JOGMEC provides Equity Financing to the Eastern Siberia Project novated after the participation of ITOCHU and INPEX

　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.

　It is the distinguished accomplishment of JOGMEC’s mission that the cooperative geological survey has paved the way for the involvement of Japanese companies in the frontier area. As crude produced in Eastern Siberia may be transported to the Japanese market through the Eastern Siberia - Pacific Ocean (ESPO) oil pipeline, it is expected that when successful, this project will accelerate the diversification of crude sources in terms of further enhancement of Japan’s energy security.

Corporate Data: Japan South Sakha Oil Co., LTD (JASSOC)
Date of Establishment: December　26, 2008
Head Office: Minato-ku, Tokyo, Japan
President: Mr. Hisato Okubo (Effective on September 24, 2013)

Shareholding:

■Before transfer

Shareholder	No. of Shares	Shareholding
JOGMEC	340	100%

■Transfer

Purchaser	No. of Shares	Purchase Price
ITOCHU	43	JPY 8,726,420
INPEX	42	JPY 8,523,480

■At the completion of transfer

	Shareholder	No. of Shares	Voting Rights	Total Shareholding
Voting Share:	JOGMEC	85	50.0%	25.0%
	ITOCHU	43	25.3%	12.6%
	INPEX	42	24.7%	12.4%
Non-Voting Share:	JOGMEC	170	-	50.0%

At the subsequent capital increase, JOGMEC’s voting shares will result in 50% of the total voting shares minus one share and the balance of JOGMEC’ equity funding will be made by acquiring the non-voting shares.

 

Date of Approval: June 13, 2013
Estimated Amount of Equity Financing: approximately JPY 3.8 Billion

Note:
Approval has been made in accordance with JOGMEC’s technical, economic, and business-environment criteria and consent from the Minister of Economy, Trade and Industry has been obtained. The project is eligible for 75% equity financing because of large expected reserves and sufficient participating interest.

INK-Zapad 100% (Operator)
Shareholders: INK 51%, JASSOC 49%