Chikako Ishiguro

Osaka Gas Co.,Ltd. cisiguro@osakagas.co.jp

19th January 2016

Future LNG market and energy landscape in Japan

Behind the Scenes of the Easing Supply and Demand Balance- “Demand”

Various Sources

2014 Jan-June (yoy gross) 2014 July-Dec (yoy) 2015 Jan-June (yoy)

Korea; LNG Demand for Power Sector

Generation Volume by Source (yoy TWh) LNG Import Volume (MT)

Korea custom, Kepco

Mt $/t Natural Gas Import Price

China; Natural Gas Supply in Winter

Natural Gas Import Volume (Winter)

China Custom

India; Highly Price Sensitive Market

Total RLNG Consumption - 45.2 mmscmd(2014)

Waterborne

LNG Import Volume (MT)

Fall in LNG Prices and LNG Imports

$/mmbtu Mt Japanese LNG Import Price Asian LNG Imports

Renewable 13-14%

Nuclear 10-11%

Natural Gas 18%

Coal 25%

LPG 3%

Power 28%

PES

486million kL

50.3million kL

TFC

326million kL

Safety

Energy Security ； Self-Sufficiency of Energy Supply

Economic Growth ； Reduction of Power Supply Costs

Environment Protection； Reduction of GHG Emissions

Fuel 72%

Energy Saving

Oil 30%

Self Sufficient

24.3%

Long-term Enerrgy Outlook in Japan to 2030

New Energy Policy in Japan

METI

Outlook for Power Generation Mix

METI

Average of 10 years

prior to Great

Earthquake

FY 2030

Oil 12 % 3 %

Coal 24 % 26 %

LNG 27 % 27 %

Nuclear 27% 22-20 %

Renewables

PV

11% 22-24 %

7.0 %

Wind 1.7 %

Geothermal 1.0-1.1%

Hydro 8.8-9.2%

Biomass 3.7-4.6%

- Liberalization of full retail market （2017）

- Neutrality of pipeline network of three gas companies (2022/4)

Gas Industry Reform

- Establishing a regional transmission organization (2015)

- Starting full retail competition (Price regulation to be continued) (2016)

- Legal unbundling of T/D divisions (2018-2020)

- Abolishing price regulation (2018-2020)

Electricity Industry Reform

Electricity / Gas Industry Reform: Market Liberalization

METI HP

Tokyo E: KASHIWAZAKI・K Hokuriku E: SHIGA

JAPC:TSURUGA

Kansai E:MIHAMA

Kansai E:OHI

Kansai E:TAKAHAMA

Chugoku E:SHIMANE

Hokkaido E:TOMARI

Tohoku E :HIGASHIDORI

Tokyo E:FUKUSHIMA 1

Tohoku E:ONAGAWA

Tokyo E:FUKUSHIMA2

Chubu E:HAMAOKA

Shikoku E:IKATA Kyushu E:SENDAI

Kyushu E:GENKAI JAPC:TOKAI2

To be decommissioned 14

On hold 18

Applied for restart 23

6 1 1

1

1

2

2

2

7

2

2

3

3

3

4

1

5

2 3 1 4

4

2

2 3 1 4

2 1 2 1 3

2 1 3

1 2 3

1

1 3

6 1 2 3 4 5

1 2 3 4

1 2

4 5

2

Source：Companies’ HP etc.

Status of Existing Nuclear Power Plants

1

Restart 2

Ap

plic

atio

n fo

r Ins

pe

ctio

n

Pre- Service

Inspection

Public

Acceptance

Pe

rmis

sio

n

Pu

blic

Co

mm

en

t

Co

mm

erc

ial O

pera

tion

Ap

pro

va

l

July 2013 Sep. 2014 Aug 2015

Schedule of Sendai Plant #1 is by Kyusyu E shown in The above flow chart is quoted from the material published by Kansai EP

Process of Restart Operation of Nuclear Power

Assessment Process

of

“Reactor Installment

License Application”

Assessment Process of

“Construction Plan Application”

Assessment Process of

“Safety Regulation Application”

Mar 2015

May2015

Ap

pro

va

l

Sep

2015

Outlook for LNG Demand Based on Nuclear Power Re-start Scenario

FY

Changes in Electricity Supply and Demand

Japanese Electricity Demand

FY 2005 2010 2013 2014

Photovoltaic 1,420 3,620 14,320 23,710

Wind 1,090 2,440 2,710 2,930

Biomass 2,150 2,400 2,370 2,520

Geothermal - 500 501 510

Generation Capacity of Renewable Energy TWh

MW

Desired

Feature of LNG

14

Decreased supply of

nuclear power

Expected Role

of LNG

Current

Market Trends

Increasing

supply

flexibility

Lowering

procurement

costs

Main fuel

for

Power generation

& city gas

Abundant and

stable supply

Increased supply of

renewables

Market

liberalization

Increased liquidity

of LNG

Low oil prices

Balancing Fuel

for

Power generation

Relaxed S/D balance

of LNG

Challenges

Introducing

new

LNG pricing

Government-led

support for

new supplies

Promoting

investment in

LNG industry

Ensuring

Japan’s

Energy Security

Role of LNG in Evolving Energy Market

Ishikari LNG/Hokkaido Gas

Kushiro LNG/JX Nippon Oil & Energy

Hachinohe LNG/ JX Nippon Oil & Energy

Shinsendai /

Tohoku Electric Power

Gas Bureau City of Sendai /

Sendai City

Soma/JAPEX

Hitachi/Tokyo Gas

Kagoshima/Nihon Gas

Nagasaki/Seibu Gas

Fukuoka/Seibu Gas

Hibiki/Hibiki

Tobata/Kitakyusyu

Riquid Natural Gas

Yanai /

The Chugoku Electric Power Hatsukaichi/Hiroshima Gas

Mizushima/Mizushima-LNG-Group

Hijeji/The Kansai Electric Power

Himeji/Osaka Gas

Senboku Ⅰ/Osaka Gas

Senboku Ⅱ/Osaka Gas

Sakai/Sakai LNG

Yokkaichi/Chubu Electric Power

Yokkaichi Center/Chubu Electric Power

Kawagoe/Chibu Electric Power

Toyama Shinminato/Hokuriku Electric Power

Oita/Oita Liquid Natural Gas

Matsuyama/Shikoku Gas

Sakaide/Sakaide LNG

Wakayama/The Kansai

Electric Power

Shimizu Sodeshi/Shimizu LNG

Yoshinoura/Okinawa Electric Power

Sodegaura/TEPCO, Tokyo Gas

Futtsu/TEPCO

Minami Yokohama/TEPCO, Tokyo Gas

Ohgishima/Tokyo Gas

Higashi Ohgishima/TEPCO

Joetsu/Chubu Electric Power

Naoetsu/INPEX

Yufutsu/JAPEX

Hakodate Minato LNG/Hokkaido Gas

Tobu Gas Akita/Tobu Gas

Nihonkai Nigata/Nihonkai LNG

Okayama/Okayama Gas

Takamatsu/Shikoku-gas

Chita Joint/Chubu Electric Power, Toho Gas

Chita/Chita LNG

Chita Midorihama/ Toho Gas

Start Before 2013

Start After 2014

16

Thank you very much for your kind attention !!