Showa Shell Sekiyu KK : Agreement Concluded on Integration of LP Gas Import and Wholesale Operations

Agreement Concluded on Integration of LP Gas Import and Wholesale Operations 05/08/2014 Cosmo Oil Company, Limited (President: Keizo Morikawa; hereinafter, "Cosmo"), Showa Shell Sekiyu K.K. (Chairman/Group CEO: Shigeya Kato; hereinafter, "Showa Shell"), Sumitomo Corporation (President: Kuniharu Nakamura), and TonenGeneral Sekiyu K.K. (President: Jun Mutoh; hereinafter, "TonenGeneral") began discussions in December 2013 on integrating their LP gas import and wholesale operations, and these four companies today concluded an integration agreement to establish an integrated LP Gas import and wholesale company on April 1, 2015. This integration is contingent on approval from the relevant authorities. Purpose of business integration The LP gas import and wholesale operations (LP gas import/procurement, shipping terminal operation, logistics, and domestic wholesaling) and overseas trading operations of the four corporate groups will be consolidated into an integrated structure to create one of Japan's top-class LP gas import and wholesale companies. To achieve that aim, the four corporate groups will strive to: (1) Ensure reliable LP gas supply in Japan and strengthen partnerships with our dealers. (2) Improve logistics efficiency and cut redundant costs in the four companies operations. (3) Enhance operational efficiency and diversify sales channels (4) Diversify procurement sources/methods and reduce procurement costs, and actively develop overseas trading on a global scale to ensure the new company is competitive Business integration method (1) Scope of integration The LP gas import and wholesale operations of Cosmo, Showa Shell and TonenGeneral The LP gas wholesaling operations of Enessance Holdings Co., Ltd. (established in 2008 by Showa Shell and Sumitomo Corporation with equity stakes of 51% and 49%, respectively) The LP gas trading operations of Sumitomo Corporation (2) Integration method The four corporate groups will carry out absorption-type spin-offs of their LP gas import and wholesale operations and integrate these operations with Cosmo Petroleum Gas Co., Ltd. (a wholly-owned subsidiary of Cosmo) as the receiving company. Cosmo, Showa Shell, Sumitomo Corporation, and TonenGeneral will each acquire a 25% stake in the integrated import and wholesale company. The new company's trade name is due to be changed in conjunction with the effective integration date of April 1, 2015. Planned business integration schedule Conclusion of integration agreement August 5, 2014 Conclusion of agreements on absorption-type company splits Dec 2014 - Jan 2015 Integration deadline (effective date) April 1, 2015 Profile of integrated import and wholesale company (tentative) (1) Trade name (new company name) Notification of the trade name to be used from April 1, 2015, will be provided as soon as a final decision has been reached (2) Head office location Tokyo (head office site now being selected in conjunction with integration) (3) Representatives and executives Notification of the names of representatives will be provided as soon as a final decision has been reached Four full-time directors (president, three vice-presidents) and four other directors to be appointed One full-time corporate auditor and three other corporate auditors to be appointed (4) Description of business Manufacture, storage, transport, sale and import/export of LP gas (5) Capital 11 billion yen (6) Settlement period December (7) Shareholders and ownership Cosmo (25%), Showa Shell (25%) Sumitomo Corporation (25%), TonenGeneral (25%) (8) Sales revenue Approx. 400 billion yen (9) Domestic sales volume Approx. 3.6 million tons (10) Import volume Approx. 3 million tons (11) Overseas trading volume Approx. 1 million tons (12) Principal offices Seven LP gas import terminals Kashima, Chiba, Kawasaki, Hekinan (in Aichi Prefecture), Yokkaichi, Sakai, Oita Four LP gas secondary terminals Shimizu, Sakaide, Matsuyama, Hiroshima (13) Principal subsidiaries and affiliates Yokkaichi LPG Terminal Co., Ltd. Kashima LPG Joint Stockpiling Co., Ltd. Oita LPG Joint Stockpiling Co., Ltd. Hiroshima LPG Terminal Co., Ltd. Other Further details on the company splits will be provided as soon as they have been finalized. Inquiries on this matter Showa Shell Sekiyu K.K. Public Affairs Division TEL: [phone]