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Showa Shell and Idemitsu Kosan to merge VLCC fleets in business alliance

Showa Shell and Idemitsu Kosan to merge VLCC fleets in business alliance

Japanese refiners Showa Shell Sekiyu and Idemitsu Kosan have formed an alliance, which will include their VLCC fleets, ahead of a full integration.

Among the aims of the Brighter Energy Alliance is the optimisation of the purchase of crude oil and transport part of initial synergies aimed at saving JPY25bn ($219m) annually.

Explaining the objectives of the alliance and following integration Showa Shell and Idemitsu Kosan said: “The business environment surrounding the companies is becoming more challenging. “Especially in petroleum refining and sales, current and future business operations of the dealers, distributors, transport companies and cooperative companies that have been working alongside the companies, as well as the companies themselves, have been significantly affected, mainly due to a drop in demand.”

The joint purchase of crude oil and joint allocation of VLCCs to reduce costs, is expected to save JPY1bn a year. From May this year the two companies will share the positioning of a fleet of 20 VLCCs with the lending and borrowing of vessels between the two parties. The two companies will also jointly purchase bunker fuel.

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