I'd like to start the FY2026 first half of year financial results investor meeting. Thank you very much for gathering despite your busy schedule today.

My name is Shohei Yoshida, General Manager of the Corporate Communication Unit, and I'll be serving as the moderator for this session. Please allow me to introduce the attendees from INPEX.

We have Mr. Takayuki Ueda, Representative Director, President and CEO, Mr.

Toshiaki Takimoto, Director and Senior Executive Vice President, and Mr. Daisuke Yamada, Director and Executive Vice President.

For the program today, I will spend about 35 minutes for the explanation and about 25 minutes for Q&A, a total of 60 minutes. Today's session will be a hybrid session with online participation as well, and the session will be interpreted simultaneously.

For those people participating through Zoom, please choose the language of your choice, and for the presentation material, please select your language using the button at the top of the slide or the page. Mr.

Ueda will first explain the business overview, and Mr. Yamada then will talk about the consolidated financial results for the six months ended June 30, 2026, and then talk about the consolidated financial forecast for the full year.

Mr. Ueda, please.

This is Ueda, CEO. Thank you very much for coming despite your busy schedule and also despite the very hot weather.

I would like to explain the overview in regards to the business situation as well as the first half of year. Please refer to the document.

To begin with, the impact of the Middle East conflict, what type of impact does this have on our company, and what is our view and what is our expectation going forward? Please allow me to explain about that.

The closure of the Strait of Hormuz has continued for some time, and so sales volume from the Abu Dhabi has been constrained to a certain extent. We feel that there is a significant positioning in regards to our Middle East business.

We will continue to undertake our business there. Abu Dhabi business, there was the current situation as described here.

The production volume has not fallen very much in Abu Dhabi, but the sales volume, and in comparison to the same period last year, our sales volume has come down by around 30%. Why?

Abu Dhabi has a port called Fujairah, which is outside the Strait of Hormuz. and so majority of oil has been exported from Fujairah for onshore production, but for the offshore, we need to go through the Strait of Hormuz, and so we are impacted to an extent, but with the effort of ADNOC, and they have been preparing the ships.

We have been able to maintain production volume, but the sales volume has come down by around 30%, particularly for Asia. If we look at this from a long-term perspective, then from May last year we have expected around 30% reduction.

Now the assumption is that the Strait of Hormuz will actually normalize around October, and that was the basis upon which we have made the assumption of about 30% reduction in sales volume for the full year. From the revenue, well, we have been able to generate the revenue to offset the reduction from Abu Dhabi, and I call this the victory of our portfolio.

Our portfolio, certainly Abu Dhabi accounts for a large portion, but we also have Australia, Asia, or Europe, and also domestic, and so because of the diversified portfolio, the impact of the closure of Strait of Hormuz has not been all that significant. In fact, INPEX, they projectives, they are operating very well, and the oil price has been at a high level on a relative basis due to the Middle East situation right now.

Overall, the loss from Abu Dhabi has been made up for elsewhere. The profit for the first half of year has reached record, and we're expecting also to achieve the record profit for the full year.

What will be the situation going forward due to the Middle East? Previously, energy system has focused on efficiency, and efficiency will remain very important, but energy security or resilience, those will be emphasized more.

The system is going to shift a little bit with a greater focus on that. As you can see on the right, the dependence on the Strait of Hormuz, now that is considered more highly.

Amongst the Middle East countries, UAE has the Fujairah port where we have one pipeline, but they intend to increase that to three pipelines to Fujairah in several years. If they achieve that, they are able to export majority of their oil from outside the Strait of Hormuz, and so dependence on the Strait of Hormuz will be reduced.

Saudi Arabia, they have Yanbu, which is a port that they have on the Red Sea side, so that's one movement, and also the other is diversification of procurement, crude oil from the U.S. or crude oil from Mexico, so many entities are trying to import from those areas and exporting from those countries, of course the cost will increase, and the oil from Great Britain they can use the LCC very large ship and it can actually reach within 20 days, but from Africa, and then they'd have to go around the Cape of Good Hope, which will require a much longer period, and EV is attracting attention again, not just gasoline.

Whether it be EVs, or whether it be gasoline, ammonia or something like that, non-heavy oil fuel for the vessels, and renewable energy as well, but clean energy has received renewed attention from the perspective of security. In totality for energy overall, we are moving slightly towards more emphasis on security, but at the same time there are also challenges as well.

For example, if a pipeline to be installed or elsewhere, they will all increase costs, security doesn't come for free. To achieve security and resilience some costs will be required, over the medium to long term overall energy cost could potentially increase.

Users, they want energy with high security, but they want the price to remain at the current level. Many people are still saying that, but that would be the challenge overall for the medium to long-term perspective in regards to energy.

How is the impact on responding for crude oil? The competitiveness of Abu Dhabi will remain, and Abu Dhabi's competitiveness will remain, and so we'll continue to invest proactively in Abu Dhabi.

Gas, we have already achieved diversification, and we are now working in Abadi, and so we are not going through a choke point, the Strait of Hormuz. Our gas won't go through there, the choke point, and so we want to expand our portfolio with high security.

That's the direction that we want to proceed towards. That's the recent overall situation.

These are the highlights from the first half of year. Mr.

Yamada will talk about the detailed numbers, but for the first half of year, highest profit on record at 363.1 billion yen for the full year. We didn't use a range, and we have come up with a number, but for the profit, we are expecting 510 billion yen of profit record level, operating cash flow about trillion yen, and Abadi.

We want to reach FID next year, and so we have been building up on the cash reserve for the development, and we expect to accumulate about 770 billion yen by the end of fiscal year. Investment cash flow for the full year, we're expecting 859 billion yen, and there are various investments for growth.

Abadi and I will talk about that later on, but even prior to Abadi, the production, there are things that will contribute to production. The interest acquisition in Malaysia, AJP, and so this is Caspian or Indonesia.

We have been working to acquire the interest, those that are already producing or about to start producing soon. We intend to pick up on those assets.

For these assets, we are expecting several billion yen of profit contribution per annum, and so through these, even prior to Abadi and even after Abadi, we intend to continue to realize the growth. The return, I will come back to this later on, but we are going to be paying 112 yen per share for the full year, which is 12 yen higher than last year, and about 140 billion yen share buyback, and total payout ratio is expected to be about 53%.

On the next page. I wanted to kind of describe INPEX as a company.

What we have worked on for the past 10 years have been described in this graph on the left, and these are the operating cash flow and the net production volume CAGR, converted into U.S. dollars, and these are the numbers from 2015 to 2025, operating cash flow on the vertical axis and production volume on the horizontal axis, and the major and the independent E&Ps, and so you can see that this is located here.

Operating cash flow, the average and the growth rate over the last 10 years is higher than the majors and independent E&Ps. The horizontal axis production volume, we're not at the top, but we're in the middle, but we are at quite a high level in terms of growth rate against the majors as well.

Last 10 years, INPEX has continued to achieve a steady growth. Going forward is shown on the right, and this is showing the production volume and 630,000 BOED, and after Abadi production starts, we expect to reach 800,000 BOED and operating cash flow will grow from 1 trillion into 1.5 trillion yen.

Last 10 years until 2035, we intend to continue to achieve a steady growth. This is the assumption that we have made.

Next page, please. The progress of each project, Abadi, I would like to explain more in detail.

First regarding Abadi, we have a steady progress, a very steady progress today. The FEED has been continued from last year, and we have seen a steady progress, and mostly 80% of progress is what we have achieved.

In fall, we'll be completing. In fact, already simultaneously we have the OTC, which is the actual tender of the construction, which is starting from July this year.

The tendering in the end will go, as for the FEED there is a dual FEED where the two consortiums are competing and we're doing the FEED together. From these two consortiums, in the end, we will have one consortium that will be selected, and that consortium will be in charge of the construction, and that selection is the EPC FEED.

After the EPC, we will have the tender, and that has already started. For the marketing, we are also in good progress.

As we announced at the end of May this year, for the Abadi project, the total production of LNG is 9.5 million tons of expectation. Out of that, we'd like to have buffer.

It's not based on long-term contract, but out of that long-term contract is around 8 million tons or so, and out of that 8 million tons of long-term contract, we already have a certain amount, which is where we have signed the key term sheet agreement, which is where we signed the price and the volume as a basic contract. This is what we have signed with the buyers in May.

In particular, BP Shell, the supermajor, and also the Indonesian national company gas company, we have had this basic key term sheet agreement, which is the base of the long-term contract. For the Japanese, it's going to happen going forward, and also others, because of the Middle East conflict, there is a lot of free interest in the Asian market, and that is where there is a high interest and there is a good reputation today.

For the marketing, we think it will go well. In fact, for the actual work, we have to start the actual work from this year.

For the case of Indonesia, the Abadi LNG is on the Cempedak, a very rural area. That's where the LNG facility will be constructed, and the LNG plant in the surrounding area, we have the fencing and also a diversion road, which is you need to have the road to diverge.

Those constructions have to start, and then we need to have the local agreement. We have contacted the Indonesian government and we had the groundbreaking ceremony to have the local cooperations for about one month ago on the Cempedak Island, we visited, and it's actually with a charter, it's a four-hour flight one way and eight hours runway.

This is a picture taken at that time. It was a really wonderful ceremony, and from Indonesia, we have the energy minister and three or four other ministers visited as well.

Prabowo, also Mr. President Prabowo also wanted to participate.

In the end, as shown on the right, it was very far, in an online manner he participated in the ceremony. From the start to the end, Mr.

Prabowo, President Prabowo also participated. This is where he was doing a speech and that was the picture.

There was a huge interest and also support from the Indonesian government. Today we are in the FEED work and marketing is going well, and also this strong interest and also support from the Indonesian government.

After the FEED, what happens with the economics, that is still the question. However, from my perspective, Abadi, from the sometime in the middle of next year, we will come to FID, the final investment decision, and we think that is quite a higher possibility at this moment.

Perhaps that is also the market recognition. Then that is for one, and then next is Ichthys.

For the cargos, for this year we have seen a very steady progress. Operation is doing very well.

We had a strike, and a lot of concerns were around a strike, but this actually happens once every four years. We have the enterprise agreement where we have a review of the labor contract, and basically the labor party, we had a lot of strong labor party position in the past, and we had this revision under that environment.

It's been a very strong environment, and we had some strikes, but it was not really a big impact. It was a minimal impact to the cargo arrangement.

That was the case, and that is where we were able to sign a four-year contract with the labor union. With this, so far the operation is doing relatively well at this moment.

For Ichthys, one of the big things is in this year, in summer, in spring, the Beetaloo basin sub-basin is where a huge shale gas reserve is expected, and that interest, we bought in three blocks from Daly Water, and as you can see in the picture, this is a huge area in the jungle, and there is a pilot production which is underway today. From June, we have the pilot project which commenced, and we would like to partly sell to the Northern Territory, and then how much reserve are there is something we like to understand.

The exploration work is continuing at this moment, but there is a huge expectation from the Australian government as well. It's a huge expectation as a project, and going forward, this will be a new Train 3 gas.

It will be a base for the new Train 3 gas for Ichthys, so that is also doing very well at this moment. Outside of that, we have Abu Dhabi.

We have a good production, but the sales are not going well. However, Abu Dhabi is still an important country.

The upstream investment is what we like to continue. The other day, at the onshore Cat Gas, a gas cap development, where the gas layer, which is on the top, which is called a gas cap.

Those development is what we have come to an agreement just the other day. Also we have the Azerbaijan's ACG oil field, which are part of the interests we bought from the government.

In Malaysia, we have the Sarawak Block 2A interest that we bought, and also Indonesia. Before and after Abu Dhabi, we also have these projects.

We like to conduct these projects, which will lead to profits. Then next, we have the CCS, blue hydrogen and power resources.

For CCS, the CCS plant has started operation last year, and in a full scale, we are going into the execution. The liquefaction plant has already started, and the Clean Nessing has already been serving the pipeline.

Also the Metropolitan Area CCS is to be done in Shiba to bring the CO2 in the Tokyo area and to have that captured storage. We have this exit on the right-hand side.

You can see the drilling rig, a picture taken as a picture from the onshore, and all the people on the beach might have a look at this and wonder what this is. It's about 2,000 meters of rig is being explored, and we have the CCS predictability, which is confirmed through these projects.

As we don't have time, we also have power resources, but I would like to go on to the next page. Next is shareholder returns.

Of course, when we are thinking about the return, I would like to mention one thing. As mentioned, we have the 112 yen of DPS, which is record high, and the share buyback of 140 billion, and approximately 53% of total payout ratio.

For 24 years, five times or less is how much we have increased the dividend. For the dividend, there are times when it's high or low, but this is all-time high record today.

When we discuss internally, when we look at the stock price today, there are a lot of discussions. As a result, I would like to explain.

Today, we believe that our growth potential is not evaluated, and we have some discounted value. For this fiscal year, we would like to have a share buyback, and of course, there are people who expect dividend, but for the dividend, 112 yen is the dividend.

For this time, concerning the stock price today, we have decided to focus more on the share buyback. That is the shareholder policy, return policy.

As you can see why in this graph, at the bottom, this is the oil price. The top is the stock price, and as you can see, until the Iranian war, our price, I used to be told it's linked to oil, but before the Iranian war, it was because of the growth strategy.

There were higher stock price than the oil price. After the Iranian war started, it was getting close to the oil price, and with the stock price increase, or if the oil price increased, it was increase in stock price, and also vice versa.

There was a lot of volatility. What happened in the end is, when the oil price and share price were about the same, or before the war, end of February, the oil price was $73, and the stock price was 3800 yen.

At the end of June, with the same oil price, with $73, it was 32.65 yen per share. If you look at today, it's slightly above.

So $83 is the oil price. Compared to $73, today $83 per barrel, and there is a $10 increase, but 3500 yen is today's stock price.

We wonder why. In the meantime, our company's growth strategy, if that did not work well, then we understand.

However, as mentioned, we have steadily executed the growth strategy, and Abadi is one example, but also for Ichthys, we have been doing steady progress against the growth. The oil price increased by $10 per barrel, but the stock price maybe is 3500 yen today.

It's a drop, and it's not really a welcoming situation. There's nothing we can say for what happens in the market.

For our company, although we're not trying to give dreams, we are doing this business steadily and returning to our shareholders steadily as well. That is the policy.

The 3500 yen and $83 per barrel of oil is something that we think is kind of a mismatch or there's a discount. Therefore, as we are going to execute the growth strategy, even compared with the pre-war, we think that the price should be higher.

From that standpoint, we think internally, we think we are undervalued, and that is, as a company, the understanding we have today. Therefore, when the stock price is low, we should do a buyback.

That's why we have focused a lot on the share buyback this time for the shareholder return, and that's the policy. That's a long explanation.

That's all for me.

Thank you very much. Mr.

Yamada will continue.

Please allow me to explain about the result of the first half of the year and the forecast for the full year. As Mr.

Ueda has explained, and so we ended up with 226.3 billion yen for the half year period, highest, and for the full year, 510 billion yen is the forecast we have, which is highest on record, and with shareholder returns highest on the level. The triple victorys, if you like.

That's the kind of numbers we are referring to. The highlight for the first half of the year, oil price was between 72 to $87.

The FX yen has weakened. As a consequence, revenue has gone down slightly, but the net profit or profit attributable to owners, parent, reached the highest level of 263.1 billion yen.

The impact of the Middle East was quite evident. As you can see, the sales volume has come down significantly, but the oil price has come up, and the FX yen has weakened due to the Middle East situation when the oil price goes up, and the LNG price also increased, and so towards the end of the year, particularly with the strong performance of the excess production, and so the production volume and cash flow of the Ichthys has increased, and so the recycling revenue also increased as well, Abu Dhabi, and taxable income came down.

We also see significant decrease in the income tax. Because of that, there were both negative and positive from the Middle East factor, but the stronger impact was positive factor.

When we talked about the May, was a full-year forecast in May, we said that the Middle East is likely to act positive for us, and that was reflected in the numbers on this occasion. This is revenue by major product, crude oil on top and natural gas on the bottom.

The crude oil revenue, 780 billion yen last fiscal year, came down to 694.9 billion yen, came down by about 85 billion yen. This is Abu Dhabi reduction because we weren't able to sell all of the cargo, and so there was this decrease.

In terms of the average unit price, they came up, and the FX weak again. For the natural gas, 351.4 billion yen to 271.9 billion yen, increasing by about 20.5 billion yen.

The sales volume equals the strong performance exceeds, and it increased by about 5.5 billion yen. For the unit price, it has come down, the unit price, but it's essentially flat.

Average unit price of the overseas, domestic came down, and the FX impact. We ended up with 371.9 billion yen.

This is the waterfall chart. On the left-hand is 123.5 billion yen, and this is the second quarter of FY25.

On the right is first half of 2026, an increase of about 40 billion yen. The revenue, and because of the significant decrease in the crude oil, we ended up 48.3 billion yen negative.

The share profit and investment accounted for using equity methods and the other income is essentially Ichthys related, which have performed well, and towards the end of the year. The oil price will also increase, and so by temporary pickup in downstream, and also TA recycling, and the cash flow of Ichthys has increased, and so we were able to achieve significant the paid-in capital reduction objectives.

On the right, we have the income tax benefit because of lower tax, and so the revenue came down by about 50 billion yen, but about 50 billion positive from Ichthys, and the tax 50 billion. Hence, 40 billion.

Abu Dhabi with the Middle East situation had both positive and negative, but the positive factor were larger. That was essentially the result.

The full year, the Brent oil price, and about 84 for quarter three and about 70 for quarter four. That is the assumption.

We expect the oil price to come down slightly, two dollars or so of a decrease for FX quarter three and quarter four, we are expecting 160 yen, and so slight decrease in yen. Similar type of trend to the first half of the year, the revenue came down, but the profit came up.

That's 510 billion yen. So 500 billion yen is like a dream number for us, but we will finally exceed that level, and ROE too, more than 10% on this occasion.

Sorry. The ratio has come up slightly, but like Mr.

Ueda was saying, we have the cash reserves for bodies. It's not to be netted, but if you actually net this, there was 0.2% impact.

There is no issue from the financial position perspective. That's the result.

This is the waterfall chart. We also have this.

This is 450 billion. This is the upside case.

In this case, around July is when Abu Dhabi will normalize. That's the time when we had assumed, and this time we have 55, 550, but this time Abu Dhabi's normalization will be around October, and that is the revised timing.

That's how we came up with this number. The left-hand side is the external factors, and mostly the Middle East conflict and the impact from that is affected.

For the foreign exchange, because of the Middle East, there is some yen depreciation. On the oil price, this is the only different area.

In the past, in the full year forecast when we announced the result, we talked about the sensitivity, oil price sensitivity. This time, compared to the May forecast, oil price has dropped, but the oil impact is positive.

That's because of premium, LPG, and there was a lot of premium, so that's why it's a reverse situation. That's also coming from Middle East conflict.

Then minus 17.5 is a project factor, but as mentioned before, Abu Dhabi cash is included, and also we have a profit booster, but the TA recycling is included. It's about 100 billion yen of TA recycling included this time.

The investment incentive and combined together, a total of 100 billion or so. With three included in total, those are the external factors.

We thought it would be positive in the May forecast, but this time it was slightly negative, but more there were positive factors than negative. That's why there is about 10 billion of improvement.

Then with the Middle East, it's a positive thing, and it's not really good news, but that was the actual result. Then for the others, we have the excess, great sales volume increase.

There's 10 cargo per month, and the sales are doing well. Then we have 15.9 billion, and then on the right-hand side, we have one-offs.

There is some impairment and ARO as well as others. It's about 20 billion plus, and in the end 510 billion yen.

We are starting from October. We think it will be normalizing in October, and it's hard to say for the Strait of Hormuz, but let's say it will be normalized by end of the year.

What happens? We also have that calculation.

Let's say it will not normalize in the year end. If it happens still until if it's still not normalizing until next year, I think it's not 10 billion, but maybe 7.7 to 8.8 billion of decline.

The oil price will not change in this assumption. Excess production will not change.

Then maybe less than 10 billion will be the impact if it will not normalize by end of the year. Then next is the cash flow.

The very top, you can see the operating cash flow, which is more than one trillion, and the investment cash flow, 859 billion yen, and from May forecast, about 60 billion of increase. However, as you can see in the bottom, the growth investment is declined.

The reason is because in Abu Dhabi was not so much of a change for Abu Dhabi, but there is a slight decline, plus the other interest investment we had, that was about 100 billion yen, which went over the year, fiscal year. The growth investment is mostly no problem, and the reason why there is an increase in investment cash flow is the others.

It's at 183, and that is Abadi. The cash reserves for the development of Abadi, about 100 billion or 200 billion yen, is what we have set aside.

In May, there is some increase and decrease, so that's why we thought it will not be so much of a number. We cannot make this cash reserves.

This time we had additional 100 billion, this is how we ended up. The next is the investment cash flow, as you can see in the left-hand side.

As mentioned, 800 is 859 billion yen today. The content is mostly the same, but just one thing is the cash reserves for Abadi.

We did not factor this in the May forecast, but now we have this included, and we have 859 billion yen in total, 859, and also the 200 billion for Abadi. How to look at this?

In 26, end of December, we will have an increase of 770 billion. This will be cash to be used for the upstream.

So 770 billion yen will be used. Then in the midterm plan, we had about 600 to 800, but in one year prior timing, we were able to achieve that.

The 1.9 trillion is on track to what we stated in the midterm plan. On the right-hand side, as mentioned, these are the disclosed projects we have and also the profit contribution.

Abadi, before the Abadi production startup will happen, we have these investments. Then this is the ROIC by segment.

As you can see, this is the detail. That's all for me.

Thank you very much. We would now like to receive questions.

We'll receive questions from the venue first, and then after that from online participants. I ask that you only ask two questions at a time.

For those people participating through Zoom, there is a raise hand function, and so please use that. For those designated by the moderator, please state your name and your company name before asking your question.

Anyone with a question? Yes, the person in the middle at the front.

Now, I have two questions, and some of them held back because of the strong message. I will ask a question.

Now, two questions from me. The first question is regarding Abadi.

On page seven, you have shared with us the schedule and the progress on different paths, and this was very easy to follow. I think the situation has been clarified a lot through this information.

As indicated in the text on this slide, this project, equity IRR, we are going to aim for the mid-teens percentage for IRR, equity IRR, and this is something you have been explaining from the past, and I understand that things are progressing quite steadily. In regards to marketing, and it seems that you have been able to kind of come to a kind of a consensus in terms of the terms at an early stage, which is quite a strong progress.

In order to secure equity IRR mid-teens, in order to secure that, what would be the biggest hurdle? What's the progress against that hurdle, if you like, at this point in time?

That's the first question. I think it's really up to the negotiation with the Indonesian government, in my view, based on the presentation material.

The taxation or the conditions with the Indonesian government is likely to be the key, but equity IRR, in order to achieve this number, what would be the biggest hurdle? If you could kind of give some explanation about that.

That's the first question. Oh, and together with that, you said 770 billion yen of the cash reserve, which is a year ahead of your original schedule.

With that, for the upstream portion, the expected amount of the fund, have you already secured the amount required? If you could also refer to that as well, that would be helpful.

That's the first question. The second question is on your slide, page 21.

Together with the investment, the project, you've also provided information with us to the timing of profit contribution. This is very helpful, although it may be difficult for you to respond, but I want to ask anyway.

If Abu Dhabi related, where you are investing a lot in recent times, and so the profit contribution as well as the production increase, the contribution, can you give some more color? It may be aligned with the government initiative, but you say that there will be contribution prior to Abadi start.

If there is anything more that you are able to speak about, prior to Abadi production start, Abu Dhabi is an important growth driver, and so could you give some more color in terms of the timing of profit contribution and so forth? These are my two questions.

Thank you. In regards to Abadi, equity IRR more than 10%, what is the biggest hurdle?

For me, I feel that there are two major factors. First is Indonesian government and so negotiation for incentive, whether this will go well or not.

More important is to what extent can we achieve a reduction in cost of the project? We are currently undergoing the FEED process right now.

Cost is not something that comes up as a lump sum and that's it. We can, talk with the contractors.

Can we reduce cost here? Can we actually change the schedule here and so forth?

There are a lot of negotiations. If we are able to reduce local content a little bit, then the cost will come down this much.

There are various ways we can work on that reduction. For us to achieve success of the project, economics is important, but prior to incentive, we have to work on achieving cost reduction through various means.

In that regard, cost is not something that you can actually address in one go. I won't say it's a living thing, but it's like that.

We need to continuously and continuously work on achieving reduction in cost. This is one significant hurdle for us, in my view.

Even after that, if the economics is not sufficient, then we need to engage in negotiation with the Indonesian government for incentives. These would be the two hurdles.

Your second question, Abadi, we have cash reserves of 770 billion yen. Is this sufficient for the investment for upstream?

It really depends on the capex, the project cost. It's difficult to say, but if we think about the past, the Abadi capex in 2018 when we did a POD, I was said that was about 20 billion yen.

Sorry, 20 billion dollars. We are going to add to that.

There is 5% increase in terms of cost. This was the number back in 2018.

After that, we need to change that to 2026 numbers. Of course, the cost has increased quite significantly due to inflation in the meantime.

If we take all that into consideration, then that becomes the total capex of the project. Now how much this will be?

We need to think about the cost reduction initiatives that we are working on that will have a significant impact. We don't know at this point in time, FEED or EPC tender, we need to go through those processes, and the number will become more clear.

From the numbers here in 2018, even if the cost increases by 30 or 40 percent, it's not going to be a significant surprise. Now that includes the capex for the entire project, upstream and downstream.

We have 56 percent, so that's the equity portion, and upstream and downstream, the LNG plant. We need to actually allocate funds for that.

The downstream, it will be a PBR trustee borrowing scheme. I will be borrowing the money where we will provide the credit guarantee, that guarantee.

The cash is required for the upstream. So 700 billion yen is what we have built up as a cash reserve.

We don't know at this point in time whether this is sufficient or not. I don't think this has reached 100 percent, and so we probably need additional effort.

Your second question, the increase in production impact from the Abu Dhabi, and we have the confidentiality agreement, we can't talk about the production volume very much, and I hope you'll forgive me for that. On that basis, and on page 21, there are a few projects related to Abu Dhabi, and so one is the further development in 2026 or 2027.

We will reach about 5 million barrels per day from 4 million or so right now. That is where there is going to be a large production increase in the upper Zakum oil field.

We will be spending several hundred billion yen of investment over these years, and we expect a large contribution from that in several times. Both the gas cap development, and this is to develop the gas reserves on top of the oil, and we are currently doing FEED for this right now, and hopefully during 2026 we want to make the FID.

The production start is likely to be 2028, 2029, and so that will be the kind of timing where we can potentially expect a profit contribution. We are spending, well, we are expecting several billion yen of profit contribution from each of the projects described on this slide.

Two questions first, Ms. Abadi.

My question is, as you explained, the long-term contract of 8, out of 8 million, 5.9 is the base contract that we have completed, and we have a good inquiry today. Over the long-term profit, to have a stabilized profit, the long-term contract, as you can see, or as you mentioned, there are a lot of inquiries, you will be increasing more of these long-term contracts.

Is that a possibility? This long-term stable contract, or fixed volume contract, is something that you're planning to increase?

Is that what you're thinking? That's number one.

Second, is regarding the shareholder return. There is a strong message today, and of course that strong message in this fiscal year is where you have more weight on share buyback.

I think that's one point. On the other hand, the total payout will be 53 percent, within the range.

It's actually just part of the 50 billion and above, 50 percent and above of the total payout that you mentioned. Just per se, if you have a strong will or intention, maybe we can try to increase the percentage more.

Also for the cash reserves, you are going to have one year achievement, one year in advance. Thinking about the cash, is there maybe a stronger message that you can communicate?

I just wanted to purely think whether that is possible or not, not thinking about you would increase the shareholder return itself. Once again, I just wanted to ask your opinion or what your views are.

Thank you. Thank you very much.

The first question was Abadi, and the sixth contract, or the long-term contract, I think the question is whether we should increase that or not. Basically, we think it is possible completely, however, we're not trying to do that as a company.

That's the answer, because as mentioned by the LNG, we have 9.5 million tons of LNG plus 150 gas pipeline. That's the business, and then out of that 9.5 million of LNG, for Exxon, it's 97 percent of long-term contract.

It was a good finance situation, but just because of Ichthys, when we had a lot of troubles, if we have too much tighter contract, then we may not have any room. For Abadi, we wanted to have some buffer.

That was the policy. As mentioned, 9.5 million tons, out of that 1.5 is something like a buffer.

That means the 8-point-some million will be the long-term contract. We thought 8-point-some million can be the long-term contract, as mentioned.

Far from the overseas buyers, we have a strong inquiry today. We can sign this right away, or we can increase further.

As mentioned, because of the reasons, we are not trying to increase more of the long-term contract than what we have today. Then the second is regarding the shareholder return.

Why don't we do a more stronger message of increasing this reward? I think that was a strong request, but I would like to use that as a good reference in our company's policy.

However, instead of doing a forceful reward, we are a growing company, and while growing, we would like to reward our shareholders along the way. Therefore, the total payout this time is 53 percent, as forecast, but by maintaining that level, we would like to make sure we have growth and then a good return to our shareholders.

That's the policy that we want to implement, and if that happens, then it will be around 53 percent. As you mentioned, the feedback, we like to take that feedback going forward.

Thank you very much.

I would like to ask two questions. Before asking my question, and your share price, or ROE, and also profitability improvement, and in comparison to five years ago, there's been a significant improvement.

Personally, I'm very happy, and I hope that you will continue with this momentum and going forward. To what extent can we trust the profitability of Abadi?

That's not going to be easy, but I hope that you will continue to engage in proactive disclosure like this, and outside the stock market. The inflation and the investment may potentially go up, or there could potentially be delay.

These are inevitable in one sense, but I hope that you will continue to disclose and work on improving profitability on a much shorter-term basis as well. Now, two questions, and more than 10 percent for Abadi.

I don't know whether we can talk about this at this point in time, but what would be your kind of assumption for the crude oil price? I understand you may not be able to refer to a price, but if you could give some idea there, that would be helpful.

I'm asking maybe too much, but at $50 per Brent, can you still target mid-teens IRR? If you're able to make a comment like that, that will help in terms of discussion.

You may not be able to talk about it right now, it's okay, but if you could potentially refer to this when you make the FID, that would be helpful. The second question is regarding ROE.

The midterm management plan, one draft that I like, the ROE and the growth rate graph, and the graph that you showed today, the growth rate, is also a great graph. I'd like you to continue to use that, but ROE 10%, and the shareholders' equity was 5 billion yen, and so 500 billion yen of net profit for this fiscal year.

This is a very encouraging number, which I'm happy to see. What I want to say is that in the midterm material, ROE was slightly lower than the majors from U.S.

or Europe, and you mentioned that, and so it was great that you recognized that and trying to work on that. ROE, and more than 10% is a target for 2035 onwards.

I think that's the kind of level that you're working with, but making investment for Abadi and crude oil price remaining where we are right now, and profit boost, the second stage and third stage, can we expect that? That's the kind of second question.

I will respond to the first question. In regards to Abadi equity IRR at 10%, and what's the oil price assumption?

This will be up to the discussion between you and moving forward. I can't say this in pure, but when we discussed in 2018, we were thinking, $65 per barrel, and that was the kind of number we had in mind when we engaged in discussion.

Back then, it was $65, and we had placed $65 to remain flat perpetually, but that's not really aligned with the real situation. I think it's after discussion.

ROE, the second question. Let me talk about the ROE, 10%, and slightly lower than the majors, which you are fully aware of, of course.

For us, if you look at our portfolio, and the core is Australia, Abu Dhabi, and Japan. These are countries of very low country risk where we have our portfolio.

In that regard, several national, they have similar portfolio in India, but the European majors, they do have assets in countries where country risk is higher. If when we make comparison against them, the risk-adjusted ROE, if there is such a concept, then our ROE, in comparison to that, is not inferior.

The portfolio rating is higher. In other words, we have assets in low-risk area, and it's not a bad level.

This fiscal year, more than 500 billion and more than 10%. We don't intend to stop at that.

We want to continue to work on it. Profit booster.

Now that the re-signing, that can be done now. Seven, eight, ten years, this level can be maintained, providing that FX, the C, we can continue.

We have the second stage. It's not going to be easy, but what we are looking at always is, our balance sheet is more than 8 trillion yen in size, and we assess our numbers based on IFRS.

The difference to balance sheet is recognized as a profit or loss. When the balance sheet is so large, small movement in the FX, small movement in the oil price, small movement in interest rate, we end up with a significant fluctuation in unrealized gains or loss.

The balance sheet, the previous year, this fiscal year, the difference is risked in P&L. That's the IFRS.

With that and also tax included, and when you look at the financial, and well, not everything will work out as a profit booster, but depending on how we look at it, whether it be related to tax, whether it be profit to profit, we may be able to have some improved contribution to profit. We're always looking at it, and it's unfortunate that I can't say this concretely, but there are some possibilities because it's 8 trillion yen, and we have portfolio globally, and the oil price and FX moves quite significantly, and so the unrealized gains or loss on the balance sheet is quite significant.

That could potentially contribute to profit. We will certainly look at the finance and tax situation from that perspective.

Thank you.

Two questions. Number one is about Ichthys in Australia.

The country risk of Australia, what is your view on that? If you can give us the color, just looking at recently, there is an in-house or domestic supply responsibility.

I don't know if this strike example would be appropriate, but is it something that we don't have to be so concerned, or because of the nationalism, do we have to keep that in mind as a country risk as well? That's number one.

The second is the shareholder return. Today, we are still at the second quarter results.

The oil price movement will make a difference of that of 518 billion net profit for the full year. Different from Yamazaki-san, the total payout ratio at this time mentioning about going above, is it because even though the oil price may move, you already have confidence in the net price and net profit for this fiscal year?

Is that the reason? Or the net profit might move or fluctuate, however, against this oil price, because it's discounted, you are thinking that the dividend payout can still be achieved.

Including the oil price fluctuations, how much confidence do you have in these forecasts? That's the second question.

Thank you. I would like to answer the first question.

Regarding Ichthys or the Australian country risk, how to look at that as a company and the domestic supply responsibility, nationalism. We do have concern, and that is honestly what we feel.

About one month ago, I went to Canberra, Australia, and various financial minister and various people were met. The challenge in Australia, there are a couple folds.

Like you mentioned, there is a domestic gas reservation policy in Australia, and that is a direction that there is a discussion at this moment to introduce that. What this is, is to the LNG export, 20% of the export should be used for internal supply to internal market.

That is the new discussion, and whether that will be executed or not. The reason why this is happening is because there is a lack of gas in the east coast of Australia.

For that, they want not to be used for export, but for internal use. That's why the internal or the domestic supply responsibility is the discussion.

From our standpoint, if that happens, then if 20% of export will be used domestically, the domestic market will have oversupply situation. The gas price domestically will go down or plummet, and in the end, Australian energy business, domestic energy business, will have difficulty.

If 20% of export will be used for domestic use, depends on what kind of contract, but we think there is a lot of challenge in the stakeholder we have. From our standpoint, it's not the export that's an issue, but it's underinvestment.

There are so many gas in Australia, they should make more investment and they should produce them. Without doing that, they're just saying the export should be diverted to the domestic market.

That business environment is actually—they're missing opportunity, and they're just discouraging the investor mindset. In the future course, it might be underinvestment.

Rather than that, I believe that they should make investments in a good way, and then they should sell the ship. Those are discussions we're having with the Australian government.

Within the government, they're still having a lot of discussions. There are still domestic issues, and the cost of living is the biggest challenge where the inflation is happening.

If that's the case, why don't we get more money from the overseas company? Then those are discussions.

Then we talk with the government. They say gas is important, and they want to make sure they will be able to secure those.

On the other hand, there is also various reasons that has to be discussed for domestic reasons. Domestic gas reservation policy.

Outside of that, there are also other discussions saying the foreign company should have more tax, paying more tax, and various discussions of such. That kind of business environment uncertainty is something that we honestly have in Australia, and we have communicated that honestly to the government as well.

The second question, I would answer that question for ECA numbers. There are a lot of discussions internally, and as Mr.

Ueda explained today, this time we have more focus on the share buyback as shareholder return. So 53% of total payout is what we have announced as of Q2, and by end of the year, what happens if there's a fluctuation in the market?

I think that was your question. As you know and understand, for Ichthys, the net profit of that, 70% of the profit is coming from Ichthys, then that LNG price is five or six months beforehand.

The oil price is used five or six months before, and that's how it's calculated. By end of July, the oil price is already set.

Therefore the fixed price in a long-term contract is how we sell. By end of December, a certain amount of profit is already how much visibility we have today.

Then if we have extra cargo, we can sell this on the spot. That's also another opportunity.

As Mr. explained today, the straightforward moves will be normalized, but if that will be delayed, then there will be negative impact.

There is a range for that difference, but the pillar of the growth is Ichthys LNG, the selling price. To some extent, at the point of focus, we have a certain visibility.

At this point, a 53% of total payout ratio is something that we can commit, and we don't think that's a forceful thing as a company. Thank you very much.

Please allow me to ask a few questions. It's related to the Australian issue.

Ichthys Train 3, as of now, how much volume have you have visibility? You said that Beetaloo has quite a large potential, but unfortunately you couldn't invest in the browse.

How much kind of visibility do you have? Second question, it may be a little bit early, but for next fiscal year, this fiscal year, Abu Dhabi tax burden has been reduced, and there was some benefit from the premium.

The impact from the Middle East has functioned somewhat positively. Next fiscal year, will you have a kind of a rebound, a negative?

Is there a potential increase in volume, or if some negative factors, if you don't need to consider that, if you could also refer to that.

I'll respond to your first question then. For Ichthys Train 3, how much visibility do we have?

It's not the case that we have a lot of visibility in terms of volume without in Train 3. Kashmate 4 and various gas field is developed right now near Ichthys, that is to extend the plateau of Ichthys.

We do have certain visibility in that regard. For Train 3, we need to identify sizable gas source.

We need to secure gas source of certain size. Beetaloo?

Some people say that it has gas reserve equivalent of 10 billion US. Some people say no.

We can kind of expect a large reserve there, but it's only likely at this point in time. We don't know for sure.

Over the next couple of years, we're going to do exploration and to identify the amount of reserve. That's the kind of thing that we want to do to investigate the situation, and if there is that much reserve, then from Beetaloo to Ichthys, we want to install a pipeline and potentially build a Train 3.

We are studying that. In terms of visibility, it's really up to the result of the exploration, the activities that we will undertake.

Next year, well, at this point in time, I can't say anything certain, and, what will happen to oil price, what will happen to exchange rate, that will have significant impact. If the oil price or the FX remains at around the level that we have right now, 160 yen, for example, then Ichthys, there could potentially be a bit of shutdown, but we're not expecting much reduction from the Ichthys.

We don't know what will happen in the future, but still, we may be able to target similar level. We expect the earnings level to kind of pick up.

If we are able to achieve, 500 billion yen, and we have been able to, control the shareholders' equity, and we may be able to maintain 10% ROE if nothing really happens. That's the kind of situation.

We're over time, but this is the end for today's event. For the questions that we cannot answer today, please contact our IR group today.

Thank you very much for all your participation out of your busy schedule. Thank you very much.