Tokyo Gas plans to leverage technological assistance from U.K. energy giant Centrica under a new partnership as the Japanese utility battles to keep its turf from eroding further in a liberalized market.
The two companies signed a memorandum of understanding in December, Tokyo Gas President Takashi Uchida said in an interview with Nikkei.
"We hope each of us floats ideas and collaborates in a broad range of fields," Uchida said.
Centrica, the No. 1 gas company in the U.K., also engages in power generation and retail sales of electricity, serving about 27 million customers. One of the "big six" energy suppliers in the country, it has been focusing on digital technology, analyzing electricity consumption data from smart meters to efficiently provide power and gas service to residential customers.
Tokyo Gas wants to collaborate with Centrica on artificial intelligence and digital technology to optimize its operation of liquefied natural gas terminals and power plants. It will also consider rolling out electronic bill payments and working on smartphone-based services for consumers.
The two already have a partnership that includes joint LNG procurement in Mozambique. In addition, under a swap arrangement, Tokyo Gas ships LNG from the U.S. to Europe and in return gets LNG produced in Asia from Centrica. They have swapped several vessels worth of natural gas.
The deal "reduces travel distances and thus cuts procurement costs," Uchida said.
Tokyo Gas is fighting in an intensely competitive market around the Japanese capital after the 2017 deregulation of the retail city gas industry.
The company recently lost 650,000 customers to rivals like the alliance of Tokyo Electric Power Co. Holdings and Nippon Gas. And the city gas market is about to grow even more crowded, with JXTG Nippon Oil & Energy set to enter next month.
"The environment is expected to remain competitive, so we have to stay on guard," Uchida said.
Tokyo Gas aims to keep domestic customers by stepping up bundled sales of gas and electricity. It also seeks to increase its service lineup overseas to lift profits.