11CEO’s Message

We will develop into a genuine,
integrated energy company with apioneering spirit that has been passed
on from generation to generation.
Representative Director, President and CEO

Takashi Uchida
Getting the blue sky back in Tokyo
This year marks the 50th anniversary of the Tokyo
Gas Group’s first import of liquefied natural gas

liquefaction technology. In November 1969, wewelcomed the first ship from Alaska, Polar Alaska, toour Negishi LNG terminal, ushering in the era of LNG.
The introduction of LNG followed a change in(LNG), when we became the first Japanese company

calorific value, which took 17 years. We replaced theto import LNG. When deciding to implement a largegas supplied with one that had a higher calorificproject that could shape the future of the company,

value. This low-profile effort of visiting individual

the management team at that time devised thecustomers one by one to adjust their gas appliancesslogan: Getting the blue sky back in Tokyo. As it

involved 7.8 million employees. As a result, today

suggested, the introduction of LNG eliminated sulfur

natural gas is widely used and it supports Japan’soxide (SOx) emissions, reduced nitrogen oxide (NOx)development as a major energy source. This process

emissions from the levels of conventional coal- andhelped to build close relationships of trust withoil-based fuel, and curbed photochemical smog, acustomers. Now they are another invisible asset thatsocial issue. It also cut carbon dioxide (CO 2 ) emissions.

provides an advantage over our competitors in today’s

The spirit of carving out new energy frontiers withinnovation is an intangible asset of Tokyo Gas thatderegulated energy market.
The shift to LNG coincided with our management

should be passed on to the next generation. During

stance of contributing to society through our core

the period of rapid economic growth in the Showabusiness. The change in calorific value was helpful inera, natural gas gained attention as a source of clean

our subsequent growth. It is largely unknown thatenergy with high calorific value to replace oil-based

natural gas is so high in calorific value and supply

energy sources amid mounting energy demand andefficiency that our Group’s investment in pipeline

environmental deterioration. Our Group subsequently

construction was minimized. Before the change, theattempted to liquefy overseas natural gas and import

calorific value of the gas varied from region to region

it by ship. At that time, natural gas rarely used on aand from operator to operator. At least 10 different

practical level and this attempt was consideredkinds of gas were supplied. Since the change, a single

technically challenging. We cleared a number of difficulttype of gas is supplied, which is beneficial for bothhurdles, one after another, including refrigerated

customers and gas appliance manufacturers.

12TOKYO GAS INTEGRATED REPORT 2019

13CEO’s Message

The spirit of carving out energy frontiers withinnovation is an invisible asset of Tokyo Gas
that should be passed on to the next generation.
We will continue to supply energy in a safeand reassuring manner to enhance
consumer confidence.

action between Japanese and European businesses.
This also applies to our expansion of LNG importsources to Canada, Mexico and other countries aswell as the joint introduction with Shell EasternAlmost a year has passed since I became

Trading Pte Ltd of a revolutionary pricing system

Representative Director and President in April 2018.

based on coal prices to ensure the long-term, stable

Looking back on the past 12 months, I feel that theprocurement of more competitive LNG. We arecircumstances surrounding the energy industry

delighted that our Group’s sincere actions for LNG,

became increasingly tougher.

which have continued since we started importing it in

Especially following the deregulation of theelectricity and gas utility markets, competition among

1969, are recognized globally.

expected switch to other operators while gaining

We will carve out new market as energy
frontiers with our continued long-term
mindset.

electricity customers at a higher than expected pace.

The general public may think that the city gas industry

Overall, we have managed to benefit fromis protected by regulation. However, it is often exposed

deregulation. Some of our gas customers who had

to fierce competition, for example, when gas lamps

switched to other suppliers are slowly returning.

and rice cookers were replaced with electric versions.

energy companies has intensified. The Tokyo Gas
Group saw more of its city gas customers thanPricing is not the only factor that draws consumers

Our Group started to hold cooking classes more than

to a particular energy company. It is important to build

100 years ago to help participants use gas with ease

trust by constantly supplying energy in a safe andof mind and learn how to make full use of gas

reassuring manner. In 2018, Japan experienced aappliances along with cooking techniques. To survive

series of natural disasters in different locations,that tough competition, our Group has created newincluding earthquakes to the north of Osaka and inmarkets by addressing people’s lifestyles and fulfilling

eastern Hokkaido as well as typhoons and heavy rain

its social responsibility to attain continued growth.

in Western Japan. These incidents renewed ourENE-FARM consists of residential fuel cells and isawareness of our responsibility toward the stable

the result of our low-profile research and development

supply of energy and disaster control, compelling usefforts over more than 20 years. Despite the commonto reconfirm that we would work on them as highbelief that the commercialization of ENE-FARM waspriority matters.

difficult, our Group managed to release it in 2009,In addition, the call for carbon reduction iswith 110,000 units sold by last year. While LNG

growing in Japan and around the world. Last year, I

transport traditionally depended on trading

realized this through direct experience. Our Group

companies, as an energy firm, we acquired LNG

considered building a coal-fired power plant intankers to acquire more freedom in transactions. OurSodegaura, Chiba Prefecture, with Idemitsu Kosan

Group started to supply energy at low prices before

Co., Ltd. and Kyushu Electric Power Co., Inc.;

our competitors. We are also proud that our Group

however, we decided to withdraw from the joint

made floor heating common as we see it today.

development, because it was not feasible from theperspective of additional environmental measures.
Local communities and investors in Japan and abroadpraised us for that decision from an ESG perspective.
We were also greatly admired for our leadership in

In the second year of the Jump stage inGPS2020, we will continue to achieve
steady development.
In November 2011, the Tokyo Gas Group announced

the joint procurement of LNG from Mozambique with

its long-term management vision ending in fiscal

UK-based Centrica plc in the world’s first innovative

2020, The Tokyo Gas Group’s Vision for Energy and14

TOKYO GAS INTEGRATED REPORT 2019

the Future: Challenge 2020 Vision. It was aimed atother companies expanded their service areas andachieving continued growth of the Group.

now serve the entire country, from Hokkaido toIn the Hop stage (fiscal 2012-2014) and the StepOkinawa. They engage in the construction andstage (fiscal 2015-2017), we worked to significantly

operation of LNG terminals, energy supply, fuel shifts,

expand our business domains and areas, establish

energy-saving services and offer wide-ranging value.

seven business domains and construct a new group

In addition, they are expanding operations toformation, with the aim of becoming a global,

Thailand, Bangladesh, the US and other countries.
In the real estate segment, we also made good

integrated energy corporate group.
Taking over the managerial leadership, it is myprogress, including redevelopment of the land that weduty to steadily implement the GPS2020 medium-termown, which is directly linked to the east gate of JR

management plan for fiscal 2018-2020, which

Tamachi Station, acquisition of a new property incoincides with the final Jump stage of the vision,

Toranomon in Minato-ku, and leasing operations atachieving targets ahead of schedule if possible, andmedium- and small-sized land lots. In addition, wepushing ahead with considerations for the next long-integrated our three related subsidiaries into one toterm management vision.

create a structure for more active operations.

For fiscal 2018, which was the first year in thepower segment. We worked towards the goal ofWe will overcome harsh businesscircumstances by taking a long-termperspective.

supplying the Tokyo Gas Group’s electricity to 2.2

Meanwhile, our overseas expansion is lagging.

million customers by the end of fiscal 2020, andRegrettably, no massive growth in energy supply

consequently attained a steady hike in electricity

volume is likely in Japan, because of the aging andcustomers in the first fiscal year. We therefore revised

shrinking population with the decline in the birth rate,the target upwards from 2.2 million to 2.4 million, andthe decrease in households and improvement in heat

revised the target date to the end of fiscal 2019, one

insulation and draft-free characteristics of buildings.

year ahead of the initial schedule, which has boosted

However, it is possible to expand business mainly tothe confidence of our employees.

countries in Southeast Asia, where natural gas is

Jump stage, we successfully increased both net sales
and profit and saw remarkable results in the electric

We also made healthy progress in the energy-becoming widely used. While striving to obtain arelated segment. Tokyo Gas Engineering Solutions

larger market share in the mature domestic market,Corporation (TGES), a subsidiary of Tokyo Gas, andwe will focus on the expansion of overseas business.

Gas Sales Volume (based on the Vision)

Electric Power Sales Volume(billion m )(billion kWh)

25

30.0

3

Increase
2.3
billion m3

20

Increase
15.5
billion kWh

20.7*
22.5

18.4

15

31.0

15.0
15.5

15.0
10

7.5

8.3

500
2012.3
Launch of the Vision 20202019.32021.3* Gas handling volume
according to GPS2020

2012.3
Launch of the Vision 20202019.32021.3

15

CEO’s Message

The next long-term management
vision will target 2030.
Towards a target of achieving an environmentally-It has already been implemented in projects infriendly energy supply, mainly for natural gas, inTamachi and Nihombashi Muromachi. Using clean city

overseas markets, we will enter new markets andgas as fuel, its cogeneration system produces

contribute to the enhancement of customers’

electricity, and at the same time the heat generated islifestyles and industrial development.

supplied for cooling, heating, hot water supply andOur most important target is to stop the decreasesteam supply. The network also features ICT-basedin gas retail customers from surpassing the preset

energy management. It is not only helpful for energylimit. New market entrants include not only TEPCO

conservation and environmental preservation, but

Energy Partner, Inc., but also CD Energy Direct Co.,

also delivers reassurance in the sense that electricity

Ltd., in which CHUBU Electric Power Co., Inc. andis available even in the event of a disaster.

Osaka Gas Co., Ltd. are stakeholders, in addition todistributor in Japan. Today, we are competing with at

We will take steady steps towards evolving
into a genuine, integrated energy company.

least 20 companies, making it difficult to maintain ourWe are increasingly asked by investors about ourmarket share in the gas retail market. We think weactions towards complete freedom from carbon,

need a long-term perspective with an eye toward thetranscending low-carbon society. I do not think that a

future of energy to restore the business.

society only built on unstable renewable energy

JXTG Nippon Oil & Energy Corporation, the largest oil

We will address EaaS with a focus on thefour Ds.

sources, such as photovoltaic and wind power, can bebuilt in a day, because a low-carbon society has yet tobe achieved. The fastest path to building a low-carbon

In our next long-term management vision that willsociety will be to make effective and intensive use ofserve as the guidelines for our actions, we will define

natural gas, which will also pave the way for meeting

2030 as a target and emphasize how the businessthe target set by the government for cutting

structure may change in the future, paying attention togreenhouse gas emissions by 26% (from the fiscal

the four Ds for gaining insights into changes in the2013 level) by fiscal 2030. This explains why we are

surrounding business circumstances.

focusing on natural gas and constructing a system for

The first D stands for deregulation. We will study
how to respond and establish unbeatable operations.

supplying it in combination with renewable energy.
Subsequently, we may see a carbon-free society

The second D refers to decarbonization. We must

created with the use of hydrogen or other means.

consider how to respond to the demand and prepare.

Meanwhile, we will carry on with our research andThe third D pertains to the decentralization of energy.

development efforts.

This trend is already gathering momentum in society.

Our Group has an entrepreneurial spirit, and more

We will explore how to combine gas cogeneration

importantly, we are supported by more than 11 million

systems, storage batteries, photovoltaic and windcustomers. We will overcome the challenges that arise

power generation and suchlike in addition to thefrom deregulation and liberalization and steadily taketraditional one-way energy transmission from large

steps toward evolving into a genuine, integrated

power plants. The fourth and final D means

energy company. We will thus work to constructdigitalization. It offers a perspective on what businessfoundations for supplying energy to the world.

should be created by using the latest digital

We define the period until 2020 as an investment

technologies and how conventional business andstage. However, we will firmly boost profit in a bid towork can change through digitalization.

maintain a total payout ratio of 60%. For the fiscal

We are planning to consider the balance of energy

year ended March 31, 2019, we increased dividends

supplied in view of the four Ds and to create andper share by 5 yen to 60 yen. I hope that ourdevelop Energy as a Service (EaaS) for the domestic

stakeholders will look forward to the Tokyo Gas

market, where demand growth will be limited.

Group’s future developments and continue to support

The smart energy network is an example of EaaS.

it for years to come.

16TOKYO GAS INTEGRATED REPORT 2019

What I want to tell youWe will aim to achieve the goalsof our GPS2020 medium-term
management plan as far ahead ofschedule as possible.

We will evolve from a gas
company serving the greater
Tokyo area into a global,integrated energy company.

We will formulate the next
long-term management vision
towards 2030.

Our strength lies in our invisible
assets, such as the trust of ourcustomers and business
partners, and the humanresources and technologies that
support it.

Use of renewable energy and
LNG is the best path towards thecreation of a low-carbon society.
We will contribute to society
through our core business.

While making growthinvestments, we increased
dividends per share by 5 yen.