Diversification

The Tokyo Gas Group is aiming to increase earnings as a diversified energy services company by carrying out
core gas operations as well as operating energy-related businesses that complement and add value to thoseoperations. Furthermore, to respond to the IT revolution and Japan’s “graying” society as well as contributeto environmental protection, Tokyo Gas is actively promoting various new businesses that transcend the boundsof the energy sector. Two examples of these are urban development and information-related businesses. In
respect of our 47 subsidiaries, we are working to raise their profitability and foster autonomy with a view totaking them public in the future. These actions are being taken in line with our Medium-Term ManagementPlan. This plan also calls for the streamlining of unprofitable businesses to maximize consolidated earnings.

Subsidiaries and Affiliate
Company

22

Equity Interest (%)

Business

Tokyo Gas Energy Co., Ltd.

100

Sales of liquefied petroleum gas (LPG) and coke

Tokyo Gas Chemicals Co., Ltd.

100

Sales of gas for industry and chemicals

Tokyo Oxygen and Nitrogen Co., Ltd.

54

Production and wholesale of liquefied oxygen and nitrogen

Tokyo Gas Urban Development Co., Ltd.

100

Real estate leasing, management and brokerage, etc.

Park Tower Hotel Co., Ltd.

100

Hotel management

KANPAI CO., LTD.

93.3

Gas facilities construction and gas appliance sales

Gastar Co., Ltd.

66.7

Production and wholesale of gas appliances

TG Credit Service Co., Ltd.

100

Leasing of information equipment, gas appliances and office equipment, and credit administration connected with gas appliances andinstallations

Chiba Gas Co., Ltd.

99.9

Supply of gas to Chiba City and surrounding cities

Tsukuba Gakuen Gas Co., Ltd.

100

Supply of gas in Tsukuba CityTokyo Gas Engineering Co., Ltd.

100

Comprehensive engineering services with a particular focus onenergy-related work

TG Information Network Co., Ltd.

100

Information processing services, software development and sales

TG Enterprise Co., Ltd.

100

Financial administration and building leasing for Tokyo Gas andof computer equipment, etc.
related companies
Tokyo LNG Tanker Co., Ltd.

100

LNG and LPG transportation and chartering of carriers

Gas Malaysia Sdn. Bhd.*

20

Supply of gas in Malaysia* Equity-method affiliate

LEFT
A room at the Park Hyatt Tokyo, managed by Park Tower Hotel Co., Ltd.
The modern interior and superb view of the Shinjuku district make a staya truly memorable experience.
RIGHT
This ultra-low-temperature, deep-freeze warehouse for tuna is one exampleof the cryogenic utilization of LNG.

TOKYO GAS Annual Report 2000

Topics
Increasing Focus on LNG and LPG Transportation Business
In July 2000, Tokyo Gas announced its intention to build and operate two LNG
carriers. The first vessel is slated for completion in 2003, while delivery of the second
is expected in either 2005 or 2006. Tokyo Gas already owns shares of LNG and LPG
carriers through our subsidiary Tokyo LNG Tanker Co., Ltd. This subsidiary wasestablished in 1991 with two goals in mind: reducing the import price of LNG andLPG feedstocks; and securing a stable energy supply.
The two proposed new vessels will allow Tokyo Gas to take advantage of new
procurement methods such as short-term contracts and spot tradings, as well as totransport LNG procured under long-term contracts. The result will be a further
reduction in LNG import prices and greater purchasing flexibility. Moreover, TokyoGas is seeking to further develop its LNG transportation business in areas such assupplying LNG to third parties.

Key Ingredient For Breakthrough Diagnostic Method
Since 1989, Tokyo Gas has been working on a process to separate and condense 13CMethane from natural gas. The first shipments were made in May 2000, following
completion of a plant to produce 13C-Methane for commercial use—the first of its
type in the world. The 13C-Methane will be processed into 13CO2 by Tokyo Gas Chemi-23

cals and sold to Otsuka Pharmaceutical Co., Ltd. for use in a breakthrough drug thatwe developed with them. The drug diagnoses the existence of Helicobacter pylori, acommon cause of gastritis and gastric ulcers, and will make for more patient-friendly
diagnoses of these ailments.
Looking ahead, Tokyo Gas intends to develop diagnostic drug applications us13

ing C-Methane to detect, for example, diabetes and cerebral disease. By aggressively promoting 13C-Methane in the pharmaceutical raw materials field, Tokyo Gas
will develop new value-added businesses for LNG.

Tokyo Gas Looks to Enter Electricity Retailing andTelecommunications Fields
In July 2000, Tokyo Gas, together with NTT Facilities Inc. and Osaka Gas Co., Ltd.,established a planning company to examine the feasibility of entering the electricity
retailing field. The new company, ENNET Corporation, will draw on the expertiseand in-depth knowledge of these three partners in the energy field to develop highvalue-added electricity operations, taking full advantage of IT to optimize the distribution of energy.
Tokyo Gas has also teamed up with Marubeni Corporation and Global Bandwidth Solutions, Inc., a wholly owned Marubeni subsidiary, to deliver next-generation,
high-speed broadband communications services to end users over the “last mile” inJapan. The “last mile” refers to the crucial final leg of service distribution from thebroadband infrastructure to end users. In this IT age, development of new businessmodels beyond the realm of energy supply that harness the power of IT will beessential growth drivers. By participating in this endeavor, Tokyo Gas has taken an
important first step in its new information and telecommunications strategy. We
expect to build up invaluable experience in the IT field from this venture.
Annual Report 2000 TOKYO GAS