Oct. 29 (Bloomberg) -- Tokyo Electric Power Co., Oji Paper Co. and other Japanese fuel oil users will pay Nippon Oil Corp. record prices in the three months to December.

Prices of low-sulfur fuel oil sold to Tokyo Electric and high-sulfur fuel oil supplied to Oji Paper will rise as much as 9.1 percent in the quarter, according to a notice sent by Nippon Oil to customers. The prices are preliminary and may be revised to adjust for changes in production costs.

Nippon Oil has been setting the benchmark price for fuel oil in Japan since 1970, and producers including Idemitsu Kosan Co. may follow the country's biggest refiner in boosting prices.

Tokyo Electric, Japan's biggest consumer of low-sulfur fuel oil, will pay Nippon Oil a record 67,520 yen a kiloliter ($612 a metric ton), 2.4 percent more than in the three months ended September.

Oji Paper, the country's biggest high-sulfur fuel oil user, will pay an initial price of 62,150 yen a ton, up 9.1 percent from the previous quarter.

Nippon Oil sets preliminary prices for the two main buyers of the fuel in the first month of each quarter. Final prices are agreed subsequently. The prices for the October-December quarter reflect changes in crude oil costs and prices in Japan's tax- free bunker fuel oil market for the September-November period.

Asian benchmark Dubai crude oil prices have risen 20 percent since Sept. 1 to $82.39 a barrel, increasing the cost of producing fuel oil.

Low-sulfur fuel oil sold to Tokyo Electric, Asia's biggest power producer, has a maximum 0.3 percent sulfur content. High- sulfur fuel oil sold to Oji Paper has a maximum 3 percent sulfur content.

To contact the reporter on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net

Last Updated: October 28, 2007 22:09 EDT