Energy Business Group Investor Meeting
December 13, 2012
Mitsubishi Corporation
Energy Business Group
Contents
1. Overview of Energy Business Group
① Organizational Structure
② Business Performance (Positioning in MC)
③ Value Chain
④ Measures Focused on Future Growth
⑤ Global Expansion of Energy Resources Business
⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and
Reserves
2. Outline of Business Divisions — Natural Gas Business
① Outlook for LNG Demand by Country/Region
② Diversifying LNG Supply Sources
③ List of Existing LNG Projects
④ Outline of Projects in the Pipeline
•
•
•
•
•
•
•
Donggi-Senoro LNG Project
Shale Gas Development in Canada/LNG Canada
Browse LNG Project in Australia
Wheatstone LNG Project in Australia
Natural Gas Development in Papua New Guinea
SGU Project in Iraq
Cameron LNG Project
1
Contents
3. Outline of Business Divisions—E&P Business
① Environment Surrounding the E&P Business
② List of Major Projects
③ Overview of Kangean Project in Indonesia
4. Outline of Business Divisions — Petroleum Business
① Organizational Chart for the Petroleum Business Division
② Environment Surrounding the Petroleum Industry
③ Key Initiatives
5. Outline of Business Divisions — Carbon & LPG Business
① Major Products in the Carbon Business
② Key Initiatives in the Carbon Business
③ LPG Business/Astomos Energy
④ LPG Business Value Chain
2
1. Overview of Energy Business Group
3
Headcount
(As of October 1, 2012)
① Organizational Structure
Group headcount: 591
Organizational Chart
Energy Business Group
Business Investees
No. of business investees: 94
Senior Vice President
Officer for E&P
Natural Gas Business
Division A
Natural Gas Business
Division B
Petroleum Business
Division
Carbon & LPG
Business Division
Head Office: 392
Japan: 100
(including 54 secondees)
Overseas: 99
(including 48 secondees)
Overseas sites
No. of Group overseas sites: 28
Asia: 13
(including Oceania)
Middle East: 7
North America: 2
Europe: 3
Russia: 1
Central and South America: 2
Energy Business Group CEO Office
Energy Business Group Administration Dept.
New Business Development Office
Africa, Europe and America E&P Business Unit
Asia E&P Business Unit
E&P New Business Development Unit
Brunei Project Unit
Malaysia Project Unit
Indonesia Project Unit
Australia Unit
Middle East Natural Gas Business Unit
Sakhalin Project Unit
Global Gas Unit
New Business Development Unit
Shale Gas Business Unit
Donggi-Senoro Project Unit
Utility Feedstock Unit
Industrial Petroleum Marketing Unit
Petroleum Supply & Marketing Unit
Petroleum Feedstock Unit
Petroleum Coke Unit
Carbon Materials Unit
LPG Business Unit
Specialty Carbon & Graphite Business Unit
Namikata Terminal Business Unit
Japan: 41
Overseas: 53
4
② Business Performance (Positioning in MC)
(Billion yen)
5,000
500.0
Group
グループ
Company-wide
全社
4,500
450.0
4,000
400.0
3,500
350.0
3,000
250.0
2,500
200.0
464.5
2,000
200.0
452.3
371.0
330.0
1,500
150.0
275.8
1,000
100.0
500
50.0
00
82.8
Year Ended
March 2009
Oil price (Dubai)
Exchange rate
$81.8
100.7 yen
71.9
94.0
Year Ended
March 2010
Year Ended
March 2011
$69.6
92.9 yen
$85.7
84.2 yen
120.6
Year Ended
March 2012
130.0
Year Ending March
2013 (Forecast)
$110.1
(Assumption) $108.2
79.1 yen (
〃
) 79.7 yen
Impact of changes in oil price on earnings (net income): for every $1/bbl increase (decrease) in the oil price,
net income will increase (decrease) approx. 1.0 billion yen on a full-year basis.
5
③ Value Chain
Liquefaction/marketing
Upstream
Natural
gas (LNG)
Petroleum
Transport
Trading
End users
・ Malaysia LNG 3
・ MIMI（NWS/Browse）
・ Sakhalin Energy Investment
・ MI Berau B.V. (Tangguh)
・ Tomori E&P (Donggi)
・Canada shale gas
・Papua New Guinea
・Wheatstone
・ Joint venture with TEPCO
・ BST (Brunei)
・ IGTC（NWS）
・CELT Inc.
・ Brunei LNG
・ Malaysia LNG (1 & 2 & 3)
・ MIMI（NWS/Browse)
・ Sakhalin Energy Investment
・ Oman LNG
・ MI Berau B.V. (Tangguh)
・ DSLNG
・ PEW (Wheatstone LNG)
Power companies
Gas companies
Petroleum companies
・ LNG Canada/ U.S. LNG Export
・ MCX ・ MCX USA
・ MCX DUNLIN
・ MPDC Gabon ・ MEDCO
・ Angola Japan Oil ・EMPI
Natural Gas Business Divisions
・Southeast Asia
・Middle East
・West Africa
・Australia
・PDS
Petroleum
products
Aluminum
manufacturers
E＆P
Trading
Crude oil
International shipping
fleet / terminals
・Diamond Tanker
・PDI
Marketing / storage
・ Kanokawa
Terminal
・ Onahama
Petroleum
・PDI
Primary distribution /
refining
Supply of raw materials / Primary
manufacturing and processing
・Coal coke
・Petroleum coke
・Coal tar
・Sekiyu Cokes Kogyo
・MC Carbon
・Ryoshin Bulk Trans
Logistics / trading
LPG
Carbon & LPG Business Division
New Business
Development
Office
Logistics / trading
①Biomass fuel
・Astomos Energy
Domestic distribution
/ trading
Petrochemical
industry
Automakers
・Showa Yokkaichi
Sekiyu
Petroleum Business Division
Carbon
Steelmakers
* Blue text represents business investees
Secondary manufacturing /
processing / carbon products
Logistics
・SG Chemicals
・Joint venture project in China
(MZAS/ Nanjing Baoning
Chemical Industries)
・Nihon Electrodes Industry
Storage
・Namikata Terminal
・Mitsubishi Shoji
Sekiyu
・MC Energy
・Dia Shoseki
・MC Carbon
Primary distribution /
wholesaling
・ Astomos Energy
②Fuel cell / hydrogen usage ③Power generation business ④ On-site power supply (co-generation)
General industry
Paper and pulp
manufacturers
Electronics
manufacturers
Food manufacturers
Ceramics industry
Electrode
manufacturers
⑤Geothermal business
6
④ Measures Focused on Future Growth
Management
vision:
A unique and sustainable energy company
(All in the name of creating an enriched society through energy)
Business
environment:
・Petroleum and gas: Tight supply-demand over the medium and long terms
→ intensified competition for resources
・Nuclear issue → increased demand for natural gas and petroleum
・Shale revolution → expanded use of gas (transport, electricity, petrochemicals)
① Build a structure that generates steady business earnings by
achieving balanced growth of resource businesses (natural gas, LNG
and E&P) and non-resource businesses (petroleum, carbon and LPG)
Aspirations:
② Maintain and expand the Group’s industry presence by expanding
natural gas (LNG) business domains, which form the core of the
Group’s earnings
③ In non-resource businesses, maintain a strong presence in the
Japanese market, while promoting globalization of business centered
on Asia and emerging countries.
7
⑤ Global Expansion of Energy Resources Business
U.K. North Sea
Development/
Production
(Crude oil)
Canada Shale Gas
Development Projects
U.S. Gulf of Mexico
Development/
Production
(Crude oil)
Sakhalin II LNG
Iraq SGU
Oman LNG
Liberia
Exploration
(Crude oil)
Gabon
Exploration/
Development/
Production
(Crude oil))
Malaysia LNG
Brunei LNG
Browse LNG
Angola
Development/
Production
(Crude oil)
North West Shelf LNG
Wheatstone LNG
Donggi-Senoro LNG
Kimberly
Exploration
(Crude oil/
Natural gas)
Tangguh LNG
Investment in
MEDCO
Kangean
Development/
Production
(Crude oil/
Natural gas)
Venezuela
Development of
Orinoco heavy oil
(Crude oil)
Papua New Guinea
Exploration/
Development
(Natural gas)
8
⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and Reserves
(Million tons/year)
Equity Share
of LNG Production
LNG持分生産能力
1200
12.00
タングー*
Tangguh*
サハリンⅡ*
Sakhalin II*
1000
10.00
7.05
8.00
800
6.00
600
4.97
7.05
7.05
Target:
10 million tons
7.05
5.34
4.97
カルハット
Qalhat (Oman)
（オマーン）
オマーン
Oman
西オーストラリア*
Western Australia*
Malaysia III*
マレーシア3*
4.00
400
Malaysia II
マレーシア2
2.00
200
Malaysia I
マレーシア1
Brunei
ブルネイ
00
2006
2006年
2007
2007年
2008
2008年
2009年
2009
2010
2010年
2011
2011年
2012年
2012
2013年
2013
2020
2020年
* Owns upstream working interest
Equity Share of Oil and Gas Production (Yearly
(Thousand BBL/Day)
160
140
原油・コンデンセート
■ 天然ガス
Natural gas
■ Crude oil/condensate
116
120
100
80
60
76
63
40
90
84
48
82
84
146
141
47
39
90
Crude il/condensate
0.22 Billion BBL
Natural gas
0.91 Billion BBL
84
42
40
20
49
76
Average)*1
99
102
2010
2011
67
36
41
42
2006
2007
2008
0
2009
*1 Oil equivalent. Includes consolidated subsidiaries and equity-method affiliates
*2 Participating interest equivalent. Includes reserves based on original standards set by MC
2012
(est.)
MC’s Reserves
Total *1*2 1.13 Billion BBL
(As of December 31, 2011)
9
2. Outline of Business Divisions —
Natural Gas Business
10
①Outlook for LNG Demand by Country/Region
LNG demand is projected to increase approximately 1.5-fold to 370 million tons in 2020,
from 240 million tons in 2011.
(million tons/year)
Asia-pacific region
Japan
Korea
Taiwan
China
India
Other Asia
Chile, Mexico (Pacific Coast)
Atlantic region
Europe
North America (Excl. Pacific Coast)
Others (Middle East, Central &
South America)
Worldwide total
2010
2011
2012
Actual
Actual
Est.
2015
Est.
135
70
33
11
9
9
0
3
75
56
13
154
79
37
12
12
11
1
3
87
66
13
171
86
36
13
16
16
1
3
76
52
9
187
80
37
15
26
13
11
6
99
73
7
6
9
15
210
241
247
2020
VS 2011
Est.
VS 2011
7
(6)
238
93
37
20
45
20
16
6
130
106
8
40
(5)
19
10
16
8
285
44
368
127
32
2
0
3
13
2
10
3
12
83
15
0
8
33
9
16
3
43
11
②Diversifying LNG Supply Sources
•
LNG exporting regions, which are currently centered on Asia and Oceania, will
expand to North America, Africa and other regions.
(There were 20 supplying nations in 2011.)
East Siberia
West Canada
West Siberia
Sakhalin
ｻﾊﾘﾝ
Europe
U.S.
Qatar
China
East Africa
East Australia (CBM)
Brazil
Existing supply regions
New supply regions
LNG importing regions
12
③List of Existing LNG Projects
Start
Project
MC’s Role
Shareholding
1969
Alaska LNG
Sales to Tokyo Electric and Tokyo Gas; Negotiation support; Import agent
＊First introduction of LNG to East Asia
1972
Brunei LNG
Investment in liquefaction and sales; Negotiation support; Import agent; Shipping
1983
Malaysia LNG
－
Investment in liquefaction and sales; Negotiation support; Import agent
25%
5-15%
* 3 Projects: Satu, Dua (FID 1992) and Tiga (FID 1999)
1989
North Wes
Shelf LNG
(Includes crude
oil development)
Investment in upstream, in liquefaction and in sales; Negotiation support;
Import agent; Shipping
＊First joint venture with Mitsui & Co., Ltd.
2000
Oman LNG
Investment in liquefaction and sales
2004
Qalhat LNG
(Oman）
Investment in liquefaction and sales; Import agent; Shipping
2009
Sakhalin LNG
(Includes crude
oil development)
2009
Tangguh LNG
2010
Shale Gas
(Indonesia)
(Canada)
2014
(Plan)
DonggiSenoro LNG
(Indonesia)
8.3%
2.8%
4%
＊ Global sales and arbitrage operations
Investment in upstream, in liquefaction and in sales; Negotiation support; Import
agent
10%
＊Joint venture with Mitsui & Co., Ltd. (LNG FID 2003)
Investment in upstream, in liquefaction and in sales; Negotiation support
venture with INPEX Corporation (FID 2005)
＊Joint
Approx. 9.9%
Investment in upstream, and in development. Joint development with Japanese
utility and gas companies
＊North American natural gas business
30-40%
Investment in upstream, in liquefaction and in sales - together with KOGAS (FID
2011)
＊Taking on operatorship of LNG plant
Approx. 45%
13
④Project Pipeline: Donggi-Senoro LNG Project
MC’s first-ever LNG project that it leads through to
establishment of the plant
The Donggi-Senoro LNG Project has been started in Indonesia to produce and
sell liquefied natural gas (LNG). MC is the largest shareholder in this project,
which is the first to be led by MC from planning through to plant operation. From
2014, the project plans to produce approximately 2 million tons of LNG per year.
Through this project, MC will build on the LNG business know-how and functions
it has cultivated over many years since its first operation in Alaska in 1969 to
ensure an even more stable supply to Japan and the East Asia region.
Location of plant
construction
Suburban Luwuk, Banggai
Regency, Central Sulawesi
Province
With shareholders coming
from Japan, Indonesia and
South Korea, this is the first
all-Asian LNG project.
14
④Project Pipeline: Shale Gas Development in Canada/LNG Canada
Promoting LNG development (LNG Canada) through a
partnership represented by Shell (40%), along with
Japan, China and Korea (20% each)
Cordova region
Montney region
Period of Entry
September 2010
February 2012
Exploration
Zone
540 km2 in Cordova
Embayment, northeastern
British Columbia
1,667 km2 in Montney
Cutbank and Dawson, British
Columbia
Reserves
5-8 trillion cubic feet (100160 million tons)
35 trillion cubic feet (720
million tons) Equivalent to 9
years’ worth of Japan’s gas
consumption
MC’s share
30%
40%
Operator
Penn West
（50%）
Encana
（60%）
Peak
production
output
Approx. 0.7 billion cubic
feet/day (approx. 5 million
tons/year, 2018)
Approx. 3.0 billion cubic
feet/day (approx. 5 million
tons/year, 2018)
Production
Period
Over 50 years
Over 50 years
Features
･Chubu Electric, Tokyo Gas,
Osaka Gas, JOGMEC
(3.75% each), and KOGAS
(5%) are also participating
as partners.
･Half (50%) of the gas
produced will be sold in
North America through
CIMA Energy, a US gas
marketing company in
which MC has a 34% share.
･Partnered with Encana,
Canada’s largest natural gas
producer
･As one of Canada’s largest
shale gas assets, this prime
project offers outstanding
productivity and cost
competitiveness.
･Immense contribution to
Canada’s economic growth
(project will create 14,000
new jobs)
Cordova
Montney
15
④Project Pipeline: Browse LNG Project in Australia
Gas and Condensate
Fields
Japan Australia LNG (MIMI) Pty. Ltd. is a 50-50 joint
venture between Mitsubishi Corporation and Mitsui &
Co., Ltd. In September 2012, its subsidiary officially
participated in the Browse LNG Project promoted by
Woodside Petroleum Ltd.
FID is planned for the first half of 2013.
Project Partners
Woodside Browse, BHP Billiton Petroleum (North West Shelf)
Pty Ltd., BP Developments Australia Pty Ltd., Chevron
Australia Pty Ltd., Shell Development(Australia)Proprietary
Limited, Japan Australia LNG (MIMI Browse) Pty Ltd
Location of Gas and
Condensate Fields
Browse Basin, 425km off Broome in Western Australia
Proposed LNG Plant Location
James Price Point in Kimberley, Western Australia
LNG Production
12 million tons per annum (4 million tons ×3 trains)
* Potential expansion to 25 million tons per annum
Reserve (estimated by
Woodside Energy)
Gas: 15.5 trillion cubic feet
Condensate: 417 million barrels
FID
Planned first half 2013
LNG plant
16
④Project Pipeline: Wheatstone LNG Project in Australia
17
④Project Pipeline: Natural Gas Development in Papua New Guinea
Outline
Exploration, appraisal and development of
natural gas in Papua New Guinea
Licenses
Nine onshore licenses in Papua New
Guinea’s Western Province
Licensed
Equity
Positions
Talisman, MC and others’ licensed equity
positions will average 40%, 20% and 40%,
respectively in these nine licenses.
LNG
Production
Approx. 3 million tons (period undetermined,
pending confirmation of gas reserves)
* Equity interests in the LNG project have
yet to be determined.
By harnessing the complementary strengths of MC’s
LNG project development and execution capabilities
and Canada-based Talisman’s natural gas exploration,
development and production capabilities, MC is
considering developing LNG from natural gas
produced in Papua New Guinea.
18
④Project Pipeline: SGU Project in Iraq
Project to effectively utilize associated gas
(currently most of such gas is flared), which
is essential to Iraq’s economic recovery.
In the future, the project expects to export
LNG (FID: from 2015 / 4 million tons a year)
Outline
Collect and refine associated gas from three oil
fields in Basrah Province, and supply products
domestically in Iraq and for export.
Operating
company
Basrah Gas Company (South Gas Company 51%,
Shell 41%, MC 5%)
Handling
volume
2 billion standard cubic feet/day (16 million
tons/year)
Start of
operations
2013
LNG
After sufficient domestic gas supplies are achieved,
make a FID on LNG as soon as feedstock gas is
available.
Syria
Iran
Baghdad
Basrah province
Saudi Arabia
Basrah
19
④Project Pipeline: Cameron LNG Project
Cameron, Louisiana
【Tolling business scheme】
Project operator
Sempra LNG
FID
2013 4Q
Start of operations
2017 2Q
Liquefaction
capacity
4.0MTPA×3Train
Marketing
Tolling Service (The three companies
GDFS, Mitsui & Co., and MC are
currently conducting negotiations as
tollers.)
Existing facilities
3Tanks、2Berths
Feed and EPC
Contractors
FEED: Foster Wheeler,
EPC: tender planned
Cameron LNG JV
LNG purchasers
Tolling agreement
U.S. gas producers
SPAs
Gas supply
agreement
Mitsubishi Corporation
U.S. gas market
Spot purchase
Pipeline agreement
Pipeline companies
Cameron Interstate
Pipeline
⇒Against the backdrop of the
shale gas revolution, MC seeks
to achieve LNG exports from
the U.S., which has abundant
gas reserves, and sell part of
this gas to Japan.
20
3. Outline of Business Divisions—
E&P Business
21
① Environment Surrounding the E&P Business
Persistently high oil prices and continued firm
demand for crude oil
Expectations for unconventional resources,
and the opening of new frontiers
・According to World Energy Outlook 2012, the IEA average crude oil
import price is expected to increase to $125 by 2035.
・Despite high oil prices, crude oil demand is projected to continue to
expand, mainly in Asian emerging countries such as China and India.
・In North America, development of unconventional resources has heated
up. Recently, there have been high hopes for shale oil in response to
sluggish natural gas prices.
・Tackling the challenge of technically difficult regions, such as great
sea depths and the Arctic Ocean.
Trend and outlook for global crude oil demand and crude oil
prices through 2035
Trend and outlook for U.S. crude oil and natural gas
production through 2035
Source: World Energy Outlook 2012
Note: Crude oil prices represent IEA average crude oil import prices.
Source: World Energy Outlook 2012
Energy policies are attracting attention
• The importance of fossil fuels, such as oil and natural gas, is being reaffirmed following the nuclear accident in Japan. In this context, the
energy policies of various countries are attracting attention.
MC’s Initiatives in the E&P Business
Obtain and provide stable
supplies of resources
Promote a growth strategy focused on the value chains (upstream) of the LNG and petroleum businesses
Contribute to earnings over the medium and long terms
22
②List of Major Projects
Project
Equity interest
(MC, net)
Partners
Status
Crude
oil/gas
Gabon (Baudroie Marine field,
Merou Sardine field, Nguma field
and others)
50.00～
100.00%
Total/Perenco
Exploration/development
/production
Crude oil
Angola
(Block 3/05, 3/05-A)
10.20%
Sonangol/ENI/ and others
Development/production
Crude oil
U.S. Gulf of Mexico (K2 project)
11.60%
Anadarko/Eni/ConocoPhillips/
NOEX/Ecopetrol
Development/production
Crude oil
U.K. North Sea Dunlin Oil Field
30.00%
Fairfield Energy
Development/production
Crude oil
Kangean, Indonesia
25.00%
JAPEX/EMP
Development/production
Gas/crude oil
PT. Medco Energi Internasional
Tbk.of Indonesia
19.97%
Encore International
Listed company
-
Liberia (Block 10)
10.00%
Anadarko/Repsol
Exploration
Crude oil
23
③Overview of Kangean Project in Indonesia
Overview
・In May 2007, MC and Japan Petroleum Exploration Co., Ltd. (JAPEX)
participated in the Kangean PSC by acquiring a combined 50% working interest.
・Through their management of Kangean Energy Indonesia Ltd., MC and JAPEX
are promoting this project as the de facto project operators.
・Production started in Terang gas field, the core project in Kangean, in late May
2012. (A gas volume of 300 Million Standard Cubic Feet per Day at the peak
period is planned to be produced and distributed across East Java Province.)
・MC plans to develop the Sirasun and Batur gas fields going forward. MC is also
conducting feasibility studies of the potential for additional exploration and
development within the Kangean PSC.
Structure of Partnership
24
4. Outline of Business Divisions —
Petroleum Business
25
①Organizational Chart for the Petroleum Business Division (November 2012)
Petroleum Business Strategy
◇Planning and development of business division
strategies, personnel and general affairs, environmental
management
E&P
Petroleum Supply & Marketing Unit
Energy Business
Group
Petroleum Business
Div.
◇Import, export and offshore trading of crude oil and
petroleum products
◇Management of petroleum refining and sales businesses
◇Responsible for business investees (PDI, PDS,
Showa Yokkaichi Sekiyu, Mitsubishi Shoji Sekiyu Group,
Dia Shoseki Group)
Group CEO Office
Upstream
Business Office
New Business
Development Office
Energy Business Group
Administration Dept.
Key Business Investments
-Petro Diamond Incorporated （PDI）
-Petro Diamond Singapore （PDS）
Natural Gas Business
Div. A
Industrial Petroleum Marketing Unit
◇Import and sales of heavy oil, lubricant oil and asphalt to
industrial firms
◇Responsible for business investees (MC Energy)
Natural Gas Business
Div. B
Utility Feedstock Unit
Carbon & LPG
Business Div.
-Showa Yokkaichi Sekiyu
-Mitsubishi Shoji Sekiyu
-Dia Shoseki
-MC Energy
-Onahama Petroleum
-Diamond Tanker
◇Trading in crude oil, heavy oil and ships for electric utilities
◇Responsible for business investees (Onahama Petroleum,
Kanokawa Terminal, Diamond Tanker)
Petroleum Feedstock Unit
◇ Import and offshore trading of naphtha, condensate
and gasoline components, and ship freight transactions
◇ Responsible for business investees (Central Tanker)
26
② Environment Surrounding the Petroleum Industry
【 Japan 】
◆ Gradual decrease in petroleum demand due mainly to Japan’s declining
population and environmental measures.
◆ Reduction in refining capacity in line with the Act on Sophisticated Energy
Supply Structures.
◆ Clear demarcation of winners and losers among refineries, distributors
and sellers and further industry realignment.
◆ Unpredictable energy mix (restart of nuclear power plants) and uncertain
petroleum demand from electric utilities
【 Overseas 】
◆ Gradual decrease in petroleum demand in OECD countries due
mainly to declining populations and environmental measures
◆ Sharp increase in petroleum demand in emerging countries in step
with vigorous economic growth.
◆ Changes in commercial flows of petroleum triggered by the Shale
Revolution
◆ Consistently high crude oil prices
27
③ Key Initiatives
【 Japan 】
Relentlessly strive to maintain and increase share of the domestic market
by maintaining and strengthening MC’s outstanding sales network and
leveraging its competitive supply capabilities and capacity to adjust for
changes in supply and demand.
【 Overseas 】
Expand new business by capturing growth in buoyant demand for
petroleum products in the Asia-Pacific region, which is undergoing rapid
economic growth.
【 Electric power 】
Provide stable supplies to meet increased petroleum demand from
electric utilities amid suspended operation of nuclear power plants, and
revise MC’s petroleum supply structure in anticipation of future demand.
28
5. Outline of Business Divisions —
Carbon & LPG Business
29
① Major Products in the Carbon Business
The carbon business develops non-resource businesses involving raw materials and supplies essential to industry,
leveraging Company-wide resource businesses.
Petroleum Coke Unit
① Protect and expand
existing business
interests)
② Strengthen value chains
by securing new sources
of petroleum coke
③ Enhance existing
businesses by securing
new inventory sites and
promoting fuel conversion
Speciality Carbon BU
Promote the manufacturing,
development and
commercialization of anode
materials for lithium-ion
batteries
Aluminium-Related Carbon
Materials Office
① Promote the manufacturing
and sales of anodes for
aluminum smelting in
China
② Promote the manufacturing
and sales of pitch coke for
China
③ Expand business utilizing a
BF carbon block cathode
manufacturer
④ Establish a One-Stop
Service for every carbon
product for aluminium
smelting.
Carbon Materials BU
① Expand existing
businesses and develop
new businesses in such
fields as graphite
electrodes, carbon black
feedstock oil, needle pitch
coke, etc.
② Promote the needle pitch
coke manufacturing and
sales business in Korea
30
②Key Initiatives
Capture earnings in growing markets
Key Division Initiative I
Projected Demand for Aluminum (million tons)
 Demand for aluminum is projected to continue growing steadily over the
medium and long terms. (Year ended March 2012: 43 million tons → year
ending March 2021: 68 million tons)
 The Division is working with the aim of capturing growth in the aluminum
market as a One Stop Servicer for aluminum smelters.
 The Division is working to strengthen its presence in the aluminum
industry in collaboration with manufacturers of carbon materials for
aluminum smelters worldwide. To this end, measures also include
overseas business investments.
70
60
50
40
30
20
10
0
05 06 07 08
09 10 11 e12 e13 e14 e15 e16 e17 e18 e19 e20
Key Division Initiative II
Major fine carbon products
 The Division offers cutting-edge fine carbon materials, such as lithium-ion
battery anode materials and crucibles for manufacturing silicon for solar
cells.
Anode
materials for
lithium-ion
batteries
Crucible for
Carbon brush for Graphite materials
manufacturing
for highwind power
silicon for solar
temperature gas
generation
cells
furnaces
 The market for lithium-ion battery anode materials is expected to
experience significant expansion. (Year ended March 2012: approx. 60
billion yen → year ending March 2021: more than 500 billion yen)
 Having established a development and manufacturing company for anode
materials, the Division is working to commercialize the manufacturing and
sale of these materials, from the supply of raw materials to hightemperature thermal treatment and other operations.
31
③LPG Business/Astomos Energy
Established an LPG operating company with one of the
world’s largest trading volumes and Japan’s largest
share through a business integration in 2006.
Astomos Energy’s bases (Branches and terminals)
[Branches]
Domestic: 10 locations (Major cities)
Overseas: 2 locations
[Supply structure]
Import terminals: 10 locations)
Secondary terminals: 6 locations
Mitsubishi Liquefied
Gas Co.
* National LPG storage terminal based on a
subterranean rock storage system
Features of Astomos Energy
Integrate and capture synergies between overseas operations (trading
functions) and domestic operations (primary distribution functions)
Outline of Astomos Energy
Namikata Terminal a wholly owned
subsidiary of MC, is scheduled to operate the
facility (storage of LPG, chemicals and
petroleum) under contract.
* 450,000 tons of LPG will be stored in a subterranean
rock storage system 180m below the surface.
Established: April 1, 2006
Business activities: Import and sales of liquified petroleum gas (LPG), overseas
LPG trading (Ship ownership)
Shareholders: Idemitsu Kosan Co., Ltd. 51%, Mitsubishi Corporation 49%
Number of Employees: 347 (as of April 2012)
Sales: 643.9 billion yen (year ended March 2012)
Trading volume: Approx. 3.7 million tons in Japan; total global trading volume of
9.4 million tons (one of the world’s largest)
Overview of Liquefied Petroleum Gas (LPG)



LPG is a gaseous fuel consisting primarily of propane and butane.
LPG is utilized by around 50% (approx. 25 million households) of all Japanese
households as a fuel for residential and commercial use. LNG is used
extensively across roughly 95% of Japan’s land area.
LPG is an environmentally friendly, distributed form of energy (used to address
the Great East Japan Earthquake).
32
④LPG Business Value Chain
 Demand for associated LPG is projected to increase
substantially in step with increased LNG production in the
Middle East and shale gas development in North America.
Astomos Energy has the advantage of a robust fleet of ships.
Leveraging this strength, the company aims to drive expansion
in overseas commercial flows of associated LP gas.
 Backed by its dominant procurement capabilities, Astomos
Energy will strive to strengthen its wholesaling and retailing
capabilities in Japan, with the view to rapidly addressing major
earthquakes and other emergencies by leveraging the features
of LPG. Looking ahead, the company will continue working to
upgrade its functions.
 By building an integrated value chain spanning LPG procurement to transport
and receiving terminal operations, along with wholesaling and retailing in
Japan, Astomos Energy is developing a stable business model as a nonresource business.
 Astomos Energy is helping to ensure crucial aspects of energy security for
Japan. These include stable procurement and transport of LPG leveraging one
of the world’s largest fleets of ships, and fuel procurement and supply through
the operation of LPG receiving and transport terminals in Japan.
 Astomos Energy is developing business in fields close to consumers through
retail sales and related businesses (Enefarm, etc.). The company also
supplies LPG to electric utilities (for power generation) and gas companies (for
heating). In these ways, the company plays a role in providing crucial social
infrastructure.
33
Shale Gas Business
Source: theengineer.co.uk
Impacts from the “Shale Gas Revolution”
Enormous Reserves
Proven Natural Gas
Reserves
6,609 tcf
Technically Recoverable
Shale Gas Resources
+
6,622 tcf
＝
13,231 tcf
Reserves-to-production
ratio: 63 years
Reserves-to-production
ratio: 127 years
Exploration and appraisal suggest resource base will expand going forward
(Source: US Energy Information Administration April 2011 “World Shale Gas Resources”)
2
Conventional Natural Gas Reserves
Shale Gas/Silt Gas
*Japan’s entire import volume consists of LNG
sourced from conventional natural gas.
Diffusion into
the air
Diffusion into
the air
Natural flow
under internal
gas field
pressure
Conventional
natural gas
ガス移動
③The cap rock acts
as a lid, trapping
the gas.
2,000～3,000m
① Due to low
permeability, gas
cannot be recovered
by vertical drilling
alone. Horizontal
drilling is also
required.
② Due to the lowpermeability of the
rock, the gas moves
through fissures
Cap rock
Shale
② Hydraulic
fracturing
(fracking) of the
rock enables
extraction of the
gas from the
resulting fissures.
シール
Reservoir rock
30～100m
Source rock
① Over many years
the gas rises (most
of it diffuses in the
air from the ground
surface)
Source rock
1,000~2,000m
Mudstone and limestone,
etc. Cap rock has very low
permeability, preventing
upward migration of the gas.
Sandstone, etc. This
rock is highly
permeable, allowing the
gas to move through it.
Mudstone and shale, etc.
Source rock contains
organic compounds that
form the gas.
 The key point is whether a gas field can be discovered or not
(exploration projects).
Silt and shale, etc. Gas formation and storage has completed in these
rocks, but the gas remains dormant in them due to their low
permeability.
 Seismic exploration and test wells provide sufficient data to ascertain the position,
depth, and amount of oil and gas reserves, so there is no exploration risk. The
main determining factor is how much can be recovered economically (similar to
coal extraction).
 Due to the low recovery rate from a single well and severe attenuation in
productivity, multiple wells must be drilled continually (by the same token, the
pace of excavation can be adjusted in line with demand, similar to the
manufacturing business).
3
The “Shale Gas Revolution”
•Transforming the Energy Situation in the US (and the World)
The US is transforming itself from net importer of LNG to a net exporter (planned) (LNG receiving terminals for over 150
million tons now operate at around 10% capacity). This is one factor behind easing of global demand for natural gas, which
enabled Japan to step up procurement following the March 2011 disaster. (LNG project built to meet projected US demand
now had extra capacity to sell).
Projection for US Natural Gas Supply Sources
 The supply-demand gap that was previously to be filled by LNG is now filled by gas from unconventional resources.
 Unconventional resource gas currently supplies around 50% of demand, projected to increase to 75% by 2035. Shale gas plays a major role in this.
 US projected to be virtually self-sufficient by 2035.
Trillion
cubic feet
2009
30
Unconventional: 75%
Unconventional: 50%
1%
25
Imported LNG
(510 million tons)
11%
14%
20
(410 million tons)
15
20%
9%
10
28%
5
0
1990
2%
1995
2000
2005
8%
9%
2010
Shale gas
46%
Onshore conventional gas
8%
8%
Offshore conventional gas
Tight sand gas
22%
Coalbed methane
Gas associated with oil
Alaska
2015
2030
2020
2025
7%
7% 1%
2035
Source: US Energy Information Administration Energy Outlook 2011
4
Canada LNG Export Scheme
Develop new reliable supply sources that can provide stable supply over the long term
(1) Stable government administration and relationship between Japan and Canada; federal,
provincial and territorial governments strongly support LNG exports
(2) Located relatively close to Japan
(about 10 days from western Canada) ⇔ (about 40 days from the US Gulf of Mexico;
reduced to 26 days after Panama Canal expansion completed)
(3) Enormous reserves but low domestic demand (population: 34 million ⇔ 300 million in the US)
5
Canada LNG Export Scheme
”Private & Confidential”
Several green field projects for Canada’s western seaboard are currently being
examined, including new construction of LNG bases and pipelines.
Source:Kitmat LNG(2012)
6
MC’s Shale Gas Business
Participation date
Exploration zone
Cordova Region
Montney Region
September 2010
February 2012
Cordova Embayment, northeast British Columbia,
Montney Cutbank and Dawson, British Columbia,
2
2
Canada, 540 km
Canada, 1,667 km
Recoverable shale
gas resources
5-8 trillion cubic feet (100 to 160 million tons)
35 trillion cubic feet (720 million tons, equivalent to
approx. 9 years of annual consumption in Japan)
MC’s share
30%
40%
Acquisition cost
C$450 million (approx. \36 billion)
C$2,900 million (approx. \229 billion)
Operators
Penn West Exploration(50%)
Encana Corporation(60%)
Peak production
volume
Approx. 700 million cubic feet per day
Approx. 3,000 million cubic feet per day
Production period
Over 50 years
Over 50 years
Operation cost
Approx. C$2,200 million (Approx.\180 billion)
Approx. C$6,000 million (Approx.\480 billion)
*MC's share
*Project 100% baisis
･Chubu Electric, Tokyo Gas, Osaka Gas,
JOGMEC (3.75% each), and KOGAS (5%) are
also participating as partners.
･Half (50%) of the gas produced will be sold in
North America through CIMA Energy, a US gas
marketing company in which MC has a 34% share.
･Partnered with Encana, Canada’s largest natural
gas producer
･As one of Canada’s largest shale gas assets, this
prime project offers outstanding productivity and
cost competitiveness.
･Immense contribution to Canada’s economic
growth (project will create 14,000 new jobs)
Features
7
LNG Exports from Canada: LNG Canada Project
Shell, KOGAS, CNPC and MC will transport feedstock gas from their respective shale gas assets in Canada’s
British Columbia and Alberta provinces via a pipeline. The gas is to be liquefied at a plant on the west coast
(Port of Kitimat, British Columbia) and LNG exports planned to commence from 2019.
Shale gas assets
Gas liquefaction plant
(Port of Kitimat)
- 6 million tons per year x 2 trains
- Consider to expand 2 additional trains
Partners
Pipelines (approx. 700 km)
Shell, KOGAS, CNPC, MC
=40%, 20%, 20%, 20%
Contracted building and operation of large diameter pipeline
to TransCanada, a major pipeline company in Canada
Schedule
- Aim to make final investment decision
by 2015
- Plan to start production by 2019
8