Tokyogasgroup csr report

Further Diversification of LNG Procurement

We are committed to further diversifying our procurement of LNG to safeguard the stable delivery of affordable supplies of LNG. As Asia leads the expansion in global demand for LNG and deregulation increases the likelihood of greater volatility in LNG demand in Japan, we must be more price competitive and flexible in our LNG transactions. In the years ahead, we will seek to increase the flexibility of LNG procurement through measures such as raising the ratio of short-term spot procurement while taking advantage of our partnerships in Japan and overseas to enhance the efficiency of transportation and adjust inventory in our transactions.
 
Triple Initiatives for Diversification
 

1. Procurement sources

We will broaden our procurement sources from conventional sources mainly in Asia and Australia to a wider range of regions around the world, including North America.

 

2. Contract conditions

We will seek to diversify contract conditions from being primarily linked to crude oil prices to incorporating multiple benchmarks such as the Henry Hub price and gain greater destination flexibility by eliminating destination clauses.

 

3. LNG network

We will seek to acquire gas fields, power stations, etc., on a global basis. Developing an LNG network linking Asia, North America and Europe will lead to reducing regional disparities in market prices and create an environment for more flexibly adjusting supply and demand.

 


Since Tokyo Gas began procuring LNG from Alaska in 1969, our LNG imports have steadily risen to meet growing demand. The company currently imports LNG under long-term contracts with 13 projects in 6 countries, including Russia (Sakhalin) and other countries in the Asia-Pacific region such as Malaysia, Australia and Brunei.
In March 2016, we entered into a new contract for an additional purchase of approximately 200,000 tons per year of LNG from the Cameron LNG project in the U.S. Combined with the approximately 520,000 tons of LNG that we had previously committed to purchase from the same project and our contract for 1.4 million tons per year from the Cove Point project in the U.S., we now have access to several sources of LNG at prices linked to the Henry Hub Natural Gas Spot Price in the U.S. natural gas market. Furthermore, we are strengthening our partnerships with a variety of LNG buyers and other companies. Overseas sources include PetroVietnam Gas in Vietnam, Korea Gas Corp., and Centrica LNG in Europe, while partnerships in Japan include utilities such as Kansai Electric Power and Kyushu Electric Power. We are striving to ensure the stable, low-priced procurement of LNG by diversifying our sources and contract terms and by forming partnerships with buyers in Japan and overseas.

LNG Project Contract Volume (as of April 2018)
Project name Contract volume
(Unit: 10,000 tons)
Start of operation Period
Brunei 100 1973 20 + 20 + 10 years (until 2023)
Malaysia I (Satu) 50 2018 6 + 7 years (until 2031)
Australia (Western Australia) 53 1989 20 + 8 years (until 2024)
Malaysia II (Dua) 90 2015 10 years (until 2025)
Qatar 35 1998 24 years (until 2021)
Malaysia III (Tiga) 34 2004 20 years (until 2024)
North West Shelf (NWS) Expansion 107 2004 25 years (until 2029)
Darwin (Australia) 100 2006 17 years (until 2022)
Sakhalin II 110 2009 24 years (until 2031)
Pluto (Australia) 150 2012 15 years (until 2025)
Queensland Curtis (Australia) 120 2015 20 years (until 2035)
Gorgon (Australia) 110 2016 25 years (until 2039)
Cove Point (U.S.A.) 140 2018 20years
Ichthys (Australia) 105 2018
(planned)
15years
Cameron (U.S.A.) Approx. 52
(8 cargoes)
2020 Approx. 20 years
Cameron (U.S.A.) Approx. 20
(3 cargoes)
2020 Approx. 20 years
DFF Inc., Corporate Social Responsibility Sect, General Administration Dept., Corporate Planning Dept., Resources & Global Business Division, Energy Solution Div, Power Buisiness Dept., Pipeline Network Division, IT Division, Residential Sales Div., Fundamental Technology Dept., Energy Solution Div, Environmental Affairs Dept., Purchasing Dept. , Health Insurance & Employees' Welfare Sect., Personnel Dept., Internal Audit Dept., Audit & Supervisory Board Member's Office, Compliance Dept., Regional Development Div., Finance Dept, TGES, TOKYO GAS COMMUNICATIONS, INC.

Enhancement of LNG Transportation Arrangements

Through our wholly owned subsidiary Tokyo LNG Tanker Co., Ltd., we efficiently manage our own fleet of carriers, which transport LNG under long-term contracts from Malaysia, Australia and Sakhalin in Russia.
Four LNG carriers with a highly economic design are being built to transit the Panama Canal, which will be used to ship LNG mainly from Cove Point in the U.S.

Energy Horizon
Energy Horizon

DFF Inc., Corporate Social Responsibility Sect, General Administration Dept., Corporate Planning Dept., Resources & Global Business Division, Energy Solution Div, Power Buisiness Dept., Pipeline Network Division, IT Division, Residential Sales Div., Fundamental Technology Dept., Energy Solution Div, Environmental Affairs Dept., Purchasing Dept. , Health Insurance & Employees' Welfare Sect., Personnel Dept., Internal Audit Dept., Audit & Supervisory Board Member's Office, Compliance Dept., Regional Development Div., Finance Dept, TGES, TOKYO GAS COMMUNICATIONS, INC.