Japan: Nippon Oil Agrees to Merger

The combined entity will take the form of a joint holding company, with details to be finalized by March 2009, the companies said in a joint press release.
The combined entity, which should be formally established by October 2009, will have sales of close to $140 billion. Financial details of the merger were not released.

The new company will cut refining capacity by about 20%, or 400,000 barrels per day, in two years, newswires cited a Nippon Oil official as telling reporters.
The merger comes as crude-oil futures fell to their lowest level in nearly four years in Nymex trading, ending at $45.70 a barrel in electronic trading mid-afternoon in Tokyo Thursday.

The new entity will achieve initial savings of 60 billion yen per year, eventually rising to 100 billion yen per year, the companies said. "The integration of the management resources of the two groups and reinforcement of their respective management structures under a new management philosophy will provide them with the strongest impetus for further and rapid growth," the companies said.

Operations in the combined entity will be divided into three divisions comprising oil refining and sales, oil development, and metals, the Nikkei newspaper reported . No name has been chosen for the new company, nor has the executive lineup been selected.

PetrolWorld 041208  MarketWatch