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August 27, 2007

Iwatani to Start Selling LNG Supplied by Tokyo Electric Power Company (Futtsu Thermal Power Station) This Year, Concentrating on the Tokyo Metropolitan Area and North Kanto Region

Iwatani International Corporation

Iwatani International Corporation is to commence sales of LNG (liquid natural gas) in eastern Japan.
An agreement has already been concluded with the Tokyo Electric Power Company to supply the LNG for this new operation, and LNG is scheduled to be shipped from the Futtsu Thermal Power Station within the year once final negotiations are completed. A satellite supply (*1) is planned using Iwatani LNG lorries.

To date Iwatani has sold LNG mainly in western Japan, expanding the company's sales base and supply know-how by establishing joint ventures with power companies. The sale of LNG in eastern Japan will however be an independent Iwatani business. With the LNG being supplied by the Tokyo Electric Power Company, the aim is to establish a sales base in eastern Japan as well.

[Rollout of Operation]

Accompanying the supply of LNG from the Tokyo Electric Power Company, Iwatani has entered into negotiations with several companies in the east of Japan, including LINTEC Corporation (Chiba Factory) and Tokyo Rope Mfg. Co., Ltd. (Tsuchiura Factory), and won contracts for several thousand tons of LNG. Distribution is scheduled to begin within the year, with a target set of around 10,000 tons in LNG sales for the 2008 fiscal year.

Iwatani sales of LNG in western Japan (including those of the joint ventures) have reached 200,000 tons a year. This latest expansion in sales area will extend our coverage from the Tokyo metropolitan area to the Shizuoka and Koshinetsu districts and to northern Kanto, in addition to the already established Aichi and Hokuriku districts.

[Approach and Positioning of LNG Supply with Lorries ]

Competing industries, such as power and city gas companies, are now able to enter the domestic energy supply market as a result of revised legislation following deregulation, and consumers are freer to choose energy sources from a wide array of suppliers.

In these circumstances, we have worked hard to expand our sales of LNG, which like LPG has low CO2 emissions, alongside our existing LPG business as part of an effort to supply clean energy and offer our customers the best solutions for their energy requirements. LNG used to be distributed mainly by city gas suppliers through gas pipes, however companies such as Iwatani from other industries have established a new and more effective means of distribution, i.e. direct supply of LNG to consumers by lorry.

In conjunction with electric power companies and other businesses, several years ago Iwatani founded three companies (*2) for the satellite supply of LNG by lorry. All have exhibited steady growth in sales. On May 31 this year, the natural gas supply company Koga Energy Co., Ltd. (*3) started operation. This operation in eastern Japan will be a giant step toward achieving our objective of becoming a total energy supplier.

[ Low-Temperature Gas Transportation, Storage, Supply and Safety Capabilities All within the Group]

One of Iwatani's advantages in the LNG lorry supply business is its extensive knowledge of the transportation, storage and safety of low-temperature gases accumulated through the industrial gas business.

LNG has an ultra low temperature of minus 162_C, so knowledge of transporting low-temperature gases is indispensable to LNG operations. Our experience of transporting liquid oxygen, liquid nitrogen and liquid argon produced by cryogenic separation of the atmosphere enabled us to supply LNG with lorries ahead of other companies. We already possess dozens of LNG lorries exclusively for LNG distribution at our affiliates. We also have a low-temperature storage tank manufacturing plant (*4) within the group, which also undertakes the construction of LNG storage tanks at satellite distribution sites. For the inspection and maintenance of these satellite facilities, the group also includes a company qualified as a government designated security and inspection organization. Together these have allowed Iwatani to establish a unique, self-sufficient network for the procurement, transportation, storage, supply and safety of LNG in Japan.


- Notes -

*1: Satellite supply
LNG is delivered by lorry to facilities for receiving, storing and evaporating LNG on the premises of the user.

 

*2: Outline of LNG sales companies

(1) eL Energy Co., Inc.
A joint venture with Kansai Electric Power Company, Inc. (founded in 2000)
Business: Direct supply of LNG
(2) LNG Chubu Corporation
A joint venture with Chubu Electric Power Company, Inc. and Cosmo Oil Co., Ltd. (founded in 2000)
Business: Direct supply of LNG
(3) Hokuriku LNES (Liquefied Natural Gas Energy Service) Co., Ltd.
A joint venture with Hokuriku Electric Power Company, Chubu Electric Power Company, Inc. and Nippon Oil Corporation (founded in 2001)
Business: Direct supply of LNG

*3: Koga Energy Co., Ltd.
A joint venture with Kansai Electric Power Company, Inc. and Koga Kyodo Gas Co., Ltd. (founded in 2005)
Business: Direct supply of LNG 12,000 tons/year (estimate)
Wholesale of LNG 3,000 tons/ year (estimate)

*4: Outline of low-temperature equipment manufacturing business
In 2005, A-Tech Co., Ltd., a subsidiary of Japan Air Gases Ltd., and the Kagawa factory of Iwatani Industrial Gases Corp., an Iwatani group company in the same business, were merged to form a new company whose business includes the manufacture of storage tanks, lorries and vessels, etc. for low-temperature liquefied gases, and related services.