Kazuhisa Yano shares his thoughts on the sustainability and electrification of energy in Asia.
1. Can you share more about Daigas’ long term goals in Southeast Asia?
Our goal is to contribute to the region’s development by being a value creator in energy business. In the long-term management vision of Daigas Group, “Going Forward Beyond Borders 2030 ” we declare our commitment to accelerate the development of our entire overseas energy business to increase its profit from about 1/20 of the Group’s profit today to one third by 2031.
In Southeast Asia, we aim to be a “Leading Company in Providing Energy Solutions in Asia” as set out as the corporate vision of Osaka Gas Singapore, the regional headquarters of Daigas Group. While focusing on investing in energy infrastructure and providing energy solutions in the region, we pursue business opportunities for LNG terminals, IPPs, renewables, gas marketing and energy services. Through these businesses, we would like to contribute to stable and sustainable energy supply in the region by utilising a century-long experience of a vertically integrated energy utility. Osaka Gas has been a public utility serving Osaka and the Kansai region, and now we asDaigas Group aim to be a global public utility that creates value in every corner of energy infrastructure and supply anywhere in the world.
2. What role can Osaka Gas play in Asia’s transition to a low carbon energy future by balancing reliability with sustainability?
Not only Asia but also the world as a whole is in such dynamic transition, where the main energy source will gradually be shifted from conventional fossil fuels to various types of renewables. Despite their importance and significance, renewables alone are not sufficient to meet the energy demand today, and they need to be supported by a stable energy source. Especially in South East Asia, where coal and oil are still heavily utilised, natural gas plays a vital role as a reliable and clean base energy. In fact, IEA claims that natural gas continues to play key roles and its demand is expected to increase in a mid-term view. Under such circumstances, Osaka Gas is pursuing renewable projects combined and optimised with natural gas solutions to contribute to a low carbon society.
One of the projects is biogas power generation. Among renewables, biogas is less affected by weather and other uncontrollable conditions. We have been extracting methane from sewage treatment process and utilising such biogas to operate cogeneration systems combined with PVs. Through partnerships with local city governments who operate water utility in Japan, we have been carrying out such projects and generating electricity to supply to 10,000 local households while saving energy by using exhaust heat within water treatment plants.
We have been very pleased with our recent progress in Southeast Asia ranging from renewables to gas marketing activity with energy saving engineering. One of them is the launch of OE Solar, which installs photovoltaic facilities on roof tops or ground surfaces of industrial and commercial facilities to provide green electricity to our customers in Thailand. Also, since last year, we have been operating a pilot project for high purity biomethane in the country where we succeeded in achieving 99 per cent methane recovery from biomass fermenters. As seen in these examples, the role that Osaka Gas can play in Asia’s transition to low carbon future is to integrate natural gas and renewables sustainably by ensuring reliability and commercial feasibility through practical projects.
3. What are Osaka Gas’ views on the increased electrification of Asia, especially in Southeast Asia and the opportunities this brings?
LNG should play a key role in Southeast Asia in light of its geographical characteristics of being surrounded by the seas. To meet the rapidly growing electricity demand in the region, LNG is necessary as the main energy source for power generation in a mid-term view.
Small scale LNG projects are in the spotlight as a way to accelerate electrification of small islands. This year, we have made an investment in AGP Group in the Philippines, who has high engineering skills and marketing capabilities in floating LNG platforms and city gas business. Through the synergy between AGP Group’s expertise and our LNG value chain knowhow, we are now capable of optimising projects in terms of cost, size and construction schedule and leveraging our capabilities in business opportunities in Indonesia and Vietnam. In Thailand, we are also working on LNG trucking to serve demands located in inland areas such as industrial parks.
In addition, we have been pursuing value creation that is downstream LNG business. One example is our CHP projects through NS-OG Energy Solutions in Thailand (NSET). NSET is a one-stop energy service business model, in which we procure gas, construct and operate facility and carry out power supply and demand management. This business model is flexibly applicable both to single customers and to certain supply areas, and it could be combined with renewables. Since a surge in land developments are expected in various parts of the region, we are keeping an eye on opportunities in which we can contribute as a value creator by integrating our knowhow in natural gas with renewables.
4. How is Osaka Gas impacted by the commoditisation of LNG?
Osaka Gas started procuring LNG about half a century ago. At that time, LNG cargoes were delivered from a few loading ports to limited preplanned discharge ports, using LNG vessels dedicated to the mostly fixed sea routes, because there were a limited number of players such as NOCs, IOCs and utility companies in the LNG industry. Since then, the industry has grown dramatically and been joined by numerous players with varying characteristics. Consequently, trade flows have become more dynamic, complex, innovative, and facilitated by customised conditions. Moreover, LNG has been commoditised like other types of energy resources such as oil, coal, etc.
The commoditisation of LNG, which has been facilitated by the LNG hub in Singapore, has brought about the following benefits for Osaka Gas so far: (i) increased supply security, (ii) access to wider range of price indices by derivatives, (iii) transparency for prices of cargoes, and (iv) increased portfolio optimisation opportunities. To maximise the benefits listed above, it will be a task of great importance for us to reinforce Osaka Gas’s portfolio risk management.
This leads to a question; what happens if the commoditisation of LNG progresses further? It might be the case in the future that all transactions, including optimisation and derivative transactions, will be made not by traders but by artificial intelligence, and payment done by virtual currency or using blockchain technology.
5. The theme for SIEW 2019 is Accelerating Energy Transformation. What do you look forward to being discussed at SIEW this year?
There is no doubt that the main energy source is going to be shifted from fossil fuels to renewables. One important thing to keep in mind is the time range of such change because the pictures we see differ depending on whether we see it from long-term or mid-term point of view. And it is important to have a mid-term portfolio to realise a long-term goal. I would like to discuss from a practical business point of view the transformation together with LNG, which will play an important role for at least next two decades. Regarding SIEW, I expect this event to be a platform for exploring optimised energy portfolio for all stakeholders. The question that should be discussed in the event is “what is the optimal solution for energy supply which enables nations and societies to grow sustainably?”
About Kazuhisa Yano, Chief Asia Reprsentative, Osaka Gas Co., Ltd
Mr. Kazuhisa Yano is Executive Chairman of Osaka Gas Singapore Pte. Ltd., an affiliate of the Daigas Group, a leading Japanese corporate group energy businesses. He assumed his current responsibilities on 1 April, 2018.
Prior to the present position, Yano experienced his senior executive assignments at Osaka Gas Co., Ltd. as Heads of the Commercial & Industrial Energy Business Unit (April 2016 – March 2018) and the Energy Resources & International Business Unit (April 2014 – March 2016).
Yano experienced other executive positions in the fields of corporate communications, commercial and industrial energy marketing, and regional networking, between June 2007 and March 2014.
In the fields of international energy business, Yano in his previous responsibilities worked as manager for business planning and development as well as for asset management both within Osaka Gas and its power business subsidiary, Gas & Power Investment, between 2000 and 2007.
After joining the company in 1981, Yano was assigned in marketing divisions for almost 20 years, covering activities ranging from residential to commercial and industrial business planning and sales. Yano was educated at Kobe University where he earned a bachelor’s degree in business administration. He also did academic work at University of Reading in UK as a graduate student (MSc in Urban Land Appraisal) and as a fellow at the Kennedy School of Government of Harvard University.’
Yano was born in November 1958.