Nippon Mitsubishi Oil Corp. and Cosmo Oil Co. Ltd.
's largest and third-largest oil refiners respectively
, will integrate their tanker operations in November as a streamlining step under a year-old alliance. The companies said they expect to cut their combined freight costs by at least $4.62 million a year through the move.
Japanese oil companies are under tremendous pressure from larger foreign-owned rivals like Exxon Mobil Corp.
to cut costs and boost efficiency to restore profitability, which has been severely eroded by their inability to fully pass along higher crude oil costs
by raising prices.
Under the agreement, Cosmo Oil will
pay $258,500 to acquire a 35 percent stake in Nippon Mitsubishi's wholly owned tanker unit Nippon Ryoyu Tanker Co.
That company will change its name to Nippon Global Tanker Co Ltd
and operate all 38 tankers currently transporting crude for the two companies. Cosmo Tanker Co
, Cosmo Oil's shipping arm, will remain in operation but from November will handle only shipping logistics, the companies said. Reducing the number of vessels would be a logical step to save additional money, but no such plan has yet been adopted, they added.