Japan's Idemitsu Kosan Company and Showa Shell Sekiyu KK said on May 9 that they have signed an agreement to form a business alliance ahead of Idemitsus planned takeover of Showa Shell.
The companies said in a statement they will immediately begin some parts of their businesses in particular crude oil purchases, procurement of raw materials including additives and transportation as well as production plans. Marketing of products will remain individually.
The closer cooperation, dubbed the "Brighter Energy Alliance', will result in cost savings of at least 25 billion yen (USD219 million) within three years.
The companies said they will still achieve costs savings of 50 billion within five year of the full integration of the two business.
The full merger has been delayed indefinitely due to opposition from a member of Idemitsus founding family.
On May 12, Showa Shell announced the Establishment of Wholly-owned Subsidiary for Company Split Related to Lubricants Business, which is not included in the Brighter Energy Alliance agreement and will remain separate. The new lubricants company will be named Shell Lubricants Japan KK and will include lubricants manufacturing, storage, transport, sales, import, export and all other related business.
Idemitsu has a base oil plant in Chiba which has capacity of 305,000 metric tons per year (6,000 barrels per day) of Group I, Group II and Group III base oils. Showa Shell has a 290,000 tons per year (5,600 bpd) Group I and Group III base oil plant in Yokkaichi.
