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The oil spill incident of a drilling rig in the Gulf of Mexico (5)

Mitsui Announces Settlement of Claims Arising from Gulf Oil Spill

May 20, 2011


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Mitsui & Co., Ltd. (Mitsui) hereby announces that a US$1.065 billion settlement has been reached between several of its subsidiaries and certain BP p.l.c. subsidiaries (BP). The settlement resolves all of BP's claims against Mitsui's subsidiaries arising from the April 2010 oil spill incident involving a drilling rig in the Gulf of Mexico (Incident).

Under the terms of the settlement, a Mitsui subsidiary will pay BP US$1.065 billion - and BP will simultaneously waive and release all of its claims against the Mitsui subsidiaries. In addition, BP will fully indemnify Mitsui and its subsidiaries as to most of the claims, including those brought by various private businesses, governments, property owners and individuals that allege property damage, personal injury, and economic loss relating to the Incident and post-explosion clean-up efforts, as well as Natural Resource Damage (NRD) costs.

By this settlement with BP, Mitsui has significantly limited its exposure in this case - and consequently reduced the risk and uncertainty for its shareholders. Doing so will also make it possible for Mitsui to focus on the future growth of its business. Importantly, the payment is to be used for the claims of individuals and entities whose injuries and damages arise out of or relate to the Incident and so should contribute to the recovery of the Gulf Coast.

Since the occurrence of the Incident, BP has sent monthly invoices to MOEX Offshore 2007 LLC (MOEX Offshore), an indirect, partially owned subsidiary of Mitsui, for reimbursement of the costs associated with the Incident and interest thereon that BP claims it is owed by MOEX Offshore as a result of its 10 percent ownership interest in the lease of the property on which the Deepwater Horizon was drilling (Interest). Through these invoices, BP has sought approximately US$2.144 billion in total from MOEX Offshore for costs associated with the Incident based on the Interest. Payment of these invoices by MOEX Offshore, as well as additional claims for future costs incurred by BP, is now moot, given the settlement announced today. BP p.l.c. has projected that its total costs for the Incident will be in excess of US$40 billion, without considering potential recoveries from third parties, including the Mitsui subsidiaries.

As part of this settlement, MOEX Offshore will transfer the Interest and most of its claims against parties involved in the Incident to BP.

Excepted from BP's indemnification obligation are punitive damages solely to the extent arising from conduct of the Mitsui subsidiaries and civil penalties assessed against the Mitsui subsidiaries. As described in Mitsui's other disclosures, the Mitsui subsidiaries may be subject to liability for civil penalties under the Clean Water Act and state environmental laws.

MOEX Offshore is a wholly owned subsidiary of MOEX USA, which in turn is wholly owned by Mitsui Oil Exploration Co., Ltd. (MOECO), in which Mitsui holds a 69.91% equity interest.

Mitsui will update its financial statements in its flash report published on May 6, 2011 to reflect the impact of the settlement and its net income attributable to Mitsui for the year ended March 31, 2011 will be changed from JPY367.9 billion to approximately JPY 306.0 billion. The updated consolidated financial statements will be released as soon as available. Mitsui has not changed its annual dividend forecast (JPY47.0 per share) for the year ended March 31, 2011.

For the year ending March 31, 2012, Mitsui has not changed forecast of net income attributable to Mitsui of JPY430.0 billion and its annual dividend forecast (JPY 55.0 per share) which was based on the current earnings forecast of JPY430 billion, announced on May 6, 2011.

Notice:
This Report contains forward-looking statements about Mitsui and its subsidiaries. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently available to it and involve known and unknown risks, uncertainties and other factors, including, but not limited to the permanent success of the plugging of the well and the outcome of other events in the Gulf of Mexico relating to the Incident. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors involve the nature and scope of Mitsui's liability with respect to the events in the Gulf of Mexico relating to the Incident, including, but not limited to, (a) the amount, if any, of penalties that may be assessed against MOEX Offshore or its affiliates by government entities, (b) the outcome of current and future legal proceedings against MOEX Offshore or its affiliates brought by governmental or private parties, which involve or may involve claims for punitive damages, or (c) the availability or adequacy of claims under indemnification provisions in the Settlement and of coverage under insurance policies with respect to the Incident. These risks, uncertainties and other factors also involve the other factors contained in Mitsui's most recent Annual Report and in its other public filings or press releases, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements. As a result, given these factors and the magnitude of the Incident and the ongoing clean-up efforts, any such liability could have a material adverse effect on Mitsui's consolidated results of operations and financial condition.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Investor Relations Division
Telephone: +81-3-3285-7910
Facsimile: +81-3-3285-9821
infoTKADZ@mitsui.com
Mitsui & Co., Ltd.
Corporate Communications Division
Kazuhisa Kawamura
Telephone: +81-3-3285-7540
Facsimile: +81-3-3285-9819