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Downstream Business

Business Overview and Characteristics

In downstream businesses, we aim to secure stable income by utilizing the know-how and experience cultivated in the domestic energy business to improve the business value of each project. The Group participates in LNG terminal and IPP businesses and other business in North America, Europe, the Middle East, and Australia. We are also engaged in natural gas sales and energy services in Southeast Asia and would like to expand into projects such as power plants and LNG terminals. We will continue to make use of business expertise amassed in the region to proactively develop our businesses.

Status of Investments

Natural Gas-Fired Thermal Power Plants in the USA Market

In the United States, an environment-friendly natural gas-fired power plant is expected as a measure to respond to the increasing demand for stable power supply due to the abolition of aging coal-fired power plants and the expansion of renewable energy. Since participating in North American natural gas thermal power plant projects for the first time in 2004, we have in recent years participated natural gas thermal power plant projects, mainly in the US northeast including in the PJM Market, one of the largest wholesale power markets in the US. We aim for independent power-plant operation by accumulating the know-how we have built up in the US power business including in project fuel procurement and marketing to the power-generation market. In 2018, we took a 100% stake in Michigan Power’s natural gasfired power plant business and are proceeding with initiatives to operate the business independently. In addition, we are steadily expanding our businesses, through the acquisition of interest in the Kleen Energy natural gas-fired power generation business and the Towantic natural gas-fired power plant business; we are currently building up their earnings contribution. Moreover, we are proactively exploring investment opportunities in the renewable energy business, which are expected to expand in the US.

Michigan Power natural gas-fired thermal power plant

Michigan Power natural gas-fired thermal power plant

Kleen Energy natural gas-fired thermal power plant

Kleen Energy natural gas-fired thermal power plant

Towantic natural gasfired thermal power plant

Towantic natural gasfired thermal power plant

Steady Progress on Freeport LNG Project

Construction is steadily advancing at the Freeport LNG Project in Texas, USA, where the launch of commercial operation of the liquefaction business is scheduled around autumn 2019. LNG procurement from the USA is aimed at diversifying our supply sources and our LNG price indexation. It also introduces LNG without restrictions on the country of destination, which will help us to achieve stable and competitive LNG procurement.


Business Development in Southeast Asia

In March 2013 we set up a local representative company in Singapore and in October 2013 we also set up a local company in Thailand to sell natural gas and provide energy services. We are developing businesses in four countries in Southeast Asia, including the establishment of a local representative company in Indonesia in August 2018 and the establishment of a joint-venture company in Vietnam in July 2019. We will be expanding our international energy business by promoting business activities while responding to local needs, particularly in Southeast Asia, where the demand for natural gas is expected to grow.

Artist’s impression of completed Phu My 3 Specialized Industrial Park

Artist’s impression of completed Phu My 3 Specialized Industrial Park