TOKYO GAS ANNUAL REPORT 2018

Business overview

Service business

From Kanto to the whole of Japan,
and to the world
Tokyo Gas Engineering Solutions Corporation (TGES) wasestablished in April 2015, by integrating the Group’s
capabilities in engineering and energy solutions. In April 2017,
TGES opened new offices in Nagano and Fukuoka. Following
on from this, in April 2018 we also opened a new office inOkinawa, while in Ehime Prefecture we established Niihama
LNG Co., Ltd., as a joint venture with four other companies,
including local companies, that will engage in engineering
service business operations together with TGES.
By partnering with energy suppliers in various regions and utilizing
its technological capabilities and know-how, TGES provides
engineering solutions to customers both in Japan and overseas.

Engineering Service

GMEA*2
Supplying electricity andsteam to Toray Group Malaysia

Okinawa Office

OutlineFor almost half a century, since introducing LNG to Japan for the
first time in 1969, Tokyo Gas has consistently handled processes
across the entire LNG value chain, including both upstream anddownstream processes, from procurement and transportation tomanufacturing and supply, sales and energy solutions.
Utilizing the technological capabilities and know-how developed
through these processes, Tokyo Gas provides one-stop solutions
to match the needs of customers both in Japan and overseas,
including LNG terminals, pipelines, district heating and cooling, andenergy services.
Net sales

Operating profit¥118.1 billion¥3.5 billion

FY2017*1 Niihama LNG Co., Ltd. (TGES: 50.1%, YONDEN Shikoku Electric Power Co., Inc.: 30.0%,Sumitomo Chemical Co., Ltd.: 9.9%, Sumitomo Joint Electric Power Co., Ltd.: 5.0%,Shikoku-Gas Co., Ltd.: 5.0%)*2 GAS MALAYSIA ENERGY ADVANCE Sdn. Bhd. (Gas Malaysia Co.:66%, TGES:34%)

FY2017

Diagram of Engineering Solution Supply

By bundling TGES’ various engineering solutions to cater tothe specific needs of customers, we provide an optimalengineering service.

Current model

Bundled service model

Providing case-by-caseengineering solutions

Engineering solutions are bundled
to provide optimal services
LNG
facilities
EnergyPipelines
service

Energyservice

Pipelines

District heating
and cooling service
Smart Energy

Energy use
facilities

Mapping,Soil etc.

Energy use
facilities

District heating andcooling service Smart
EnergyMoreover,Mapping,Investment

Soil etc.

TGES America
Supplying steam, etc. to Toray
Carbon Fiber America

Nagano Office
Kyushu Office (in Fukuoka)

Providing individual solutions as a bundle

LNG
facilities

Niihama LNG*1

LNG

PlantsMiddle-pressure
pipeline
High-pressure
pipeline

LNG
receivingterminal

Energy (utility)
service center
Middle-pressure
pipeline
Smart Energycenter

Valve station
Governor station

Medical facilities
Gas network
Heat network
Electricity network
Hotels andUtility networkcommercial facilities
ICT network

SchoolsOffices andhousing
complexes

Niihama LNG ProjectBundling engineering and energy services
Niihama LNG Project: Constructing an LNG terminal in collaboration withYONDEN (Shikoku Electric Power) and the Sumitomo GroupIn this joint project together with YONDEN Shikoku ElectricPower Co., Inc., Sumitomo Chemical Co., Ltd., Sumitomo
Joint Electric Power Co., Ltd. and Shikoku-Gas Co., Ltd., wewill construct a new LNG receiving terminal at the site ofSumitomo Chemical’s Ehime Works, and supply gas both toEhime Works itself and to a new natural gas-fired thermal

29power station that is to be constructed by Sumitomo Joint
Electric Power.
The LNG terminal, which will be the largest in the Shikoku
region, is scheduled to commence operation in FY2021, withTGES participating in its design and construction, as well as
LNG demand development.

Introduction

Providing engineering solutions leveraging technological capabilities
and know-how developed almost half a century

Engineering business

Thailand: LNG receiving terminal construction PMC(January 2018)

Utility services at Osaki Citizen Hospital(Osaki, Miyagi Prefecture)

TGES has constructed a multiplex energy system at Osaki Citizen
Hospital that combines a city gas fueled cogeneration system and boilers
with heavy fuel oil and pellet boilers.
In addition to enhancing the client’s energy-saving and BCP
characteristics, the system has also created an environment in which
the client can concentrate on hospital administration, by taking over therole of energy-related equipment management, which was a significant
burden to the client in the past.
The installation of this system is also contributing to an increase in gas
sales volume for Furukawa Gas Co., Ltd., which supplies city gas to theclient, making this project a triple win for the client, gas operator andservice provider.

Osaki Citizen Hospital

Energy services for Toray Group(Malaysia and United States)

PPT LNG Map Ta Phut Receiving Terminals

Case2

Bangladesh: LNG terminal feasibility study, etc.
(July 2017)

Message
Niihama LNG Co., Ltd.

Naoya Murata

Financial data

In the Niihama LNG Project, companies from industries with different backgrounds and different values are coming together to build andoperate a single LNG terminal. We consider this to be an ideal project format for creating new energy infrastructure, where companies
concentrate their various individual strengths and expertise to contribute to the advancement of the local economy and reducing
environmental impacts, in addition to furthering their own mutual interests.
In FY2016, I was responsible for sales to the Sumitomo Chemical Group, and since FY2017 I have handled discussions with eachpartner company regarding the conversion to joint business operations. Because the negotiations involved multiple companies withdifferent backgrounds and values, there were some difficult situations, but each of the companies brought their own strengths to thetable, and with our passionate enthusiasm we were able to overcome numerous hurdles and eventually achieve the establishment of
the joint venture company in April 2018.
Currently, all project members are running around Niihama City, working hard to get the blood of this newly born company pumping as it should.
Moving forward, too, I will continue to make my very best efforts, together with the assembled members from other firms who havecome together for this project, as we work towards beginning the construction this October, commencing operation in FY2021, andachieving the subsequent advancement of the entire local area and the reduction of our environmental impact.

Invisible assets

TGES was awarded a joint feasibility studies and engineering contract(together with Nippon Koei Co., Ltd.,) by Petrobangla (Bangladesh Oil,Gas and Mineral Corporation) regarding the feasibility of land-based LNG
receiving terminals. The project represents the first order to be received by
the Tokyo Gas Group in Bangladesh.
Although Bangladesh does produce natural gas itself, it currently faces asituation in which voracious demand is exceeding the country’s existing
supply capabilities, and the project aims to tackle this situation.

TGES has been commissioned to deliver energy services to overseas
plants owned by the Toray Group (a Japanese corporate group). Theservices include the construction of energy plants with gas cogeneration
systems, boilers, and other equipment (such as for air-conditioning
and water treatment), and the efficient all-inclusive supply of electricity,
steam, water and other resources generated using those plants.
Through efficient plant design and maintenance based on our extensive
past construction and operational record, we will seek to achieve energysaving benefits and long-term cost reductions through the delivery ofoptimal energy systems.

Corporate governance

Case2

Business overview

In 2014, TGES was awarded an order for assignment as a project
management contractor (PMC) for the capacity expansion construction
project at PPT LNG Map Ta Phut LNG Receiving Terminals, Thailand.
TGES was subsequently awarded another PMC contract by PTT LNG tomanage its Nong Fab LNG Receiving Terminal construction project, and iscurrently engaged in associated project management duties.
These projects involve the construction of new terminal facilities as part ofa plan to increase LNG receiving capacity, in order to cater to the growth inenergy demand in Thailand due to the nation’s economic development.

Case1

Overall image after
full deregulation

Case1

Through its energy service business, TGES supplies heat,electricity, water and air by building systems—which focus
primarily around gas cogeneration, but also incorporate renewable
and unharnessed energy sources—to meet customer needs that
include energy-saving, CO2-reducing, cost and labor saving, andBCP (Business Continuity Planning) solutions.
We also continue to evolve and adapt by engaging in new
initiatives such as smart energy networks and regional lending.

GPS2020

Based on accumulated user’s know-how, the Tokyo Gas Group
provides total, optimal engineering solutions, including those forafter facilities commence operation. Since the 1980s, the Grouphas built up a track record of achievements both in Japan andoverseas, and is involved in numerous projects in regions such asAsia, where growth in demand is becoming increasingly evident.

Energy service businessMessage

The Tokyo Gas Group has handled processes across theentire LNG value chain for almost half a century, including
both upstream and downstream processes.
We offer the knowledge and expertise that we have accumulated
through actually using the LNG terminals, pipelines, district heating
and cooling centers and various other facilities and equipment that
we have designed and built during that time as engineering solutions
based on user’s know-how, to clients both in Japan and overseas.

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TOKYO GAS ANNUAL REPORT 2018

Business overview

Service business

Office leasing business
msb Tamachi (musubu Tamachi)
At our property which connects directly to the East Exit ofTamachi Station on the JR Yamanote Line, we are engaged inthe development of a smart energy network and enhanced
Business Continuity Planning (BCP) functionality (such as byinstalling dual-fuel emergency generators that can run on bothheavy fuel oil and city gas). Through this project, we aim tocontribute to the local community by creating an advanced andappealing urban development and real estate leasing business.
Phase I of the development (Tamachi Station Tower S andPullman Tokyo Tamachi) was completed in May 2018, and weare currently working with the aim of completing constructionof Phase II (Tamachi Station Tower N) in FY2020.
Note: Phase I: Land leasing business, Phase II: Office leasing business(based on Tokyo Gas capital investment)
JR Tamachi Station(Yamanote Line)

Urban Development Service (Real Estate)

Hotel

Tamachi
StationTower N

Pedestrian
deckOutline

Net sales

Operating profit¥42.3 billion¥7.9 billion

FY2017FY2017

Chiyoda-ku
Shibuya-ku

Shimbashi
StationMinato-ku Tamachi

Tokyo Station
Koto-kuChuo-kuToyosuSetagaya-ku
Meguro-ku
Shinagawa
StationShinagawa-ku

Ota-kumsb Tamachi (musubu Tamachi)Sustainable Development Goals
Initiatives Towards Achieving the Sustainable Development Goals (SDGs)

Tamachi
StationTower SStoresOver the course of 130 years in business, the Tokyo Gas Group has
acquired large-scale and medium-scale properties (areas of land)with high utilization value, in high-profile areas such as Shinjuku,Ginza, Tamachi and Toyosu. Utilizing sites which it owns but which
are no longer required for business purposes, and with a primary
focus on city center areas, the Group operates an office andresidential real estate leasing business, working around the basic
concept of securing stable revenues and improving asset value.

Urban PlanningPark(Shibaura Park)

msb Tamachi

Residential leasing businessWe are also engaged in proactive leasing business operations
on small to medium-sized properties (as of March 2018, 9buildings w/ 204 residential units). As we head towards the2020s, we will aim to achieve further business growth andexpansion, as we acquire more real estate properties in orderto create good quality assets that are well-suited to leasing.
In May 2018, we commenced construction of a rental housing
complex (provisionally named Toyotama Rental HousingComplex) in Nerima-ku, Tokyo.
Toyosu mixed land area property development
The Toyosu area is situated in a prime location, approximately 4km awayfrom Tokyo Station. With significant events ahead such as the opening of thenew Toyosu Fish Market in October 2018 and the hosting of the Olympic andParalympic Games in 2020, the area is now attracting even greater attention.
The Tokyo Gas Group aims to create a new mixed land area developmentin Toyosu that will include both residential and commercial properties, in adevelopment area covering approximately 17ha.

Intended location of the Tokyo 2020
Olympics and Paralympics Athletes’ Village
Toyosu-ohashi Bridge

Harumi-ohashiBridge

Tokyo Gas GroupsiteToyosu
MarketToyosu
MarketFujimi Bridge

Shijoumae
StationToyosu Market

Shintoyosu
StationToyosu Smart Energy Center
Ariake NorthBridge

Kiyari Bridge

Ariake Tennis no Mori
StationIntended location of the Tokyo 2020 Olympics andParalympics Stadium

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Aiiku
Hospital

Redevelopment area

Urban Development in Tamachi Station East Exit area (North Zone)
In the Tamachi Station district, Tokyo Gas is engaged in an attractive urban
development project, in which offices, public facilities, hotels, hospitals
and other buildings coexist with the surrounding environment. Through theimplementation of a smart energy network that utilizes gas cogeneration
systems, renewable energy and other smart energy features, we are helping
to improve the area’s energy-saving, environmental and disaster-readinesscharacteristics.

SocialServices
Facility

Minato Park
Shibaura

ToyosuStationYurikamome

Optimal proposals withElectric PowerServices
Optimal proposals, implementation and maintenancefor energy facility and equipment
Smart management utilizing smart meters, IoT and AILifestyle and business support
New value-added proposals to address low-carbon,
digitalization and new technologies

Residential Customers

Always Plan (total energy service plan)

Tokyo Gas's Always Plan

Electric PowerServices

Always Electricity+ Points linked toelectricity rates+ Gas and electricity
package discount

Always Reliable
Services
Simple, convenient web
services
Fiber-optic
communications
services

As working cupple we arebusy and want to shorten
the amount of time we
spend on housework.

Using our website orCustomers can call us right
myTOKYOGAS, customers
away at our customer call A nearby Lifeval or Enesta
can complete any
center with any questions representative will visit you necessary procedures ormake use of our services at
at your home.
about rates or appliances.
their convenience.

EnergyFacilities / equipment

Services

Gas
LPG
Electricity

Gas fixtures andappliances
Housing fixtures andappliances
Electrical fixtures andappliances
Remodeling

Trouble with waterequipment and facilities
Residential monitoring
Housework support
Maintenance
Energy conservation
consulting
New areas…

Gas and electricity
usage data

Condition of customer
equipment/appliances
Past visit history

Data for devices using IoT

The Tokyo Gas Group

Commercial and Industrial Customers

Smart Menu Development
With a view toward the low-carbon society of the future, weare also working to develop a “smart menu” of services,which will introduce and utilize features such as demand
response, renewable energy and storage cells (accumulators).

CaseStudy

Saku Central Hospital

What is Demand Response Service?

Demand response is a mechanism whereby electricity users adjust their volume ofdemand in order to match the balance of supply and demand of electric power. The
Tokyo Gas Group provides this demand response service as a response to open callsfrom general transmission and distribution operators for load adjustment capabilities.

Financial data(Nagano Prefecture)

At Saku Central Hospital in Nagano, we areachieving energy conservation and cost
reductions through regional energy use
between multiple buildings. We are also utilizing
renewable energy, through the installation of awoodchip-fueled biomass boiler. From a BCP
perspective of ensuring operational continuity,
we introduced a cogeneration system thatrestarts operation automatically in the eventof a power outage, and adopted mediumpressure gas supply pipes offering a high level ofresistance to seismic activity.

SupplementaryInformation

Invisible assets

Energy Solutions Business
Through the promotion and expansion of widespread natural
gas usage by extending its pipeline network and increasing
lorry-based supply, and by providing a competitive supply ofelectric power to large-scale customers in cooperation withpartners such as ENNET and Synergia Power, Tokyo Gas isproviding energy solutions that achieve benefits such asenergy conservation, CO2 reductions and cost reductions
for customers.

Corporate governance

Combine services to support
daily life and deliver value
for money, peace of mind,
simplicity and convenience

I want to talk tosomeone about aplumbing problem.

Business overview

GasAlways Gas+ Points linked to gas
rates

Provide optimal energy supplies that arealigned with customers’ actual energy use

CustomerCan I make my monthly
utility bill lower?

&Tariffs for the specificgas equipments(“Danran Plan”, etc.)

Tokyo Gas has prepared an extensive menu of lifestyleservices to cater to the life stages and requests of individual
customers, and has developed a platform that will offer
one-stop services in combination with gas and electricity.

Overall image after
full deregulation

The Always Plan is a total energy service plan that combines
a gas and electricity packaged discount with various services,which customers can choose freely. Through the plan, Tokyo
Gas aims for customers to enjoy value for money, peace ofmind, simplicity and convenience.

When you have any troubles in your life,
think of Tokyo Gas

GPS2020Work to achieve more widespread use ofcity gas and LPG
Increase numbers of customers for whom we provide
gas and electricity services as a set by proposing
optimal energy plans that combine gas and electricity
as only Tokyo Gas canMessage&Gas

Introduction

With GPS×G, Tokyo Gas is delivering not only gas, but gas and electricity as aset package to all customers.
In addition to proposing optimal gas and electricity plans, we will combine
them with other services that meet customers’ lifestyle and business needs,
and use various means to deliver them to a greater number of customers.

A biomass boiler and woodchips

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