Brunei LNG and converting the entire supply area to natural gas (1975)

Where quality of supply ends and volatility of earnings begins

To label these fifteen years an equipment upgrade for environmental compliance is to misread the character of the undertaking. Converting to natural gas meant not only changing the feedstock and the production plant but rebuilding, one unit at a time, the appliances of an enormous number of customers scattered across six prefectures — an irreversible, simultaneous public works project. That Osaka Gas saw it through from 1975 to 1990 without interrupting supply and without an accident is where the bearing of the company as a public utility shows itself.

Yet the conversion also fixed in place a dependence on LNG bought abroad. Long-term contracts promise stable supply while leaving a structure in which a rise in the import price squeezes profit, and in later years Osaka Gas would keep facing that weight under a regulated tariff. The decision to change the feedstock raised the quality of supply and, in the same motion, left management with the question of where to place the volatility of earnings. Whether the conversion succeeded still depended on how well the rebuilt business would afterwards be used.