‘Energy is one of the biggest problems we are encountering and the de-regulation is coming at the right time,’ says Mr. Michiaki Hirose, President of Tokyo Gas, in this interview with The Worldfolio
The International Energy Agency expects energy demand to grow 37% by 2040. Ensuring sustainable growth by minimizing the impact on the environment remains one of the most important challenges to be addressed. Do you feel sustainability is still a buzzword or have we finally entered a new turning point with the COP21 and the COP22 new regulations?
I think everyone in the world is facing a problem with CO2; it is not just a domestic problem but a global one. In Japanese we have a word which is “Jikuu” that means time and space, and I bring it up because it has very much to do with this issue – in the sense of time, because it is not just affecting this generation but also affecting the ones to come, and in the sense of space, because is not just in this region, but in many others.
When we look at the different energy sources, Japan accounts for a third of global demand for LNG. In your perspective, how does LNG support the green growth of Japan?
We are one of those countries that doesn’t have many natural resources. We can actually provide between 4-5% of the resources we need. We are facing environmental, but also energy problems, we cannot separate them to have a new policy. We have to make a balance between those ones and build our own policy that can consider both parts. We are concerned about environmentally friendly technologies and within the fossil fuels, LNG is one of the cleanest product for our country.
Abenomics has introduced a jolt in Japan’s economy with the objective of shifting towards a new paradigm of sustainable growth. What is the role of the energy market deregulation towards this goal?
The last arrow that refers to deregulations is very important for the growth strategy of our country. I believe Abenomics has made good progress so far, but I understand that there might be some changes to be still introduced. Up to now, energy is one of the biggest problems we are encountering and the de-regulation is coming at the right time to help the sector.
Chuken Kigyo are Japan’s hidden champions, namely medium-sized companies that, thanks to their investment in R&D, have been able to conquer large shares of the global market in their respective industries. In this context and considering Tokyo Gas as one of these champions, could you please give us some details about the history and its role in the energy sector in Japan?
Our company was established in 1885. Our history is a history of challenges and competition. From the very first moment we started we had different strategies compared with other companies in the sector. In the past we were only providing lighting to customers, from there we shifted to heat, and also cogeneration, combined heat and power, we had changed with times. From this year onwards, starting in April, we are going to face the challenge of the liberalization of the gas and we hope we can continue to strengthen ourselves with the spirit we always had, with the hunger of trying new things that characterizes us.
In a previous interview you stated that “Tokyo Gas will take the central role in forming a pillar with other companies [in the industry realignment]”: the main strategy behind the “Challenge 2020 Vision”. What are the main strategies behind the 2020 vision. How do you plan to play a bigger role within the de-regulation of the energy sector in Japan?
This is a really big chance for us. And if we can capitalize on it, I am pretty sure we can do even better than before. So this liberalization policy goes in line with the globalization trends and now we can cross borders and think of other regions where we can operate and do business. It is in our spirit to embrace new opportunities, so this change is actually something I’m very much looking forward to.
From a business point of view, could you please share with us some of the key financial highlights of the past year? And looking at the future, since diversification is very important, what are the new business segments that will drive the growth of the company?
Every house and building around us is our customer. The range is very broad, goes from a single household to business partners, and mainstream, big companies. Our strength is proving our services from the smallest customer to the biggest, not just in this region, but others – and now, why not globally?
Prime Minister Abe is pushing forward policies in an effort to open up the country’s economy to the global market. Japan Inc. companies are following suit with an aggressive strategy to expand globally through M&As. Tokyo Gas is also present the US, so could you give us some details about the activities that you are undertaking in that market?
In general America is really important and a very close partner for Japan. We have a long history of relations with America. From now onwards, I believe the relationship among the two countries will get closer and closer. One of the examples I can think of is related to LNG. We started our import from America, more specifically from Alaska to Yokohama in the year 1969, about 48 years ago.
Tokyo Gas worked (and still does some projects) together with Tokyo Electric in this project and besides that we believe that USA is particularly important. I would like to use the work “Umi no oya” in the sense of the stretch connection that exists between parents – like “parents of the oceans”. By the end of this year we are expecting to have our first arrival of shale gas cargo, produced in Texas. In terms of energy, the relationship between the two countries that is being built is also getting stronger.
What is the potential of M&A activities and strategic alliances to further penetrate the American market?
South East Asia is actually one of the markets that we see the biggest potential in at the moment, and we believe we can contribute with the experience and know-how we have collected over the years. With the good relations we have with the USA, we hope we can strengthen our presence in the ASEAN region. However, we would like to get closer with the USA in what’s related to the upstream part of the business and make firm steps towards that goal.