Arabian Oil Co. and Fuji Oil Co. said Wednesday they have agreed to integrate operations under a joint holding company to be set up next January.
The two firms plan to finalize details of the integration by September, including the holding firm's name, capital and a merger ratio.
Arabian Oil, Japan's biggest crude oil producer, and Fuji Oil, a midsize oil refiner, said they hope the integration will help make operations more efficient and generate synergy effects in upstream and downstream oil businesses.
Fuji Oil, 19.5 percent owned by Arabian Oil and 19.4 percent by Japan Energy Corp., is an unlisted company and has no relation with the identically named Fuji Oil Co., a major palm oil manufacturer listed on the first section of the Tokyo Stock Exchange.
Arabian Oil is in talks with the Kuwaiti government to secure a deal that would allow it to continue drilling in Kuwait's part of the Khafji oil field.
The oil firm and the Kuwaiti government wanted to reach an agreement by Tuesday but have decided to extend the deadline to the end of February, Arabian Oil said.
Meanwhile, Arabian Oil cut its earnings forecast for 2001, due largely to an extraordinary loss of 11.6 billion yen incurred from asset transfers in connection with expiring drilling concessions in Kuwait.
The company now expects a group net loss of 5.7 billion yen, compared with a profit of 3 billion yen forecast in August, with group revenues of 148 billion yen, down from the previously estimated 153 billion yen.
The forecast for group pretax profit remains unchanged at 48 billion yen.