Energy Business Group Investor Meeting
42
December 13, 2012 Mitsubishi Corporation Energy Business Group Energy Business Group Investor Meeting
Transcript of Energy Business Group Investor Meeting
December 13, 2012Mitsubishi CorporationEnergy Business Group
Energy Business Group Investor Meeting
Contents1. Overview of Energy Business Group
① Organizational Structure② Business Performance (Positioning in MC)③ Value Chain④ Measures Focused on Future Growth⑤ Global Expansion of Energy Resources Business⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and
Reserves
2. Outline of Business Divisions — Natural Gas Business① Outlook for LNG Demand by Country/Region② Diversifying LNG Supply Sources③ List of Existing LNG Projects④ 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
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3. Outline of Business Divisions—E&P Business① Environment Surrounding the E&P Business② List of Major Projects③ Overview of Kangean Project in Indonesia
4. Outline of Business Divisions — Petroleum Business① Organizational Chart for the Petroleum Business Division② Environment Surrounding the Petroleum Industry③ Key Initiatives
5. Outline of Business Divisions — Carbon & LPG Business① Major Products in the Carbon Business② Key Initiatives in the Carbon Business③ LPG Business/Astomos Energy④ LPG Business Value Chain
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Contents
1. Overview of Energy Business Group
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① Organizational StructureHeadcount
Group headcount: 591
Head Office: 392Japan: 100(including 54 secondees)Overseas: 99(including 48 secondees)
No. of Group overseas sites: 28
Asia: 13(including Oceania)Middle East: 7North America: 2Europe: 3Russia: 1Central and South America: 2
Organizational Chart
Energy Business Group C
EO O
ffice
Energy Business Group
Business Investees
No. of business investees: 94
Japan: 41Overseas: 53
(As of October 1, 2012)
Overseas sites
New
Business Developm
ent Office
4
Senior Vice PresidentO
fficer for E&
P
Energy Business Group Adm
inistration Dept.
Natural G
as Business D
ivision A
Africa, Europe and America E&P Business U
nit
Asia E&P Business Unit
E&
P N
ew B
usiness Developm
ent Unit
Brunei P
roject Unit
Malaysia P
roject Unit
Australia U
nitIndonesia P
roject Unit
Middle East N
atural Gas Business U
nit
Natural G
as Business D
ivision B
Sakhalin P
roject Unit
New
Business Developm
ent Unit
Global G
as Unit
Donggi-Senoro
Project Unit
Shale Gas Business U
nit
Petroleum Business
Division
Petroleum
Supply &
Marketing U
nitIndustrial P
etroleum M
arketing Unit
Utility Feedstock U
nitP
etroleum Feedstock U
nit
Carbon & LPG
Business D
ivision
Carbon M
aterials Unit
Petroleum
Coke U
nitS
pecialty Carbon &
Graphite B
usiness Unit
LPG Business U
nit
Nam
ikataTerm
inal Business Unit
82.8 71.9 94.0 120.6 130.0
371.0
275.8
464.5 452.3
330.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000 グループ 全社
② Business Performance (Positioning in MC)
Oil price (Dubai) $81.8 $69.6 $85.7 $110.1 (Assumption) $108.2 Exchange rate 100.7 yen 92.9 yen 84.2 yen 79.1 yen ( 〃 ) 79.7 yen
Impact of changes in oil price on earnings (net income): for every $1/bbl increase (decrease) in the oil price, net income will increase (decrease) approx. 1.0 billion yen on a full-year basis.
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Year Ended March 2009
500.0
450.0
400.0
350.0
250.0
200.0
200.0
150.0
100.0
50.0
0
(Billion yen)Group Company-wide
Year Ended March 2010
Year Ended March 2011
Year Ended March 2012
Year Ending March 2013 (Forecast)
New Business Development
Office
③ Value Chain
End users
Natural gas (LNG)
Petroleum
LPG
Crude oil
Carbon
・ MCX ・ MCX USA・ MCX DUNLIN・ MPDC Gabon ・ MEDCO・ Angola Japan Oil ・EMPI
・ 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）
・ Brunei LNG・ Malaysia LNG (1 & 2 & 3)・ MIMI（NWS/Browse)・ Sakhalin Energy Investment・ Oman LNG・ MI Berau B.V. (Tangguh)・ DSLNG・ PEW (Wheatstone LNG)
・ LNG Canada/ U.S. LNG Export
Trading International shipping fleet / terminals Marketing / storage Domestic distribution
/ trading
E＆P
Petroleum Business Division
* Blue text represents business investees
Power companies
Gas companies
Petroleum companies
Steelmakers
Aluminum manufacturers
General industry
Electronics manufacturers
Food manufacturers
Ceramics industry
Electrode manufacturers
Upstream Liquefaction/marketing Transport
・CELT Inc.
Petrochemical industry
Automakers
Paper and pulp manufacturers
Carbon & LPG Business Division
Logistics / trading LogisticsSecondary manufacturing / processing / carbon products
Logistics / trading
・ Astomos Energy
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Primary distribution / refining
・ Kanokawa Terminal・ Onahama Petroleum
・PDI
Petroleum products
・Southeast Asia・Middle East・West Africa・Australia・PDS
・Diamond Tanker
・PDI・Showa Yokkaichi Sekiyu
・Mitsubishi Shoji Sekiyu・MC Energy・Dia Shoseki
・Coal coke・Petroleum coke・Coal tar
・Sekiyu Cokes Kogyo・MC Carbon・Ryoshin Bulk Trans
・SG Chemicals・Joint venture project in China (MZAS/ Nanjing BaoningChemical Industries)・Nihon Electrodes Industry
・MC Carbon
・Astomos Energy・Namikata Terminal
Storage Primary distribution / wholesaling
Supply of raw materials / Primary manufacturing and processing
①Biomass fuel ②Fuel cell / hydrogen usage ③Power generation business ④ On-site power supply (co-generation) ⑤Geothermal business
Natural Gas Business Divisions
Trading
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)
Aspirations:
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)
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.
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8
Sakhalin II LNG
Oman LNG
Gabon Exploration/
Development/Production (Crude oil))
Angola Development/Production (Crude oil)
U.K. North Sea Development/Production (Crude oil)
U.S. Gulf of Mexico Development/Production (Crude oil)
Canada Shale Gas Development Projects
North West Shelf LNG
Malaysia LNGBrunei LNG
Tangguh LNGDonggi-Senoro LNG
Investment in MEDCO
KangeanDevelopment/Production (Crude oil/Natural gas)
Venezuela Development of
Orinoco heavy oil (Crude oil)
Liberia Exploration (Crude oil)
Wheatstone LNG
Papua New Guinea Exploration/Development (Natural gas)
Browse LNG
⑤ Global Expansion of Energy Resources Business
Kimberly Exploration (Crude oil/
Natural gas)
Iraq SGU
0
200
400
600
800
1000
1200
2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年 2020年
LNG持分生産能力
タングー*
サハリンⅡ*
カルハット
（オマーン）オマーン
西オーストラリア*
マレーシア3*
マレーシア2
マレーシア1
ブルネイ
*1 Oil equivalent. Includes consolidated subsidiaries and equity-method affiliates*2 Participating interest equivalent. Includes reserves based on original standards set by MC
MC’s ReservesTotal *1*2 1.13 Billion BBL(As of December 31, 2011)
⑥ Equity Share of LNG Production / Equity Share of Oil and Gas Production and Reserves
6384 82 76 90 84
(Thousand BBL/Day)
(est.)
36 41 4267
99 1024048 42
49
47 39
7690 84
116
146 141
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 2012
天然ガス 原油・コンデンセート
Equity Share of Oil and Gas Production (Yearly Average)*1
Natural gas 0.91 Billion BBL
Crude il/condensate0.22 Billion BBL
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7.057.05
4.97 4.97 5.34
7.05 7.05Target:
10 million tons
(Million tons/year)Equity Share of LNG Production
12.00
10.00
8.00
6.00
4.00
2.00
0
* Owns upstream working interest
2006 2007 2008 2009 2010 2011 2012 2013 2020
Tangguh*
Sakhalin II*
Qalhat (Oman)
Oman
Western Australia*
Malaysia III*
Malaysia II
Malaysia I
Brunei
■ Natural gas ■ Crude oil/condensate
2. Outline of Business Divisions —Natural Gas Business
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①Outlook for LNG Demand by Country/Region
LNG demand is projected to increase approximately 1.5-fold to 370 million tons in 2020, from 240 million tons in 2011.
(million tons/year) 2010 2011 2012Actual Actual Est. Est. VS 2011 Est. VS 2011
Asia-pacific region 135 154 171 187 32 238 83Japan 70 79 86 80 2 93 15Korea 33 37 36 37 0 37 0Taiwan 11 12 13 15 3 20 8China 9 12 16 26 13 45 33India 9 11 16 13 2 20 9
Other Asia 0 1 1 11 10 16 16Chile, Mexico (Pacific Coast) 3 3 3 6 3 6 3
Atlantic region 75 87 76 99 12 130 43Europe 56 66 52 73 7 106 40
North America (Excl. Pacific Coast) 13 13 9 7 (6) 8 (5)Others (Middle East, Central &
South America) 6 9 15 19 10 16 8
Worldwide total 210 241 247 285 44 368 127
2015 2020
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• 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.)
②Diversifying LNG Supply Sources
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China
West Canada
U.S.
ｻﾊﾘﾝ
West Siberia
Europe
East Australia (CBM)
Sakhalin
Brazil
Qatar
East Africa
East Siberia
Existing supply regionsNew supply regions
LNG importing regions
Start Project MC’s Role Shareholding
1969 Alaska LNG Sales to Tokyo Electric and Tokyo Gas; Negotiation support; Import agent＊First introduction of LNG to East Asia
－
1972 Brunei LNG Investment in liquefaction and sales; Negotiation support; Import agent; Shipping 25%
1983 Malaysia LNG Investment in liquefaction and sales; Negotiation support; Import agent* 3 Projects: Satu, Dua (FID 1992) and Tiga (FID 1999)
5-15%
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.
8.3%
2000 Oman LNG Investment in liquefaction and sales 2.8%
2004 Qalhat LNG (Oman）
Investment in liquefaction and sales; Import agent; Shipping＊ Global sales and arbitrage operations
4%
2009 Sakhalin LNG (Includes crude oil development)
Investment in upstream, in liquefaction and in sales; Negotiation support; Import agent＊Joint venture with Mitsui & Co., Ltd. (LNG FID 2003)
10%
2009 Tangguh LNG (Indonesia)
Investment in upstream, in liquefaction and in sales; Negotiation support ＊Joint venture with INPEX Corporation (FID 2005)
Approx. 9.9%
2010 Shale Gas (Canada)
Investment in upstream, and in development. Joint development with Japanese utility and gas companies＊North American natural gas business
30-40%
2014 (Plan)
Donggi-Senoro LNG
(Indonesia)
Investment in upstream, in liquefaction and in sales - together with KOGAS (FID 2011)＊Taking on operatorship of LNG plant
Approx. 45%
③List of Existing LNG Projects
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④Project Pipeline: Donggi-Senoro LNG Project
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With shareholders coming from Japan, Indonesia and South Korea, this is the first all-Asian LNG project.
Location of plant construction
Suburban Luwuk, BanggaiRegency, Central Sulawesi
Province
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.
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 MontneyCutbank and Dawson, British
Columbia
Reserves 5-8 trillion cubic feet (100-160 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
Promoting LNG development (LNG Canada) through a partnership represented by Shell (40%), along with Japan, China and Korea (20% each)
④Project Pipeline: Shale Gas Development in Canada/LNG Canada
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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.
④Project Pipeline: Browse LNG Project in Australia
LNG plant
Gas and Condensate Fields
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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 feetCondensate: 417 million barrels
FID Planned first half 2013
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④Project Pipeline: Wheatstone LNG Project in Australia
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.
④Project Pipeline: Natural Gas Development in Papua New Guinea
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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.
Basrah province
Syria
Basrah
Baghdad
Saudi Arabia
IranOutlineCollect 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
LNGAfter sufficient domestic gas supplies are achieved, make a FID on LNG as soon as feedstock gas is available.
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)
④Project Pipeline: SGU Project in Iraq
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④Project Pipeline: Cameron LNG Project
Cameron LNG JV
Mitsubishi Corporation
Tolling agreement
U.S. gas producers
U.S. gas market
LNG purchasers
SPAs
Spot purchase
Gas supply agreement
Pipeline companies Cameron InterstatePipeline
Pipeline agreement
【Tolling business scheme】
⇒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.
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Cameron, Louisiana
Project operator Sempra LNG
FID 2013 4Q
Start of operations 2017 2Q
Liquefaction capacity 4.0MTPA×3Train
MarketingTolling 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
3. Outline of Business Divisions—E&P Business
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① Environment Surrounding the E&P Business
MC’s Initiatives in the E&P Business
Persistently high oil prices and continued firm demand for crude oil
Energy policies are attracting attention
・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.
• 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.
Expectations for unconventional resources, and the opening of new frontiers
・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 U.S. crude oil and natural gas production through 2035
Source: World Energy Outlook 2012
Trend and outlook for global crude oil demand and crude oil prices through 2035
Source: World Energy Outlook 2012 Note: Crude oil prices represent IEA average crude oil import prices.
Obtain and provide stable supplies of resources
Promote a growth strategy focused on the value chains (upstream) of the LNG and petroleum businessesContribute to earnings over the medium and long terms
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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 InternasionalTbk.of Indonesia 19.97% Encore International Listed company -
Liberia (Block 10) 10.00% Anadarko/Repsol Exploration Crude oil
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・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.
③Overview of Kangean Project in Indonesia
Structure of Partnership
Overview
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4. Outline of Business Divisions —Petroleum Business
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Energy Business Group
Petroleum Supply & Marketing Unit◇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)
Industrial Petroleum Marketing Unit◇Import and sales of heavy oil, lubricant oil and asphalt to industrial firms◇Responsible for business investees (MC Energy)
Petroleum Feedstock Unit ◇ Import and offshore trading of naphtha, condensate and gasoline components, and ship freight transactions◇ Responsible for business investees (Central Tanker)
-Petro Diamond Incorporated （PDI）-Petro Diamond Singapore （PDS）
Utility Feedstock Unit◇Trading in crude oil, heavy oil and ships for electric utilities◇Responsible for business investees (Onahama Petroleum, Kanokawa Terminal, Diamond Tanker)
Carbon & LPG Business Div.
Natural Gas Business Div. B
E&P
Natural Gas Business Div. A
Petroleum Business Div.
-Showa Yokkaichi Sekiyu-Mitsubishi Shoji Sekiyu-Dia Shoseki-MC Energy-Onahama Petroleum-Diamond Tanker
Key Business Investments
Petroleum Business Strategy◇Planning and development of business division strategies, personnel and general affairs, environmental management
Group CEO Office
①Organizational Chart for the Petroleum Business Division (November 2012)
Energy Business Group Administration Dept.
Upstream Business Office
New Business Development Office
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【 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
② Environment Surrounding the Petroleum Industry
【 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.
③ Key Initiatives
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5. Outline of Business Divisions —Carbon & LPG Business
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Speciality Carbon BUPromote the manufacturing, development and commercialization of anode materials for lithium-ion batteries
Aluminium-Related Carbon Materials Office① 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 aluminiumsmelting.
Carbon Materials BU① 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
The carbon business develops non-resource businesses involving raw materials and supplies essential to industry, leveraging Company-wide resource businesses.
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① Major Products in the Carbon Business
Petroleum Coke Unit① 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
Capture earnings in growing marketsKey Division Initiative IKey Division Initiative I
Key Division Initiative IIKey Division Initiative II
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.
The Division offers cutting-edge fine carbon materials, such as lithium-ion battery anode materials and crucibles for manufacturing silicon for solar cells.
The market for lithium-ion battery anode materials is expected to experience significant expansion. (Year ended March 2012: approx. 60 billion yen → year ending March 2021: more than 500 billion yen)
Having established a development and manufacturing company for anode materials, the Division is working to commercialize the manufacturing and sale of these materials, from the supply of raw materials to high-temperature thermal treatment and other operations.
Graphite materials for high-
temperature gas furnaces
Crucible for manufacturing silicon for solar
cells
Carbon brush for wind power generation
Anode materials for lithium-ion batteries
Major fine carbon products
Projected Demand for Aluminum (million tons)
05 06 07 08 09 10 11 e12 e13 e14 e15 e16 e17 e18 e19 e20
70
60
50
40
30
20
10
0
②Key Initiatives
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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.
Outline of Astomos EnergyEstablished: April 1, 2006Business 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).
Features of Astomos EnergyIntegrate and capture synergies between overseas operations (trading
functions) and domestic operations (primary distribution functions)
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③LPG Business/Astomos Energy
* National LPG storage terminal based on a subterranean rock storage systemNamikata 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.
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.
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By building an integrated value chain spanning LPG procurement to transport and receiving terminal operations, along with wholesaling and retailing in Japan, Astomos Energy is developing a stable business model as a non-resource business.
Astomos Energy is helping to ensure crucial aspects of energy security for Japan. These include stable procurement and transport of LPG leveraging one of the world’s largest fleets of ships, and fuel procurement and supply through the operation of LPG receiving and transport terminals in Japan.
Astomos Energy is developing business in fields close to consumers through retail sales and related businesses (Enefarm, etc.). The company also supplies LPG to electric utilities (for power generation) and gas companies (for heating). In these ways, the company plays a role in providing crucial social infrastructure.
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, AstomosEnergy 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.
④LPG Business Value Chain
Shale Gas Business
Source: theengineer.co.uk
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Enormous Reserves
6,609 tcf + 6,622 tcf 13,231 tcf＝
Proven Natural Gas Reserves
Technically Recoverable Shale Gas Resources
Exploration and appraisal suggest resource base will expand going forward
Reserves-to-production ratio: 63 years
Reserves-to-production ratio: 127 years
(Source: US Energy Information Administration April 2011 “World Shale Gas Resources”)
Impacts from the “Shale Gas Revolution”
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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).
Conventional Natural Gas Reserves
Mudstone and shale, etc. Source rock contains organic compounds that form the gas.
① Over many years the gas rises (most of it diffuses in the air from the ground
surface)
Diffusion into the air
Diffusion into the air
Reservoir rock
Cap rock
② Due to the low-permeability of the
rock, the gas moves through fissures
③The cap rock acts as a lid, trapping
the gas.
Mudstone and limestone, etc. Cap rock has very low permeability, preventing upward migration of the gas.
Shale Gas/Silt Gas
Sandstone, etc. This rock is highly permeable, allowing the gas to move through it.
Conventional natural gas
*Japan’s entire import volume consists of LNG sourced from conventional natural gas.
The key point is whether a gas field can be discovered or not (exploration projects).
② Hydraulic fracturing
(fracking) of the rock enables
extraction of the gas from the
resulting fissures.
① Due to low permeability, gas
cannot be recovered by vertical drilling alone. Horizontal
drilling is also required.
Natural flow under internal
gas field pressure
2,000～3,000m
30～100m
1,000~2,000m
Source rock
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.
Shale
Source rock
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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).
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Trillioncubic feet
Alaska
Offshore conventional gas
Gas associated with oilCoalbed methane
Imported LNG
Onshore conventional gas
Shale gas
Source: US Energy Information Administration Energy Outlook 2011
2009
11%
1%
9% 7%
9% 8%
20%
14%
8%2%
8%
7%
46%
1%
Tight sand gas28% 22%
Unconventional: 50%
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.
Projection for US Natural Gas Supply Sources
(410 million tons)
(510 million tons)
Unconventional: 75%
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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)
Canada LNG Export Scheme
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Several green field projects for Canada’s western seaboard are currently being examined, including new construction of LNG bases and pipelines.
”Private & Confidential”
Source:Kitmat LNG(2012)
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MC’s Shale Gas Business
Cordova Region Montney RegionParticipation date September 2010 February 2012
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)*MC's share
Approx. C$6,000 million (Approx.\480 billion)*Project 100% baisis
Exploration zone
Recoverable shalegas resources
Features
Cordova Embayment, northeast British Columbia,Canada, 540 km2
Montney Cutbank and Dawson, British Columbia,Canada, 1,667 km2
5-8 trillion cubic feet (100 to 160 million tons) 35 trillion cubic feet (720 million tons, equivalent toapprox. 9 years of annual consumption in Japan)
･Chubu Electric, Tokyo Gas, Osaka Gas,JOGMEC (3.75% each), and KOGAS (5%) arealso participating as partners.･Half (50%) of the gas produced will be sold inNorth America through CIMA Energy, a US gasmarketing company in which MC has a 34% share.
･Partnered with Encana, Canada’s largest naturalgas producer･As one of Canada’s largest shale gas assets, thisprime project offers outstanding productivity andcost competitiveness.･Immense contribution to Canada’s economicgrowth (project will create 14,000 new jobs)
Shale gas assets
Pipelines (approx. 700 km)Contracted building and operation of large diameter pipeline to TransCanada, a major pipeline company in Canada
Gas liquefaction plant (Port of Kitimat)- 6 million tons per year x 2 trains- Consider to expand 2 additional trainsPartnersShell, KOGAS, CNPC, MC=40%, 20%, 20%, 20%Schedule- Aim to make final investment decision by 2015- Plan to start production by 2019
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.
LNG Exports from Canada: LNG Canada Project
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