned by operational service providers and continued to pursue cost-cutting measures such as reviewing construction maintenance cycles.


■Fire drill at petroleum complex within Fukui base

Stockpiling


Enhancing emergency response capabilities

　Emergency discharge drills (or equivalent training drills) were held at five petroleum and LP gas stockpiling bases: Mutsuogawara, Fukui, Kamigoto, Akita and Kushikino. Other key activities in fiscal 2015 are listed below.　• Oil substitution: completed the sale/discharge of 660,000 kl and

the purchase of 400,000 kl of crude oil; transferred 630,000 kl between bases in preparation for emergency discharge

　• Performed a joint loading and unloading exercise at the facilities of Hokkaido Joint Oil Stockpiling Co., Ltd. (jointly used by the Tomakomai East base), where FY2014 government funding has been used to boost sea berth docking capacity from 100,000 DWT to 300,000 DWT class, and verified the increase in emergency discharge capacity.

International cooperation in petroleum stockpiling

　International collaboration is vital in order to be prepared for a potential emergency disruption to oil supplies and to enhance energy security in Japan. To this end, JOGMEC works closely with the International Energy Agency (IEA) and the petroleum stockpiling authorities of other countries on an ongoing basis. Maintaining a robust petroleum stockpiling system across Asia is vital for Japan’s energy security. Accordingly, JOGMEC works closely with ASEAN countries to establish the regional petroleum stock piling system. Listed below are the major activities conducted by JOGMEC in fiscal 2015.　• JOGMEC launched a new initiative, the Training Program to Support

Establishment of Petroleum Security for ASEAN Countries in Japan, which is designed specifically for officials at the director-general and department head level from ASEAN nations who have responsibility for petroleum and petroleum security policy. The Program was well received by participants, as evidenced by the expressions of gratitude and welcome included in the joint statement issued by the ASEAN+3 Ministers on Energy Meeting.

　• With respect to the Survey of Petroleum Stockpiling Demand, initiated in fiscal 2014, JOGMEC conducted a study of legislative requirements in relation to petroleum stockpiling in Cambodia in response to a request from the Cambodian Ministry of Mines and Energy and in accordance with an MOU between JOGMEC and the Ministry. The Ministry is preparing the relevant legislation that includes petroleum stockpiling, and was extremely grateful for the

useful briefings provided by the Japanese contingent.　• Meetings on the ASEAN+3 Petroleum Stockpiling Roadmap,

which sets out voluntary and non-published targets for petroleum stockpiling in ASEAN countries, are held annually, with JOGMEC serving as joint secretariat together with the ASEAN side. This year’s meeting was used to present progress reports as well as insights and proposals from the Japan side.

Providing financial support for petroleum and LP Gas stockpiling by private companies

　JOGMEC provided low-interest financing to the 13 oil refinery operators in Japan that are required by law to maintain stockpiled reserves of petroleum and LP gas, to enable them to purchase the requisite supplies of petroleum and LP gas. The loans were funded by approximately ¥854.6 billion of joint financing procured from private-sector financial institutions in the form of syndicate loans through competitive tendering on interest rates. The low-interest financing contributes to attainment of the private-sector stockpiling targets.

Promoting the stockpiling of rare metal

　JOGMEC conducted interviews with domestic and international companies frequently involved in the rare metals business, in an effort to promote the agile purchase and release of storage. Having gathered and analyzed information, JOGMEC proceeded with the purchase of rare metals as deemed necessary. JOGMEC also took new steps to upgrade and expand its rare metal stockpiling exploratory committee, consisting of user companies and other such organizations. The committee held three times in fiscal 2015, and successfully identified and monitored trends in supply and demand based on sources such as primary information, making the most of networks with private companies and other organizations.　JOGMEC is constantly recruiting companies that can supply mine products subject to stockpiling requirements, and then screening, registering and managing these companies. Thus far we have registered a total of 80 companies covering the full range of the relevant mine products, and we have constructed an efficient and reliable purchasing system.

■The third gas delivery vessel arrives in port (Kurashiki National LP Gas Stockpiling Base)

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

Stockpiling


Financial Review

Metals Strategy,


ent

CHAPTER

6 Mine Pollution ControlJOGMEC provides technical and financial support to mine pollution controlling entities so that they can appropriately and effectively carry out mine pollution control measures.

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 controlling entities, JOGMEC provides consult ing services and information related to construction work for mine pollution control and the formulation of mine pollution control policy. Additionally, JOGMEC provides technical assistance related to surveys for and the design and construction of mine pollution control work on commission from local governments and has also undertaken the operation and management of The Matsuo New Neutralization Plant (Iwate Prefecture).　Additionally, JOGMEC collects and organizes data on abandoned mines, offers technical training and holds information exchange meetings for mine pollution controlling entities and other parties, and provides technical support for mine pollution control measures taken by the government. 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 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-own 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 environmentally considerate mine development by sharing information and knowhow related to mine pollution control to resource-own countries.

Project flow of support for Mine Pollution Control

Government

JOGMEC

Local Governments (1/4)

Abandoned Mines

without owners

Operating mines Suspended or Abandoned Mines

with owners

Technical & Intelligence Support

Deposits

FundsFinancial ＆TechnicalSupport

Implementation of Mine Pollution Control

Subsidies (3/4)

Technical Support

Grants for Administrative Services Subsidies Interest Subsidy



Coal R

esource D

evelopment

Geotherm


entStockpiling


Financial Review

Metals Strategy, Exploration, and



Technical support for Mine Pollution Control【Technical support for mine pollution controlling entities】　Primarily, entities which have exploitation rights have the　obligation to implement mine pollution control programs in　accordance with the Polluter Pays Principle. However, local　governments have implemented 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 provides technical support.　Major activities in fiscal 2015 are listed below.　• Conducted a water system study designed to promote more

efficient treatment of mine wastewater from the A mine in Kyoto prefecture.

　• Provided technical support to the B mine in Miyazaki prefecture, including measuring arsenic loads at water usage points downstream of the mine and proposing effective strategies for reducing arsenic loads.

　• Prepared designs of stabilization works for mine dumps at the C mine in Kagoshima prefecture with the capacity to withstand level 2 seismic movement, as per the established precedent for mines where no responsible operator to implement pollution control exists

　• Provided advice to local governments carrying out mine pollution control construction works at eight mines including the D mine in Yamagata prefecture where JOGMEC has been contracted to provide services, along with water quality and quantity monitoring in the vicinity of the mine, and technical consulting services.

【Operation and management of the New Neutralization Plant at the Abandoned Matsuo Mine】　Following a commission from Iwate Prefecture, since 1982, JOGMEC has been managing and operating the New Neutralization Plant at the abandoned Matsuo Mine that discharges the largest amount of drainage water among abandoned mines. Over 34 years, JOGMEC has contributed to the water quality improvement of Kitakami River by safely and consistently maintaining the quality of 9 million m3 of treated water per year, keeping values within established standards.　JOGMEC pursued a range of risk reduction initiatives including major disaster drills based on scenarios such as a nighttime disaster, to improve preparedness for disasters and accidents, commencing work on a lightning protection system, and updating disaster and incident response manuals. We also introduced cost-cutting measures such as systematic upgrading of equipment at aging treatment facilities and advanced pH regulation of treatment water to minimize chemical consumption levels.

【Mine pollution control technology development】　Mine wastewater at abandoned mines has to be treated on a semi-permanent ongoing basis. This is a major burden for a mine pollution control entity. JOGMEC is developing technologies designed to reduce mine wastewater treatment costs by enabling more efficient and effective treatment of mine wastewater. Passive mine water treatment is one of the cost-reducing technologies.　Major activities in fiscal 2015 are listed below.　• JOGMEC implements R&D on mine wastewater treatment

technologies which is based on sulfate reducing bacteria reaction. The reaction requires organic matter such as rice bran. An outdoor validation tests involving acidic mine wastewater; developed a low-cost process that uses agricultural waste (typically rice husk and rice bran) that can be sourced locally; confirmed that it consistently eliminates metals over a period of 1,200 days.

　• Together with universities and research institutes, JOGMEC conducted joint research into new mine wastewater treatment systems using bioremediation technology and other material that can help to reduce costs. With respect to reduction and reuse of neutralizing precipitates, layered double hydroxide (L-DH) can be used as a neutralizing agent, and that it is possible to reduce the volume of neutralizing precipitate. Further, our findings suggest that neutralizing precipitates from abandoned mines could potentially be used as raw material to make hydrogen sulfide removal.

【Providing training and developing human resources for Mine Pollution Control】　To secure the human resources necessary for taking mine pollution control measures and to enhance the understanding of the importance of both resource development and environmental protection, JOGMEC has taken initiatives related to the development of human resources and awareness building activities. Listed below are major activities conducted by JOGMEC.　• We held two meetings to exchange information about mine

pollution and the environment under the themes of cutting the cost of mine water treatment, mine pollution control measures and risk response. JOGMEC provided information useful in the implementation of mine pollution control programs to 124


■Water system studies

■The Matsuo New Neutralization Plant

■Mine wastewater treatment process using natural reactions—outdoor validation test setup



participants from local governments and other parties affiliated with mine pollution control.

　• In face of the shortage and aging of personnel involved in mine water treatment management, one of sector’s biggest issues, JOGMEC held two basic training courses on mine pollution control techniques in cooperation with the Japan Mining Industry Association with the aim of enabling 18 engineers to acquire specialist knowledge on mine drainage treatment.

　• JOGMEC sought to instill technical knowhow in the engineers involved in mine drainage treatment projects by producing an educational video for mine drainage engineers entitled ”Outline of Mine Pollution Prevention Measures for Suspended or Abandoned Mines”.

　• JOGMEC held two “Eco-tours” for the students of schools located near mine drainage treatment facilities and abandoned mines, etc., and provided enlightening lectures on the importance of both resource development and environmental conservation.

　• JOGMEC accepted 1,035 visitors to The Matsuo New Neutralization Plant in Iwate prefecture, including officials of administrative organizations, students and company employees, etc., from within and outside the prefecture, and provided them with an opportunity to learn about the importance of mine pollution control programs.

　(365 officials from administrative organizations, 174 university students, 89 students from elementary, junior high and high schools, 104 professionals, and 303 people who lived around the mine.)

Providing financial assistance for Japanese companies’ mine pollution control work

【Providing loans for mine pollution control】　JOGMEC provides stable financial support for mine pollution control. In fiscal 2015, JOGMEC provided a total of 210 million yen in loans to two private companies for mine pollution control work and drainage treatment at six mines. In addition, JOGMEC lent 60 million yen to one company to support the company’s payment contributions as a pollution control business operator towards 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.The outstanding balance of the Mine Closure Fund stood at 1.6 billion yen in fiscal 2015 with fund contributions of 8 million yen from 15 mines. The balance of the Drainage Treatment Fund stood at 5.1 billion yen with no fund contributions in 2015.

Technical support for the governments of mineral resource-own countries

　JOGMEC provides technical support for resource-own countries by taking advantage of its experience in mine pollution control. It contributes to environmental protection in resource-own countries by holding seminars, dispatching personnel, and providing training, and has been building friendly relationships with such countries.Listed below are the major activities conducted by JOGMEC.- JOGMEC provided information related to mine pollution control to a total of 329 participants by holding seminars on mine pollution control in four countries (Peru, Laos, Botswana and Zimbabwe).- JOGMEC carried out surveys for mine pollution prevention and provided related on-the-job training (OJT) in Peru and Laos. JOGMEC provided coaching on technologies including field survey methods (including water quantity and quality measurement and accurate location and size measurement of sources of mine pollution, etc.) and analysis and evaluation methods for use on data obtained from survey results to 10 members of staff from the Ministry of Energy and Mines of Peru, and 13 members of staff from the Ministry of Energy and Mines of Laos.- JOGMEC continued the dispatch of a mining pollution control policy advisor to Peru, and provided on-site technical advice. It also presented specific countermeasures for mine sites where the implementation of mine pollution control work had been preferentially required.- JOGMEC invited three trainees from Peru, and provided educational activities regarding Japanese initiatives for mine pollution control measures and abandoned mine sites in Japan. It also provided lectures about pollution control measures to a total of 79 trainees invited by JICA from 26 different countries.■Eco Tour in progress

■On-the-job technical training in Peru

Business Overview




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM


eviewMetals Strategy, Exploration, and


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 Agency (“ 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. 　JOGMEC’s accounts are settled for each fiscal year and JOGMEC’s financial statements are submitted for approval by the Minister of Economy, Trade and Industry by June 30 every year, after being audited by internal and independent auditors.　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 752.2 billion yen at the end of fiscal 2015.　In addition to national government investment, which was 52.6 billion yen in fiscal 2015, JOGMEC procures funds from a number of external sources, including revenues from grants for administrative services (19.7 billion yen), subsidies (10.3 billion yen), revenues from entrusted activities (84.4 billion yen), and loans from financial institutions (941.9 billion yen).　The procurement methods of these funds has been determined by the use of 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 19.7 billion yen in fiscal 2015. 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 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


General Overview

Financial Review

other specific activities (management of national petroleum stockpiles, domestic geological surveys of oil and gas, etc.) requested by the state.　In fiscal 2015, JOGMEC posted a current gross loss of 54.3 billion yen. The main factors in this loss were the fact that JOGMEC posted 62.2 billion yen in losses on write-offs of investment in subsidiaries for the current fiscal year in relation to investment in oil and other natural resources exploration projects, which exceeds our own earnings such as the dividend income, liability guarantee fee income, etc. And the fact that the JOGMEC also posted 2.1 billion yen in provisional reserves for loss on liabilities for guarantee pertaining to funds for development of oil and natural gas projects.　It is difficult to objectively judge the collectability of stock for investment in the exploration stage. Therefore, JOGMEC posts half of the investment balance is assessed as the fair value of exploration stage projects based on JOGMEC’s bylaws in accordance with “the practical guidelines for financial instrument accounting standards” established by the Japanese Institute of Certified Public Accountants. Because there are any concerned item in “the Accounting Standards for Incorporated Administrative Agency”. 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 that have exploration stage projects.

Finance and Liability Guarantees

　JOGMEC, together with private-sector companies, provides equity capital for oil and gas E&P projects, and also provides liability guarantees for oil and natural gas E&P projects.　In fiscal 2015, JOGMEC provided a total of 113.3 billion yen in equity capital to 19 companies including three new exploration projects. Equity finance is recorded as investment in stocks of affiliates and investment securities (outstanding balance of 315.4 billion yen at of the end of fiscal 2015) in the fixed investment column. Currently, none of these subsidiaries and affiliates is publicly listed.　JOGMEC provided liability guarantees for 13 companies (outstanding balance of 829.8 billion at the end of fiscal 2015).　In oil and LPG stockpiling-related activities, JOGMEC invested 19.5 billion yen at the end of fiscal 2015 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 3 billion yen at the end of fiscal 2015. In addition, JOGMEC provides loan 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 828.4 billion yen at the end of fiscal 2015. 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 854.6 billion yen at the end of fiscal 2015.　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. In addition to providing equity capital, including asset acquisition, to six companies (outstanding balance of 41.4 billion yen at the end of fiscal 2015), JOGMEC also provided loans totaling 4 billion yen to two companies for domestic and overseas exploration projects (outstanding balance of 19.4 billion yen at the end of fiscal 2015). In addition, JOGMEC provided a liability guarantee for seven companies (outstanding balance of 110.7 billion yen at the end of fiscal 2015). JOGMEC also provide loans for mine pollution control (outstanding balance of 2.5 billion yen at the end of fiscal 2015).　JOGMEC provided 400 million yen in equity capital to the first geothermal development exploration project after the new system introduced, and also provided liability guarantees to three companies with total balance of 6.1 billion yen at the end of fiscal 2015.

Stockpiling

　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, which were included in the assets (43.1 billion yen at the end of fiscal 2015).

Mine pollution control

　As part of its mine pollution control activities, JOGMEC is responsible for managing two funds for mining rights holders.　One is the fund for Mine Pollution Prevention, which was created to meet mine remediation costs after mines are suspended or abandoned. Interest earned on fund paid into the reserves by mining rights holders and funds is returned when costs are incurred for remediation work.　The other is Drainage Treatment Fund. Income from the management of this fund is exclusively used to maintain mine drainage treatment facilities at suspended or abandoned mine sites. Expenses incurred for this work are recorded as mine pollution control costs, and these were 0.1 billion yen in fiscal 2015.




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM




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

Assets　I Current assets　　　Cash on hand and in banks 135,978,291,840 1,207,408,026 　　　Marketable securities 28,620,266,613 254,131,297 　　　Trade accounts receivable 11,460,956,785 101,766,620 　　　Inventories 22,602,849,567 200,700,138 　　　Advance payments 491,872,000 4,367,537 　　　Suspense payments 50,000 444 　　　Prepaid expenses 13,368,775 118,707 　　　Accrued income 465,155,522 4,130,310 　　　Short-term loans receivable 4,840,622,122 42,981,905 　　　Loans receivable for subsidiaries and affiliates 241,670,000 2,145,889 　　　Loans receivable for funding private-sector stockpiling activities 828,367,300,000 7,355,419,109 　　　Accounts receivable 5,174,196,603 45,943,852 　　　Advances 1,834,534 16,290 　　Total current assets 1,038,258,434,361 9,219,130,122

　II Fixed assets　　1. Tangible fixed assets　　　　Buildings 7,456,898,811 66,212,918 　　　　　Less : accumulated depreciation (2,889,155,285) (25,654,016)　　　　Structures 1,200,034,086 10,655,604 　　　　　Less : accumulated depreciation (386,781,628) (3,434,396)　　　　Machinery and equipment 10,847,772,714 96,321,903 　　　　　Less : accumulated depreciation (7,802,194,556) (69,278,943)　　　　Vessels 19,312,310,249 171,482,066 　　　　　Less : accumulated depreciation (5,498,822,690) (48,826,342)　　　　Vehicles 513,853,942 4,562,724 　　　　　Less : accumulated depreciation (497,630,742) (4,418,671)　　　　Tools, furniture and fixtures 3,765,588,288 33,436,231 　　　　　Less : accumulated depreciation (2,787,648,723) (24,752,697)　　　　Land 3,790,224,619 33,654,987 　　　　Construction in progress 129,068,326 1,146,052 　　　　Rare metals 43,049,996,586 382,258,894 　　　Tangible fixed assets, net 70,203,513,997 623,366,311 　　2. Intangible fixed assets　　　　Patents 1,027,002,176 9,119,181 　　　　Mining rights 17,529,051 155,648 　　　　Software 16,100,244 142,961 　　　　Telephone rights 3,147,000 27,944 　　　　Mining right in progress 55,653,400 494,170 　　　Total intangible fixed assets 1,119,431,871 9,939,903 　　3. Investments and other assets　　　　Long-term deposit 39,908,034,605 354,360,101 　　　　Investments in securities 86,067,020,133 764,225,006 　　　　Investments in subsidiaries and affiliates 376,237,455,193 3,340,769,448 　　　　Long-term loans receivable 20,281,219,736 180,085,418 　　　　Long-term loans receivable from subsidiaries and affiliates 2,746,956,000 24,391,369 　　　　Claims provable in rehabilitation from bankruptcy 7,098,742,873 63,032,702 　　　　　Less : allowance for doubtful receivables (2,755,559,000) (24,467,759)　　　　Security deposits 20,809,992 184,781 　　　Total investments and other assets 529,604,679,532 4,702,581,065 　　Total fixed assets 600,927,625,400 5,335,887,279 　Total assets ¥1,639,186,059,761 $14,555,017,402


Balance Sheet (March 31, 2016)


Liabilities and Net assetsLiabilities　I Current liabilities　　　Grants received in advance for administrative services 8,442,022,535 74,960,243 　　　Current portion of long-term borrowings 87,337,856,170 775,509,289 　　　Loans payable for funding private-sector stockpiling activities 854,558,300,000 7,587,979,933 　　　Trade accounts payable 8,482,119,402 75,316,280 　　　Accounts payable-other 5,631,995,991 50,008,844 　　　Accrued expenses 324,893,307 2,884,863 　　　Consumption taxes payable 214,018,000 1,900,355 　　　Advances received 15,352,768,000 136,323,637 　　　Deposits received 62,042,239 550,899 　　　Allowance　　　　Accrued bonuses 37,062,744 329,096 　　Total current liabilities 980,443,078,388 8,705,763,438

　II Long-term liabilities　　　Contra accounts for services and assets　　　　Contra account for assets funded by grants for administrative services 4,456,857,940 39,574,302 　　　　Contra account for assets purchased with other grants 232,410,792 2,063,672 　　　　Contra account for construction in progress funded by grants for administrative services 129,068,326 1,146,052 　　　Long-term borrowings 4,841,135,000 42,986,459 　　　Allowances　　　　Allowance for retirement benefits 529,910,860 4,705,300 　　　　Allowance for loss on guarantees 19,674,293,632 174,696,267 　　　Long-term accounts payable 435,341,493 3,865,579 　　　Reserve for prevention of mine pollution 1,638,293,000 14,547,088 　　　Security deposit for coal mine damage compensation 1,733,271,156 15,390,438 　　Total long-term liabilities 33,670,582,199 298,975,157 　Total liabilities 1,014,113,660,587 9,004,738,595

Net Assets　I Capital　　　National government investments 752,242,176,993 6,679,472,358 　　Total capital 752,242,176,993 6,679,472,358

　II Capital surplus　　　Capital surplus 30,178,109,300 267,964,032 　　　Accumulated depreciation charged to capital surplus (14,781,875,446) (131,254,444)　　　Accumulated impairment loss charged to capital surplus (2,653,500) (23,562)　　　Fund for prevention of mine pollution 5,117,410,831 45,439,627 　　Total capital surplus 20,510,991,185 182,125,654

　III Accumulated deficits　　　Accumulated reserve carried over from first mid-term target period 2,121,391,829 18,836,724 　　　Reserve (or accumlated deficits) 3,720,885,523 33,039,296 　　　Undisposed accumulated deficits (153,631,081,700) (1,364,154,517)　　　　（Total loss for the year ￥54,340,464,648)　　Total accumulated deficits (147,788,804,348) (1,312,278,497)

　IV Unrealized holding loss on securities 108,035,344 959,291

Total Net assets 625,072,399,174 5,550,278,806 Total liabilities and Net assets ¥1,639,186,059,761 $14,555,017,402




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM





Ordinary expenses　　Operating expenses:　　　Operating expenses 22,474,883,906 199,563,878 　　　Operating and administrative expenses 6,278,252,036 55,747,221 　　　Depreciation 1,066,834,585 9,472,870 　　　Accrual for bonuses 30,390,712 269,852 　　　Provision for loss on guarantees 2,087,921,306 18,539,525 　　　Cost for purchases for oil 23,088,116,399 205,009,025 　　　Loss on write-offs of investments in securities 411,741,121 3,656,021 　　　Loss on write-offs of investments in subsidiaries and affiliates 62,228,847,270 552,555,916 　　Expenses for entrusted activities 81,218,495,600 721,172,932 　　General and administrative expenses:　　　Payroll expenses 1,057,740,717 9,392,121 　　　Depreciation 26,087,991 231,646 　　　Accrual for retirement benefits 20,664,282 183,487 　　　Accrual for bonuses 6,672,032 59,244 　　　Administrative expenses 344,501,077 3,058,969 　　Finance costs:　　　Interest expense 758,642,210 6,736,301 　　　Other finance cost 46,365,727 411,701 　　Interest on reserve for prevention of mine pollution 8,571,617 76,111 　　Operating expenses relating to mine pollution prevention activities 61,998,942 550,514 　　Interest on security deposit for coal mine damage compensation 4,406,499 39,127 　　Miscellaneous losses 310,597,426 2,757,924 　Total ordinary expenses 201,531,731,455 1,789,484,385

Ordinary revenues　　Revenue from grants for administrative services 17,354,669,460 154,099,356 　　Operating revenues:　　　Interest on loans receivable 931,673,758 8,272,720 　　　Revenue from sales of oil 23,088,116,399 205,009,025 　　　Guarantee fee income received 7,687,610,578 68,261,504 　　　Dividends received 4,517,861,310 40,115,977 　　Revenues from other grants received:　　　State subsidies 10,237,349,248 90,901,698 　　Revenues from entrusted activities:　　　Revenue from activities entrusted by national government 77,888,756,507 691,606,788 　　　Revenue from activities entrusted by local governments 485,421,530 4,310,260 　　　Revenue from activities entrusted by others 1,400,679,675 12,437,220 　　Financial revenues:　　　Interest income 218,606,423 1,941,098 　　　Interest income on securities 405,774,531 3,603,041 　　Reversal of contra account for assets funded by grants for administrative services 969,874,757 8,611,923 　　Reversal of contra account for assets purchased with other grants 13,897,694 123,403 　　Miscellaneous income 1,374,037,115 12,200,649 　Total ordinary revenues 146,574,328,985 1,301,494,663

Ordinary loss 54,957,402,470 487,989,722

Extraordinary loss　　Loss on disposal of fixed assets 28,158,425 250,030 　Total extraordinary loss 28,158,425 250,030

Extraordinary income　　Gain on sales of fixed assets 1,161,175 10,311 　　Gain on reversal of allowance for retirement benefits 615,423,512 5,464,602 　　Reversal of contra account for assets funded by grants for administrative services 28,511,555 253,166 　　Reversal of contra account for assets purchased with grants 5 0 　Total extraordinary income 645,096,247 5,728,079

Net loss for the year 54,340,464,648 482,511,673 Total loss for the year ¥54,340,464,648 $482,511,673


Financial ReviewStatement of Operations (For the year ended March 31, 2016)


Ordinary expenses　　Operating expenses:　　　Operating expenses 22,474,883,906 199,563,878 　　　Operating and administrative expenses 6,278,252,036 55,747,221 　　　Depreciation 1,066,834,585 9,472,870 　　　Accrual for bonuses 30,390,712 269,852 　　　Provision for loss on guarantees 2,087,921,306 18,539,525 　　　Cost for purchases for oil 23,088,116,399 205,009,025 　　　Loss on write-offs of investments in securities 411,741,121 3,656,021 　　　Loss on write-offs of investments in subsidiaries and affiliates 62,228,847,270 552,555,916 　　Expenses for entrusted activities 81,218,495,600 721,172,932 　　General and administrative expenses:　　　Payroll expenses 1,057,740,717 9,392,121 　　　Depreciation 26,087,991 231,646 　　　Accrual for retirement benefits 20,664,282 183,487 　　　Accrual for bonuses 6,672,032 59,244 　　　Administrative expenses 344,501,077 3,058,969 　　Finance costs:　　　Interest expense 758,642,210 6,736,301 　　　Other finance cost 46,365,727 411,701 　　Interest on reserve for prevention of mine pollution 8,571,617 76,111 　　Operating expenses relating to mine pollution prevention activities 61,998,942 550,514 　　Interest on security deposit for coal mine damage compensation 4,406,499 39,127 　　Miscellaneous losses 310,597,426 2,757,924 　Total ordinary expenses 201,531,731,455 1,789,484,385

Ordinary revenues　　Revenue from grants for administrative services 17,354,669,460 154,099,356 　　Operating revenues:　　　Interest on loans receivable 931,673,758 8,272,720 　　　Revenue from sales of oil 23,088,116,399 205,009,025 　　　Guarantee fee income received 7,687,610,578 68,261,504 　　　Dividends received 4,517,861,310 40,115,977 　　Revenues from other grants received:　　　State subsidies 10,237,349,248 90,901,698 　　Revenues from entrusted activities:　　　Revenue from activities entrusted by national government 77,888,756,507 691,606,788 　　　Revenue from activities entrusted by local governments 485,421,530 4,310,260 　　　Revenue from activities entrusted by others 1,400,679,675 12,437,220 　　Financial revenues:　　　Interest income 218,606,423 1,941,098 　　　Interest income on securities 405,774,531 3,603,041 　　Reversal of contra account for assets funded by grants for administrative services 969,874,757 8,611,923 　　Reversal of contra account for assets purchased with other grants 13,897,694 123,403 　　Miscellaneous income 1,374,037,115 12,200,649 　Total ordinary revenues 146,574,328,985 1,301,494,663

Ordinary loss 54,957,402,470 487,989,722

Extraordinary loss　　Loss on disposal of fixed assets 28,158,425 250,030 　Total extraordinary loss 28,158,425 250,030

Extraordinary income　　Gain on sales of fixed assets 1,161,175 10,311 　　Gain on reversal of allowance for retirement benefits 615,423,512 5,464,602 　　Reversal of contra account for assets funded by grants for administrative services 28,511,555 253,166 　　Reversal of contra account for assets purchased with grants 5 0 　Total extraordinary income 645,096,247 5,728,079

Net loss for the year 54,340,464,648 482,511,673 Total loss for the year ¥54,340,464,648 $482,511,673


I Cash flows from operating activities　　　Payments for raw materials, goods and services purchased (111,896,145,827) (993,572,597)　　　Payroll expenses (5,357,577,260) (47,572,165)　　　Loans receivable made (859,207,700,000) (7,629,263,896)　　　Refund of reserve for prevention mine pollution (88,142,000) (782,650)　　　Expenses related to mine pollution prevention activities (68,513,725) (608,362)　　　Purchases of investments (114,001,366,218) (1,012,265,727)　　　Purchases of oil (24,370,023,189) (216,391,611)　　　Consumption tax paid (433,017,776) (3,844,946)　　　Other operating expenses paid (1,924,702,320) (17,090,235)　　　Guarantee fees received 7,690,343,054 68,285,767 　　　Reserve for prevention of mine pollution received 8,365,000 74,276 　　　Grants received for administrative services 19,713,364,000 175,043,189 　　　Revenues received from entrusted activities 84,225,137,123 747,870,157 　　　Other grants received 10,172,385,486 90,324,858 　　　Collection of loans receivable 838,192,527,951 7,442,661,410 　　　Collection of investments 1,205,302,503 10,702,384 　　　Revenue from sales of oil 24,370,023,189 216,391,611 　　　Consumption taxes refunded 231,058,676 2,051,666 　　　Other operating revenues received 2,699,176,261 23,967,113 　　Subtotal (128,839,505,072) (1,144,019,757)　　　Interest and dividends received 6,245,065,980 55,452,548 　　　Interest paid (658,460,471) (5,846,745)　Cash flows from operating activities (123,252,899,563) (1,094,413,955)

II Cash flows from investing activities　　　Purchases of time deposits (449,158,790,289) (3,988,268,427)　　　Proceeds from time deposits upon maturity 450,075,039,892 3,996,404,190 　　　Purchases of securities (43,535,350,200) (386,568,551)　　　Proceeds from securities upon maturity 34,469,898,306 306,072,619 　　　Purchases of tangible fixed assets (2,871,046,784) (25,493,223)　　　Proceeds from sales of tangible fixed assets 14,014,310 124,439 　　　Purchases of intangible fixed assets (171,858,877) (1,526,007)　Cash flows from investing activities (11,178,093,642) (99,254,960)

III Cash flows from financing activities　　　Proceeds from long-term borrowings 87,372,030,170 775,812,735 　　　Repayments of long-term borrowings (54,331,287,807) (482,430,188)　　　Proceeds from loans payable for funding private-sector stockpiling activities 854,558,300,000 7,587,979,933 　　　Repayments of loans payable for funding private-sector stockpiling activities (805,841,200,000) (7,155,400,462)　　　Proceeds from national government investments 52,592,591,848 466,991,581 　　　payments for transferring of unnecessary properties to government (36,600,000) (324,987)　　　Repayments of lease obligations (175,049,019) (1,554,333)　Cash flows from financing activities 134,138,785,192 1,191,074,278

IV Effect of exchange rate changes on cash and cash equivalents (17,579,946) (156,100)V Net increase in cash and cash equivalents (309,787,959) (2,750,737)VI Cash and cash equivalents at beginning of year 14,354,943,583 127,463,537 VII Cash and cash equivalents at end of year ¥14,045,155,624 $124,712,801




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM




Financial ReviewStatement of Cash Flows (For the year ended March 31, 2016)

Ⅰ.Significant Accounting Policies

　Effective for the year ended March 31, 2016, Japan Oil, Gas and Metals National Corporation (“JOGMEC ”), an Incorporated Administrative Agency, adopted the revised version of the “Accounting Standards for Incorporated Administrative Agency,” “Notes to Accounting Standards for Incorporated Administrative Agency” (revised on January 27, 2015) and “Q&A on Accounting Standards for Incorporated Administrative Agency and Notes to Accounting Standards for Incorporated Administrative Agency” (revised in February 2016). (Hereinafter referred to as “Accounting Standards for Incorporated Administrative Agency, etc.”)　However, in regard to the provision of No. 43 (Note 39) of “Accounting Standards for Incorporated Administrative Agency,” as transitional measures have been applied under Article 8 of the Supplementary Provisions of “Act for partial amendment of the Act on General Rules for Incorporated Administrative Agency,” segment information that is based on the current segments is disclosed until cease of the transitional measures.　Also, in regard to the provision of No.81 (Notes 60 and 61) of “Accounting Standards for Incorporated Administrative Agency,” as transitional measures have been applied, No. 81 (Note 60) before revision is applied.

1.Basis of PreparationThe accompanying financial statements of 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 Agency” 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 ¥112.62 =US$1.00, the exchange rate prevailing on March 31, 2016. 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 ServicesAs JOGMEC applies the transitional measures, revenues from grants

for administrative services are recognized as the related expenses are incurred. This is because it takes certain period of time to construct a new management system over estimated expenses and actual expenses of operations based on monetization unit and administrative activities.

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 (except for leased 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 (except for leased 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.(3)Leased assets

Depreciation of leased assets is calculated by the straight-line method over the lease term with zero residual value.

Depreciation of certain specific depreciable assets (as defined in “Accounting Standards for Incorporated Administrative Agency, No. 87”) is directly deducted from capital surplus and is 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 loss on guarantees

Allowance for loss 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 and Retirement Benefit CostAllowance 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.

The method of attribution of projected benefit obligation by the end of the current fiscal year is straight-line method.

Prior service cost 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.

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.

Lump-sum retirement allowance is calculated based on the simplified method which records amount to be paid for voluntary termination at the end of the current fiscal year as retirement benefit obligation.(Change in Accounting Policies)

After adoption of revised Accounting Standards for Incorporated Administrative Agency, etc., calculation method of retirement benefit obligation and service cost is revised and calculation method of discount rate is changed from the method which is based on the years approximated to average remaining working period to the method which is based on single weighted average discount rate reflecting expected payment period and payment amount per each expected payment period. This change has no effect on profit-and-loss.6.Valuation of Securities

(1)Held-to-maturity securitiesHeld-to-maturity securities are stated at amortized cost calculated

by the straight-line method.(2)Investments in subsidiaries and affiliates


Japan Oil, Gas and Metals National Corporation Notes to Financial Statements （March 31, 2016）

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 securities

1) 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 InventoriesInventories are stated at the lower of cost or market, cost being

determined by the specific identification method.

8.Foreign Currency TranslationAssets 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.

9.Consumption TaxesTransactions subject to consumption taxes are recorded at amounts

exclusive of consumption taxes.

Ⅱ.Notes to Financial Statements1.Balance Sheet

March 31, 2016(Yen) (U.S.dollars)

(1) Estimated amount of bonuses not recorded as accrued bonuses ¥322,844,976 US$2,866,675

(2) Estimated amount of retirement benefits to be covered by grants for administrative services

¥4,277,450,380 US$37,981,268

(3) Guarantees given for loans: ¥946,582,990,667 US$8,405,105,582

2.Statement of OperationsYear ended March 31, 2016(Yen) (U.S.dollars)

(1) Loss on disposal of fixed assets:Machinery and equipmentTools, furniture and fixturesPatents

¥2¥28,290

¥28,130,133

US$0 US$251

US$249,779 (2) Gain on sales of fixed assets:

Vehicles ¥1,161,175 US$10,311

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

Year ended March 31, 2016(Yen) (U.S.dollars)

Cash on hand and in banks ¥135,978,291,840 US$1,207,408,026 Time deposits (¥121,933,136,216) (US$1,082,695,225)Cash and cash equivalents ¥14,045,155,624 US$124,712,801

(2)Significant non-cash transactionsYear ended March 31, 2015

(Yen) (U.S.dollars)Assets acquired through finance leases:Tools, furniture and fixtures: ¥80,484,300 US$714,654

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

March 31, 2016(Yen) (U.S.dollars)

Due within one year from the balance sheet date ¥127,958,988 US$1,136,201

Due after one year from the balance sheet date ¥307,382,505 US$2,729,378

Total ¥435,341,493 US$3,865,579

　The above lease obligations have not been classified and presented by current and noncurrent portion in the balance sheet because of their immateriality.

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, via the respective 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, 2016 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).)




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM



Technology DevelopmentJapan Oil, Gas and Metals National Corporation Notes to Financial Statements （March 31, 2016）

　 March 31, 2016

Carrying value Estimated fair value Difference

(Million yen)

(Million U.S.dollars)

(Million yen)


(Million yen)


(1)Cash on hand and in banks 135,978 1,207 135,978 1,207 - -

(2) Marketable securities and investments in securities1) Held-to-maturity securities 58,803 522 59,866 531 1,063 9

2) Other securities 55,697 494 55,697 494 - -

(3)Short-and long-term loans receivable 25,121 223 25,496 226 374 3

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

828,367 7,355 828,367 7,355 - -

(5)Long-term deposits 39,908 354 39,972 354 64 - (6) Claims provable in

rehabilitation from bankruptcy

7,098 63 - - - -

Less : allowance for doubtful receivables (2,755) (24) - - - -

4,343 38 4,343 38 - - Total Assets 1,148,219 10,195 1,149,721 10,208 1,501 13 (1)Current portion of long-term borrowings and long-term borrowings

92,178 818 92,350 820 171 1

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

854,558 7,587 854,558 7,587 - -

Total Liabilities 946,737 8,406 946,908 8,407 171 1

(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.

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 fair value of these deposits is determined by striking deposit interest rates supposed on new similar deposits based on their classification of periods.(6)Claims provable in rehabilitation from bankruptcy　　The Fair value is close to the amount calculated by deducting allowance for doubtful receivables from the book value, because allowance for doubtful receivables is based on the expected recoverable amount from guarantees and collateral.Therefore, the fair value is calculated based on that expected recoverable amount.

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 376,423 million yen (3,342 million U.S. dollars) included in all of “Investments in subsidiaries and affiliates” and a part of “Investments in securities” 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 (1,638 million yen (14 million U.S. dollars) in the balance sheet) and Security deposit for coal mine damage compensation (1,733million yen (15 million U.S. dollars) in the balance sheet) are to be repaid upon demand in principle. 　Therefore, the Corporation cannot specify the time for such repayment demand at its discretion.　Since it is recognized that it is extremely difficult to determine the fair value, the reserve is not included in the table shown above.

6.Impairment of Fixed AssetsFixed Assets with impairment lossesTelephone rights

March 31, 2016Carrying Value Amount not charged to income

(Yen) (U.S dollars) (Yen) (U.S dollars)Telephone rights ¥9,000 US$80 ¥69,000 US$613

　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.

7.Asset Retirement Obligations　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.Payment to National Treasury in Relation to Unnecessary Property　Details about payment to National Treasury in relation to unnecessary property are as follows:①Types of property Cash on hand and in banks

②Name of propertyFunds received from selling the machinery and

equipment of the Kami Goto National Petroleum Stockpiling Base

③Book value

(Yen) (U.S. dollars)(1)Acquisition cost ¥36,600,000 US$324,987(2)Depreciation －－(3)Book value ¥36,600,000 US$324,987

④ R e a s o n s f o r w h i c h p r o p e r t y b e c a m e unnecessary

There are no expectation of using the property as a result of the sales of the machinery and equipment

of the Kami Goto National Petroleum Stockpiling Base.


⑤A method of payment to National TreasuryPayment in kind in accordance with paragraph(1)of article 46-2 Act on General Rules for Incorporated

Administrative Agency⑥Amount of capital gains from sale of assets －⑦Cost of deduction －

⑧ A m o u n t a n d date of payment to National Treasury and other

(Yen) (U.S. dollars)(1)The amount of payment to National Treasury ¥36,600,000 US$324,987

The date of payment August 4, 2015(2)The amount of payment to the local public organization －－

The date of payment －(3)The amount of payment t o t h e o t h e r p r i v a t e organization

－－

The date of payment －

⑨Amount of reduction of capital (Yen) (U.S. dollars)¥3,123,750 US$27,737

⑩Notes －

9. Allowance for Retirement Benefits(1) Outline of retirement benefit plans　JOGMEC has adopted funded and unfunded defined benefit plans and defined contribution plans for employees’ retirement benefits.Under a defined benefit corporate pension plan (funded plan), employees are entitled to lump-sum or annuity payments based on their respective salaries and service periods. Under a lump-sum pension plan (unfunded plan), employees are entitled to lump-sum payments based on their respective salaries and service periods as retirement benefits, and allowance for retirement benefits and retirement benefit expenses are calculated based on the simplified method.(2) Defined benefit plans1) Change in benefit obligation, excluding 3) plans accounted for

under the simplified method, for the year ended March 31, 2016(Yen) (U.S.dollars)

Benefit obligation at beginning of year ¥825,108,145 US$7,326,480 　Service cost ¥8,172,929 US$72,571 　Interest cost ¥2,700,263 US$23,977 　Actuarial differences ¥246,994,135 US$2,193,164 　Benefits paid (¥19,326,379) (US$171,607)　Prior service costs (¥113,879,392) (US$1,011,183)　Employee contribution ¥0 US$0 　Return of substitutional part of Employee's Pension Fund (¥441,202,353) (US$3,917,620)Benefit obligation at end of year ¥508,567,348 US$4,515,782

　2) Change in plan assets for the year ended March 31, 2016(Yen) (U.S.dollars)

Fair value of plan assets at beginning of year ¥365,124,285 US$3,242,091 　Expected return on plan assets ¥3,651,242 US$32,421 　Actuarial differences ¥56,797,113 US$504,325 　Employer contribution ¥14,865,962 US$132,001 　Benefits paid (¥19,326,379) (US$171,607)　Employee contribution ¥2,262,990 US$20,094 Fair value of plan assets at end of year ¥423,375,213 US$3,759,325

　3) Change in net defined benefit liability under simplified method for the year ended March 31, 2016

(Yen) (U.S.dollars)Net defined benefit liability at beginning of year ¥580,893,490 US$5,157,996 　Retirement benefit expenses ¥27,447,508 US$243,718 　Benefits paid (¥102,071,566) (US$906,336)Net defined benefit liability at end of year ¥506,269,432 US$4,495,378

4) Amount recognized in the balance sheets, including plans accounted for under the simplified method, at March 31, 2016

(Yen) (U.S.dollars)　Benefit obligation for funded plan ¥508,567,348 US$4,515,782 　Plan assets (¥423,375,213) (US$3,759,325)　Net benefit obligation for funded plan ¥85,192,135 US$756,457 　Benefit obligation for unfunded plan ¥506,269,432 US$4,495,378 　Subtotal ¥591,461,567 US$5,251,834

　Unrecognized actuarial differences (¥161,195,175) (US$1,431,319)　Unrecognized prior service costs ¥99,644,468 US$884,785 　Net amount recognized on the balance sheets ¥529,910,860 US$4,705,300 　Allowance for retirement benefits ¥529,910,860 US$4,705,300 　Prepaid pension cost ¥0 US$0 　Net amount recognized on the balance sheets ¥529,910,860 US$4,705,300

5) Details of retirement benefit expenses for the year ended March 31, 2016(Yen) (U.S.dollars)

　Service cost ¥8,172,929 US$72,571 　Interest cost ¥2,700,263 US$23,977 　Expected return on plan assets (¥3,651,242) (US$32,421)　Actuarial differences recognized in earnings (¥2,530,334) (US$22,468)　Prior service costs recognized in earnings (¥14,234,924) (US$126,398)　Retirement benefit expenses under simplified method ¥27,447,508 US$243,718 　Other (¥2,262,990) (US$20,094)　Defined benefit expenses ¥15,641,210 US$138,885

6)The asset allocation for the plans, excluding plans accounted for under the simplified method, at March 31, 2016

　Bonds 38%　Stocks 31%　Life insurance company general accounts 21%　Other 10%　Total 100%

7) Setting method of expected long-term rates of return on plan assets　The expected long-term rates of return on plan assets is determined based on the actual return on the plan asset portfolios and the expected rate of return on those portfolios.8) Assumptions of actuarial calculation　Assumptions of actuarial calculation at March 31, 2016 are as follows:　Discount rates: 0.2%　Expected long-term rates of return on plan assets: 1.0%(3)Defined contribution plans　Contribution made to the defined contribution plans by JOGMEC amounted to ¥1,485,144 (US$13,187).(4)Other　JOGMEC was allowed to return the past portion of substitutional part of Employee's Pension Fund pursuant to the company Defined-Benefit Corporate Pension Act on April 1, 2015. Along with this, JOGMEC adopted the defined benefit corporate pension plan and the defined contribution corporate pension plan, instead of welfare and pension system. JOGMEC recorded an extraordinary profit of ¥615,423,512(US$ 5,464,602) as JOGMEC was allowed to return the past portion of substitutional part of Employee's Pension Fund.

III. Actions Resulting in Significant Financial Obligations　Not applicable

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




oal Resource

Developm

entG

eothermal Resource

Development

StockpilingM




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 accumulated deficits) consisting of the balance sheet by account, the statements of operations, cash flows and 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 2015 fiscal year from April 1, 2015 to March 31, 2016. We have also audited the entity-wide financial statements consisting of the entity-wide balance sheet, the entity-wide statements of operations, cash flows and execution costs for administrative services, significant accounting policies, notes to financial statements and the related entity-wide supplementary schedules of JOGMEC.President’s Responsibility for the Financial Statements

President is responsible for the preparation and fair presentation of these financial statements (except for the proposal for appropriation of retained earnings and disposal of accumulated deficits) in accordance with “Accounting Standards for Incorporated Administrative Agency” 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 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 based on our audit. We conducted our audit in accordance with “Auditing Standards for Incorporated Administrative Agency” generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements 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. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, 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.

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 have not identified 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. However, our audit has not been designed for the purpose of expressing an opinion on whether or not there are any frauds, errors or illegal acts committed by president or other personnel within JOGMEC’s organization which would not result in material misstatements of the financial statements.Opinion

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

　　Report on the Proposal for Appropriation of Retained Earnings and Disposal of Accumulated Deficits, the Accounting Matters Stated in the Business Report 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, the accounting matters stated in the business report as well as the financial reports for each account and on an entity-wide basis of JOGMEC for the 2015 fiscal year from April 1, 2015 to March 31, 2016. The accounting matters which we have audited in the business report are derived from the accounting books and records of JOGMEC.President’s Responsibility for the Proposal for Appropriation of Retained Earnings and Disposal of Accumulated Deficits, the Business Report and the Financial Reports

President is responsible for the preparation of these proposals for appropriation of retained earnings and disposal of accumulated deficits in accordance with the related regulations, the business report presenting properly the financial position and the results of operations, and the financial reports presenting properly the financial results by certain business group in accordance with the budget classification.Auditor’s Responsibility

Our responsibility is to report on whether the proposal for appropriation of retained earnings and disposal of accumulated deficits is prepared in accordance with the related regulations, whether the accounting matters stated in the business report present properly the financial position and the results of operations, and whether the financial reports present properly the financial results by certain business group in accordance with the budget classification.

Report on the Proposal for Appropriation of Retained Earnings and Disposal of Accumulated Deficits, the AccountingMatters Stated in the Business Report and the Financial Reports

Our report is as follows:(1)　 The proposal for appropriation of retained earnings and disposal of accumulated deficits for each account is　prepared in accordance with the related

regulations.(2)　 The accounting matters stated in the business report present properly the financial position and the results of operations of JOGMEC.(3)　 The financial reports for each account and on an entity-wide basis present properly the financial results of JOGMEC by certain business group in accordance with

the budget classification established by president.Convenience Translation

We have reviewed the translation of these financial statements into U.S. dollars, presented for the convenience of readers, and, in our opinion, the accompanying financial statements have been properly translated on the basis described in Note 1.

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

Ernst & Young ShinNihon LLCJune 15, 2016Tokyo, Japan

NoteThe following information, among the financial information for which the Independent Auditor’s Report is issued, are not presented in the accompanying Financial

Statements; the financial statements by account, the entity-wide statement of execution costs for administrative services (including related significant policies and notes), the related entity-wide supplementary schedules, the proposal for appropriation of retained earnings and disposal of accumulated deficits for each account, the accounting matters stated in the business report, and the financial reports for each account and on an entity-wide basis.

Mr. Keisuke Kuroki PresidentJapan Oil, Gas and Metals National Corporation

Independent Auditor's Report

44 45Annual Report 2016Annual Report 201644 45Annual Report 2016Annual Report 2016

Independent Auditor's Report Financial Review

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 third medium-term objective beginning in April 2013.

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

■President　 Keisuke Kuroki

■Capital　 7522 billion yen (as of March 31, 2016)

■No. of employees 532 people (as of March 31, 2016)

■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

44 45Annual Report 2016Annual Report 201644 45Annual Report 2016Annual Report 2016

Overview of JOGMEC General Overview

Position Name Term Previous History

President Keisuke Kuroki2016.2.29

～

2018.3.31

Executive Director, Nippon Steel Corporation, Managing Executive Offier, Chief of Kimitsu Ironworks, Nippon Steel CorporationVice President & Executive Officer, Nippon Steel CorporationExecutive Vice President, Nippon Steel CorporationExecutive Corporate Adviser, Nippon Steel & Sumitomo Metal CorporationExecutive Vice President, JOGMEC

Executive Vice

PresidentKoichi Hamano

2016.2.29

～

2020.2.28

Director, Industrial Machinery Division, Manufacturing Industries Bureau, Ministry of International Trade and Industry (METI)Director, Finance Division, Business Environment Department, Small and Medium Enterprise Agency, METIDirector for Energy Policy, Minister's Secretariat, METIDirector, Policy Planning Division, Natural Resources and Fuel Department, Agency for Natural Resources and Energy, METIDirector, Budget and Accounts Division, Minister's Secretariat, METI

Executive Director

Makoto KawaharaInternal Audit Office, General Coordination,Financial Management & Accounting, Evaluation and Research & Analysis

2016.4.1

～

2018.3.31

Director, General Affairs Division, General Coordination and Policy Planning Department, Kyushu Bureau of Economy, Trade and IndustryDirector, Office of Renewables Portfolio Standard, Energy Conservation and Renewable Energy Department, Agency for Natural Resources and Energy, Ministry of International Trade and Industry (METI)General Manager, General Planning Department, the High Pressure Gas Safety Institute of JapanDirector, High Pressure Gas Safety Office, Commerce, Distribution and Industrial Safety Policy Group, Commerce and Information Policy Bureau, METIDirector, Product Safety Division, Commerce, Distribution and Industrial Safety Policy Group, Commerce and Information Policy Bureau, METI

Executive Director

Kenji AkiyoshiOil & Gas Upstream Business Unit

2013.5.1

～

2018.2.28

Deputy Director, Middle East Office, JOGMECDeputy Director General, Survey and Technology Department, JOGMECDirector General, Technical Strategy and Planning Department, JOGMECDirector General, Project Department , JOGMEC

Executive Director

Makoto IchikawaOil & Gas Upstream Technology Unit

2014.3.1

～

2018.2.28

Director, Petroleum Engineering Research Division, Technology Research and Development Department, JOGMECProject Director, Survey and Technology Department, JOGMECDeputy Director General, Project Department, JOGMECGeneral Manager, Houston Office, JOGMECDirector General, Project Department, JOGMEC

Executive Director

Takafumi TsujimotoMetals Strategy & Exploration Unit

2014.3.1

～

2018.2.28

General Manager, Lima Office, JOGMECDirector General, Metals Mining Technology Group, JOGMECCouncilor, Metals Strategy & Exploration Unit, JOGMECSenior Councilor, Metals Strategy & Exploration Unit, JOGMEC

Executive Director

Masatoshi WatanabeStockpile Unit

2016.4.1

～

2018.3.31

Director, Operation Division, Stockpile Management Department, JNOCDirector, Operation Team, Petroleum Stockpile Operation Group, JOGMECDirector, Planning Team, Petroleum Stockpile Management Group, JOGMECDeputy Director General, Stockpile Planning Department, JOGMECDirector General, Petroleum Stockpile Management Department, JOGMEC

Executive Director

Hajime Ikeda Metals & Coal Finance and Environment Unit

2016.7.1

～

2018.6.30

Director, Exploration Division 2, Metals Exploration Department, JOGMECDirector, Mine Pollution Control Department, JOGMECDirector General, Metals Environment Management Department, JOGMECDirector General, Coal Development Department, JOGMEC

Auditor Hirotaka Miyake

2016.3.1

～

Approval of the financial

statements of fiscal year 2017

Deputy Director General, Stockpile Management Department, JNOCDeputy Director General, Petroleum Stockpile Operation Group, JOGMECGeneral Manager, Sydney Office, JOGMECDeputy Director General, Survey and Technology Department, JOGMECDirector General, Seismic Vessel Project Group, JOGMEC

Auditor Atsuko Takada

2016.4.1

～

Approval of the financial

statements of fiscal year 2017

General Manager, Human Development, Human Resources Department, NIPPONKOA Insurance Co., Ltd. General Manager, Research & Planning, Compliance Department, NIPPONKOA Insurance Co., Ltd. General Manager, Sales System, Compliance Department, NIPPONKOA Insurance Co., Ltd. General Manager, Compliance Department, NIPPONKOA Insurance Co., Ltd. Director, General Manager, Human Resources Department, Sompo Japan Nipponkoa Career Bureau Inc.

As of September, 2016


Officers

President

Executive Vice President

Executive Directors

Chief Geologist

Internal Audit Office

Genaral Coordination Department

Financial Management & Accounting Department

Evaluation Department

Research and Analysis Department

Administration and Training Department

Exploration Department

Seismic Vessel Project Group

Technology Department

Technical Solutions Project Group

Methane Hydrate Research & Development 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

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 April 2016


Organization Structure

Office Address TEL FAX

Beijing Office (China) 3005 Chang Fu Gong Office Building, Jia-26, Jian Guo Men Wai Street, Beijing CHINA 100022 +86-10-6590-9520 +86-10-6590-8366

Jakarta Office (Indonesia) 5th Floor, SUMMITMASⅡ, Jl.Jend.Sudirman Kav.61-62,Jakarta, 12190INDONESIA +62-21-522-6640 +62-21-522-6650

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

(Oil & Gas)+61-2-9264-9611(Metals)+61-2-9264-2493 +61-2-9264-4914

Washington Office (U.S.A.) 1233 20th Street, N.W. Suite 206 Washington,D.C. 20036 U.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, Oficina 704, San Isidro Lima-27, PERU +51-1-221-5088 +51-1-221-1871

Santiago Office/ Oficina enSantiago (Chile)

World Trade Center, Torre Norte 1005, Av. Nueva Tajamar 481, Las Condes, Santiago, CHILE +56-2-2203-6130 +56-2-2203-6130

Moscow Office (Russia)R o o m 6 5 0 , H o t e l：M e z h d u n a r o d n a y a - 2 Krasnopresnenskaya Nab.12 Moscow 123610RUSSIAN

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

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

(Oil & Gas)+44-20-7287-7915(Metals)+44-20-7287-7916 +44-20-7287-7917

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

+971-2-6330366+971-2-6217704 +971-2-6330280

Botswana Geologic RemoteSensing Centre (Botswana)

Plot 54353, 5th Floor Office B, Masa Centre,Gaborone, BOTSWANA +267-390-2878 +267-390-2879


Woldwide Network

Office AddressMutsu-Ogawara Site Management Office 525-2 Aza-Futamata, Oaza-Obuchi, Rokkasho-mura Kamikita-gun, Aomori 039-3212 JapanTomakomai Site Management Office 308 Aza-Shizukawa, Tomakomai-shi, Hokkaido 059-1363 JapanAkita 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 JapanShirashima Site Management Office 1-108 Hibiki-machi, Wakamatsu-ku, Kitakyushu-shi, Fukuoka 808-0021 Japan

Kamigotou Site Management Office 818-411 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 Office 5024-1 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 Site Management Office 2-1-2 Shio-dori, Kurashiki-shi, Okayama 712-8054 JapanNamikata Site 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 Metals Environment & Geo-thermal Resource Support Office 30-7, Moto-machi, Date-shi, Hokkaido 052-0022 Japan

Tohoku Metals Environment & Geother-mal Resource Support Office 2-5-17 Matsunami, Yamagata-shi, Yamagata 990-0023 Japan

Chugoku-Kinki Metals Environment & Geothermal Resource Support Office 2-10-1 Toranomon, Minato-ku, Tokyo 105-0001 Japan

Kyushu Metals Environment & Geother-mal Resource 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

Metals Technology Center 9-3 Furudate, Kosakakozan, Kosaka, Akita 017-0202 JapanKyushu Branch Office 2-19-24 Hakata-ekimae, Hakata-ku, Fukuoka-shi, Fukuoka 812-0011 Japan

★Head Office　★Technology & Research Center（TRC）●Petroleum Stockpile Site Management Office　　　LPG Stockpile Site Management Office●Kashiwazaki Test Field Office　■Metals Enviroment & Geothermal Resource Support Office,Kyushu Branch Office　■Metals Technology Center

Shirashima Site Management Office

Tomakomai Site Management Office

Kashiwazaki Test Field OfficeNanao Site Management Office

Fukui Site Management Office

Hokkaido Metals Environment & Geothermal Resource Support Office

Kurashiki Site Management Office

Kamisu Site Management Office

Mutsu-Ogawara Site Management OfficeMetals Technology CenterKuji Site Management OfficeMatsuo Mine Pollution Control Project Support OfficeAkita Site Management OfficeTohoku Metals Environment & Geothermal Resource Support Office

Technology & Research Center (TRC)

Head OfficeChugoku-Kinki Metals Environment & Geothermal Resource Support Office

Namikata Site Management OfficeKikuma Site Management Office

Kyushu Branch OfficeFukushima Site Management Office

Kamigotou Site Management Office

Kyushu Metals Environment &Geothermal Resource Support Office

Kushikino Site Management OfficeShibushi Site Management Office


Domestic Network

Japan Oil, Gas and Metals National Corporation

ANNUAL REPORT

Year ended March 31 2016Annual Report

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

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

annual report - 独立行政法人石油天然ガス ... · annual report year ended march 31 ......

Documents