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Value Chain of the Osaka Gas Group

CSR Efforts Throughout the City Gas Value Chains

City Gas Value Chain of the Osaka Gas Group

The Osaka Gas Group procures natural gas, which is an environmentally-friendly and stable energy source, from overseas suppliers, and provides gas to more than 7.34 million households and businesses, mainly in the Kansai Region.

The Group secures the safety of customers and gives them peace of mind by procuring natural gas in a stable manner and building a solid security and accident-prevention system. By participating in the overseas upstream / downstream businesses, the Group has been expanding the scope of its business fields and enhancing further its natural gas value chain.

Stable procurement of LNG from eight countries

Unlike oil resources, which are unevenly concentrated in the Middle East, natural gas resources are spread worldwide. The number of years natural gas can be drilled for exceeds that of oil*, giving the former a comparative advantage as an energy source. Osaka Gas started importing LNG in 1972 from Brunei, and since then has diversified its procurement sources.

At present, we are procuring LNG from eight countries — Brunei, Indonesia, Malaysia, Australia, Qatar, Oman, Russia and Papua New Guinea. We are set to embark on an LNG project in the U.S. state of Texas to import LNG in 2018.

*Sources
BP Statistical Review of World Energy June 2017

Stepped-up efforts to expand business fields

Other than midstream businesses such as gas imports and receipts, gasification at LNG terminals and the provision of gas to end-consumers through pipelines, Osaka Gas' value chain includes upstream business such as the development of overseas gas fields and downstream business such as operation of LNG extraction terminals and power plants. We steadily forward those businesses as well as plan to join new project based on prudent risk assessment in the upstream business. Also, in the overseas downstream business, we intend to actively expand our energy business field in Southeast Asia.

Countries with Natural Gas Reserves and Natural Gas Supply Sources for Osaka Gas

Countries with Natural Gas Reserves and Natural Gas Supply Sources for Osaka Gas
*Sources
BP Statistical Review of World Energy June 2017

Gas Supply to about 7.34 million households and businesses

Globally procured LNG is gasified and processed at domestic LNG terminals, and is provided to about 7.34 million households and businesses, mainly in the Kansai region, via extended gas pipelines of a total length of about 62,200 km. The amount of gas to be shipped from our two main LNG terminals, located in Osaka and Hyogo, is determined according to the trend of gas demand — a mechanism aimed at securing stable gas supply to customers. We are managing the amount of gas reserved in each gas holder of our supply chain and their supply pressure on a real-time basis and in an integrated manner. We have established a 24-hour, 365-day emergency call and staff dispatch system against possible accidents and natural disasters.

On the supply side, Osaka Gas, as a general gas pipeline operator, ensures the supply of gas to customers in its service area without interruption. We act as a last-resort gas provider in line with the liberalization of retail gas sales in April 2017. Ensuring the safety of gas appliances and other facilities installed at customers' homes is a role whose fulfillment is equally shared between general gas pipeline operators like us and gas retailers. As a general gas pipeline operator, we are in charge of ensuring safety in the supply of gas and taking adequate safety steps in emergencies, while periodically checking possible gas leakage from gas pipes inside customers' properties.

Preparation against possible accidents

We have adopted a variety of anti-earthquake measures in the past, including the installation of various safety devices at LNG terminals, the adoption of gas pipelines made from durable and quake-resistant polyethylene, and the spread of the use of a gas meter that can automatically stop gas supply in response to a quake. Also, we make efforts to deploy devices that automatically stop gas supply of designated areas, and devices remotely shut down gas supply in response to vibrations bigger than a certain level triggered by an earthquake. We have been also enhancing anti-tsunami measures at LNG terminals and supply facilities following the earthquake-tsunami disaster that hit eastern Japan in March 2011.

Natural Gas Supply Area Covered by Osaka Gas Group

Natural Gas Supply Area Covered by Osaka Gas Group

Electricity Value Chain of the Osaka Gas Group

Japan's energy policy was reviewed following the March 2011 disaster that hit eastern Japan, leading to state reform of the electricity and gas market systems. Seizing the occasion of full deregulation of retail business of electricity in April 2016, the Osaka Gas Group commenced to sell electricity to households in the Kansai region.

The Osaka Gas Group will grasp the possible effects on the environment and society from its electricity business operations, and ensure fairness and transparency in its business operations, while taking these effects into consideration. By doing so, the Group aims to transform itself into a comprehensive energy service provider.

Possession of Diverse Power Sources

The Osaka Gas Group undertakes power generation business with diverse power sources, including fossil energy sources, cogeneration systems and renewable energy sources of its own. The combined power output capacity in Japan of all of these power sources is about 1.88 million kW, with the most power generated at the highly efficient Senboku Natural Gas Power Plant. The output capacity also includes electricity generated by wind power and solar power. The Group will continue tapping more power sources as a means of stabilizing electricity supply.

Electricity Sources Owned by the Osaka Gas Group in Japan

Electricity Sources Owned by the Osaka Gas Group in Japan
* Composition of electricity sources owned by Osaka Gas (based on a power generation plan covering the period between April 1, 2017 and March 31, 2018)
Osaka Gas supplies electricity by combining two major power sources. One is power generation based on natural gas (fossil fuel), which is clean and weighs less on the environment. The other is electricity generated under the feed-in-tariff (FIT) program (solar power, biomass and wind power) The purchase by Osaka Gas of electricity generated by the “ENE-FARM type S, ” a household-use solid oxide fuel cell (SOFC), is included in the composition of power sources owned by Osaka Gas. Power from ENE-FARMs accounts for less than 1% of the Company's total electricity sources.
*1 FIT program is partly financed by surcharges imposed on electricity users to promote the diffusion of renewable energy. The national average of CO2 emissions from all energy sources, including fossil-based power sources, is applied to the calculation of CO2 emissions from FIT electricity consumption.
*2 Electricity traded via this market includes hydrogen power, fossil-based power, nuclear power, FIT electricity and electricity generated from renewable energy sources.
  • The CO2 emission coefficient (after adjustment) of Osaka Gas for FY2018 is 0.415 kg-CO2/kWh of electric power (initial plan).

Power Supply Areas and Power Supply Mechanism

The Osaka Gas Group began supplying electricity to households and business operators such as restaurants and merchandise shops in April 2016 following full liberalization of the retail power market. Areas where the Group can supply power are the six prefectures in the Kansai region (excluding Fukuura, Ako City, Hyogo Prefecture) plus Fukui Prefecture (to the west of Mihama Town, Mikata County), Mie Prefecture (Kumano City, Kiho Town and Mihama Town of Minamimuro County) and Gifu Prefecture (part of Sekigahara Town, Fuwa County). Electricity can even be supplied to households and businesses that do not currently receive gas service from Osaka Gas.

Osaka Gas provides electricity to its customers using power transmission and distribution networks operated by Kansai Electric Power Co., Inc. (KEPCO), which means that the service quality and reliability will remain the same as those provided by KEPCO. The Osaka Gas Group has established a solid electricity supply system whereby power supply will not be suspended even if trouble occurs at power stations operated by the Group. Area of the Osaka Gas Group's Electricity Retail Business

Area of the Osaka Gas Group's Electricity Retail Business

Area of the Osaka Gas Group's Electricity Retail Business

Flow of Electricity Supply

Flow of Electricity Supply

Effects of Power Generation Business on the Environment

The Osaka Gas Group, as a comprehensive energy service provider, recognizes that it is an extremely important mission for the utility to bring its electricity business operations into harmony with the environment. Among important challenges to be addressed to attain the utility's goal of helping create a low-carbon society is reducing CO2 emissions. At present, power sources possessed by the Group in Japan are capable of generating electricity with a combined output capacity of about 1.88 million kW, of which CO2 emission is assessed to be 3,903 thousand t-CO2e.*

Senboku Natural Gas Power Plant is a mainstay power station operated by Osaka Gas, with a total power production capacity of 1,109 thousand kW. The plant is powered by natural gas, a fuel whose environmental impact is less than that by other fossil fuels such as coal and petroleum. In order to reduce its environmental impact, the Plant employs the energy-efficient combined cycle method, which combines a gas turbine and a steam turbine

Nakayama Nagoya Joint Power Generation Co., Ltd., an affiliate of the Group, is building a biomass-mixed coal-fired power plant with a power output capacity of 110 thousand kW. The fuel used at the new plant will contain 30% woody biomass. The use of biomass is expected to curb CO2 emissions significantly compared to conventional coal-fired power plants.

Procedures for environmental assessment have started in line with the Environmental Impact Assessment Act regarding the proposed construction of a new power station in Nishiokinoyama, Yamaguchi Prefecture, tentatively called Nishiokinoyama Power Plant. The construction project has been undertaken by Yamaguchi-Ube Power Generation Co., a company jointly established by Ube Industries, Ltd., Electric Power Development Co. and Osaka Gas. The project envisages adopting the most advanced and highly energy-efficient coal-fired power-generation facilities to bring the business into harmony with the environment.

Similar environmental assessment procedures are also under way in line with the Environmental Impact Assessment Act for a new natural gas-based power generation project, tentatively called "Himeji Natural Gas Power Plant Project," undertaken by Himeji Natural Gas Generation Co., a joint company between Osaka Gas and Idemitsu Kosan Co. The project plans to introduce the highly energy efficient gas turbine-combined cycle method.

Furthermore, the Osaka Gas Group owns a large number of electricity sources that have less impact on the environment, including renewable energy sources such as wind power and solar power, and cogeneration systems. The Group resolves to help the realization of a low-carbon society by diffusing power generated by such power sources which has less environmental impact.

High Energy Efficiency Achieved Using the Gas Turbine Combined Cycle Method

High Energy Efficiency Achieved Using the Gas Turbine Combined Cycle Method

Effects of the Power Generation Business on Society

When undertaking electricity business, the Osaka Gas Group makes efforts to grasp its possible effects not only on the environment but also on society, and take these factors into account.

The Group is prepared to fulfill its accountability to customers regarding their concern over the reliability of its power supply service and product quality. Specifically, we reply to customers' questions and requests through a help desk set up at our customer center while striving to solve their troubles or problems via a customer desk operated using a chat function. We have also opened a user-friendly website page dedicated to our electricity business.

To help our employees acquire professional expertise in comprehensive energy services, including the electricity business, we are holding educational seminars and trainings for them. In preparation for tapping into new business fields, we are also working on improving our business flows and operational manuals, which are part of the Group's efforts as a comprehensive energy service provider to respond to customer needs and requests in a responsible manner.

Presentation of New Value as a Comprehensive Energy Service Provider

Exclusive website for members, My Osaka Gas

Exclusive website for members, "My Osaka Gas"

ENE-FARM type S

“ENE-FARM type S,”
consists of a power generation unit and a tank
for heated water

The Osaka Gas Group presents new value to customers through the electricity business. The Group has unified the customer contacts for gas and electricity services into one, realizing a one-stop energy service for its customers.

Our exclusive website "My Osaka Gas" provides a service that enables its members to confirm their gas and power consumption through display in a graph, as well as the fees charged thereon. The online membership site is designed to help consumers live a comfortable life while promoting energy saving.

In April 2016, Osaka Gas launched the new model "ENE-FARM type S," a household-use solid oxide fuel cell (SOFC), thereby becoming the first company in Japan to purchase redundant electricity from customers. Provision of such equipment enables Osaka Gas to contribute to CO2 emission reduction in Japan, support the central government's policy of diversifying power sources and promoting the distribution of power sources, and ease peak power demand.

To become a company to which customers increasingly turn as a comprehensive energy service operator, Osaka Gas launched a housing support service called "Sumikata Service (Home Services)" in May 2016 to offer a wider range of housing-related services.

Aiming for furthering energy-saving at customers, the Group also launched information and communication technology (ICT)-based services.

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