JGC Corporation Annual Report 2006

Review of Operations

Oil and Gas Development Projects

In fiscal 2005, JGC conducted a large number of projects in the oil and gas development field against
the backdrop of surging capital investment in Middle Eastern oil-producing countries.
In Saudi Arabia, we secured an order for a large-scale natural gas liquids (NGL) recovery plant from
the state-owned Saudi Arabian Oil Co. (Saudi Aramco). This new project will recover NGL from natural
gas refined at processing facilities already constructed by JGC in Saudi Arabia. The recovered NGL
will be transported via pipeline to an integrated refining and petrochemical complex being developed
by Saudi Aramco and Sumitomo Chemical Co., Ltd. for use as a raw material in the manufacture of
ethylene. The NGL recovery project is slated for completion in the first half of 2008. This order illus-
trates how JGC is involved in key projects from upstream through to downstream areas in Saudi
Arabia, helping to play a major role in the development of the country’s energy strategy.
In Iran, meanwhile, JGC is constructing a large-scale natural gas processing plant for Petropars
Ltd., a subsidiary of the National Iranian Oil Company. This project is scheduled for completion in early
2007. In Qatar, we are working on another large-scale natural gas processing facility for Dolphin Energy
Ltd., with an estimated completion date of mid-2007. Natural gas refined at this facility will be transported
via pipeline to the neighboring U.A.E., where it will be used as fuel in power generation and desalination
plants that JGC has invested in and operates.
Moving into fiscal 2006, in Algeria we completed the In Amenas natural gas field development
project for BP Exploration (In Amenas) Ltd. and Sonatrach, Algeria’s state-owned oil and gas company.

Petroleum Refining Projects

During the year, against the backdrop of surging crude oil prices, JGC won orders for and was engaged
in a large number of petroleum refining projects both in Japan, where accelerated efforts are being
made to increase heavy oil refining capacity etc., as well as in other parts of Asia and in the Middle East.
In fiscal 2005, JGC secured a deal to construct Vietnam’s first large-scale petroleum refinery and
ancillary facilities for Vietnam Oil and Gas Corporation (Petro Vietnam). Vietnam is an oil-producing
nation, but still lacks any domestic oil refining capability. Consequently, at the moment, all crude oil for
refining is exported and petroleum products are imported. One of Vietnam’s long-held ambitions will
be realized with the planned completion of this new petroleum refinery in early 2009.
In Japan, we won a succession of new orders for the construction of heavy oil upgrading facilities
from a number of oil refining companies.
In Bahrain, we continued to work on an oil refinery modernization project for the Bahrain Petroleum
Company (BAPCO) with a planned completion date at the end of 2006.
Meanwhile, in February 2006, we completed a
refinery modernization project for KazMunaiGas, the
national oil company of Kazakhstan. This facility is
now the country’s largest oil refinery. We also com-
pleted construction of a new petroleum refinery for
Sohar Refinery Company in Oman in June 2006, and
are now proceeding with the commissioning work.

Petroleum refinery for Sohar Refinery Company, Oman

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LNG Projects
With demand expanding in the U.S., Europe and China, LNG projects are being planned and initiated
worldwide. As the leading engineering contractor for LNG plants, JGC participated in many Front End
Engineering and Design (FEED) jobs and construction projects during fiscal 2005.
JGC was awarded Yemen’s first-ever LNG plant project. The plant, for the Yemen LNG Co., Ltd.
will have two trains and an annual output of 3.35 million tons per train. The first train is scheduled for
completion at the end of 2008, followed by the second train in mid-2009. We were also awarded two
FEED jobs for LNG plants in Angola and Australia, and we plan to actively use these opportunities to
secure related construction work as well.
In Indonesia, we continued to work toward the scheduled completion of the Tangguh LNG plant for
BP Berau, Ltd. in the second half of 2008. This project is a major element of BP’s LNG strategy and
will also play a significant role in the development of Indonesia’s economy. When completed, this
important project will also cement Indonesia’s position as the world’s largest supplier of LNG.
In Nigeria, we completed
the fourth and fifth trains in
early 2006 at an LNG plant
for Nigeria LNG Ltd. We are
now working to finish train six
sometime in the second half
of 2007.

3D view of LNG plant for BP Berau, Indonesia

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 JGC Corporation Annual Report 2006

Chemical Projects
The biggest theme for JGC in this field in fiscal 2005 was participation in national projects conducted
jointly by the Japanese petrochemical industry and oil-producing nations.
As already mentioned on page 4 in the “To Our Shareholders” section, and page 6 in the “Special
Feature 1” section, JGC won an order to construct core facilities for an integrated refining and
petrochemical complex, part of the Rabigh project currently being developed by national oil company
Saudi Aramco and Sumitomo Chemical. For Sumitomo Chemical, this is a groundbreaking project,
representing its first ever petrochemical facility located in an oil-producing region and heralding a new
stage in its global strategy. For Saudi Aramco, the project will diversify its operations by developing an
even wider presence in downstream-related areas. This national project also dovetails with Saudi
Arabia’s policy of stimulating domestic job growth. The project is scheduled for completion in the
second half of 2008.
Meanwhile, in China, we completed construction of a polycarbonate manufacturing plant for Teijin
Polycarbonate China Ltd. in May 2005. We are now working on the second phase of this project,
currently slated for completion in early 2007. In Japan, we finished an industrial gas manufacturing
plant in Ube City, Yamaguchi Prefecture, for Central Glass Co., Ltd. in October 2005.
Since the beginning of 2006, we have also completed a number of other facilities, including: an
ethylene plant for Shell Petrochemicals Co., Ltd. and China National Offshore Oil Corp. (CNOOC) in
China; a chemical plant for
PT. Trans-Pacific Petrochemi-
cal Indotama (TPPI) in Indo-
nesia; and a chemical plant
for EVAL Company of
America, a subsidiary of lead-
ing Japanese chemical firm
Kuraray Co., Ltd., in the U.S.

Groundbreaking ceremony for the Rabigh project, Saudi Arabia

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Power Generation, Nuclear Power
and New Energy Projects
In the new energy field, we achieved further major successes in the area of gas to liquids (GTL), which
is attracting attention as a source of clean energy.
In fiscal 2005, JGC was awarded a project management contract in Qatar for the world’s largest
GTL project, from Qatar Shell GTL Limited, a subsidiary of the Royal Dutch Shell. Since securing basis
of design and basic design package contracts for this project, we had been awarded a subsequent
FEED contract prior to the project management contract, giving JGC an extensive role in Royal Dutch
Shell’s GTL projects.
In the nuclear power field, Japan Nuclear Fuel Ltd. (JNFL) has been constructing a spent nuclear
fuel reprocessing facility in Rokkasho, Aomori Prefecture, since 1993. JGC has installed piping in the
active galleries of the facility, and testing is now under way prior to the planned start of operations in
August 2007. In power generation, we completed a power plant for the national oil company Saudi
Aramco in Saudi Arabia in June 2005.

Living and General Production

Projects
The advanced level of JGC’s engineering technologies in the pharmaceuticals field was acknowledged
by the sector worldwide in fiscal 2005.
Specifically, the new bio plant we completed for Daiichi Asubio Pharma Co., Ltd. in Gunma Prefec-
ture in October 2005 was selected as one of the five finalists in the 2006 Facility of the Year Awards
run by the International Society for Pharmaceutical Engineering (ISPE) and other sponsors. Open to
pharmaceutical-related facilities constructed between March 2004 and October 2005, this prestigious
industry prize was awarded to sites that demonstrated advanced levels of technology.
In other developments in the pharmaceuticals field, we secured a contract for a microalgae manu-
facturing facility in Shizuoka Prefecture from Yamaha Motor Co., Ltd., and continued with the con-
struction of a multi-line health drink production site in Saitama Prefecture, scheduled for completion in
mid-2007, for Taisho Pharmaceutical Co., Ltd. Completed projects during the fiscal year included:
two pharmaceuticals manufacturing facilities for the Chemo-Sero-Therapeutic Research Institute
(Kaketsuken) in May 2005 and January 2006; and
the refurbishment of a pharmaceuticals manufac-
turing plant for Sankyo Co., Ltd. in Fukushima
Prefecture in September 2005.

New bio plant for Daiichi Asubio Pharma, Japan

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 JGC Corporation Annual Report 2006

Environmental Protection, Social

Development and IT Projects
Our activities in this field during fiscal 2005 were
characterized by the construction of high-quality
medical facilities around Japan that won high
marks from customers.
During the year, we continued to work on the
renovation of Saka General Hospital for the Miyagi
Welfare Association, Miyagi Prefecture. In addition
to project management, we are providing planning
for rebuilding projects and design supervision. By
working closely with the customer, we are reducing
Yuai Memorial Hospital for the Ibaraki Resident
construction costs, as well as enhancing cost Co-operative Union

transparency, and ensuring high levels of quality.

The hospital’s main building was completed in August 2005, with renovation work on existing hospital
wings to be completed in August 2006. Other medical facilities completed during fiscal 2005 were the
Matsuoka Hospital for the Matsuoka Foundation in July 2005, and the Yuai Memorial Hospital for the
Ibaraki Resident Co-operative Union in November 2005.
In research facilities, we completed a research lab for medical pharmaceuticals maker Maruho Co.,
Ltd. in Kyoto in March 2006.

Enterprise Investment Business

One of our objectives with Scenario 2010, the JGC Group’s new medium-term management plan
launched in April 2006, is to actively develop the Enterprise Investment aspect of our activities, supported
by our existing robust financial base, to grow it into a second core business alongside the Engineering
and Construction (E&C) business.
As already mentioned on page 4 in the “To Our Shareholders” section, and page 8 in the “Special
Feature 2” section, JGC secured the business license for the operation of a large-scale power generation
and desalination plant in Saudi Arabia in August 2005. In the same month, we also concluded a
contract with The Zhejiang Juhua Co., Ltd., a chemical manufacturing firm based in Zhejiang Province,
China, to establish a clean development mechanism (CDM) project. In another development, we invested
in a business in Egypt involved in the sale and manufacture of ammonia produced from natural gas for
use in fertilizers in May 2006.

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Catalysts and Chemical Products
Three key trends supported significantly higher sales of fluid catalytic cracking (FCC) catalysts,
hydrotreating catalysts and petrochemical catalysts — an increasing focus in the industry on heavy
oil, efforts to reduce environmental impacts, and the rising output of petrochemical feedstocks.
Chemical products, centered on fine chemicals, also continued their strong performance from the
previous fiscal year. As a result, revenues and earnings from catalysts and chemical products increased
overall compared to a year earlier.
In the catalysts business, sales of FCC catalysts — a product category where Catalysts & Chemicals
Industries Co., Ltd. (CCIC), a subsidiary of JGC, has captured the leading share in the domestic market
— and hydrotreating catalysts were firm in Japan and overseas. At the end of 2005, CCIC completed
their second FCC catalyst manufacturing plant to meet rising demand. Sales of petrochemical catalysts
were strong, supported by the rising domestic and international output of petrochemical products.
Sales of environmental catalysts, such as de-NOx catalysts, were also robust thanks to healthy demand
from the U.S.
In the chemical products business, vigorous investment in IT-related areas translated into firm sales
of semiconductor abrasive compounds and antireflective materials for flat-panel displays (FPDs).
Sales of optical materials, raw materials for cosmetics, and cathode materials for lithium ion recharge-
able batteries were also healthy. Steps were taken during the year to increase the manufacturing
capacity for FPDs antireflective materials and lithium ion rechargeable battery materials. In particular,
demand for antireflective
materials for FPDs, such as
LCD and plasma TVs, has
been growing dramatically,
with supply struggling to keep
up with demand. JGC
group’s increased output will
help to support further busi-
ness expansion.

Catalyst manufacturing plant

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