37Business overview

Overseas business

OVERSEAS
BUSINESS
OutlineWe have expanded and increased overseas bases and staff, andhave participated in LNG or natural gas related business projects
in Australia, North America, and Southeast Asia, all in order tomake overseas business another major source of growth for theTokyo Gas Group, as indicated in the Challenge 2020 Vision.
Looking ahead, in addition to conducting discussions with a view
to further business development, we will also work to ensure
efficient distribution of management resources as we advance ouroverseas business operations.

¥50.9 billion
Segment profits ¥15.3 billion
Net sales

Know-how in the midstream and downstream
businesses accumulated in Japan
Global network established through activities
such as material procurement and businessparticipation

Strengths

Net sales and Segment profits(billion)

Net sales (LH)

Risks

FY2018FY2018Business operations may be stalled, or the burden of expenses
may increase, as a result of country-specific laws, regulations
and/or business practices
Fluctuations in crude oil/gas prices and foreign exchange rates
may impact the revenues and expenditures of all overseasbusiness operations

Crude Oil Price and Foreign Exchange Rate(billion)

Segment profits (RH)($/bbl)Crude Oil Price (LH)

Foreign Exchange Rate(¥/$)

1612045129015030860

10015430

5000600
2014.3 2015.3 2016.3 2017.3 2018.3 2019.32020.3(planned)

2000
2014.3 2015.3 2016.3 2017.3 2018.3 2019.3 2020.3(planned)

Aiming to develop and advance our overseas business operations as a global
integrated energy corporation
Leveraging our experience related to the global LNG value
chain, we will enhance and expand businesses inaccordance with the characteristics of each region where
we operate in an attempt to increase recognition of Tokyo
Gas as an LNG specialist.
We will continue to invest in projects that contribute to
the construction of energy infrastructure, with a primary
focus on midstream to downstream businesses, for which
we can expect to see stable returns. We will aim to build aportfolio with the least impact from fluctuations in energy
prices, and continue working to increase the added value of
our existing projects. In addition, we will consider renewableenergy and other future business fields with growthpotential, entry into regions where we can expect to seemarket growth and where we can leverage our strengths.
The Tokyo Gas Group’s operations currently span 13
business locations in nine countries (including North
America, Southeast Asia and Australia).

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TOKYO GAS INTEGRATED REPORT 2019

North America

Upstream Business

Midstream- andDownstream Business

Operation andmanagement of shale
projects

Natural gas-fired power
generation
Renewable energy—

LNG terminal business
Natural gas-fired power
generation
Gas supply
Energy service

Southeast Asia

Australia

Operation andmanagement of LNGprojects

Other regions

Business Location
Tokyo Gas America Ltd.

TGES America Ltd.

Acario Ventures

Houston, Texas

South Carolina

Silicon Valley

Tokyo Gas Asia Pte. Ltd.

Jakarta Representative Office

Manila Representative Office

Singapore

Indonesia

Philippines

Bangkok Representative Office

Ho Chi Minh & Hanoi
Representative Offices

Kuala Lumpur
Representative Office

Thailand

Vietnam

MalaysiaTokyo Gas Australia Pty Ltd.

——

Perth & Brisbane
Paris Representative Office—FranceAiming to construct LNG value chains and expand renewable energy
North America

Projects and business locations
Empire
Upstream BusinessMidstream- andDownstream BusinessBusiness Location

Birdsboro
AcarioCove Point LNG
East Texas

Barnett

TGES America

Tokyo Gas America
Eagle FordLtd.
MT Falcon
Bajio
Joint projects for renewableenergy exploration

Upstream Business

Monitoring commodity price trends and carefully estimating
the productivity and reserves of gas fields, we are proceeding
to form appropriate alliances with experienced operators andinvest in prime assets. Tokyo Gas has so far participated inthree natural gas development projects in the United States.

Start ofInvestment
Participation
ratio

Project Name
U.S.A. Barnett shale gas development

Mar. 2013

25%

U.S.A. Eagle Ford shale gas development

Jun. 201625%

East Texas gas development
business

May. 2017

30%

U.S.A.

In North America, energy is in high demand and thenatural gas market is expected to rise for a long time.
The energy market is deregulated with activetransactions. In this region, we will accelerate ourparticipation in upstream, midstream and downstream
businesses and renewable energy business. We will
strive to acquire know-how that will be useful for futurebusinesses worldwide while working to establish arevenue base.
Midstream- andDownstream Business

Renewable energy

When planning natural gas-fired power generation we willcontinue to use well-defined criteria to select projects in which toparticipate, giving due consideration to demand and supply ofelectricity, competition with other power sources, regulations
and business environments on a state-by-state basis. We haverecently participated in two natural gas fired power generation
businesses in the East Coast region, where there is large-scaledemand.
In April 2019, we announced our intention to secure a 50%
stake in a renewable energy exploration and operationcompany based in Mexico, established by Engie S.A., which isa company headquartered in France. We will work on therenewable energy business in Mexico using the company as aplatform with Engie.

Project Name

Start ofParticipation

Investment
ratio

MexicoNatural gas-fired power plantbusiness

Oct. 2004

49%

MexicoNatural gas-fired power plantbusiness

Jun. 2010

30%

U.S.A.

Industry-oriented energy
services business (TGES America)

Feb. 2015(Foundation)

100%

U.S.A.

Natural gas-fired power plantbusiness

Oct. 201625%

Natural gas-fired power plantbusiness

Apr. 201733.33%

Joint project for renewableenergy exploration2019(scheduled)50%(scheduled)(Bajio Power Plant)(MT Falcon Power Plant)(Empire Power Plant)

U.S.A.

(Birdsboro Power Plant)

MexicoBirdsboro Power Plant

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Business overview

Overseas business

Southeast Asia

Tokyo Gas Group’s Bases in Southeast Asia
Hanoi Representative Office

Manila Representative Office

Bangkok Representative Office

Following rapid economic growth, natural gas demand and LNG
imports are forecasted to rise in Southeast Asia. We will contribute tothe introduction of LNG and natural gas and the construction of anenergy infrastructure in collaboration with governments andcompanies in each country. Specifically, we will work on midstream
and downstream businesses, such as LNG terminals, gas-fired power
generation, gas distribution and energy services.
As bases for implementing these actions, we launched branch offices
in Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines.

Ho Chi Minh City
Representative Office
Kuala Lumpur
Representative Office

Tokyo Gas Asia Pte. Ltd. (Singapore)

Jakarta Representative Office
Jakarta Representative OfficeMidstream- andDownstream Business

The Tokyo Gas Group will provide a wide range of value, from natural
gas engineering to expertise to operational know-how and energysaving services, to contribute to the development of natural gas
infrastructure by capitalizing on its knowledge and experience in theutilization of LNG and natural gas. We will take part not only in tangible
aspects such as the construction of LNG terminals, power stations andother energy infrastructure expected in various countries, but also inintangible aspects such as LNG demand cultivation, LNG terminaloperation, and LNG procurement. In this way, we will increase ourinvolvement and presence across the entire LNG value chain.
In 2017, we invested in gas distribution businesses in Vietnam andIndonesia, while in 2018, we commenced the first independent gas
supply as a private business to industrial consumers in Thailand
through a local gas distribution operator in which we had invested. In
addition, we concluded a joint development agreement concerning theconstruction and operation of an LNG receiving terminal in thePhilippines.
In the field of engineering, in 2017 we were awarded an order for
feasibility studies and engineering work concerning the construction ofLNG receiving terminals in Bangladesh, while in 2018, we were awarded
an order to provide project management consultant services for theconstruction of LNG receiving terminals in Thailand.

Start ofParticipation

Project Name
Philippines

Submitted declaration of interest
regarding formation of an LNG value
chain

Oct. 2017

Philippines

Concluded a joint development
agreement for construction andoperation of an LNG receiving
terminal in the Philippines

Dec. 2018

VietnamInvested/acquired a stake in a gas
supply business company and formeda strategic allianceJul. 2017

ThailandInvested/acquired a stake in a natural
gas-fired thermal power generation
project

Oct. 2016

Thailand

Secured an order to provide PMC
services in the construction of theNong Fab LNG receiving terminal

Jan. 2018

Invested/acquired a stake in a gas
supply business company

Jan. 2018

Started gas distribution businessDec. 2018

Indonesia

Invested/acquired a joint stake in agas supply business company

Oct. 2017

Bangladesh

Secured an order for work relating toLNG receiving terminals

Jul. 2017

ThailandIn the Philippines, the country’s introduction of LNG amid the future exhaustion of domestically
produced gas is predicted, and its government is working to attract domestic and overseas businesses
for the construction of LNG receiving terminals. My duty is to collect information on trends in energy
policies and LNG-related regulations that are being dramatically changed as well as stakeholders’Messageactivities though everyday communication with government bodies and private energy-related
firms, and participation in energy-related seminars and forums. I ensure that the information isLady Trishia
up-to-date and accurate, which will be broadly shared among those concerned in the company.
GonzalesManila Representative The Philippines has never used LNG, which is why government officials among others are highlyOfficemotivated to learn about the LNG industry. Every day, we receive inquiries on the business of LNG
receiving terminals and LNG import and procurement, as well as requests for visits of our terminals.
I hope to gain knowledge and expertise in the overall LNG value chain through this experience andcontribute to building close relationships of cooperation between the Philippines and Japan.

40TOKYO GAS INTEGRATED REPORT 2019

Investing our energies into the operation and management of existing projects
Australia

Participating projects and business locations
Participating project
Business Location

Darwin (Bayu-Undan gas field)
Ichthys

Pluto
GorgonQueensland Curtis
Tokyo Gas Australia Pty Ltd.
Perth Office

Tokyo Gas Australia Pty Ltd.
Brisbane Office

Ichthys LNG Project

Upstream BusinessWe have invested in five LNG projects in Australia, which has grown into amajor LNG supply base to East Asia. One of these is the Ichthys Projectthat recently came into operation. We will continue to operate and manage
these projects with a view towards maximizing their value.

Tokyo Gas Australia Pty Ltd. (Perth)

LNG Production
Capacity(Million tons / year)

Start ofParticipation

Tokyo Gas Interest

Start of Production(Operation)

Darwin

3.0

2003

3.07%

Jan. 2006

Pluto

4.9

2008

5.00%

Apr. 2012

Gorgon

15.6

2009

1.00%

Mar. 2016

Queensland Curtis

8.5

2011

1.25% (Gas Field) / 2.50% (No. 2 Liquefaction Plant)

Dec. 2014

Ichthys

8.9

2012

1.575%

Oct. 2018

Project Name

Message
WataruNakayama
Tokyo Gas Australia
Pty Ltd.

Aiming to achieve stable LNG supply and revenue expansion, Tokyo Gas Australia participates infive large-scale LNG projects and engages in project management.
In October 2018, the Ichthys LNG Project started shipment, which meant that all our projects
in Australia were in operation. The Ichthys project is the first in history to be operated by a Japanesebusiness and joined by major Japanese gas and electric power companies, including Tokyo Gas.
We contributed to increasing the project value by offering advice on project operation whenshifting from the construction phase to the operation phase, as well as offering suggestions on agas production well drilling plan for higher efficiency and lower risks based on our experience
gained through participation in the four projects in Australia that were already in operation.
Tokyo Gas Australia has participated in the joint operation of projects with a number of major
oil companies. It also works intensively to train personnel for overseas businesses. We activelyengage in education activities based on the work experience of personnel to quickly develop
people who will contribute to the maximization of value for overseas business.

Initiatives Towards Achieving the Sustainable Development Goals (SDGs)

Taking up the challenge of creating an LNG value chain in Southeast Asia
In 2017, we invested and acquired stakes in gas supply businesses in Vietnam (July) and Indonesia (October). In January
2018, we acquired a stake in a similar business in Thailand. In December 2018, we signed a joint development agreement
regarding construction and operation of an LNG receiving terminal in the Philippines.
By leveraging our Group’s technological capabilities and know-how to provide energy solutions and constructinfrastructure, we are seeking to promote the widespread adoption of clean, environmentally-friendly natural gas. We also
hope that contributing to the creation of jobs and economic development through our local business operations will lead toan increase in educational opportunities and help to eliminate disparities in wealth and living standards in those countries.