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Japanese oil rivals agree to join forces

Japan's No. 1 oil company, Inpex, and its rival Teikoku Oil said yesterday they would merge next year in a bid to compete in the world's oil exploration market.

The two companies said in a joint statement that their boards separately had agreed the merger plan at meetings earlier in the day.

Under the plan, the pair will jointly establish a holding company, Inpex Holdings Inc, with capital of ?30 billion (US$255 million) through a stock transfer.

One share in the new firm will be equal to one share in Inpex and 0.00144 of a share in Teikoku when the holding company is listed on the Tokyo Stock Exchange on April 3.

The planned merger is aimed at creating a bigger and financially stronger player in the international market amid the global resource boom.

"Major oil developers overseas have strengthened their competitiveness through merger and acquisition, and competition to obtain natural resources has intensified," the statement said.

"Considering the situation, Inpex and Teikoku Oil have decided to integrate operations in order to secure a firm position in the international market."

A combination of the two firms' latest annual earnings results suggests the merged unit's net profit would amount to ?85 billion on sales of ?560 billion.

Inpex currently produces 330,000 barrels of oil and natural gas a day at roughly 20 fields in Asia and elsewhere, while Teikoku Oil's overseas daily production amounts to 45,000 barrels.

The Japanese government still holds a 36 percent stake in Inpex, which used to be a state-owned enterprise.
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