1. LNG in Japan Challenges of Tokyo Gas in the Current Turbulent Market

2. LNG Import around the World (2007)
South Korea
(25.9)
Taiwan
(8.2)
India
(7.5)
U.S.A.
(16.4)
Spain
(18.2)
France
(9.8)
Turkey
(4.5)
Others (Belgium, Italy, Portugal, etc.)
(10.1)
(Cedigaz)
Unit: Mton
China
(2.9)
Japan
(68.3)
Asia accounts for 64% of the total imports and Japan remains to be the biggest importer

3. Diversification of LNG Sources In Japan
Japan, which has been buying LNG for 39years, is an LNG buyer with credibility.
Japan has improved its supply security through diversification of LNG sources.
For many of such LNG sources, Japan is the foundation customer.
Alaska
Brunei
Abu-Dhabi
Indonesia
Malaysia
Australia
Oman
Data Sources: Trade Statistics
Qatar

4. Primary Energy Consumption Comparison of the world (2007)
Former
Union
The share of natural gas consumption is still smaller in comparison to other countries.
Source:BP Statistical Review of World Energy June 2008

5. LNG Supply-Demand Projection in Japan
Unit:
MTPA
based on “Natural gas market in Asia-Pacific and Atlantic 2008, IEEJ”
38MTPA of LNG
Japan, with scarcity in natural resource, will continue to increase LNG import to meet the increase in gas demand and to renew existing contracts.

6. Movement in Crude Oil and LNG Prices
($/mmbtu)
($/bbl)
Recent rapid rise in crude oil has impacted LNG price discussion
Asian LNG Prices have been stable in the past, but in the future … ?

7. Japanese Gas Company’s Current Situation
Porter’s Five Forces
Threat to Substitute
less LNG supply
high LNG price
Bargaining Power of Suppliers
electricity - less oil price sensitive - clean brand image
Intensity of Competitive Rivalry
deregulation
decrease in demand due to financial crisis
Bargaining Power of Customers
Threat of the Entry of New Competitors
no “easy” client anymore (less usage of expensive energy (ie LPG and Kerosene)
distant customer (investment is necessary for pipeline and main)
demand from environment-friendliness
gas vs gas competition with electric power company

8. Japanese Gas Company’s Current Situation
Porter’s Five Forces
Threat to Substitute
less supply
high LNG price ~oil parity
Bargaining Power of Suppliers
Sustainable Japanese gas market need to be supported by:
LNG price that can support LNG Buyer’s long term investment and growth
2. LNG price with less sensitive to oil price fluctuation (gentler slope)
separation of long-term and spot LNG pricing
electricity (less oil price sensitive)
clean brand image for electricity
deregulation
decrease in demand due to financial crisis
Intensity of Competitive Rivalry
Bargaining Power of Customers
Threat of the Entry of new Competitors
no “easy” client anymore (less usage of expensive energy (ie LPG and Kerosene)
distant customer (investment is necessary for pipeline and main)
demand from environment-friendliness
gas vs gas competition with electric company

9. Regional Aspects of Gas Prices
Asia-Pacific
Eurasia
Middle-East
Atlantic
Existing Flow
Oil Products
JCC
Henry Hub
New Flow
Although globalization has emerged in a portion of shorter-term trades, the bulk of LNG trades remain to be regional long-term contracts.
Downstream gas market still carry strong regional characteristics around the world.

10. LNG Market Trend in Asia
China
A large number of domestic pipe line projects exist.
The difference between domestic market prices and LNG prices cannot be covered by subsidies.
Will end users not be able to pay high prices?
Although numerous plans exist for the LNG terminal construction, will those be realized?
Will return to the coal-based energy policy occur?
India
With the development of domestic gas fields in Dhirubhai and Deen Dayal on the East Coast in place, is large amount of LNG is required?
Rise of
LNG prices

11. Strong Points of Japan as an LNG Buyer
39 years history  Stable Buyer
Has actual market  Strong demand base
Substantial facilities  can absorb demand growth
Financial support for natural resources  advantages in terms and conditions
Japan will continue to be the Foundation Customer for New LNG Projects.
By launching new LNG projects with Japanese buyers as the Foundation Buyers, new LNG projects can further expand its business to other new markets and new fields.
Especially natural gas demand for gas companies will dramatically increase if the LNG price satisfies conditions for sustainable growth in downstream gas market. Win/Win situation for both LNG Buyers and the Sellers.

12. Upstream by Tokyo Gas LNG Sale and Purchase (SPA)
Area 03-13
NORTHERN TERRITORY
WESTERN AUSTRALIA 50
KILOMETRES
A U S T R A L I A
100
JPDA
Area 03-12
250km
500km
Melville Is.
EAST TIMOR
DARWIN
Suai
Dili
BAYU-UNDAN
ConocoPhillips (US) 57.15% (Operator)
Santos (Au) 11.39%
INPEX (JPN) 11.27%
Eni (Italy) 10.99%
TEPCO/Tokyo Gas 9.20% (TE:TG= 2 : 1)
Resources
Natural Gas 3.4TCF(100bcm)
LPG Condensate 400mil. bbl
LPG/Condensate (FSO)
Submarine PL (500km)
Darwin LNG (1 train)
[Total Cost USD 3.5bil]
LNG Sale and Purchase (SPA)
Seller: Darwin LNG
Buyer: TEPCO, Tokyo Gas
Volume: 3mtpa (TE 2mtpa, TG 1mtpa)
Period: Jan. 2006~ (17years)
Shipping: FOB
Topics
2004: Condensate
LPG
2006: LNG

13. New Upstream Participation Pluto and Gorgon
Project Outline
Pluto
Gorgon
Equity
Holder
Woodside 100%
Chevron 50%
Shell 25%
ExxonMobil 25%
Reserve
4.5~5tcf
40tcf
Plant Capacity
4.3mtpa
15mtpa
Plant Location
Barrup LNG Park
Barrow Island
Project Start
2010 -
TG Contract (LNG & Upstream)
Pluto
Gorgon
<Contracted>
<HOA>
Seller
Woodside
Chevron
ACQ
1.5~1.75mtpa
1.2mtpa
Duration
15 + 5years
25 years
Transport
FOB
(incl. some ExShip)
Equity 5%
TBD
Gorgon LNG

14. LNG Transportation by Tokyo Gas
Purpose of FOB / Owing Vessels
Increase of Trading Opportunities
for spot trading
for cargo diversion
Transportation for Other Buyers
North West Shelf Expansion: transportation by Tokyo Gas for co-Buyers
3 LNG vessels owned and 1 vessel chartered as Long Term basis 145,000 m3 Moss type
Energy Frontier - September / Energy Advance - March. 2005
Energy Progress - November / Energy Navigator - June. 2008
2 jointly-owned LNG vessels (dedicated to Badak IV)
Service In: LNG FLORA – March. 1993/ LNG VESTA – June. 1994
7th Ship (2009), 8th Ship (2011)
* Line: Malaysia-I, M-III (Short-term), North West Shelf Expansion, Darwin, Sakhalin-II, Spot, and new projects

15. Thank you very much!!