Core Businesses

3Overseas Business

Overview of Overseas Business
The Tokyo Gas Group develops wide-ranging businesses that include engaging in overseas projects, from upstream businesses,
such as overseas gas field development, to midstream- to downstream businesses, as exemplified by IPP business and energy
service and engineering businesses.

■Status of Overseas Business
Overseas midstream- to downstream projects
Overseas upstream projects

T-Power

Cordova

T-Power

Barnett

Tokyo

Barnett
MT Falcon

Bajio

Queensland
CurtisGas Malaysia
Gas Malaysia
Energy Advance Sdn Bhd.
DarwinMalhas

MT Falcon

IchthysPlutoGorgon

EcogenGas Malaysia
GorgonScale of Investment Fiscal 2012–2020 total

Income Level
Overseas Business Operating Income■ Other investments in affiliates:¥ billion¥140.0 billion

10.710.0■ Operating foundations:

7.5¥270.0 billion

7%

5.0

■ Infrastructure:

13%
Approx.
¥2,060.0 billion

35%¥730.0 billion

2.4

2.5

2.80

2012

2013

2014

FY

In fiscal 2014, operating
income from overseas
business amounted
to¥10.7 billion, ayear-on-year increase of¥7.9 billion, due to theincrease in income fromthe Pluto LNG Project.

Composition of Consolidated Net Income29%■ New demand

cultivation:¥600.0 billion

16%■ Overseas
business:¥320.0 billion

Time of Vision’s formulation(Fiscal 2009–10%
fiscal 2011 average)■ Overseas

Fiscal 2020

20%

50%

Business■ Gas business■ LNG sales, electric power

Of the total capital expenditures and investments of¥2,060.0 billion for the nine-year period from fiscal 2012 tofiscal 2020, ¥320.0 billion, equivalent to 16%, is earmarked
for overseas business.

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Tokyo Gas Annual Report 2015

25%

70%

25%

business, other

Under “the Challenge 2020 Vision”, we are aiming to expand total netincome and increase Overseas Business earnings to compose 25% ofconsolidated net income.

Core Businesses

Upgrading and Expanding Overseas Base Capabilities
Through alliances with local business partners, we are opening new overseas bases as well as augmenting our existing bases toundertake our own project composition and business promotion. Furthermore, during the next three years, we will increase ourbusiness development personnel to 200 and upgrade as well as expand our overseas base capabilities.

Examples of Initiatives(1)Singapore, Jakarta, Bangkok, Hanoi
We are building local networks and promoting project compositions and commercialization that leverage the Group’s comprehensive capabilities.
(2)North America, Australia
In addition to the operational management of existing businesses, we are leveraging the local networks that we have built up thus far andpromoting the development of new projects.

■Bases in Southeast Asia
Existing base
New base

VietnamThailand

Malaysia

Singapore

Indonesia

Deeply rooted in thelocal areas, we areleveraging the Company’s knowhow to theutmost and promoting
natural gas applications in all the countries of Southeast Asia.
Tokyo Gas Asia Pte. Ltd.
PresidentNobuhisa Kobayashi
Providing energy solutions to customers conducting business inSoutheast Asia and contributing to the building of local energy
infrastructure, Tokyo Gas Asia Pte. Ltd. was established in Singapore
in December 2014 to convert into tangible forms “accelerate global
business development,” one of the main policies in the fiscal 2015 tofiscal 2017 period toward the realization of the Tokyo Gas Group’s“Challenge 2020 Vision.”
Southeast Asian countries are in the process of development, andin the years ahead demand for energy will stay on the increase in linewith further economic growth. Although many of Southeast Asian
nations possess their own in-country resources, the trend is forincreasing volumes of LNG imports within Southeast Asia to meetrobust demand, and consideration is being given to making further
progress with this utilization. Leveraging to the utmost its knowledgeof such areas as natural gas-related technologies and expertise inenergy solutions that have been built up in Japan, the Tokyo Gas
Group will support the promotion of natural gas utilization in all
Southeast Asian countries.
In order to accurately seize these opportunities, the Tokyo Gas
Group established representative offices in Vietnam and Indonesia inApril 2015 and is also planning to open an office in Thailand.
Including the existing office in Malaysia and Tokyo Gas Asia Pte. Ltd.
In Singapore, new projects are being researched and developed atfive bases in Southeast Asia, and Tokyo Gas Asia will continue to fulfil
a managing function over them.
In line with Tokyo Gas Asia’s method of conducting business, thecharacteristics of each country depend on the country, and topossess sufficient knowledge of each country’s culture, religion andbusiness practices, in other words to conduct business in a way thattakes into consideration factors that are deeply rooted in the locale, isof the utmost importance. What is more, while building good
relationships to gain and maintain the trust of a rich network ofcontacts—including people in local energy-related corporations andin government—as well as of major companies with a track record ofachievements, I would like to devote all of my own energy topromoting business in those countries and regions.
It is believed that Southeast Asia will undergo a rapid transformation in the years to come, but I am confident that Tokyo Gas Asia will
be able to accompany the region along the road to development.

Tokyo Gas Annual Report 201532

3 Overseas BusinessCore Businesses

Upstream BusinessObjectives

In addition to working for sustainable growth by securing new sources of revenue as business investment, upstream
business enables both the stabilization of overall Group revenues in the face of fluctuations in raw material prices and thegathering of valuable information as a participant in upstream projects.

Project Name

Location

LNG Production Capacity

Year of Participation

Tokyo Gas Interest

Start of Operation

DarwinAustralia

3 million t/year

2003

3.07%

Pluto

Australia

4.3 million t/year

2008

5%

January 2006
April 2012

GorgonAustralia

15.6 million t/year

2009

1%

Planned to commence production in 2015

QueenslandCurtis

Australia

8.5 million t/year

2011

1.25% (Gas field)
2.5% (No. 2 Liquefaction Plant)

Commenced phased operations
from December 2014

Cordova

Canada5.5 million t/year

2011

3.75%

2009

IchthysAustralia

8.4 million t/year

2012

1.575%

Planned to commence production in 2016

BarnettUSA

2 million t/year

2013

25%

2003

Darwin LNG Project

Barnett

The business of the Queensland Curtis LNG Projecton the east coast of Australia is liquefying unconventional natural gas on the island of Curtis andshipping that gas as LNG. In this case, theunconventional natural gas is the coal bed methane(CBM) found in the coal seams centered on Surat
Basin in the state of Queensland. Having
commenced phased operations in December 2014,
the Company started to receive CBM-derived LNG
from this project in April 2015, marking the firstdelivery to Japan of long-term contract LNG fromunconventional natural gas sources.
First delivery to Tokyo Gas Sodegaura LNG Terminal (Sodegaura City, Chiba Prefecture)Future Strategies
In addition to acquiring the upstream rights associated with conventional LNG procurement, we are planning further diversification in theform our project participation takes—such as the acquisition of gas
field rights not associated with procurement in North America andparticipation in small- to medium-scale LNG projects—and targeting
further expansion. When expanding business, if the project seems

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Tokyo Gas Annual Report 2015

favorable following thorough and more careful scrutiny, we will not
hesitate to get involved in the project. Furthermore, with regard tochanges in the price of crude oil, currency exchange rates and thebusiness environment, we will promote strategies to mitigate anddecrease these fluctuating risks along the entire LNG value chain andwill continue to build a flexible yet robust business structure.

Core Businesses

Midstream- to Downstream Business
Objectives

In addition to being able to leverage the Group’s strengths competitive advantages, including in energy services andengineering, we are able to ensure a stable income as business investment.

Energy Service project

Engineering BusinessWe design, construct and conduct the operational management
and maintenance of facilities, including gas cogeneration
systems, and provide one-stop utilities, such as electricity, heat,water and compressed air.

Leveraging the information processing technologies associatedwith natural gas handling technologies and the gas business, we
design and construct as well as undertake the project management of energy infrastructure, including LNG terminals.

Project NameLocation

Main BusinessYear of Participation

Tokyo Gas Interest

Gas Malaysia Bhd.

Malaysia

City gas supply project

1992

14.8%

BajioMexico

Natural gas power project

2004

49%

MalhasBrazil

Natural gas pipeline project

2005

15%

MT FalconMexico

Natural gas power project

2010

30%

T-PowerBelgium

Natural gas power project2012

26.66%

EcogenBrazilEnergy Service project

2012

10%

Gas Malaysia Energy Advance Sdn Bhd.

Malaysia

Energy Service project

2014

34%

Examples of Initiatives
Construction commenced of Building No. 1at Gas Malaysia Energy Advance Sdn Bhd.
energy services businessWith the objective of entering the energy services business inMalaysia, Tokyo Gas Engineering Solutions (TGES) Corporation
established Gas Malaysia Energy Advance Sdn Bhd. (GMEA), ajoint venture with Gas Malaysia Berhad, in April 2014.
Having concluded a 15-year agreement covering energy
services with three Toray Corporation-owned subsidiaries(Toray Group Malaysia), GMEA commenced construction of anenergy plant with the aim of commencing supplies in 2016.

Diagram of Energy Services Business
Toray Group Malaysia

Factory

Factory

Electricpower

Factory

Gas Malaysia Energy Advance Sdn Bhd.

（Possesses a gas
turbine co-generation system

Natural gas

Establishing a gas turbine co-generation system on Toray
Group Malaysia premises, GMEA will supply electric
power and steam to Toray Group Malaysia using as fuelnatural gas procured from Gas Malaysia. GMEA will becollectively responsible for design, construction andmaintenance and receive energy service fees from Toray
Group Malaysia, which will thus reduce its energy costs,
conserve energy and cut the volume of its CO2emissions.

Energyservices feesSteam） Gas fees

Gas Malaysia Bhd.

Designed to supply electric power and steam, the energy control
center under construction

Future Strategies
Leveraging the Group’s total energy-related technologies andknowhow, we will identify areas in Southeast Asia and North Americaand develop business in a focused manner. To give specificexamples, we will contribute energy solutions to customers that are

deploying overseas and to the building of local energy infrastructure.
In addition, we will leverage the technologies and knowhow of local
energy businesses and take on the challenges of developing local
value chains through alliances with local energy companies.

Tokyo Gas Annual Report 201534