At the Frontier of Change

Building a More Powerful Supply Infrastructureand Strengthening Procurement
Our gas operations are supported by Japan’s largest gas supply infrastructure. Terminal and pipeline construction over many years has given us the capability of meeting increases in demand over the next decade.
To clinch demand in areas in the Kanto region where demand is expected to increase, we will construct two
new pipelines: the Tochigi Pipeline and the Minamiashigara Pipeline. Moreover, the ownership of LNG carriers will facilitate the efficient transportation of feedstock. All our actions are focused on the achievementof the dual goals of ensuring a stable supply and efficient management.

Backed by a Powerful Production and Supply BaseTokyo Gas’ 48,000km pipeline system supplies a customer base of 8.9 million. Our service area, metropolitan Tokyo andneighboring prefectures, has the highest gas demand in Japan.
Tokyo Gas has made strategic investments to bolster its supply capability to cater to this demand. In 1998, the Ohgishima
LNG Terminal came on stream, and this was followed in 1999 with the completion of the Keihin Transmission Pipeline and theYokohama Transmission Pipeline. Today, Tokyo Gas has in place a 300km-long supply loop encircling the greater Tokyo areathat is connected by high-pressure pipes to our three LNG terminals: Negishi, Sodegaura and Ohgishima. This loop-system hasbolstered our ability to provide customers with a reliable supply of gas.
Our pipeline infrastructure will also underpin our expansion beyond our traditional service area, as deregulation opens
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windows of opportunity. We intend to take maximum advantage of our strengths as a leading presence in the industry toexpand our customer base.

New Pipelines to Cater to New Demand
Having evaluated the potential returns on its investment, Tokyo Gas intends to aggressively enter regions where gas demandis expected to increase and to build and extend its supply infrastructure in this vein. Tokyo Gas has been building pipelines toservice the northern part of the Kanto region. In the Utsunomiya area of Tochigi Prefecture, a rising population is predicted tospur a further increase in gas demand. Our new Tochigi Pipeline will ensure a stable supply to this area. Currently, domesticallyTokyo Gas will become the firstutility company in Japan’s powerand gas industry to independently
own an LNG carrier.

The Sodegaura LNG Terminalis the world’s largest LNG
receiving terminal.

TOKYO GAS Annual Report 2001

Utsunomiya Line

Other Company Line

Utsunomiya

Tochigi
Tochigi Line (2006)
Sano
Kumagaya-Sano Line (2004)
Kumagaya

Saihoku Line (2001)

IbarakiSecond Joso Line (2003)
Other Company Line

SaitamaTokyo
HeadOffice

ChibaTokyoBay

The Keihin Transmission Pipeline and theYokohama Transmission Pipeline, both completed in 1999, link Tokyo Gas’ three LNG terminals in the Tokyo Bay area with a loop of
high-pressure pipes. This has enabled Tokyo Gas
to respond to rising industrial demand in theKeihin district near Yokohama, provide a morereliable supply of gas in the greater Tokyo areaand meet rising demand in the future. Plans callfor constructing new pipelines in Tochigi,
Minamiashigara and other areas to further
expand and strengthen Tokyo Gas’ supply system.

Second Chiba Line
YokohamaShonan Line
(2002)

Ohgishima
LNG Terminal

Sodegaura LNG Terminal

Tokyo Gas’ Pipelines
High-pressure transmission pipelines
Under construction
PlannedMedium-pressure transmission pipelines( ) Proposed year of completion
Tokyo Gas service area

Negishi LNG TerminalMinamiashigara(Length of pipeline: 47,908km)

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produced natural gas is used as a feedstock in the Utsunomiya service area. When complete, the new Tochigi Pipeline will
sharply increase our transportation capacity to this area, enabling the supply of gas derived using LNG from terminals in Tokyo
Bay. Our objective is to also capture large-volume demand from industrial areas neighboring the new pipeline. About 70 km
in length, the new pipeline is slated for completion in 2006.
The Minamiashigara area in Kanagawa Prefecture is another service area we will extend our reach to with the newMinamiashigara Pipeline that is scheduled for completion in 2003. Deregulation has opened the way to the start of supplies tolarge-volume customers in this area. The development of demand through advancement into deregulated areas outside ourservice area will be a key corporate theme moving forward. We thus intend to continue extending the reach of our pipelines.
On the sales front, July 2001 saw the establishment of the Inter-Regional Sales and Service Division to promote widerranging supply and development of demand. An integrated structure will allow us to grasp customer needs and present bestfit proposals for using gas in an expanding service area.

Constructing an Efficient Procurement System Centered on Company-Owned LNG Carriers
As part of our efforts to strengthen procurement, a Tokyo Gas subsidiary, Tokyo LNG Tanker Co., Ltd., is building two LNG
carriers. Up to now, Tokyo Gas has jointly owned two LNG carriers with shipping companies and other gas companies. TokyoGas will have full ownership of the two new carriers which will lower freight charges and consequently lower feedstock costs.
Thus procurement efficiency will be raised and Tokyo Gas’ competitiveness bolstered. Tokyo Gas will also be able to takeadvantage of short-term contracts and spot trading, as well as long-term contracts with the two new LNG carriers. In thefuture, we plan to expand our scope of operations by offering transportation services to third parties.

Annual Report 2001 TOKYO GAS