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CSR Charter ⅠCreating Value for Customers

Safety and Security 1: Procurement Stage

Aspects Determined as Materiality

  • Customer Health and Safety

Principle and Outline

In recent years, expectations and demand for natural gas have grown from the viewpoint of ensuring energy security. Osaka Gas has been making efforts to ensure the stable procurement of LNG by further diversifying procurement sources. The Company has been also striving to procure LNG with market competiveness by diversifying contract price indicators. When importing LNG from other countries, we are making the transportation process expeditious, safe and steady by operating LNG tankers, including those owned by Osaka Gas, in an efficient manner.

To ensure the stable procurement of natural gas and make our natural gas business profitable, we have been participating in liquefaction projects and gas field development projects.

Stable Procurement

Ensure stable procurement by diversifying sources of LNG imported by Osaka Gas

Unlike oil resources, which are unevenly concentrated in the Middle East, natural gas resources—the source of city gas and fuels for power generation—are spread worldwide. Natural gas’s reserve-to-production ratio is also much longer than that for oil,* giving the former a comparative advantage as an energy source. Osaka Gas started importing LNG in 1972 from Brunei, and since then has ensured stable procurement by diversifying 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 state of Texas, in the United States, and will continue redoubling our efforts to ensure stable LNG procurement.
LNG procured from the United States requires a contract with pricing determined mainly by indexing to crude oil, to which is added a contract with pricing linked to Henry Hub prices, the index upon which the market price for natural gas futures is based in the United States. This system will help to ensure stable LNG prices in times of rising crude oil prices.

* Source
BP Statistical Review of World Energy 2019

LNG Imported by Osaka Gas (The amount of LNG for electricity generation and whole sale trade is included.)

LNG Imported by Osaka Gas (The amount of LNG for electricity generation and whole sale trade is included.)

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

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

Expanding upstream business including obtaining LNG rightss

Osaka Gas is one of the first Japanese companies to work on the upstream business. In 1990, we took part in a gas field development project in Indonesia, which was later followed by gas and oil development projects in other countries.

As for our future upstream business, we will steadily implement existing projects while taking advantage of our domestic position as a gas and electricity buyer as well as an investor in development projects. In the future, we also aim to obtain concessions in new development projects, focusing on relatively less risky medium-scale projects.

Upstream Businesses of the Daigas Group

(As of Mar. 31, 2019)

Project name Location Project type Concession
ratio
Year of
participation
in the project
Sunrise Australia, East Timor LNG 10% 2000
Evans Shoal Australia LNG 10% 2000
Idemitsu Snorre, Norway Norway Oil, natural gas 1-10% 2005
Qalhat LNG Oman LNG 3% 2006
Crux Australia LNG, oil 3% 2007
Gorgon Australia LNG, oil 1.25% 2009
Ichthys Australia LNG, oil 1.2% 2012
Pearsall shale gas / oil U.S.A Natural gas, oil 35% 2012
Condensate and gas development in West Papua New Guinea Papua New Guinea Natural gas, oil 10 - 20% 2014
East Texas Shale Gas Project U.S.A Natural gas, condensate,
liquid natural gas
about 30% 2018

Expanding fleet of LNG tankers

LNG JUNO

“LNG JUNO”

Osaka Gas has been striving to secure its LNG transportation capacity using a fleet of seven LNG tankers. Demand for LNG transportation is expected to grow following the scheduled starts of new projects such as the Freeport project in the United States.

Under these circumstances, we will effectively utilize our existing fleet and expand it if necessary to ensure stable and economical source gas procurement and to diffuse the use of natural gas.

Fleet of Osaka Gas LNG Tankers

(As of Mar. 31, 2019)

Tanker When the service
started
Tank capacity Shipyard Tanker management
company
LNG JAMAL Oct. 2000 135,000 m³
(5 Moss-type tanks)
Mitsubishi Heavy Industries, Ltd. NYK Line
LNG DREAM Oct. 2006 145,000 m³
(4 Moss-type tanks)
Kawasaki Heavy Industries, Ltd. NYK Line
LNG BARKA Dec. 2008 153,000 m³
(4 Moss-type tanks)
Kawasaki Heavy Industries, Ltd. NYK Line
LNG JUPITER July 2009 153,000 m³
(4 Moss-type tanks)
Kawasaki Heavy Industries, Ltd. NYK Line
LNG VENUS Nov. 2014 153,000 m³
(4 Moss-type tanks)
Mitsubishi Heavy Industries, Ltd. Mitsui O.S.K. Lines, Ltd.
LNG MARS Oct. 2016 153,000 m³
(4 Moss-type tanks)
Mitsubishi Heavy Industries, Ltd. Mitsui O.S.K. Lines, Ltd.
LNG JUNO Nov. 2018 180,000 m³
(4 Moss-type tanks)
Mitsubishi Shipbuilding Co., Ltd. Mitsui O.S.K. Lines, Ltd.

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Safety and Security 1: Procurement Stage
Safety and Security 2: Processing Stage
Safety and Security 3: Distribution Stage
Safety and Security 4: Consumption Stage
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