FEC (The International Friendship and Economic Exchange Council) Secretariat 
Aiming to be a development company originating in Japan that takes on the world.
Intense formative experiences and connections at the Ministry of Economy, Trade and Industry
Intense formative experiences and connections at the Ministry of Economy, Trade and Industry
Chairman Ken Matsuzawa Today, we will be speaking with Mr. Toshiaki Kitamura, Advisor to INPEX Corporation. After joining the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry), Mr. Kitamura served as director of various bureaus, including the Trade and Economic Cooperation Bureau and the Manufacturing Industries Bureau, and now supports Japan's energy industry as an advisor. We would very much like to hear about your experiences and ideas, as we would like to share them with our younger members. So, could you tell us about the process by which you took charge of the management of INPEX after the merger of the three companies and established it as Japan's only international oil and gas development company?
Advisor Toshiaki Kitamura Let me begin by telling you about my background. I've been working for over 50 years now. Of those years, I spent more than 30 as a civil servant at the Ministry of International Trade and Industry. After that, I joined INPEX, and this year marks my 17th year here. Looking back, I truly feel that I've been blessed with wonderful connections.
The first oil crisis occurred in 1973, just two years after I joined the Ministry of International Trade and Industry. Crude oil prices rose sharply, causing long queues at gas stations and panic buying of toilet paper; the whole country was in a panic. I was assigned to the Petroleum Department at the time, so I was right on the front lines of energy administration.
My experience as a civil servant was a powerful formative experience. During the second oil crisis from 79 to 80, I worked tirelessly in the Petroleum Development Division to ensure a stable energy supply. For the first 10 years or so after joining the Ministry of International Trade and Industry, I was involved in energy-related work.
After that, I gained experience in several departments, and finally retired after serving as Director-General of the Trade Policy Bureau and Vice Minister of Economy, Trade and Industry. After retiring, I briefly served as a visiting professor at a university, when the then-chairman of INPEX asked me if I would like to join his company. I felt that it was a fortunate opportunity, as I still had some unfinished business in the area of "stable energy supply," which is my original focus.
Try again at the dream you left unfinished.
Matsuzawa During your time as a civil servant, you held positions such as Director-General of the Trade and Economic Cooperation Bureau, which is quite an impressive career. What regrets did you have about your time in the government?
(I.e. My experience at the Ministry of Economy, Trade and Industry is my starting point. While working in the Petroleum Development Division of the Petroleum Department, where I was in charge of the development industry, I undertook various initiatives, but ultimately, at that time, I was unable to create a "Japanese oil development company that could compete on a global level."
There was once Arabian Oil. Furthermore, the government, with support from the National Oil Corporation, brought together numerous related companies to promote so-called national projects, hoping to create a world-class development company. However, ultimately, they failed to cultivate a development company capable of competing with global corporations. The essence of a "development company" lies in how to secure high-quality assets in the long term, overcoming hurdles such as resource depletion and securing rights. It could be said that Japan's attempts to date have ultimately failed to overcome this obstacle.
Matsuzawa That's right. Arabian Oil was once one of Japan's leading companies. Speaking of Arabian Oil, there was a lot of talk about its interests. It must have been a very difficult time for them back then.
(I.e. You're absolutely right. In fact, Arabian Oil was unable to extend its oil field concessions in 2000 and ultimately ceased to exist. Concessions refer to the rights that oil-producing countries grant to oil development companies to explore, develop, produce, and sell oil and gas.
The oil development business is inherently unpredictable; there's no guarantee of finding oil. Even if oil is found, it's difficult to determine whether stable production is possible to recoup the enormous development costs invested. Compared to other industries, it requires enormous capital, carries a high risk of failure, and yet, if the rights are lost, it all collapses abruptly.
At the time, I was serving as Prime Minister Obuchi's secretary. I was asked many times if we could extend our rights, but unfortunately, we were unable to do so, and we lost our drilling rights. Of course, both Arabian Oil and the government tried their best, but it was no use. As someone who had been involved in oil development, I felt a deep sense of regret that a symbol of Japan's oil development, which had lasted for over 40 years, was gone.
These experiences left me with a very strong desire to try again. I wanted to prevent something like what happened with Arabian Oil from ever happening again, so when I was invited by the then-chairman of INPEX, I felt incredibly fortunate. I remember being delighted to join INPEX, thinking that I might be able to challenge myself again to fulfill my unfinished dreams and aspirations. I feel very fortunate that this connection led me from being a civil servant to working at INPEX.
The background to the establishment of INPEX and the aspirations behind the merger of the three companies
Matsuzawa So, in a way, you had a fateful encounter with INPEX. From there, how did you go about establishing INPEX as it is today?
(I.e. INPEX has finally become a world-class oil, natural gas, and LNG (liquefied natural gas) development company in Japan. It has established bases not only in Japan but also in Australia, Abu Dhabi (United Arab Emirates), Indonesia, and Europe.
Its roots lie in the merger of three development companies. The first is "Teikoku Oil," established in 1941 just before the Pacific War, which was solely responsible for developing oil fields in Japan. The second is "Indonesian Oil," established in 1967, which was developing oil and gas in Indonesia. The third is "Japan Oil Development," established in 1973, which acquired oil interests in Abu Dhabi and continues production there to this day.
These three companies merged between 2004 and 2008, giving rise to "International Petroleum Development Teikoku Corporation (now INPEX)" in 2008. Behind this merger was the desire to create a Japanese oil development company that could compete on a global scale. This would have been difficult to achieve individually, so the merger allowed them to aim for the global market. This ambition was grand and wonderful, and it perfectly matched my own dreams.
Three growth drivers
I joined the company in 09, the year after the merger, and became president the following year, 10. At that time, we had a net profit of around 1000 billion yen and about 1500 employees. However, looking at the details, the majority of our profits depended on a specific project owned by Indonesian Petroleum, and moreover, the rights to that project were scheduled to expire within a few years. Furthermore, most of our other projects had reached their production peak and were entering a period of resource depletion. In other words, although we appeared to be a fairly successful development company on the surface, our future prospects were by no means secure.
However, there were significant signs of growth. So when I became president in 2010, I decided that our company would focus on three growth drivers. Firstly,Ichthys LNG ProjectPromotion of the secondOil interests in Abu DhabiThe resurgence of [unclear]. Thirdly,Development of the domestic gas supply networkWe approached these three projects with the determination that they were "projects on which our future rests." In particular, the Ichthys LNG project was a project that ignited the passion of many employees as oil development professionals.
I want to discover, develop, produce, and provide it on my own.
Matsuzawa Is that the spirit of an oil development engineer? What kind of project was it?
(I.e. The Ichthys LNG project involved developing a massive offshore gas field discovered by the company itself in northwestern Australia. The investment was estimated at 5 to 7 trillion yen, making it one of the largest overseas projects ever undertaken by a Japanese company.
The challenge here wasn't the scale, but the fact that it was the first time our company had acted as the operator. An operator is a company or organization that, when multiple companies jointly develop oil or natural gas, actually determines the development concept, sets the general framework for marketing and finance, and then manages, oversees, and operates the on-site work. Simply put, they are like the "leader and site supervisor of the development project."
Resource development is rarely undertaken by a single company. Because of its large scale, high risks, and the significant capital required, it's common practice to collaborate with other companies and partners. Typically, the partners provide the funding, while the operator makes the decisions and assumes responsibility.
In other words, Ichthys was the first project in which INPEX handled everything from exploration to development. Instead of just providing funding alongside operators as before, they discovered, developed, produced, and brought the oil to the world with their own hands. This gave them the feeling that they had finally become "full-fledged" oil developers. This ignited the passion of the oil exploration professionals.
Oil development is the "total art" of business.
I believe that oil development is a "comprehensive art of business." It's characterized by its grand scale and dynamic development closely intertwined with international politics and economics. It involves countless decisions, involving multiple stakeholders: narrowing down target countries, negotiating rights, initiating exploration, comparing development methods, determining sales destinations, finding funding sources, structuring financing, and selecting development companies through bidding. The operator is the one who brings all of this together.
Developing natural resources requires enormous amounts of risk capital. The success rate of exploration remains low, and even when successful, many cases do not progress to development. Furthermore, development often takes place in countries with political and economic risks, and there are various risks in the development process itself. In addition, there are many other risks, such as not being able to set your own selling price and having to leave it to the international market. In such circumstances, it is quite difficult to get the approval of other partners, buyers, financial institutions, and the governments of the target countries to say, "Okay, we understand, we'll leave it to you."
For a long time, Japan was the world's largest importer of LNG. In other words, it was a period of simply "buying" LNG. That's why taking the lead in developing Ichthys was truly an unprecedented challenge.
"It's reckless," "There's no way it can be done," some said.
(I.e. Given the enormous risks involved and our lack of experience, many people told us it was impossible. INPEX has little experience as an operator even in the regular oil and gas business, and there are only about a dozen companies in the world with experience as an LNG operator.
Our investors have also given us harsh criticism, saying things like, "You're trying to launch a project that will put the company in jeopardy." They've also asked, "Why don't you sell your stake and let an oil major (a giant oil and energy company) be the operator?" In fact, we've even been approached by other companies developing LNG in Australia, asking if we could be the operator. They have experience, so they propose with confidence. It's only natural for investors to feel more secure entrusting the project to a company with a proven track record.
We received a lot of criticism for trying to use such a large amount of capital without any experience, but we decided to go ahead with it. It was a difficult challenge, but if we couldn't do it, INPEX would remain just a company that provides funding forever. We wouldn't be able to make our presence felt in the world. Moreover, it is only with operator experience that the path to acquiring high-quality interests around the world opens up.
The reason why the world's major oil companies are considered world-class is because they have a proven track record as operators. In the development industry, the amount of experience one has as an operator is the most important status symbol. For INPEX to become a "Japanese development company that can compete on a global level," operator experience was absolutely essential.
= Abu Dhabi, 2018 (Photo courtesy of JETRO)
Principles of a business leader and a sense of mission to take on challenges
Matsuzawa Despite having no prior experience, taking on the challenge of becoming an LNG operator, a rare venture globally, must have been a considerable source of pressure for the manager.
(I.e. It was tough. It was tough, but because my aspirations and determination as a manager, and the circumstances surrounding the merger of the three companies, all aligned, I felt I had no choice but to do it. When I joined INPEX, a manager I respected taught me, "Companies are going under every day. Remember that it is the manager's responsibility whether a company goes under or grows," and "Being a company manager is really tough. To overcome difficulties and lead a company, you need high aspirations."
Looking back now, those were truly invaluable words, and I only truly understood them after becoming a business owner. I believe it was because I had these two principles in mind that I was able to make the bold decision to take on challenges.
Business management is not just a game of numbers. Without the passion and trust of people, even the most impressive equipment is meaningless. Especially in high-risk fields like energy development, I strongly believe it's essential that every employee takes pride in knowing they are supporting Japan's energy supply.
Furthermore, our company's roots lie in Teikoku Oil, a company with a painful history marked by the deaths of 1600 employees who were conscripted during the war and died under harsh conditions. Similarly, Indonesian Oil and Japan Oil Development have also experienced many hardships and setbacks. Because of these experiences, I believe that within our company, there is a shared understanding that "our current work is built upon the history of the blood, sweat, and tears of our predecessors. That is why we must develop this company not half-heartedly, but truly become a company that will bear the responsibility for Japan's energy."
I believe that was the biggest driving force behind completing Ixis.
Matsuzawa Wow, that really touches me. The word "sense of mission" is truly fitting.
(I.e. Japan's energy self-sufficiency rate is only 12-13%, the lowest among developed countries. Japan continues to rely almost entirely on imports for oil and natural gas. Currently, oil and natural gas account for the majority of energy in the world and in Japan, and this situation is not expected to change significantly in the long term. In this context, a stable energy supply is a matter of national security itself; any international conflict or supply trouble would directly disrupt the lives of the people. That is why a system is needed to secure overseas resources stably using Japan's own resources.
The Japanese government has set a goal of meeting 50% of its oil and natural gas consumption, and eventually 60%, through domestic development. Currently, it is at around 40%, and we at INPEX are responsible for about half of that.
Matsuzawa I see. It's surprising that INPEX handles half of it.
(I.e. That's right. Our business has expanded to Australia, Abu Dhabi, Indonesia, Norway, and within Japan, among other places.
In particular, the Ichthys LNG project in Australia supplies more than 1% of the liquefied natural gas (LNG) currently entering Japan. We take pride in the fact that "our work supports the lives of people in Japan." With independent development, both the supply volume and price are stable. For a stable energy supply, it is essential that we ourselves conduct exploration, development, and production overseas.
Decarbonization efforts that fulfill social responsibility
Matsuzawa That's truly a sense of mission. I'd like to ask again, but lately we hear the terms "decarbonization" and "carbon neutrality" a lot. This is a major turning point for the energy industry, isn't it?
(I.e. You are absolutely right. In the long term, decarbonization is indeed a very important issue. The Japanese government has also set a goal of achieving net-zero greenhouse gas emissions by 2050. As a company that plays a central role in ensuring a stable energy supply, we are also fulfilling our social responsibility and have already begun three initiatives, focusing on INPEX's areas of expertise.
The first initiative is "promoting CCS." CCS is a technology that captures emitted CO2 before it is released into the atmosphere and safely stores it deep underground. To reduce the amount of CO2 emitted from our own oil and natural gas extraction, including Ichthys, we have already decided on a project to bury it back into the seabed. This will also be implemented at the Abadi gas field in Indonesia, where we plan to begin development in the future. In addition, we have started the "Metropolitan Area CCS" project to bury CO2 back into Tokyo Bay in the Keiyo Industrial Zone, one of Japan's largest CO2 emission areas.
The second point is "exploring next-generation energy sources." There are various technologies, and at this point, it is not yet clear what will be the key to decarbonization in the future. We have begun working on hydrogen, ammonia, and synthetic methane, but currently the costs are high, and there is no prospect of commercialization from a technological standpoint.
For example, we have launched a large-scale demonstration project for synthetic methane. We aim to build a local production and consumption model that supplies synthetic methane produced by reacting CO2 emitted from INPEX's gas field in Niigata with hydrogen. Also in Niigata, we are conducting a demonstration project for so-called blue hydrogen (where CO2 generated from the production process is treated with CCS to produce hydrogen) using natural gas from our own gas field. These are probably things that only we can do in Japan.
Finally, the third point is "Our challenge in the renewable energy field." Australia, where Ichthys is located, has excellent conditions for solar and wind power. It has vast land, strong sunshine, and stable winds. We are developing renewable energy businesses using solar and wind power here. In addition, we are also pursuing geothermal power generation, which is similar to our technology, as a commercial project in Japan and Indonesia.
Expectations for the Association for the Promotion of Private Diplomacy
Matsuzawa It seems you are working to fulfill your social responsibilities from many different angles. Finally, could you please say a few words about what you expect from the Association for the Promotion of Private Diplomacy?
(I.e. I currently serve as an executive member of international exchange organizations with countries that have close ties to INPEX, such as Japan and Australia, Japan and Indonesia, and Japan and the UAE. Through this experience, I have come to deeply understand the importance of fostering mutual understanding and trust.
Based on these experiences, I would say that the activities of the Association for the Promotion of Private Diplomacy, which builds trust, the foundation of international relations, are extremely meaningful. Currently, Japanese companies are expanding overseas on a very large scale, and not only so-called large corporations, but also regional and medium-sized companies are actively conducting business abroad.
However, for companies unfamiliar with international business, obtaining information about countries of interest and building mutual understanding is not easy. That said, the Ministry of Foreign Affairs and overseas diplomatic missions alone cannot support all companies.
The grassroots activities of the Association for the Promotion of Private Diplomacy are a great help to companies in various industries and regions that are expanding and further developing their overseas operations. This will become increasingly important in the future.
And one more thing I'd like to mention is the importance of our lecture activities. For executives who want to expand overseas, these lectures are a valuable opportunity to learn how to view the current international situation and to understand future international trends. In other words, they are a place to learn international affairs literacy. This is a unique initiative, so I would like to see these lecture activities further developed.
Matsuzawa Thank you for sharing your valuable insights with us today.
(This interview took place on October 31, 2025, and was published in the December issue of FEC News.)
Toshiaki Kitamura was born in Hokkaido in 1948. He graduated from the Faculty of Law at the University of Tokyo. In 72, he joined the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry). He served as Director-General of the Trade and Economic Cooperation Bureau, the Manufacturing Industries Bureau, and the Trade Policy Bureau. In 2006, he became Vice Minister of Economy, Trade and Industry, and retired in 07. After retirement, he served as an advisor to Tokio Marine & Nichido Fire Insurance Co., Ltd. and a visiting professor at Waseda University Graduate School before becoming Vice President of Inpex Corporation (now INPEX) in 09. He served as President of the company from 10 and became Chairman of the Board of Directors in 18. In 20, he became Chairman of the Japan Petroleum Association, and in 24, he became an advisor to INPEX Corporation. In 22, he received the Order of Australia, and in 25, the Order of the Sacred Treasure, Gold Rays with Neck Ribbon.