ITOCHU to be involved in new development at ACG field in Caspian sea

-New crude oil production platform to be constructed-

March 9, 2010

ITOCHU Corporation (hereinafter “ITOCHU”) has, through its wholly owned subsidiary ITOCHU Oil Exploration (Azerbaijan) Inc., been involved in the crude oil development and production business in the ACG field in the Caspian Sea in Azerbaijan.
On March 9, the partners in the above business, including ITOCHU as well as the State Oil Company of Azerbaijan Republic (SOCAR), sanctioned investment in the new Chirag Oil Project(COP).

The COP will be to construct a new production platform, which will commence operation at the end of 2013. The investment is planned to be total 6 billion U.S. dollars. The COP development will allow recovery of approximately 360 million additional barrels of oil in total. Together with the crude oil that is already being in produced from five platforms operated in the ACG field, the crude oil produced from this new platform will be sent to the Sangachal Terminal located on the outskirts of the city of Baku in Azerbaijan. The crude oil is then exported via the BTC (Baku-Tbilisi-Ceyhan) pipeline, which reaches Ceyhan, Turkey (Mediterranean coast) by way of Tbilisi, Georgia, and other pipelines.

The ACG field has been developed to the point where it produces approximately 850,000 barrels of crude oil per day. The COP will make a significant contribution to ITOCHU’s production volume.

ITOCHU acquired a 3.9205% interest in the field in 1996 and was the first Japanese corporation to establish an office in Azerbaijan. INPEX Corporation, another Japanese corporation, is also participating in the project.

Additional Information

1) Summary of the ACG field (Production Sharing Agreement)
The ACG field is located in the Caspian Sea in Azerbaijan, covering 432.4km2. The Deep Water Gunashli complex is located about 100km east of the country’s capital city, Baku, and has a water depth of approximately 175m. The ACG field consists of three oil fields, Azeri, Chirag, and deepwater part of the Gunashli, and potential ultimate recovery from the field is estimated at over 5 billion barrels of oil – a super-giant field by any global measure. The Production Sharing Agreement for ACG field was signed in 1994 and will remain effective until 2024.

2) Summary of participation and partners
ITOCHU Oil Exploration (Azerbaijan) Inc., a subsidiary of ITOCHU Corporation, acquired a 3.9205% interest in the field in 1996. In addition to ITOCHU Oil Exploration (Azerbaijan) Inc., other companies with a participating interest in the field are: BP (operator with -34.1%), Chevron (10.3%), State Oil Company of Azerbaijan Republic (SOCAR, 10%), INPEX (10.0%), Statoil (8.6%), ExxonMobil (8%), TPAO (6.8%), Devon (5.6%), and Hess (2.7%).

3) BTC Pipeline
This crude oil pipeline stretches 1,768km in length from Baku in Azerbaijan to Ceyhan, Turkey on the coast of the Mediterranean Sea by way of Tbilisi, Georgia and can handle 1 million barrels of oil per day. The first shipment of crude oil from Ceyhan began in June 2006. ITOCHU, through its subsidiary ITOCHU Oil Exploration (BTC) Inc., has a 3.4% invested share in BTC Co., the company that builds and operates the pipeline, for the purpose of ensuring a route to carry the crude oil produced at ACG field in Azerbaijan.