Tokyogasgroup csr report

Ensuring Stable Supply of Energy in Japan and Abroad

Stable Procurement of LNG

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 coming years, we will seek to increase the flexibility of LNG procurement through such measures as diversifying our conditions while bolstering our alliances in Japan and overseas and enhancing our transactions through higher transportation efficiency and inventory adjustment.
 
Three Types of 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, Central America and Africa.

 

2 Contract conditions

We will seek to diversify contract conditions by incorporating contracts linked to multiple benchmark indicators such as the Henry Hub price, in addition to conventional crude oil price-linked contracts. We also plan to achieve greater destination flexibility through increasing the number or contracts with no destination clauses.

 

3 LNG network

By developing an LNG network linking Asia, North America, Central America, Africa and Europe, we aim to reduce regional disparities in market prices, and increase flexibly in supply and demand adjustment.

 

 
Since Tokyo Gas became the first company in Japan to procure LNG from Alaska in 1969, our LNG imports have steadily risen each year along with growing demand, with procurement volume reaching 13,950,000 tons in fiscal 2018. The company currently imports LNG under long-term contracts with 14 projects in 6 countries, including Russia (Sakhalin), Qatar and the United States, in addition to other countries in the Asia-Pacific region such as Australia, Malaysia and Brunei.
In October 2018, we entered into a basic agreement for purchasing a maximum of approximately 600,000 tons per year from the LNG Canada project, and a basic agreement for purchasing approximately 800,000 tons per year from the Energia Costa Azul LNG project in November of that year. In February 2019, we signed a new agreement with UK-based Centrica for jointly purchasing approximately 2,600,000 tons per year from the Mozambique LNG project.
Overseas sources include PetroVietnam Gas in Vietnam, Korea Gas Corp., Centrica LNG in the United Kingdom, and RWE in Germany, while partnerships in Japan include utilities such as Kansai Electric Power and Kyushu Electric Power. We are striving to ensure the stable, affordable procurement of LNG and to invigorate the LNG market by diversifying our sources and contract terms and by forming partnerships with companies in Japan and overseas.

LNG Project Contract Volume (as of April 2019)

Project name Contract volume
(Unit: 10,000 tons)
Start of operation Period
Brunei 100 1973 20+20+10 years (until 2023)
Malaysia I (Satu) Up to approx.50
from 2018 to 2023
Up to approx.90
from 2024
2018 Up to 13 years (until 2031)
Australia (Western Australia) 53 1989 20 + 8 + 7 years
(until 2024)
Malaysia II (Dua) 90 1995 20 + 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 107.3 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 20 years
Ichthys (Australia) 105 2018 15 years
Cameron (U.S.A.) Approx. 72 2020
(planned)
Approx. 20 years
Mozambique LNG 260
(joint purchasing with Centrica)
Mid-2020 Up to 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, Russia (Sakhalin), and the United States.
We also built four LNG vessels with a highly efficient design and capable of transiting the Panama Canal, primarily for shipping LNG from Cove Point in the United States. The vessels began operating in 2018.

Energy Liberty
Energy Liberty

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.