Japan's Nippon Oil, Kyushu Oil plan merger

18 March 2008 12:14  [Source: ICIS news]

TOKYO (ICIS news)--Nippon Oil and Kyushu Oil plan to merge operations in order to stay competitive in Japan’s weak petroleum industry and to increase exports to booming markets in Asia and the Pacific rim region, a Nippon Oil spokesman said on Tuesday.

The two companies have signed a memorandum to begin talks on the proposed merger, which is targeted to be completed by 1 October, he added.

The companies planned to integrate and optimise their crude oil procurement, transportation, refining and logistics operations in the country after the merger, they said.

They would also focus on strengthening the competitiveness of Kyushu Oil’s Oita refinery, they added.

However, further details including whether Nippon Oil would acquire all of Kyushu Oil’s shares and price details of shares to be issued to Kyushu Oil’s shareholders were yet to be discussed between the parties, the spokesman said.

While Japan’s petroleum industry was suffering from reduced internal demand for oil fuels on high crude costs, business opportunities were expected to rise in the rest of Asia and the Pacific region on a steady increase in demand for petrochemical and oil products, the refiners added.

The two companies have a combined paraxylene capacity of 1.61m tonnes/year and propylene capacity of 860,000 tonnes/year.

Nippon Oil holds a 10% share in Kyushu Oil whose primary shareholder is Nippon Steel Corp, which has a 35.97% share.

For more on paraxylene and propylene visit ICIS chemical intelligence

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Author: Tomomi Yokomura
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