Cosmo, Kyokuto Consider Joint Operation of Chiba Refineries

Cosmo Oil Co. (5007) and Kyokuto Petroleum Industries Ltd. will consider cooperating on the operation of their Chiba refineries to improve efficiency.

TonenGeneral Sekiyu (5012) K.K. and Mitsui Oil Co., owners of Kyokuto Sekiyu, and Cosmo Oil agreed to consider building a pipeline between their two plants in Chiba prefecture near Tokyo, the three companies said in a statement today. The trio may also set up a joint venture to coordinate operations of the two refineries, they said.

Japanese refiners are under pressure to restructure to better compete with competitors in South Korea, China and other Asian countries. The Ministry of Economy, Trade and Industry, which oversees Japan’s refining industry, plans to expand subsidies for Japanese refiners to operate jointly and scrap inefficient facilities starting next year, it said in August.

“Each refinery has different equipment configuration, and we have been always thinking that it would work well” if the two refineries cooperate in operation, Koji Moriyama, the general manager of Cosmo Oil’s corporate planning department, told reporters in Tokyo. Details of cooperation have yet to be decided, Moriyama said.

The three companies plan to report progress on the talks in the first quarter of next year, Kosuke Kai, TonenGeneral’s spokesman, told reporters today.

To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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