August 31, 2006		Cosmo Oil Co., Ltd.		Public Relations Office

About the Results of our Investigation into the Improper Procedures taken contrary to the High-Pressure Gas Control Law at our Chiba Refinery in 1995

Following its announcement of a "Partial Revision to Investigation Report on the Accident at the Chiba Oil Refinery" on August 4, 2006, Cosmo Oil Co., Ltd. (Headquarters: 1-1-1, Shibaura, Minato-ku, Tokyo; Capital: 62.4 billion yen; President: Yaichi Kimura) received severe reprimands from the Nuclear and Industry Safety Agency, METI, and the Commercial and Industrial Labor Dept., Chiba Prefecture. They required us to find the causes of the improper procedures taken in 1995, to plan preventive measures, and to check if our procedures and inspections have been taken in accordance with the High-Pressure Gas Safety Law since April 1997. We have now prepared the results of our investigation and submitted the report to the authorities concerned. In addition, we would like to provide you with the following details.

We would like to take this opportunity to repeat our humble apologies for these oversights.

Details

1.About the results of the investigation into the accident that occurred at the hydrogen manufacturing unit No.1 of Chiba refinery in 1995 and action against reoccurrence

1. (1)Method of investigation
   Concerning documents related to the accident, kept at the Chiba refinery, we interviewed 18 persons, including the director and personnel concerned at the Chiba refinery and the staff members concerned at the headquarters.
2. (2)Summary of the accident
   1. (a) Time:
      Around 10:20 PM on Monday, December 11, 1995.
   2. (b) Accident:
      A fluid including hydrogen leaked out of the gas-liquid separation tank HP-V18 (having the same function as that damaged on April 16, 2006) used in the hydrogen manufacturing unit No.1 because a linear opening was made in the tank's shell plate. Around 10:40 PM, about 20 minutes after the accident, we started shutting down the unit, and it had stopped safely by around 11:10 PM.
   3. (c) Damage:
      No one was injured and no other facilities were damaged.
3. (3)Causes of the accident
   A fluid entering the gas-liquid separation tank collided with the baffle plate, which changed and concentrated the flow onto a part of the shell plate, and the resulting erosion and corrosion made a linear opening with the length of approximately 7 mm, from which the fluid leaked.
4. (4)Improper procedures during and after the accident
   1. (a) After the accident occurred, we did not inform the authorities concerned as stipulated in theLaw on the Prevention of Disasters in Petroleum Industrial Complexes and Other Petroleum Facilities.
   2. (b) We sent no notification based on the High-Pressure Gas Control Law.
   3. (c) On December 12, the day following the accident, we closed the opening (first-aid repair) without the permission of the Safety Div., Commercial and Industrial Labor Dept., Chiba Prefecture.
5. (5)Causes of our improper procedures
   1. (a) We did not report the accident, contrary to the Law on the Prevention of Disasters in Petroleum Industrial Complexes and Other Petroleum Facilities, because we thought that it might take a long time to describe the causes and the measures and considered that the down time would be longer, due, for example, to replacement work.
   2. (b) We gave priority not only to safety but also to early recovery. Accordingly, we selected the first-aid repair without permission to shorten the repair period.
6. (6)False data created when the equipment was updated (replaced) in 1996
   The equipment (gas-liquid separation tank) damaged in December 1995 was replaced in June 1996. The documents prepared to request the equipment change indicated that the reason for this replacement was that the wall thickness had reduced with time. As a result of the investigation, we came to a conclusion that thickness data of fixed measurement points without actual measurement was created out of a need to prove the aforementioned reason.
   
   This data was included in the report titled "Investigation Report on an Explosion and Fire (April 16, 2006) in the Pressure Reducing Light Oil Desulfurizer/Hydrogen Manufacturing Unit No.1 in Chiba Refinery" which was submitted to the authorities concerned on June 20, 2006.

2.About the results of investigating our procedures and inspections based on the High-Pressure Gas Safety Law after April 1997

1. (1)Method of investigation
   1. (a) We surveyed the specifications for all the work conducted in all our refineries from April 1997 to now, and identified work that should have followed the High-Pressure Gas Safety Law.
   2. (b) We confirmed the presence of requests for changes, the permission granted, and the completion and inspection records on a work basis to determine whether our procedures were correct or not.
2. (2)Results of the investigation
   1. (a) We found that two first-aid repairs were made without a request for a change and with a method not complying with technical standards. The two repaired facilities have already been stopped in consideration of safety.
   2. (b) We found that five first-aid repairs were made without notification after abnormal conditions were detected, just as in the 1995 accident. After that, we made a request for changes to update them.
   3. (c) We found damaged facilities that we considered did not adversely affect safety but that should be checked by the authorities concerned to confirm that repairs comply with the regulations or standards.

3.Preventive action

1. (a) Restructuring our safety control system
   We have learned important lessons from the explosion and fire at the Chiba refinery in April 2006. Accordingly, we will give priority to problems associated with fixed measurement points and structural changes and review all the points for equipment and verify all structural changes made in the past 10 years.
2. (b) Improving the awareness of compliance with corporate ethics
   We caused this problem in spite of the efforts of Cosmo Oil Group's Corporate Ethics Committee for awareness of compliance with corporate ethics. Therefore, we will boost our activities for corporate ethics, particularly in our refineries.
   
   We will form a Compliance Committee as a suborganization of the Corporate Ethics Committee on a refinery basis (chairperson: the director of each refinery), and the latter will always support and supervise the former to improve the awareness of compliance in our refineries.
   
   The director of each refinery will continue highlighting the importance of compliance, and all the personnel will receive training related to corporate ethics. In addition, we will review and strictly operate our reporting system for the occurrence of abnormal events and our regulatory procedures for changing any equipment.
3. (c) Enhancing the checking functions of the manufacturing department of the refinery
   To establish a system in which opinions presented by the safety and control department will be reflected in operation and equipment control, we will modify our work rules to allow the Safety and Environment Office, a safety and control department, to function independent of the refinery.
   
   The executive in charge of safety was also responsible for manufacturing in the past, but we will separate these two duties and give clear authority to each executive in charge of safety, the Safety and Environment Control Dept. of the headquarters, and the Safety and Environment Office of the refinery.
   
   We will make and follow a work flow in which the Safety and Environment Office will make a decision on whether a regulatory request or notification will be necessary for each process, and the work will start after all the regulatory procedures are complete.
   
   In addition to an internal audit in each refinery, the Safety and Environment Control and Refining and Technology Depts. of the headquarters as well as the Safety and Environment Offices and Engineering Works Depts. of the other refineries will regularly inspect the resulting work and regulatory procedures conducted by each refinery. Moreover, the Internal Auditing Office of the headquarters will carry out the second audit. Using the above monitoring sequence, we will check whether operations are proper in the refinery and make those operations transparent.

4.About the accident investigation report submitted on June 20, 2006

According to directions given by the Commercial and Industrial Labor Dept., Chiba Prefecture, we will submit a new investigation survey report to Chiba Prefecture and the authorities concerned. We have changed the members of the Accident Investigation Committee and formed a new fact survey team as a suborganization of the committee to carry on the investigation.

5.Apology

Finally, we would like to express our sincere regrets and apologize for these oversights and all the trouble we have caused.

We will do our utmost to take preventive measures, and with your advice and cooperation will make efforts to recover our credibility.

We will severely punish the staff members concerned.