Oil Corp, and rival Nippon Mining Holdings will yield as much as 60-billion-yen in cost savings by 2013. (US$1=90 yen).
The companies said they will trim a massive combined 400,000 b/d in surplus refining capacity or a fifth of their combined capacity by April 2012. That would equal to around eight percent of Japan’s total refining capacity.
Their combined sales will likely reach 13.15 trillion yen in the current financial year to March 2009.
The deal will help them cut costs at a time when Japan’s economy is sinking into recession and there’s little scope for export of refined oil products to other Asian countries which are also suffering from slow or negative growth.
Analysts have long complained that Japan’s refineries are holding on to excess capacity, well above what’s needed to meet domestic demand. The industry may be set for further consolidation if the world’s third largest oil market continue to contract.