ExxonMobil subsidiaries in Japan to merge

by The Associated Press

Two Japanese oil companies affiliated with U.S. industry giant ExxonMobil Corp. said Feb. 22 that they will merge in a bid to cut costs.

General Sekiyu K.K., an oil distributor that operates a national chain of gas stations, and Tonen Corp., an oil refiner, said they will combine their businesses on an equal basis effective July 1.

The new entity, to be called Tonen General Sekiyu K.K., will become Japan’s third-largest oil refiner, they said.

In a joint statement, the two companies said they were confronting “falling margins and weak demand” and needed to “further improve operating efficiency and profitability.”

Tonen General is projecting a parent-company profit of 35.5 billion yen ($319.2 million) on sales of 1.13 trillion yen ($10.2 billion) for the fiscal year ending Dec. 31, 2001.

Profits among Japan’s oil refiners and distributors have fallen as the government has eliminated regulatory barriers that once restricted access to the market. Analysts say deregulation has left the country with a glut of gas stations, increasing competition and depressing margins.

The Feb. 22 deal comes eight months after Nippon Oil Co. and Mitsubishi Oil Co. merged to form Japan’s largest oil distributor.

General Sekiyu and Tonen plan to reduce their combined work force of 2,700 employees by 300. Voluntary retirements will account for most of the reductions, they said.

ExxonMobil, which became the world’s largest publicly traded oil company after Exxon and Mobil merged in November last year, owns 50.1 percent of General Sekiyu and 51 percent of Tonen. It will control 50.03 percent of the merged company.