East Siberia Japan Oil-Irkutsk Oil Company JV Joined By Itochu, INPEX

September 24, 2013

On September 24, 2013, Mr. Kawano Hirobumi, President of Japan Oil, Gas and Metals National Corporation (JOGMEC), the Japanese state-run company, announced that the joint project between JOGMEC and INK in Eastern Siberia (INK-Zapad) had moved to a new stage after being joined by ITOCHU Corporation and INPEX CORPORATION, two major Japanese private companies, to the project as shareholders of JASSOC, which is a subsidiary of JOGMEC holding 49% in INK-Zapad.

JOGMEC announced it will provide equity financing to the Eastern Siberia project conducted by Japan South Sakha Oil Co. LTD ("JASSOC"), earlier established by JOGMEC for the purpose of a geological survey program, which recently entered new stage after ITOCHU Corporation ("ITOCHU") and INPEX CORPORATION ("INPEX") acquired a part of shares in JASSOC.

Based upon the "Japan-Russia Action Plan" adopted at the Japan-Russia summit meeting in January 2003 followed by the "Initiative for Strengthening Japan-Russia Cooperation in the Far East and East Siberia" proposed at the countries' summit meeting in June 2007, JOGMEC started in May 2009 the geological survey program jointly with a Russian upstream company, OOO Irkutsk Oil Company ("INK"), in Zapadno-Yaraktinsky and Bolshetirsky subsoil blocks located in the northern part of Irkutsk Region.

As a special approach to meet the requirements under Russian regulations, JOGMEC established its wholly-owned subsidiary JASSOC which acquired 49% shares of the joint venture company "INK-Zapad" (the remaining 51% shares held by INK), operator of the both blocks. The initial geological and geophysical research, including wildcat wells, has confirmed the presence of hydrocarbon in three areas within these two license blocks, requiring further exploration and appraisal activities which shall be conducted under the private sector’s initiative.

With such successful achievement of the geological survey program, JOGMEC recently transferred a part of its shareholding in JASSOC to ITOCHU (12.6%) and INPEX (12.4%) through a tender process, and granted equity financing to the restructured JASSOC covering up to 75% of future exploration expenditures. JOGMEC will remain a shareholder holding less than 50% of voting shares in JASSOC.

Source: JOGMEC, 2013.