Inpex : Annual Report 2019/12 (Entire File)

INPEX CORPORATION

Annual Report 2019/12

For the Period ended December 31, 2019

CONTENTS

About INPEX	INPEX is the largest oil and gas E&P company in Japan with global exploration, development and production projects in 20 countries.
Our Mission	We are committed to contributing to the creation of a brighter future for society through our efforts to develop, produce and deliver energy in a sustainable way.
Our Goal	We aim to become a leading energy company serving an essential role in global society by meeting the energy needs of Japan and countries around the world.

• 02Inpex Value Creation

  • 02The History of INPEX

  • 04Value Creation Process

  • 06The Structure and Mechanism of Oil and Natural Gas Exploration and Development

  • 08Financial and Operating Highlights

• 10Management Strategies and Results

26Project Overview

• 26Segment Overview

• 28Project Overview by Region

42

Sustainability and Governance

10	Message from the Representative Directors	42	Sustainability
12	Message from the President	50	Interview with Outside Directors
20	Progress toward Meeting Medium-term Business Plan Targets	52	Corporate Governance
22	Cash Allocation Aimed at Increasing Corporate Value	56	Directors, Audit & Supervisory Board Members and
24	Abadi LNG Project	Executive Officers

About Our Reporting

INPEX's Annual Report is edited with the purpose of conveying both financial and non-financial information in an easy-to-understand manner, highlighting the Company's performance during the reporting period.

The Annual Report for the fiscal term ending December 31, 2019 features explanations of our responses to changes in business conditions in which the Company operates, an overview of the fiscal period under review, initiatives and successes of the Medium-term Business Plan2018-2022, and our CSR measures. In addition, this report is intended to convey our oil andnatural gas development operations-the Company's core business-to unfamiliar readersin an easy-to-understand manner using photos and charts. Going forward, we will take stepsto enhance information provision by using this report as a means to encourage meaningfuldialog with stakeholders. During compilation, we referenced the International Annual ReportingCouncil's (IIRC) International Annual Reporting Framework. Of note, the Company changed its accounting period-end from March 31 to December in 2019. As a result, the fiscal term ending December 31, 2019 is a nine-month accounting period extending from April 1 to December 31.

DISCLAIMER

Information contained in this Annual Report is not an offer or a solicitation of an offer to buy or sell securities. You are requested to make investment decisions using your own judgment.

Although the Company has made sufficient effort to ensure the accuracy of informationprovided herein, the Company assumes no responsibility for any damages or liabilities including,but not limited to, those due to incorrect information or any other reason.

FORWARD-LOOKING STATEMENTS

This Annual Report includes forward-looking information that reflects the Company's plansand expectations. Such forward-looking information is based on the current assumptionsand beliefs of the Company in light of the information currently available to it, and involvesknown and unknown risks, uncertainties and other factors. Such risks, uncertainties andother factors could cause the Company's actual results, performance, achievements or finan-cial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking information. Such risks and uncertainties include, without limitations, fluctuations in the following:

• ˔the price of and demand for crude oil and natural gas;

• ˔exchange rates; and

• ˔the costs associated with exploration, development, production and other relatedexpenses.

The Company undertakes no obligation to publicly update or revise any information in this Annual Report (including forward-looking information).

NOTES REGARDING FIGURES

Financial figures in this Annual Report have been, in principle, rounded to the nearest unit(e.g., millions, billions) for convenience. The "Project Overview by Region" section (starting on page 28) describes, in principle, the operating situation as of March 31, 2020. Figures in parentheses denote negative amounts. Natural gas production volume for projects in production is not the volume at wellheads, but corresponds to sales to buyers.

INPEX CORPORATION is listed on the First Section of the Tokyo Stock Exchange underthe securities code 1605. The Company is also included in the Nikkei Stock Average (Nikkei225) and the JPX-Nikkei Index 400 (JPX400).

59Financial and Corporate Information

• 6011-Year Financial Information

• 62Background Information: Oil and Gas Accounting Policies and Treatment

• 64Management's Discussion and Analysis of Financial Condition and Results of Operations

• 70Consolidated Financial Statements/Notes to Consolidated Financial Statements

• 89Independent Auditor's Report

• 90Subsidiaries and Affiliates

• 92Business Risks

• 100Oil and Gas Reserves and Production Volume

• 103Corporate Information

INPEX announced details of its "Vision 2040: Delivering Tomorrow'sEnergy Solutions" and "Medium-term Business Plan 2018-2022: Growth& Value Creation" in May 2018. For an overview, please refer to pages20-21 in this Annual Report and the Company's Web site for more infor-mation.

https://www.inpex.co.jp/english/company/

The History of INPEX

Our Vision

Since the founding of INPEX in 2008, we have worked to ensure a stable supply of energy to our customers by focusing on the exploration and production of crude oil and natural gas as our core business.

We will continue to strive to achieve the three business targets outlined in Vision 2040, our long-term vision announced in May 2018.

We will continue to contribute toward the creation of a brighter and more prosperous society through our efforts to develop, produce and deliver energy in a sustainable manner.

Three business targets

for 2040

Corporate value

Medium-term Business Plan 2018-2022

Renewable Energy

The Medium-term Business Plan 2018-2022 establishes definitive targets and initiatives for the five years from fiscal 2018 to fiscal 2022 in order to realize the Vision 2040 business targets.

Global Gas Value Chain

Please refer to pages 20-21 for details regarding our progress in achieving the Medium-term

Business Plan 2018-2022 targets.

Long-term Growth Drivers

Realization of new projects/ expansion of existing projects

Abadi LNG Project

Ichthys LNG ProjectExisting Upstream Oil and Natural Gas Assets

Upper/Lower Zakum, ADCO Onshore Concession,

Minami-Nagaoka, Kashagan, ACG, etc.

2018

2022

2040

˔Growth in volume and value

Atop 10international oil company

Akey playerin the development and supply of natural gas in Asia and Oceania

• ˔Take appropriate steps to address climate change

  Accounting for10%of INPEX's project portfolio

  Volume˔Achieve production volume of 1 million BOED, continuously expand reserves

  Value˔Significantly increase net income and cash flow from operations, improve capital efficiency

  • ˔Expand annual gas supply volume in Japan to more than 3 billion m3

  • ˔Develop gas demand in growth markets, including in Asia

  • ˔Maintain and strengthen supply and demand management and trading functions

  • ˔Maximize value of upstream natural gas assets

• ˔In addition to the geothermal power generation business, which draws on synergies with the Company's oil and natural gas E&P activities, expand participation in the wind power generation business

• ˔Promote technological research and development related to greenhouse gas reductions

2008Oct.INPEX CORPORATION is founded through the merger of INPEX, Teikoku Oil and INPEX Holdings

2010Sep.Acquires interest in Sebuku Block in Indonesia

2012Jan.Ichthys LNG Project in Australia reaches final investment decision

2013Apr.INPEX Mega Solar Joetsu is completedDec.Naoetsu LNG Terminal is completed

2014Jan.Welcomes extension of concession agreement for Upper Zakum Oil Field in the United Arab Emirates (Abu Dhabi)

2015Apr.Acquires interest in ADCO onshore concession in the United Arab Emirates

2016Aug.Commences Toyama Line natural gas trunk pipeline operations in Japan

2017Mar.Sarulla Geothermal IPP Project commences commercial operations

2018Feb.Acquires interest in Lower Zakum Oil Field concession and welcomes extension of concession agreements for Satah and Umm Al Dalkh oil fields in the United Arab Emirates (Abu Dhabi)

2019Jun.Prelude FLNG Project commences shipments

Company history

(Ruby Gas Field production commences in 2013)

Mar.Acquires interest in Prelude FLNG Project in

Australia

Aug.Acquires interest in Lucius Project in the United

States

Acquires indirect interest in Block 14 in Angola

JunJoins Sarulla Geothermal Independent Power

Producer (IPP) Project in Indonesia

Oct.Kashagan Oil Field in north Caspian Sea region

(Kazakhstan) commences crude oil shipments

Sep.Welcomes 25-year extension of production sharing agreement for ACG oil fields in southwest Caspian Sea region (Azerbaijan)

Mar.Abadi LNG Project in Indonesia commences

Pre-FEED work

MayAnnounces formulation of Vision 2040 and

Medium-term Business Plan 2018-2022

Jul.

Oct.Ichthys LNG Project commences LNG shipments

Jul.

Nov.Ichthys LNG Project achieves financial completion, reaches 100th LNG cargo shipment milestone

Ichthys LNG Project commences productionAbadi LNG Project receives approval on revised plan of development

INPEX CORPORATION Annual Report 2019/12