ProfileTokyo Gas Co., Ltd. is Japan’s largest provider of city gas, serving more than 10 million customers, primarily in the Tokyo
metropolitan area and surrounding Kanto region, an economic zone that accounts for around 40% of the nation’s GDP.
Since energy resources are scarce in the Japanese archipelago, Tokyo Gas converts LNG to city gas at its LNG terminals, and supplies the city gas through a pipeline network. We also sell gas appliances and conduct repairs andinspections. In addition to sales and services at customer sites, we participate in resource development projects andare advancing our LNG transport business using our own shipping fleet.
A key strength is our “LNG value chain,” which extends from upstream through to end-users. Deploying this strength,
we not only supply natural gas in a safe and reliable manner, but also operate an “integrated energy business, with natural gas at its core,” which delivers solutions for diverse energy needs on a one-stop basis, including electric power,
heating, and renewable energy.

Natural gas resource development— Participation in upstream projects (Darwin, Pluto, Gorgon, etc.)

Procurement, transportation— Long-term LNG procurement contracts with 10 projects
in six countries— LNG transportation via own shipping fleet

Production, power generation
Tokyo Gas’s LNG Value Chain— City gas production— LNG-fired thermal power generation
business

Supply— City gas supply via pipelines— LNG supply via LNG lorries— Wholesale supply to other gas suppliers

Sales, services— City gas supply for residential, commercial and others, and industrial uses
— Energy services

Features of Gas Business in Japan
Unlike in Europe and the U.S., where gas production and gas con-

Breakdown of Primary Energy Consumption(Japan, the U.S., Europe)%

sumption locations are connected via pipelines, in Japan, liquefied
natural gas (LNG) is brought in by ship, converted to city gas, anddelivered to end-users mostly via pipelines. Because this entails

100

significant costs, the share of total primary energy supply by natural gas is relatively low in Japan compared with Europe and the U.S.
However, natural gas is winning growing acclaim for its environmental benefits, as it gives off lower CO2 and NOx emissions thanother fossil fuels. In addition, demand for natural gas in Japan isgrowing year by year as pipelines are extended.

60

1.0
3.9
13.2

80
24.7

1.7
2.6
8.4

2.3
6.6
9.2

22.9

16.4
Renewable energy

37.2

40

31.1

40.2

Hydro power
Nuclear power
Coal

20
17.0

27.2

34.4

Oil
Natural gas0Japanthe U.S.

EuropeSource: BP Statistical Review of World Energy, June 2011

Tokyo Gas’s Two Growth Drivers

1

Environmental Benefits of Natural Gas

Environmental advantage: Natural gas is the cleanest of all fossil fuelsCompared with other fossil fuels, natural gas emits lower volumes of carbon dioxide (CO2) and nitrogen oxides (NOx) whenburned and emits no sulfur oxides (SOx). Accordingly, it has an extremely low environmental impact. Moreover, the International
Energy Agency (IEA) estimates that natural gas usage will increase in its “BLUE scenarios” for reducing CO2 emissions by 50%(from 2008 levels) by 2050.
In addition, city gas can be used for power generation in necessary places, and heat thus emitted can be used to heat waterand power air-conditioning systems. Thanks to the technological progress of such “gas cogeneration” and other dispersed
power sources, the role of natural gas continues to grow.
Comparison of Emissions (Coal = 100)

CO2NOX100
8060

SOX100
70

Coal

Oil70

Oil40

Natural gas

100

Coal

Coal

Oil0

Natural gas

Natural gas

Forecast for Global Energy Supply under Various IEA Scenarios
Primary Energy Supply (million tons crude oil equivalent)2005 Actual

9,000

Even in the scenario under which theatmospheric concentration of CO2 in 2050
is reduced to the lowest level, the useof natural gas is expected to increase.

6,000

Baseline scenario: Current conditions continue
ACT Map 2050 scenario: Atmospheric concentrationof CO2 in 2050 is reduced to 550 ppm or lower
Blue Map 2050 scenario: Atmospheric concentrationof CO2 in 2050 is reduced to 450 ppm or lower

+34%
–27%

3,000–18%

According to the Intergovernmental Panel on Climate
Change (IPCC), to prevent a variety of adverse factors
leading to climate change on a global scale, the atmospheric
CO2 concentration needs to be reduced to less than 450ppm (IPCC Fourth Assessment Report).

0Natural gasOil

Coal

Nuclear power

Biomass Other renewableenergyStable supply: Development of unconventional gases greatly
extends reserves-to-production ratio
Compared with “conventional gases” extracted from oil and gas fields,“unconventional gases” can be extracted from solid rock. In the past, technological limitations have prevented development of such gases at the extraction
and production stages. Thanks to recent technological innovations, however,unconventional natural gases, such as coal-bed methane (CBM), shale gas, andtight sand gas, have started to enter full-scale use. In addition to CBM, TokyoGas also participates in a shale gas development project.
Unconventional gases can be found all around the world and clearly exceed conventional gases in terms of resource volume. Accordingly, the reserves-to-production
ratio for natural gas will greatly surpass the current ratio of around 63 years.

Reserves of Conventional andUnconventional Gases
Unit: Trillion cubic feet (TCF)

CBM
10,16921%
Tight sand gas
7,406

15%

Conventional
gases
15,40131%
Shale gas
16,10333%
Source: Tri-zen, USGS, SPE2

Advantageous Service Area

One of the world’s largest economic zones

Breakdown of GDP of Japanby Major Area

While the population of Japan is declining, there is a net inflow trend in theTokyo metropolitan area, one of the world’s largest economic zones. The Kantoregion, which extends for a 200-kilometer radius around Tokyo, accounts for(Year ended March 31, 2009)

Tokyo area

39.4%

around 40% of Japan’s GDP. Thanks to an abundance of flat terrain and extension of pipelines, the Kanto region is expected to see an increased demand forfuel conversion in main areas of industrial concentration. This highlights a major
strength for Tokyo Gas, whose business base is the Kanto region, Japan’slargest source of energy demand.

Total ¥505 trillion
39.4% Tokyo area: Tokyo, Kanagawa, Saitama, Chiba, Ibaraki,Tochigi, Gunma, Yamanashi, and Nagano prefectures
15.8% Osaka area: Osaka, Hyogo, Kyoto, Shiga, Nara,and Wakayama prefectures
9.6% Nagoya area: Aichi, Gifu, and Mie prefectures
Source: Cabinet Office, Government of Japan, National Accounts of Japan

Share of Tokyo Gas ofTotal City Gas Sales Nationwide(Year ended March 31, 2011)

Tokyo Gas total

44.9%

44.9% Tokyo Gas total 14,745 million m3
10.7% Residential
9.3% Commercial and others
19.0% Industrial
5.9% WholesaleTokyo area

Japan total 32,805 million m3
Source: The Japan Gas Association web site,(Gas Sales Volume JGA Newsletter)
The figures are calculated on the basis of 45 MJ/m3.
Note:

The above figures do not include the sales volume ofeight city gas companies in the Tohoku Region affectedby the Great East Japan Earthquake.

Sales of industrial-use gas as a growth driver

Industrial-use Gas Sales Volume

Japan’s three major city gas providers —Tokyo Gas, OsakaGas, and Toho Gas — together account for 80% of the nation’sgas supply. Of this total, the sales volume of Tokyo Gas has(Years ended March 31)

reached 45% of the nationwide total. Amid growing environmental awareness among corporations, industrial-use gassales volumes have exceeded residential-use volumes since
fiscal 2000, providing a driving force for overall sales growth.

Million m3

10,0006%/year

8,000
6,000

9%/year

4,000
2,000
000 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Estimates