Presentation

Brian Kitney
VP Commercial

Osaka Gas

Upstream Investments:
A Case Study
September, 2013
Osaka Gas Australia
 Introduction

Corporate Overview
 Confidential

Key Figures
Natural gas service area
 CORE BUSINESS: Domestic Gas Utility
Kyoto
 Headquartered in Osaka, Japan
(Affiliates : Perth, New York, Houston and London) Kobe Osaka
Osaka Nara
Bay
 Started business operations in 1905
 Serving 7 million natural gas customers in
the Kansai Region
 Imports about 8 MTPA of LNG (around 12% of Japan’s imports)
 Developing 3.2GW of power business as a second core
Tokyo
business
Osaka
(Japan, USA, Canada, Spain, Australia and Abu Dhabi)

 Investing in 7 countries for LNG & upstream assets

(Australia, Indonesia, Oman, USA, Canada ,Norway, and Papua New
Guinea)

 140 affiliated companies

 19,800 employees (Osaka Gas and consolidated
subsidiaries)
 Confidential

Financial / Operational Highlights

(Consolidated, March 2013)

 Operating Revenues: US$14.7billion

 Net Income: US$558billion
 Market Capitalization: >US$9billion
 Credit Ratings: S&P: AA-／ Moody’s: Aa3
*US$1=\ 94.05 (29 Mar 2013)

Operating Revenues Net Income (Billion Yen) Gas Sales Volume (Million m3)
(Billion Yen)

4
 Confidential

Osaka Gas Business Profile

Share of gas sales volume in Japan 209 Gas Companies
Japan has several local pipeline
25 networks separate from each other
28% % throughout its land instead of one
trunk line running through from one
Osaka Gas end to the other.
There are 209 gas companies in
Saibu Gas 2%
Japan. The gas supply area covers
11% 35%
6% of the land in Japan, mostly the
Toho Gas
Tokyo Gas urban areas.

Number of companies by size

・Major pipeline network No. of customers No. of
・Pipeline under contemplation companies
or construction
10,000 or less 98
100,000 or less 89
500,000 or less 16
More than 500,000 6
Total 209
Osaka Gas Toho Gas Tokyo Gas

5
 Confidential

Gas Sales Volume of Osaka Gas by Sector

(Million m3) (million m3)

(FY 2013 means the year ended 31 March 2013)

6
 Confidential

Peer Comparison

Business size comparison:

Gas Utilities Compared to Australian players
# Company Location # Company Location Rank
1 Gas Natural Spain
1 Woodside Australia 91
2 GAIL India Osaka Gas Japan 117
3 Tokyo Gas Japan 2 AGL Australia 128
4 Snam Italy 3 Santos Australia 131
5 Osaka Gas Japan 4 Origin Australia 179
6 Hong Kong & China Gas China
7 Oneok USA

DATA: Platts Top 2012 Global Energy Companies

Platts annual survey ranks companies based on financial
performance, using: asset worth, revenues profits, returns
on investment

7
 Confidential

Corporate Benchmarking
Osaka Gas is one of the world’s big buyers of LNG
25.0 2009
2013
20.0

15.0
mmtpa

10.0

5.0

0.0
CNOOC
TEPCO

Qatar Petroleum

CPC
Petronet LNG
GDF Suez

Tokyo Gas

Osaka Gas

Tohoku Electric
Union Fenosa Gas
Repsol YPF

Enel
Toho Gas
Chubu Electric

BOTAS
KOGAS

BG

Shell

Kansai Electric

Kyushu Electric
Source: Wood Mackenzie
Contracted Volumes Purchased by Company (MMTPA) - sorted by largest players in 2013 (Source: Wood Mackenzie)

8
 Confidential

Osaka Gas Australia

- Established in June 2000 with the participation in Sunrise and Evans Shoal
Establishment
- First in Perth amongst Japanese utility companies (now 7 utilities in Perth)
Osaka Gas Australia (OGA) as the core hub of OG group’s upstream
Strategic business:
Mission -To manage existing upstream assets
-To acquire new assets
Personnel - 22 People

Assets

 2000: Sunrise (JPDA)

 2000: Evans Shoal (Australia)
 2006: Qalhat (Oman)
 2007: Crux (Australia)
 2009: Gorgon (Australia)
 2011: Ichthys (Australia)
 2013: Stanley (etc) (PNG)

9
 Confidential

Osaka Gas Long Term Vision

10
 Confidential

Osaka Gas Long Term Vision “Field of Dreams 2020”

Global Energy and Environment Businesses Group with solid
foundations making progress in the fields of;
 Domestic energy businesses
Upstream  International energy businesses along energy value chain
 Environment and non-energy businesses

(consolidated)
<Scale comparison in ratio>
1 : 2 : 1
2020 International Energy Businesses Environment and Non-Energy Businesses

Domestic Energy Businesses

1 : 2
5 :
(Includes Real estate, I.T, chemicals, health etc)

11
 Confidential

Broadening Business Fields

1USD=80yen
$18.75 billion investments for solidifying three business field

Total of $18.75 billion investment 2009 – 2020

[$8.75 billion 2009 – 2013]

Upgrading existing businesses: $8.75 billion [$3.7 billion]

Environment/
Domestic energy businesses Non-energy
businesses
$8.25billion $0.5 billion

Investments for incubation and expansion: $10 billion [$5.0 billion]

Domestic energy International energy Environment/non-

businesses businesses energy businesses
$2.2 billion $4.4 billion $3.4 billion
(Includes Real estate, I.T, chemicals, health etc)

12
 Confidential

Osaka Gas Business Profile

CORE BUSINESS

Value Chain
 Transmission and Distribution
Osaka Gas manages 60,000km of transmission and distribution pipelines

 Osaka Gas’ experience and expertise in

the T&D business include:
- Expanding pipeline networks Mie-Shiga Line
(D/600mm, L/56km)
- Integrated central-control
Himeji-Okayama Line
monitoring system (D/600mm, L/85km)
Chubu EP’s Kawagoe Power
- Advanced safety system for Plant/Yokkaichi LNG Center
efficient dispatching Himeji
Senboku I & II
 Osaka Gas and Chubu Electric Power are
constructing the Mie-Shiga Line

The Supply Area of the OG Group

High Pressure Pipe Line

Tokyo
Osaka

14
LNG Receiving Terminals
Osaka Gas’ experience in LNG operations also includes
managing receiving terminals in Japan for over 40 years
 Osaka Gas’ experience in LNG Senboku I Himeji*
Terminal Senboku II*
terminal include:
1971 (I)
- Construction and operation of Start Operation 1984
1977 (II)
LNG receiving terminals
Vaporizers 20 units 6 units
- Overseas consultation for LNG (Capacity) (1,775 ton/h) (600 ton/h)
terminal construction and LNG tanks 22 units 8 units
utilization of cryogenic energy (Capacity) (1.8 mil m3) (0.74 mil m3)
 Osaka Gas has decided to construct new *Q Flex class acceptable
storage tank of 230K m3 in Senboku
(Estimated to be operated in 2015 onwards)
Senboku I Senboku II Himeji

15
 Confidential

LNG Procurement
Osaka Gas secures most of its LNG volume on long-term
basis.
 In FY2009, Osaka Gas procured 7.4
million tons of LNG mainly from 6
countries Russia

Gulf of Mexico Egypt

Algeria
Qatar
Abu Dhabi
Oman
Trinidad & Tobago
Nigeria Yemen Brunei
EQ. Guinea
Malaysia
Indonesia
Papua New
Peru
Guinea
Australia

Long-term contracts
Spot/Short Term purchases

16
 Confidential

LNG Portfolio
※Portfolio/Short-term volume is excluded

FY2010 FY2015
Qatar Qatar Russia
4% Brunei 4% 3%
Brunei 5%
8% Indonesia
Indonesia 5% Australia
36%
Oman 31%
16% Malaysia
13%

Australia
Oman PNG
17%
Malaysia 19% 19%
18%

FOB ratio: 48% 70%

17
 Confidential

LNG Transportation
Osaka Gas is committed to grow its LNG transportation business,
to reduce shipping cost and to expand business opportunity.
FOB ratio：48％（2010）⇒ 70％(2015)
LNG LNG LNG LNG LNG LNG NO.7/8
FLORA VESTA JAMAL DREAM BARKA JUPITER Carrier

Papua New
NWS Papua New
Indonesia Indonesia Guinea/
Project Oman Expansion/ Qalhat Guinea/
Badak IV Badak IV Gorgon/
Sakhalin2 Gorgon
Sakhalin2
Capacity 125,000m3 125,000m3 135,000m3 145,000m3 153,000m3 153,000m3 153,000m3
Operator NYK MOL NYK NYK NYK NYK MOL
Builder Kawasaki Mitsubishi Mitsubishi Kawasaki Kawasaki Kawasaki Mitsubishi
Delivery 1993 1994 2000 2006 2008 2009 2014/2015
BOG re-
Ice Class Ice Class Continuous
Feature liquefaction
Grade 1D Grade 1C Tank Cover
System
18
 カナダシェール Press：2012/7/31
LNG Trade – Recent Transactions
Freeport LNG Tolling (US)
Execution of Agreement ： July 2012
Location ： Freeport, Texas US
Capacity: 4.4 MMTPA
Contract Capacity ： 2.2 million tons per annum (MMTPA)
(Note: Chubu Electric Contract Capacity : 2.2 MMTPA)
Start of Commercial Operation ： 2017 （planned）
Liquefaction Capacity ： 3 trains with capacity of approx. 4.4 MMTPA each
Freeport LNG terminal
Export Authorization ： Received

❑ Acquiring an LNG supply source

• Enhancing procurement stability by diversifying sources
• Introducing new LNG price index (HH-linked) and securing
competitive LNG
• Destination-free LNG
19
 Confidential

Osaka Gas
R&D and Technical
Expertise
 Confidential

LNG Technology Provider

Full Containment BOG Re-liquefaction
LNG Tank (cold energy storage system)

Cold Energy
Senboku II Application

Invar Alloy LNG

Piping

Cryogenic Power
Plant

ＬＮＧ Vaporizers

21
 Confidential
Osaka Gas has provided consulting
services for 3rd party Terminals
＜JAPAN＞
＜SPAIN＞ Hiroshima Gas

Sagunto (ＳＡＧＧＡＳ) Nihon Gas

＜CHINA＞
Reganosa (ＥＮＡＧＡＳ) Okayama Gas
Feasibility Study
Shikoku Gas
Saibu Gas ＜U.S.A.＞
Okinawa Electricity
Port Pelican (Chevron)
Baja California (Chevron)
＜TAIWAN＞
Taichung (CPC) ＜KOREA＞
Tung-Ting(CPC) Pyeongtaek (Kogas)
Incheon (Kogas)
＜THAILAND＞ Tongyeong (Kogas)
Map ta phut (PTTLNG) on-going
Kwangyang (POSCO)

＜SINGAPORE＞
Totally, consulting service
FEED work
has been provided in
＜MACAO＞ ＜PHILIPPINES＞
１４ overseas terminals &
Feasibility study
６ domestic terminals

22
 Confidential

Osaka Gas Mid / Downstream

Business

2nd CORE BUSINESS

• Power / IPP
 Confidential

Power Business
Medium- and long-term strategy
- Expand the existing power business to be a second core business after natural gas.
- Further expansion of business planned; securing and developing new power sources
and portfolio
- Response to power supply short-fall after nuclear crisis

Enlarging capacity
国内水力･ﾊﾞｲｵﾏｽ +14万kW 海
(billion yen) Profit contribution
外IPP +150万kW
3,000MW

1,100MW
Short-term
(Semboku)
- Small decentralized power sources
Long-term
1,900MW
-Construct large-scale plants
-Acquire divest. assets of
power cos.
FY2010 FY2020
*including capacity outside Japan
24
 Confidential

International Mid / Downstream Business

Country Project Type Ownership Acquired
Tenaska
Mid- to long-term strategy USA
Gateway
IPP (845MW) 40% 2004
Seeking global opportunities for achieving stable revenue Spain Amorebieta IPP (755MW) 50% 2005
flow using human resources and know-how of the group USA OGPA 8 IPPs (1,852MW) 24.1% (net) 2005
Target areas LNG regas terminal
Pipelines, gas distribution, USA Freeport 10% 2008
(13Mton/year)
Gas marketing (gas solutions, marketing), Australia EII Pipelines, IPPs, etc. 30.2% 2008
IPP (power generation), Renewables, etc. IPP (132MW)
Australia Hallet 4 39.9% 2009
Target countries Wind farm
Europe, Asia/Oceania, and North America Spain Sagunto
LNG regas terminal
20% 2010
with small country risks (6.4Mton/year)

2008 2013 2020 UAE Shuweihat Ⅱ IWPP (1,500MW) 10% 2011

Assets 34 → 100 → 150 (billion yen) Solar power
Portfolio of U.S IPP’s
Canada Aurora generation 44.95% 2012
(8 including Guam) (9 sites,100MW)

Tenaska Gateway IPP Sagunto LNG Terminal

Freeport LNG Terminal Amorebieta IPP Shuweihat Ⅱ IWPP

Aurora Solar Power Generation

IPP：Independent Power
Producer
Portfolio (pipelines, IPPs, etc.)
IWPP：Independent Water Hallet 4 Wind farm
and Power Producer
25
 Confidential

Recent Transactions
Hallet 4 Wind Farm, in South Australia
 October 2009: investment decision in Hallet 4 wind
farm project in South Australia
 Capacity: 132MW
 Ownership
APA 20.2%
Osaka Gas 39.9%
Marubeni 39.9%

Aurora solar power generation, in Canada

 June 2012: investment decision in Aurora solar
power generation project in Ontario, Canada
 Capacity: 100MW
 Ownership
Osaka Gas: Mitsubishi: Sharp＝44.95 : 44.95 : 10.1

26
 Confidential

Osaka Gas Upstream Business

• Supply Security / Flexible LNG

• Natural Hedge
• Additional Revenue Stream
• Developing Expertise
 Confidential

Overseas Activities
Osaka Gas is actively participating in overseas projects Idemitsu Snorre
Canada Mega Solar (Norwegian North Sea)
Canvey Island LNG
Osaka Gas Energy (under feasibility study)
America (New York)
Canada Shale
Osaka Gas UK
Osaka Gas Power (London) Headquarters
America (7 IPPs)
Amorebieta IPP Marianas Energy
Texas Shale (Spain)
Tenaska (IPP)
Gateway IPP Universe Gas & Oil,
Freeport LNG (Texas, USA) Qalhat LNG Japan CBM
Sagunto LNG (Oman)
Terminal
(Spain) Sunrise, Evans Shoal
Upstream projects Ichthys Crux
Gorgon Energy Infrastructure
Ownership
Country Name Type Status Acquired Investments (Gas and
(OG Net) Osaka Gas Australia
(Perth) Power Portfolio)
Indonesia Universe Gas & Oil LNG 1.5% In operation 1990

Australia Sunrise LNG 10% Under study 2000 Hallet 4 (Wind Power)

Australia Evans Shoal LNG 10% Under study 2000

Norway Idemitsu-Snorre Oil 2-5% In operation 2005

Oman Qalhat LNG LNG 3% In operation 2006

Australia Crux LNG 3% Under study 2007

Australia Gorgon LNG 1.25% Under development 2009

Indonesia Japan CBM CBM 1.8% Under study 2009

Canada Cordova Shale gas 3.75% In operation 2011

Australia Ichthys LNG 1.2% Under development 2011

USA Pearsall Shale gas/liquids 35% Under development 2012

Papua New
Stanley etc Condensate/LNG 15-20% Under development 2013
Guinea
28
 Confidential

Australia / East Timor - Sunrise

Sunrise JV Partners  Discovered in 1974
Woodside (Operator) 33.4%
 8 wells drilled to date
ConocoPhillips 30.0% (Reservoir intersected by 7wells)
Shell 26.6%  Full field 3D seismic coverage
Osaka Gas 10.0%  10% equity purchased from Woodside in
2000
 In April 2010, partners selected FLNG
technology as preferred development
option

Australia – Indonesia
Maritime border

Troubadour
Sunrise Field Field

29
 Confidential

Australia - Evans Shoal

Evans Shoal
Evans Shoal Partners (Gas Field)
Shell (Operator) 32.5%

ENI 32.5%

Petronas 25.0%

Osaka Gas 10.0%

 Discovered in 1988
 3 wells drilled to the field to date
(All of them intersected reservoir) Evans Shoal – 2 (1998)

 4th well currently drilling Evans Shoal – 1 (1988)

 Full field 3D seismic coverage

 10% equity purchased from Shell in
2000 Evans Shoal South – 1 (2006)

30
 Confidential

Australia - Gorgon LNG Project

Gorgon JV Partners
Chevron (Operator) 47.333%
Shell 25.0%
ExxonMobil 25.0%
Osaka Gas 1.25%
Tokyo Gas 1.0%
Chubu Electric 0.417%

 Discovered in 1980
 15.6 MMTPA = Australia’s biggest-ever LNG
development
 In 2009
・Final Investment Decision taken
・LNG SPA (1.5 MMTPA x 25yrs) signed
・Equity acquisition completed
 Equity lifting of LNG

31
 Confidential

Australia – Ichthys LNG Project

Ichthys JV Partners
Inpex (Operator) 66.07%
Total 30.0%
Osaka Gas 1.2%
Tokyo Gas 1.575%
Offshore Production Subsea
Chubu Electric 0.735% Facility and FPSO pipeline

Toho Gas 0.42%

 Liquids rich gas

 8.4 MMTPA = 2 x 4.2 MMTPA
Onshore LNG Plant
 In 2011
・Final Investment Decision taken
・LNG SPA (0.8 MMTPA by Osaka Gas)
signed
・Equity acquisition agreement concluded.

32
 Confidential

Australia - Crux
Crux Field
Crux JV Partners
Shell 82.0%
Nexus 15.0%
Osaka Gas 3.0%

 Development Concept
• Originally planned to be condensate
stripping project. Now studying LNG
options
• Possible stand alone LNG / regional
hub or tie back to Shell’s Prelude
facility

33
 Confidential

Oman - Qalhat LNG

Qalhat LNG Shareholders
Government of Oman 46.84%
Oman LNG 36.80%
Union Fenosa Gas 7.36%
Qalhat LNG Plant
Itochu 3.00%
Mitsubishi 3.00%
Osaka Gas 3.00%

 Production Capacity
・3.3 MMTPA [Start of production: Dec.2005]
 LNG Buyers
・Union Fenosa Gas 1.65 MMTPA 2006~ DES
・Mitsubishi Corp. 0.8 MMTPA 2006~ FOB
・Osaka Gas 0.8 MMTPA 2009~ FOB
Central Oman
Gas Fields

34
 Confidential

PNG：Stanley
Contracted SPA with Horizon Oil in May 2013
(awaiting completion)
Development of Condensate
PRL4 FID:2012
Start of production: 2015(Planned)
PRL21 FID: Targeting 2014
Ongoing Exploration works to secure gas
to support a LNG project
PRL4 % PRL21 % PPL259 %

Horizon 30 Horizon 27 Horizon 15

Osaka Gas 20* Osaka Gas 18* Osaka Gas 10*

Talisman 40 Talisuman 32.5 Eagle Wood 65

Mitsubishi 10 Kina 15 Mega 10

Petroleum Foutune

Mitsubishi 7.5

* Subject to completion
35
 Confidential

World-Wide Investment in Upstream Business

Idemitsu-Snorre Universe Gas & Oil (Indonesia)
(Norway) (supplying gas to LNG plant, 33.4% share)
(Oil, 35% share) On Stream
On Stream
Canada Shale (Canada)
OGUK (Shale Gas, 7.5% share)
On Stream
Sunrise (Australia)
(LNG, 10% Interest)
Japan CBM (Indonesia) Pre-Development Phase
(40.1% share) OGEA
Stanley (PNG)
Appraisal Phase (Condensate / LNG, 20%)
OGRA
Development
Evans Shoal (Australia) Texas Shale (USA)
(LNG, 10% Interest) (Shale Gas/Oil, 35% share)
Appraisal Phase Development / Production
Qalhat LNG (Oman)
(3% share in LNG plant)
On Stream
Crux (Australia) * Gas Project
Ichthys (Australia) OGA (LNG, 3% Interest) Pre- Oil Project
(LNG, 1.2% interest) Development Phase
Under construction Office
Gorgon (Australia)
(LNG, 1.25% interest)
Under construction
36
 Confidential

Conclusion
 Confidential

Platform for Growth

Leveraging Osaka Gas Experience
 Financial Capability
 LNG off-take
 Expertise through the value chain in LNG
Transportation / Regas / Pipelines / Downstream
marketing knowhow
 Natural gas related technologies
 Increasingly experienced upstream partner

38
 Confidential

Major Strengths
Osaka Gas is able to contribute its expertise along the entire
natural gas value chain
Exploration Receiving Transmission Distribution Gas & Power
Transportation
& Production Terminals Network Network Marketing
 Interests in oil &  Has interests in  Construction and  Operates and maintains 59,000 km  More than 8BCM
gas fields in six LNG carriers operation of three pipelines in Japan of natural gas
Indonesia, LNG receiving sales
 2 Additional  Investor in 13,000km Australian
Australia, East terminals
tankers on order pipeline system  Electric power as
Timor, Norway,
 Reliable a second core
US and Canada  Utilization of  Centrally controlled supply system
operations for business both at
carriers for global
almost four  Sophisticated use of IT home and abroad
LNG trading
decades with
 High preparedness against  Japan’s major
 BOG re- excellent safety
earthquakes and other natural owner/operator of
liquefaction plant records
LNG Offtake & disasters district heating &
on board from
 World’s largest cooling systems
Trade 2000 (LNG
class above –
 Leader in Jamal) Financial Strength  Development &
ground LNG tanks
Japanese buyers’  Market capitalization of marketing of
consortium  Advanced LNG around $9 billion residential
 Expertise in vaporisers and cogeneration
innovative specialised LNG  Revenues: $14.7 billion system (Fuel Cell
procurement and pipe materials Type and Engine
 Strong cash flows and
trading of LNG Type)
 Wide-ranging solid credit ratings (AA-
 Annual LNG trade applications of /Aa3)
exceeding cryogenic energy
8MMTPA

39
 Confidential

Greater Depth / Greater Breadth

40
 Confidential

Ongoing International Growth

LNG Oil / Pipeline Gas

1st-tier Asia Pacific, North America Australasia, S.E Asia

Area (Other areas including Middle East, Africa North Sea, USA etc
are of interest) (low, mid/low risk countries)

Discovered, Development, Producing

Phase Close to FID, Production Near-commissioning

Reliable partner
Partner with technical and financial capability

Equity LNG lifting is attractive Remaining production life > 5yrs

Others
Unconventional gas is within scope Unconventional gas is within scope

Increase the share and the value of “International business” for

Osaka Gas and grow across the full value chain.

41
 A Century of Experience

Osaka Gas UK, Ltd

1st Floor, Carrington House, 126-130
Regent Street, London W1B 5SE, UK
Head Office
Phone: +44 (0) 20 7851 7483
4-1-2 Hirano-machi, Chuo-ku,
Fax: +44 (0) 20 7287 9617
Osaka, 541-0046, JAPAN
Phone: +81 (6) 6205-4566
Fax: +81 (6) 6222-2044
Website: ｗｗｗ.osakagas.co.jp
Osaka Gas Energy America Co.
Osaka Gas Freedom Energy Co.
One North Lexington Avenue, Suite 504
White Plains, NY 10601, USA
Phone: +1 (914) 253-5500
Fax: +1 (914) 328-4430

Osaka Gas Resources America Co.

1980 Post Oak Blvd Suite 1500 Houston,
TX 77056
Phone: +1 (713)-360-4820
Osaka Gas Australia Pty Ltd
Fax: +1 (713)-360-4701
Level 16, 108 St Georges Terrace
Perth, WA 6000, Australia
Phone: +61 (8) 6188 0450
Fax: +61 (8) 6188 0455

Thank you
42