(Update) Nippon Oil OKs INPEX-Teikoku Integration Plan

Tokyo, Dec. 19 (Jiji Press)–Japan’s biggest oil distributor, Nippon Oil Corp. , on Monday expressed support for a plan by INPEX Corp. and Teikoku Oil Co. to integrate their operations in April 2006 under a joint holding firm.

Nippon Oil, which is Teikoku Oil’s largest shareholder, with a stake of 16.5 pct, had been reserving its position on the merger plan announced in November, which will dilute its influence over the management of Teikoku Oil.

Nippon Oil President Shinji Nishio told a press conference that the company has decided to support the merger plan because it judged as important enhancing ties with Teikoku Oil and INPEX, which will become a core company in Japan’s energy development industry.

Teikoku Oil and INPEX are both oil and gas developers.

Nippon Oil’s approval came as the three companies agreed to enhance capital ties between Nippon Oil and the joint holding firm.

According the agreement, Nippon Oil will initially hold an equity stake of 3.8 pct in the joint holding firm and consider raising the stake to a maximum 7.5 pct in the future.

In return, the joint holding firm will study the possibility of raising its stake in Nippon Oil to around 1.5 pct from the 0.7 pct it will hold at the time of its establishment.

Also under the agreement, Nippon Oil Managing Director Shigeo Hirai will become an outside board member of the envisaged holding firm.END