(Refiles to correct typographical error in quote in third
TOKYO Dec 24 Cosmo Oil Co Ltd, Showa
Shell Sekiyu KK, TonenGeneral Sekiyu KK, and
Sumitomo Corp aim to integrate their liquefied
petroleum gas (LPG) wholesale and import businesses to become
Japan's top LPG distributor, the four companies said on Tuesday.
The move is the latest in a series of restructurings of
energy businesses by Japanese firms to become more
cost-effective and win bigger negotiating power to help lower
their procurement costs. Tuesday's announcement confirms a
Nikkei report of the move last weekend.
"Through integration of our LPG distribution, procurement
and overseas trading operations, we'll be able to become more
efficient and broaden our procurement networks," Hiroshi Tomita,
General Manager at Showa Shell, told a news conference.
The three oil distributors and a trading house will start
discussion on details of the integration, with an aim to sign an
agreement between April and June next year, and start operation
as a new entity between October and December.
With estimated annual sales of 400 billion yen ($3.85
billion) and sales volume of 3.6 million tonnes, the new company
will have an about 25 percent share in the local LPG market,
topping the current No.1 distributor Eneos Globe Corp, a joint
venture of JX Nippon Oil & Energy, Mitsui & Co and
Japan used about 16 million tonnes of LPG in fiscal 2012,
mainly by households for cooking and heating water.
"We see the United States as an important source of
importing LPG since the prices are low due to increased output
of shale gas," said Shigeki Nara, general manager at Sumitomo
"We want to diversify our procurement sources. We believe we
can help lower LPG retail prices in Japan in the future," he
Japan imported about 85 percent of LPG from the Middle East
in the 2012 fiscal year. Import prices are linked to an index
set by Saudi Arabia and they have been kept at high level.
The new firm, with an annual import capacity of 3 million
tonnes and an overseas trading volume of 1 million tonnes a
year, also aims to expand global reach.
"Japanese annual demand has been flat over the past several
years. But overseas demand, such as in Southeast Asia, is
growing and we see an opportunity there," said Koji Moriyama,
general manager at Cosmo Oil.
($1 = 103.9950 Japanese yen)
(Reporting by Yuka Obayashi; editing by Keiron Henderson)