Natural Gas Market Development

- Osaka Gas Activities -

Osaka Gas Co., Ltd.

Feb 23, 2015

Philippines Infrastructure Seminar 2015

Takaomi Kannen (Commercial and Industrial Energy Business Unit)

Yosuke Kuwahara (Pipeline Business Unit)

1

Agenda

1. Outline of Osaka Gas

2. Gas Business in Philippines （Batman1 Project）

3. Our Sales Activities for Natural Gas Market Development

4. Our Gas Distribution Pipeline in Urban Area

5. Conclusion

2

1. Outline of Osaka Gas

3

Key Facts

Establishment 10 Apr. 1897

No. of Customers 7.16 million

LNG purchased 8.0 million tons/year

Affiliated companies 145 companies

No. of Employees 21,250

(Osaka Gas Group: Osaka Gas

and affiliated companies)

Osaka Tokyo

Natural gas service area

Osaka

Kyoto

Kobe

Nara Osaka

Bay

Net Sales: US$ 14.7 billion*

Net Income: US$ 405 million*

Total Assets: US$ 16.2 billion*

Credit Ratings: S&P: AA-／ Moody’s: Aa3

(Consolidated, March 2014) Financial/Operational Highlights

Company profile

*US$1=¥102.92 (31 Mar 2014) 4

Energy Business Value Chain of Osaka Gas

Upstream Investment / LNG Procurement Upstream Investment / LNG Procurement

LNG Transportation LNG Transportation

LNG Receiving Terminals LNG Receiving Terminals

Gas Transmission and Distribution Gas Transmission and Distribution

Gas Marketing Gas Marketing

Power Business Power Business

Import : 8million tons/ year

from 7 countries

Import : 8million tons/ year

from 7 countries

Ownership of

7 LNG carriers

Ownership of

7 LNG carriers

3 LNG terminals

Over 30 years operational experience (30 tanks)

3 LNG terminals

Over 30 years operational experience (30 tanks)

Operation and maintenance of 61,300km of pipeline

with maximum pressure 7MPa

Operation and maintenance of 61,300km of pipeline

with maximum pressure 7MPa

7.1 million customers

Cogeneration:1,413MW

Home-use cogeneration systems

(Engines, Fuel cells)

7.1 million customers

Cogeneration:1,413MW

Home-use cogeneration systems

(Engines, Fuel cells)

Development and operation of

power plants(1,84GW)

- Senboku Power Station(1,109MW)

- 5 wind farms

- 6 solar power plants

Development and operation of

power plants(1,84GW)

- Senboku Power Station(1,109MW)

- 5 wind farms

- 6 solar power plants

Residential

fuel cell

Residential

fuel cell

Offices Offices

Factories Factories

Households Households

Qatar Qatar

Oman Oman Malaysia Malaysia

Indonesia Indonesia

Australia Australia

Brunei Brunei

Sakhalin Sakhalin

5 Confidential

2. Gas Business in Philippines

（Batman1 Project）

6

Batman1 Project

Future Option Route

PHASE-1 Route

PHASE-2 Route

Legend PHASE-1 ： Trunk Line(24")

： Distribute Line(16")

PHASE-2 ： Trunk Line(16")

Future Option ： Trunk Line(24")

●： Block Valve Station

■： Governor Station

★： Governor Metering Station

☆： Metering Station

◎： Expressway EXIT

PH

AS

E-1

Route：

65.7

km

(24”)

P

HA

SE

-2 R

oute

：29.1

km

(16”)

7

BATMAN2

(Bataan - Manila)

140kms.(2020)

BATMAN2

(Bataan - Manila)

140kms.(2020)

ET LOOP

(EDSA - Taft Loop)

40kms. (2020)

ET LOOP

(EDSA - Taft Loop)

40kms. (2020)

SU-MA

(Sucat - Malaya)

35 kms. (2017)

SU-MA

(Sucat - Malaya)

35 kms. (2017)

BATCAVE

(Batangas -Cavite)

40kms (2022)

BATCAVE

(Batangas -Cavite)

40kms (2022)

BATMAN1

(Batangas - Manila)

80-100kms (2015-17)

BATMAN1

(Batangas - Manila)

80-100kms (2015-17)

Batman1 Project

Source: DOE, Philippine Energy Plan (2012-2030)

3. Our Sales Activities for

Natural Gas Market Development

8

Organization Chart

Auditing Dept.

Stra

teg

ic

Affilia

ted

B

usin

esse

s

- Corporate Strategy Dept.

- Affiliated Business Dept.

- Finance Dept.

- Accounting Services Dept.

Energy Resources & International

Business Unit

Board of

Directors

Pipeline Business Unit

Commercial & Industrial Energy

Business Unit

LNG Terminal & Power Generation

Business Unit

Executive

Board

Chairman

President

Executive Vice

Presidents

- Technology Planning Dept. (28)

- Energy Technology Lab. (64)

- Engineering Dept. (68)

- Fuel Cell Development Dept. (33)

Secretariat

Corporate Communications Dept.

Human Resources Dept.

General Affairs Dept.

Purchasing Dept.

Environment Dept.

Regional Development Dept.

Tokyo Branch

Research Institute for Culture, Energy & Life

Compliance Dept.

Liquid Gas Co., Ltd.

Nissho Petroleum Gas Corp.

Urbanex Co., Ltd.

OGIS-RI Co., Ltd.

Osaka Gas Chemicals Co., Ltd.

Bu

sin

ess U

nits

Co

re

Affilia

tes

Information & Communication Systems

Dept. (29)

International Business

Development

Annual R&D budget : ¥ 9.6 B ( US$ 90 M)

Corporate Planning HQ

R&D HQ (193) Residential Energy Business Unit

9

Gas Sales Volume

188 million

MMBTU

Sales volume（bil. m3）

Residential

Industrial

Wholesale

by pipeline

Total 371 million MMBTU

Com/Ind. Energy B.U. Com/Ind. Energy B.U.

Commercial/Industrial

Gas Sales Volume ⇒ 68%

98 million

MMBTU

68 million

MMBTU

21 million

MMBTU

We have especially enhanced the industrial/commercial gas demand by

satisfying the needs from our customers.

Commercial

Financial Year 10

3. Comfortable Lifestyles with Natural Gas

Gas System for Customers

2. Commercial and Industrial Energy System

1. Better Living Through Natural Gas

Movie

11

Higher efficient system compared to Thermal Power Plant

What’s Gas Co-generation

Thermal

Power plant

需要地

Electrical

Energy

Primary Energy

Coal ,Oil,

Natural Gas

Waste heat

Transmission Loss

Gas Supply Base

Primary Energy

（Natural Gas）

Electrical

Energy

Usable

Heat

（ＬＨＶ Basis） Waste heat

Energy efficiency

70～80％

Energy efficiency

40％

Gas Cogeneration System

demand

Point

Electricity

demand

Point

Enhancement of Energy Efficiency

⇒ Reduce CO2 emission

Reduce Energy Cost residential C&I 12

Gas System for Residential Customers

We can create the happier life with gas advanced system.

Co-generation system

Floor heating

Reduce the electricity demand

Energy saving, cost saving

shower

Mist sauna & dehumidifier for

the bathroom

Gas cooking stove

13

Gas Absorption Chiller

GHP (Gas Engine Driven Heat Pump)

Feature

Supply of chilled water utilizing various

energy sources such as gas, steam

and waste heat.

Environmentally friendly equipment

without green house gases.

Feature

The compressor of the heat pump is

driven by the gas engine.

Indoor Unit is same as EHP.

Inverter control.

Absorption

Chiller/Heater

Cooling tower

Condenser

Evaporator

Gas

Absorber

Generator

Chilled water Fan coil unit

Fan

Gas

Electricity

Compressor

Gas engine

Hot water

(Waste Heat)

Exchenger

Indoor Unit

Gas Air Conditioning System for C&I Customers

Outdoor Unit

Indoor Unit Outdoor Unit

Operation with lower electric power, cost saving, energy saving.

14

Gas System for Commercial Facilities

※ガス専焼で油タンク不要

Co-

generation

chiller PV

GHP

Electricity,

light

cooling cooling

Energy

monitoring

Natural gas

Solar

collector

Electricity,

light

Supermarket

Reduce the electricity demand

Energy saving, cost saving For energy security

Create electricity

on site Cooling by gas

Use of solar power

15

Smart Energy Network

Natural

gas

Office

electricity

cooling

HOTEL

Residential

electricity

Smart energy network is next-generation energy system that create new value by

combining distributed energy sources through a process of integrated control.

ICT

Network

Smart Energy Network

Supermarket

electricity electricity

cooling cooling

electricity

bathroom

kitchen

Natural gas

ch

iller

Co-

generation

PV

Cold water

Waste heat(steam/hot water)

Energy center

16

4. Our Gas Distribution Pipeline

in Urban Area

17

Gas Transmission and Distribution System

High pressure pipelines

（10bar and over）

Medium

pressure B

pipeline （3 ～ 1 bar）

Low pressure

pipeline （1bar or less）

Medium pressure A regulator

（Medium pressure A

→ Medium pressure B)

Medium pressure B

regulator （Medium pressure B

→ Low pressure）

High pressure

regulator （High pressure → Medium pressure A)

Medium pressure A pipeline (10 ~ 3bar)

High pressure 10bar and over

Medium pressure 1bar and over –

Less than 10bar

Low pressure Less than 1bar

Gas Storage Holders

Pressure Specification (Gas Utility Industry Law)

Pressure regime of gas transmission

and distribution system

Transmission Pipeline

Distribution Pipeline

LNG Terminals (Vaporization, Calorific adjustment, Odorization)

*G: Pressure Regulator

18

Overview of Gas Pipeline in Urban Area

Osaka City

Osaka Gas has rich expertise and know-how in operation and maintenance of supply to many customers in urban areas like Osaka city.

Construction Trenchless Technique

Polyethylene Pipe

Safety

Efficient Operation

Supply Suspension System

Intelligent Gas Meter

Smart Meter

Further safety services

19

Trenchless Technique

Trenchless technique can reduce the volume of excavated soil, minimizes the adverse effects of pipeline construction work on people and traffic, and reduces pipeline construction costs.

20

Drilling machine

Mud water unit

Drill head Signal processing system Directional control operation

Our Technical and Operational Expertise

▦ Overcame challenges Great Hanshin Earthquake in 1995

- gas supply suspended to 860,000 customers

- gas supply restored within 85 days.

▦ Established advanced anti-earthquake measures learned

through major earthquakes for;

- preventing secondary disaster

- emergency actions

- restoration work

21

Disaster Measures ～ Supply Suspension System ～

Supply Isolation Blocks

Supply Suspension System

Blocks Shut-off system Supply suspended

pipeline network

Super

Blocks

Remote control

（at Medium A line valves）

Medium A, medium B and

Low pressure

Middle

Blocks

Remote control

（at Medium A regulators）

Medium B and Low

pressure

Little

Blocks

Seismic automatic

（at Medium B regulators） Low pressure

22

Intelligent Residential Gas Meter Polyethylene Pipe

Shutoff valve Lithium battery

Flow volume sensor

Earthquake sensor

Pressure switch

Microcomputer

Recovery switch

LED lamp

23

Advanced Technology for Safety

Emergency dispatch service in Osaka Gas

Fire department, Police, etc.

Report

Dispatch

Order

Call

We have 24hours emergency service to ensure

our 7,000,000 customers’ safety.

24

Central control center Central control center

Local safety office Local safety office Periodical inspection Periodical inspection

Customer call center Customer call center

Emergency Car Emergency Car Customer Customer

250,000 calls and 200,000 dispatches / year

Smart Meter Adopted by Osaka Gas

25

Safety and Security Services with Smart Meter

26

Magnet door switch Passive sensor Gas-leak alarm Fire sensor

Controller

With

communication

device

Emergency communicator

Prevention of crimes Prevention of crimes Prevention of disaster Prevention of disaster

Emergency communicating service Emergency communicating service

Meter with

communicator

Gas meter

5. Conclusion

27

Key Features of Natural Gas Market

Possible Contribution by Osaka Gas LNG supply, including LNG receiving terminal operation

Natural Gas Market Development with energy solution, technology and

engineering

Benefit for the Country Environmental friendly resource

prevents Air Pollution

Stable Energy supply by LNG

from over the world

Reducing energy consumption by

high efficient natural gas

equipment

Pipeline supply enables stable

and convenient use of energy

Benefit for Users Reducing energy cost by high

efficient natural gas equipment

Opportunity to use wide range of

gas equipment less maintenance

required

Stable and convenient use of

energy by pipeline gas

28

END

29

Appendix

30

District Heating/Cooling business

Osaka Dome City Kobe Harbor Land

DHC sites

Japan’s first plant in operation in 1970

Operating at 19 sites* *including plants owned by JV with other firms

Total CHP Capacity: 20 MW

Gas Sales: 47 MMCM/y

Use of unutilized energies garbage/sludge incineration heat

river water heat

supply gas pressure

31