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Japan refiners, Sumitomo plan LPG merger in 2014

12.24.2013  | 

Three Japanese oil refiners and trading firm Sumitomo Corp. said they plan to merge their LPG import and wholesale operations in a move that would give them the largest share of the market in the country.

Keywords: [LPG] [Japan]

By TSUYOSHI INAJIMA and YUJI OKADA

TOKYO (Bloomberg) -- Three Japanese oil refiners and trading firm Sumitomo Corp. said they plan to merge their liquefied petroleum gas (LPG) import and wholesale operations in a move that would give them the largest share of the market for the fuel in the country.

The refiners—Cosmo Oil Co., TonenGeneral Sekiyu KK and Showa Shell Sekiyu KK—and Sumitomo plan to reach a basic agreement by June 2014, and set up a joint venture by December 2014, they said in a joint statement today.

LPG importers are under pressure as demand for the fuel weakens because of energy-saving efforts and competition with electricity and city gas. Demand for the fiscal year ending March 2015 is expected to fall 0.6% to 17.5 million metric tons (metric MMt) from a year earlier, an advisory panel to the Ministry of Economy, Trade and Industry said in a June report.

The planned venture will have revenues of about 400 billion yen ($3.8 billion) and domestic LPG sales of about 3.6 MMt per year, they said. It would control about 26% of Japan's LPG wholesale market.

The companies have not decided the size of the stakes they will own in the venture, said Kentaro Take, manager of TonenGeneral's demand and supply division. The Nikkei newspaper reported on Dec. 21 that the four companies will each have 2%.

Japan imported 12.6 MMt, or 77.6% of its LPG requirements, in the year ended March 2012, the Japan LP Gas Association said in a February report. The country's LPG demand peaked at 19.7 MMt in fiscal 1996, according to data compiled by the association.

Separately, Cosmo Oil, Showa Shell and Sumitomo agreed to consider the merger of their LPG retail operations by the end of December next year, they said in a joint statement. The planned retail venture will have sales of about 60 billion yen and 240,000 customers, they said.



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rosenaft
03.15.2014

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Best Regards
Managing Director: Mahdi solimani

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