33

Business overview

Service business

SERVICE BUSINESSEngineering Solutions

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

Providing individual solutions
as a bundle
We offer optimal services by bundling a selection of engineeringsolutions that meet the needs of customers based on those
owned by Tokyo Gas Engineering Solutions Corporation(hereinafter “TGES”).

¥146.9 billion FY2018
Segment profits¥6.2 billion FY2018
Net sales

Current model

Bundled service model

Providing case-by-caseengineering solutions

Engineering solutions are bundled toprovide optimal services

LNG
facilities

Energyservice

Pipelines

District heatingand cooling
service Smart
EnergyEnergy usefacilities

Mapping,
Soil etc.

LNG
facilities
Energy service

Pipelines

District heating andcooling service
Smart Energy

Energy use
facilities

Mapping,
Soil etc.

Moreover,Investment
LNG

From Kanto to the whole of Japan, and to the world
TGES was established in April 2015 to integrate the Tokyo Gas
Group’s capabilities in engineering and energy solutions. It has
branches in Nagano, Fukuoka and Okinawa. In Ehime, it jointly
established Niihama LNG Co., Ltd. with four companies that areengaged in business with local firms and other organizations.
Overseas, it operates an energy service business throughGas Malaysia Energy Advance Sdn. Bhd. (GMEA) in Malaysia andthrough TGES America Ltd. in the U.S. An LNG terminalconstruction project is in progress in Thailand.
By partnering with energy suppliers in various regions andutilizing its technological capabilities and know-how, TGES provides
engineering solutions to customers both in Japan and overseas.

Diagram of Engineering Solution Supply
Okinawa Office

GMEA* 2
Supplying electricity and steam toToray Group Malaysia
Supplying electricity to PanasonicAppliances Air-Conditioning Malaysia
Sdn. Bhd.

PlantsMiddle-pressure
pipeline
High-pressure
pipeline

Niihama LNG* 1

TGES America
Nagano Office
Kyushu Office (in Fukuoka)

LNG receivingterminal

Energy (utility)
service center
Middle-pressure
pipeline

Smart Energycenter

Valve station
Governor station

Supplying steam, etc. to Toray Composite
Materials America, Ltd. (CMA)*1 Niihama LNG Co., Ltd. (TGES: 50.1%, Shikoku Electric Power Co., Inc.: 30.0%,SUMITOMO CHEMICAL COMPANY, LIMITED: 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 ENERGY ADVANCE Sdn. Bhd.
(Gas Malaysia Co.:66%, TGES:34%)

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

facilities

SchoolsOffices andhousingcomplexes34

TOKYO GAS INTEGRATED REPORT 2019

Providing engineering solutions leveraging technological capabilities andknow-how developed over almost half a century
The Tokyo Gas Group has handled processes across the entire
LNG value chain for almost half a century, including bothupstream and downstream processes. We offer the knowledge
and expertise that we have accumulated through actually using

the LNG terminals, pipelines, district heating and cooling centersand various other facilities and equipment that we have designed
and built during that time as engineering solutions based onuser’s know-how, to clients both in Japan and overseas.

Engineering business

Energy service business

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.

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, CO 2 -reducing, cost and laborsaving, and BCP (Business Continuity Planning) solutions. We
also continue to evolve and adapt by engaging in new initiatives
such as smart energy networks and regional lending.

Case 1Case 2Thailand: LNG receiving terminal construction PMC

Utility services at the Iwaki City Medical Center(January 2018)(Iwaki City, Fukushima Prefecture)

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 to manage
its Nong Fab LNG Receiving Terminal construction project, and is currently
engaged in associated project management duties.
In recognition of its technological strengths and abundant experience
accumulated through the construction,
operation and maintenance managementat LNG receiving terminals in Japan andoverseas, TGES won this order. It will
carry out the overall management of theproject, including the technological andcontractual aspects, to ensure the design,procurement, construction (safety, qualityand process) and trial operation
performed by the construction contractor
Nong Fab LNG
will be implemented as planned.
Receiving Terminal

Reconstructed at a new location in winter 2018 and designated as a coredisaster hospital, Iwaki City Medical Center has introduced gas
cogeneration to enhance its business continuity and reduce theenvironmental impact. TGES carried out one-stop management of gas
cogeneration and other energy equipment and built facilities throughstationed personnel to provide an environment that allows the client toconcentrate on hospital management. During the introduction, it
collaborated with JobankyodogasCo., Ltd. on gas supply and energy
services. The client, the gas
operators and service operators
respectively contribute to local
medical care in their own roles.

Iwaki City MedicalCenter

Example of bundled servicesImplementation of the Niihama LNG Project
It is a joint project with four other companies: Shikoku Electric Power Co., Inc., Sumitomo Chemical Co., Ltd.,
Sumitomo Joint Electric Power Co., Ltd., and Shikoku-Gas Co., Ltd. The five companies made joint investments
to establish Niihama LNG. Currently, a new LNG terminal is being constructed on the premises of the Ehime
Works of Sumitomo Chemical. Niihama LNG will accept LNG at the terminal and operate the terminal, including
gasification. Natural gas and LNG will be supplied to the Ehime Works, the natural gas thermal power plant built
by Sumitomo Joint Electric Power and the neighboring district. This project will spread the use of natural gas.
TGES will capitalize on its engineering abilities in design, construction and operation for the construction of theterminal and the pipeline. It will push ahead with demand cultivation using its diverse know-how gained byengaging in energy solutions.

New business development in Southeast Asia

My duties are to develop the district heating and cooling business outside Japan. In
Southeast Asia, economic growth is accelerating urban development. The introductionof district heating and cooling systems is predicted to quicken. TGES has around 50
years of experience as Japan’s largest district heating and cooling operator, although it
is a new entrant overseas, where it lacks a track record. In the tough competitiveenvironment, we are careful to respond swiftly and sincerely in business talks andinvolve concerned parties to persistently advertise the Tokyo Gas Group’s latest
technologies, proven track record and reliability. Now it is vital to win a first project thatwill serve regional development using the technologies cultivated in Japan. We willcontinue to work with an eye towards developing peripheral businesses, such as energy
services and the expansion of the smart energy network.

Message
Masahiro Suzuki
Overseas Business DivisionTokyo Gas EngineeringSolutions Corporation

Niihama LNG Terminal

35Business overview

Service business

SERVICE BUSINESSUrban Development Service (Real Estate)

OutlineOver the course of 130 years in business, the Tokyo Gas Group has
acquired large-scale and medium-scale properties (areas of land) with highutilization value, in high-profile areas such as Shinjuku, Ginza, Tamachi andToyosu. Utilizing sites which it owns but which are no longer required forbusiness purposes, and with a primary focus on city center areas, theGroup operates an office and residential real estate leasing business,working around the basic concept of securing stable revenues andimproving asset value. It will work on joint projects with business partners
in an effort to expand the regional development services business.

¥44.6 billion FY2018
Segment profits¥9.1 billion FY2018
Net sales

Chiyoda-ku

Toranomon

Tokyo Station
Chuo-ku

Shibuya-ku

Koto-ku

Shimbashi Station
Shiba
Minato-ku

TamachiToyosuMeguro-ku

Shinagawa-ku

ShinagawaStationmsb Tamachi(musubu Tamachi)

Type 1 Urban
Redevelopment Projectin the Toranomon
2-Chome District

Office leasing business
msb Tamachi (musubu Tamachi)
At our property which connects directly to the East Exit of Tamachi
Station on the JR Yamanote Line, we are engaged in thedevelopment of a smart energy network and enhanced BusinessContinuity Planning (BCP) functionality (such as by installing dual-fuelemergency generators that can run on both heavy fuel oil and citygas). Through this project, we aim to contribute to the local
community by creating an advanced and appealing urban
development and real estate leasing business. Phase I of thedevelopment (Tamachi Station Tower S and Pullman Tokyo Tamachi)
was completed in May 2018, and it is now followed by Phase II(Tamachi Station Tower N). We are striving to finish it in fiscal 2020.
Note: Phase I: Land leasing business, Phase II: Office leasing business(based on Tokyo Gas capital investment)

Shiba Park Building

JR Tamachi StationPullman Tokyo
Tamach*1
PedeastriandeckNagisa
Terrace*2

Tamachi
StationTower STamachi
StationTower N

Minato Park Shibaura

Shibaura
Nursery School

Shibaura Park

Redevelopment areamsb Tamachi (musubu Tamachi)

Aiiku
Hospital*1 Hotel*2 Commercial Building

Type 1 Urban Redevelopment Project in theToranomon 2-Chome District

Shiba Park Building

The Tokyo Gas Group takes part in the consortium for theconstruction of a large complex that will mainly accommodate offices(scheduled to be completed in November 2023) and for theacquisition of its reserve floor area in the redevelopment project at
the former site of the Toranomon Hospital, near Toranomon Stationon the Tokyo Metro Ginza Line and Tameike-Sanno Station on theGinza Line and on the Namboku Line.
Around the project site, there are a number of other ongoingredevelopment projects. The district is gaining significant attention,
because it will undergo a dramatic change in the next couple of years.
We will be committed to the project to contribute to energization ofthe entire area.

It is a rare, large office building in Tokyo, with a single floor area ofapproximately 6,000m 2 and located within walking distance from JR
Hamamatsucho Station, and Daimon Station and Shiba-Koen
Station on the Toei Subway. We have acquired it and now jointly
operate it with five companies, including Kanden Realty &Development Co., Ltd.
We and Kansai Electric Power Co., Inc., a parent company ofKanden Realty & Development, Co., Ltd. have concluded a strategic
partnership in the real estate business. Acquisition of this property
is the first achievement of the partnership between the twocompanies. We will continue to share know-how, consider joint
projects and take other actions that enrich the partnership.

36

TOKYO GAS INTEGRATED REPORT 2019

Toyosu mixed land area property development

Residential leasing businessWe are also engaged in proactive leasing business
operations on small to medium-sized properties(as of March 2019, 13 buildings with 326 residentialunits). As we head towards the 2020s, we will aim
to achieve further business growth and expansion,as we acquire more real estate properties in orderto create good quality assets that are well-suited
to leasing. In October 2019, construction of arental housing complex in Nerima-ku, Tokyo,
provisionally named Toyotama Rental Housing
Complex, is scheduled for completion.

The Toyosu area is situated in a prime
location, approximately 4km away fromTokyo Station. With significant events
such as the opening of the new Toyosu
Fish Market in October 2018 and thecoming 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 development in Toyosu
that will include both residential andcommercial properties, in a development
area covering approximately 17ha.

Intended location of the Tokyo 2020
Olympics and Paralympics Athletes’ Village
Toyosu-ohashi
BridgeHarumi-ohashi
BridgeTokyo Gas
Group site

ToyosuMarketToyosu
MarketFujimi Bridge

ShijoumaeStationShintoyosu
StationAriake NorthBridge

Kiyari Bridge

ToyosuStationToyosu MarketToyosu Smart Energy Center

Yurikamome

Ariake Tennis noMori Station

Intended location of the Tokyo 2020 Olympics andParalympics Stadium

Initiatives Towards Achieving the Sustainable Development Goals (SDGs)

We are conducting urban development to construct urban districts where communities
are in harmony with the environment. Using gas cogeneration systems, renewable energyand suchlike, the smart energy network improves energy conservation, eco-friendlinessand disaster control qualities.

Promotion of GPS for households
Broadening the array of Service items through co-creation

The Tokyo Gas Group will combine services matched with customers’ lifestyles
through its proposal of gas and electricity supply to provide greater economic
value, peace of mind, simplicity and convenience for customers. To further satisfy
their requests, we are expanding the co-creation of services developed withbusiness partners, including business ventures. We will consider investing inpartner companies if a higher level of synergy is expected.

Gas

Tariff for gas;
General Tariff, Always
Gas, Specified Gas

Extended
Existing

Delivering vitality
Delivering reassurance

Safety and reassurance

Tariff for electricity;
Always Electricity 1S,
PowerAlways Electricity 1~3(Electricity)- Always Reliable Services
including Gas Fixture Special
Support and Residential
Monitoring Services

Housing fixtures- Always Home Support
including minor home
improvements and renovations,home services such as cleaning,tidying up and storage

A wide variety of services that build
closer ties with customers
Utilization of IoT and digital technologies

Lifestyle-related services- Service content to be expanded in Residential
Monitoring Services and others- Service offering all manuals for housing fixtures

Services

P32

Food and health- Broadening the array ofproducts and services against
heat shock response- Home services (mealpreparation) and others
1

Utilization of IoT anddigital technologies 2- Sleep and fatigue relief
support services- Voice content services

3

Existing

Overall facilities
1Expansion of co-creationand consideration ofinvestment
We will integrate our knowledge andexpertise with business partners toprovide vitality in addition toreassurance.

Gas and electric appliances, housing fixtures and equipment,renovations, leasing and credit(Co-creation) Home services

We offer home services to customers in collaboration with Kajitaku Co., Ltd., which operates meal
preparation, cleaning and tidying and storage services. Especially for the meal preparation service, Tokyo
Gas offers premade recipes to KAJITAKU CO., Ltd based on its know-how cultivated by running cooking
classes since 1913 and giving food preparation guidance to its employees.
2(Co-creation and investment) Sleep and fatigue relief support services

We have formed a capital and business partnership with EcoNaviSta Co., Ltd. to jointly develop services
that will support customers’ health.

3(Co-creation and investment) Voice content services

We have formed a capital and business alliance with OTOBANK Inc. to jointly develop voice content thatis helpful for putting young children to sleep, meal preparation and other daily situations.