Yokohama, Japan - JGC Corporation has decided to invest in the gas development business of Teikoku Oil de Burgos S.A. de C.V., the Mexican subsidiary of Teikoku Oil Co., Ltd.

PEMEX, the Mexican state-owned oil company, had been the sole enterprise engaged in oil and gas exploration and development in Mexico. That changed in October 2003 when Mexico invited international tenders to boost natural gas production with the aid of foreign capital. On November 19, Teikoku Oil was awarded the contract to provide gas development services in the Fronterizo block, following the successful tender for the Cuervito block.

The services are to be provided by a consortium formed by Teikoku Oil and two major Central American and South American development companies: Petrobras of Brazil, and Diavaz of Mexico. A special-purpose company (held by Petrobras with 45%, Teikoku oil with 40%, and Diavaz with 15%) has been established to perform the development projects (including drilling and workover, production plant construction and operation) in the Cuervito and Fronterizo blocks. The three companies plan to invest up to US$ 260 million in the Cuervito block and US$ 265 million in the Fronterizo block. A 15-year development period is expected for each block.

In order to proceed with these projects in Mexico, Teikoku Oil established a Mexican subsidiary (Teikoku Oil de Burgos S.A. de C.V.). JGC's participation is as an equity holder in this company, with a 25% share of the investment.

Through to the present time, JGC has been involved as an engineering contractor offering optimization services for the development of oil and gas resources. JGC also provided the engineering and construction of surface facilities such as crude oil production and gas processing facilities. Meanwhile, JGC has been planning entry into the resource development business, structuring itself for this realization and joining the Japan Petroleum Development Association in May 2002.

It is our hope that such equity participation will lead to further business expansion.