OVERSEAS BUSINESSBusiness overview

OutlineWe have expanded and increased overseas bases and staff, and have participatedin the LNG or natural gas related business projects in Australia, North America, andSoutheast Asia, all in order to make overseas business another major earnings sourceof the Tokyo Gas Group, as indicated in the Challenge 2020 Vision. Looking ahead,
the newly-established Global Business Division in April 2017 is spearheading efforts
for further business development, constructing of a new portfolio having stronger
resistance to undesirable effects of changes in energy prices, and for promotion ofadding more value in the existing businesses.

Net sales

Number of participating projects¥31.9 billion

16FY2016

Segment assets ¥270.7 billion(as of March 31, 2017)

Net Sales and Number of Projects(¥ billion)

Net Sales (LH)50

Projects (RH)

2040

1630

1220

810

400
2012.32013.3 2014.3 2015.3 2016.3 2017.3

Oil Price and Exchange RateStrengths• Know-how in the midstream and downstream businesses accumulated in Japan• Global network established through activities such as material procurementand business participationRisks($/bbl)(¥/$)

Crude Oil Price (LH)
Foreign Exchange Rate (RH)

120

200

90150

• Business operation can be stalled or expense burden may rise, in response tolaws and regulations, or business practices, inherent to each country

60100• Fluctuation in crude oil/gas prices and foreign exchange rates in theupstream business

30

5000
2008.3 2010.3

2012.32014.32016.3 2017.3

Forming an LNG value chain
NorthAmerica

We are focusing on entry opportunities in the upstream, gas-fired thermal power generation, and gas and electricity supply
areas in North America. We envision forming a North America LNG value chain, in which synergies can be generated among
businesses, such as by stably supplying gas from one of our upstream projects to our operations in gas-fired thermal power
generation and gas supply.

Upstream Business

Monitoring commodity price trends andcarefully estimating the productivity and reserves of gas

When planning gas-fired
power generation we will continue to use well-defined criteria

fields will enable us to form appropriate alliances withexperienced operators and invest in prime assets. Alongthese lines, in May 2017 we acquired rights in a gas
development operating company in Texas.

to select projects in which to participate, giving due
consideration to demand and supply of electricity,competition with other power sources, regulations andbusiness environment by each regional government. We haveso far participated in two gas power generation business inthe East Coast, where the scale of demand is huge.
In gas supply business, we seek to participate in business, inwhich we can leverage our Group’s strength, such as demanddevelopment.

Project Name

Start ofTokyo Gas
Participation Interests

U.S.A. Barnett shale gas development

Mar. 2013

25%

U.S.A. Eagle Ford shale gas development

Jun. 2016

25%

U.S.A. East Texas gas development business

May 2017

30%

Midstream- and Downstream Business

Project Name

Start ofTokyo Gas
Participation Interests

U.S.A.

Natural gas-fired power plant business
Oct. 2016
in New York State (Empire Power Plant)

25%

U.S.A.

Natural gas-fired power plant business
Apr. 2017
in Pennsylvania (Birdsboro Power Plant)

33.33%

Focus on operation and management of existing projects
Australia

29

We have invested in five projects in Australia,
which has grown as a major LNG supply base tothe Far East. Four of these LNG projects are in
operation today. Including the Ichthys Project,
we will continue to focus on operation andmanagement of those projects, with creation ofmaximal value in mind.

Four LNG projects that have already begun
operation in Australia, are proceeding smoothly. We will continue
to focus on operation and management of the five projects,
including the Ichthys Project still in preparation, to maximize
their value.
Upstream BusinessIn the last 12 months, the Tokyo Gas Group decided to participate in six
projects in North America, where various entry opportunities are available,and Southeast Asia, where use of natural gas is expanding.
Going forward, in addition to new projects mainly in North America andSoutheast Asia, we will promote risk management, partly by using pastexperiences, and add more business values to raise and stabilize earnings.

Birdsboro

Ichthys Darwin

Barnett
EmpireEagle Ford

Pluto
Bang Bo

East Texas
MT Falcon

GorgonLNG Vietnam

BajioTOKYO GAS ANNUAL REPORT 2017

Accelerating global development

Queensland Curtis

Gas Malaysia

Upstream Business

SoutheastAsia

Midstream- and Downstream BusinessNorth America

Southeast Asia

Australia

UpstreamBusiness

Operation and management ofexisting projects; explorationof new projects-Operation and management ofexisting projects

Midstream- andDownstream
BusinessGas-fired thermal powergeneration; gas andelectricity supply

LNG terminal; gas-fired thermal
power generation; gas supply;
energy service-In Southeast Asia where a greater use of natural gas has been driven by anational policy and high growth of the energy market is projected, we seek toparticipate in LNG terminal, gas-fired thermal power generation, gas supply,and energy service businesses. In addition to opening offices in Indonesia,Thailand, and Vietnam in 2015, we established a representative office in thePhilippines in April 2017. Our ultimate target is to form a Southeast Asia LNG
value chain.

Midstream- and Downstream BusinessBy building a relationshipwith local governments and through alliances with localcompanies, we intend to increase our participation in
midstream- and downstream businesses, while closely
monitoring changes in business environment, including
relevant policies and regulations. In October 2016, weparticipated in a natural gas-fired power generation businessin Thailand.

Tokyo Gas Group’s Basesin Southeast Asia

Hanoi Representative Office

Manila Representative OfficeThailand Representative Office
Ho Chi Minh City Representative Office

Kuala Lumpur Representative Office

Tokyo Gas Asia Pte. Ltd. (Singapore)

Jakarta Representative Office

Project Name

Start ofTokyo Gas
Participation Interests

Thailand

Oct. 2016

Bang Bo Power Plant

28%

LNG Production Capacity(Million tons / year)

Start ofParticipation

Tokyo Gas Interest (Equity Stake)Start of Production

Darwin3.02003

3.07%

Jan. 2006

PlutoGorgon
Queensland Curtis
Ichthys

4.7
15.6
8.5
8.9

2008
2009
2011
2012

5.00%
1.00%
1.25% (Gas Field) / 2.50% (No. 2 Liquefaction Plant)
1.575%

Apr. 2012
Mar. 2016
Dec. 2014
By March 2018 (Plan)

Project Name(Operation)30