Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 23 -- Nippon Oil Corp. and South Korean oil refiner SK Corp. will form a 10-year capital and business alliance under which each firm will spend ¥12 billion to purchase an initial 1% stake in the other.
The companies may increase their cross-shareholdings from the initial percentage, according to Nippon Pres. Shinji Nishio, who said the accord would include production, oil procurement, and the exchange of products and chemicals from their refineries.
Nishio said SK is the best partner for Nippon because its expertise and strategy are similar. SK commands 32% of the South Korean market. It has the world's second-largest refinery and—like Nippon—it has an oil processing capacity of some 1.11 million b/d.
Nishi said the two companies have combined sales of $100 billion/year, Currently China Petroleum & Chemical Corp. (Sinopec) dominates Asian competitors as the leading refiner in China, the world's fastest-growing gasoline market.
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