The group initially planned to achieve 100 billion yen in profit improvements through reductions in distribution, manufacturing and procurement spending during its first five years, but now aims to hit that goal within three years. Taking into account the severe business climate that is expected to continue both in Japan and abroad, the two companies acknowledged the need for even more drastic rationalization and efficiency improvement, which neither company would likely be able to achieve individually, the statement continued.

The group did not comment on plans for its respective base oil refineries, but noted that it would combine or close some of its manufacturing bases across its various segments. JX Holdings and TonenGeneral understand that fixed cost reduction through refinery closure is vital to achieving further profit improvements. With that understanding, the integrated energy company will study and conduct refinery closure as soon as possible.

JXTG hopes to earn 500 billion yen or more during its fiscal year 2019. Mainstays for the groups future growth will be its enhanced, next-generation businesses, which include overseas markets, electricity, gas, new energy, lubricants, and specialty chemicals.

JX Holdings has three base oil plants in Japan and claims about 32 percent of the countrys finished lube market. It manufactures automotive and industrial lubricants under its Eneos brand. TonenGeneral produces base oil at its Wakayama refinery and holds approximately 8 percent of domestic finished lube sales, marketed under ExxonMobils Mobil brand. Both companies plan to continue marketing products under their respective brands after the merger.

The new companys president will be JX Holdings President Yukio Uchida, and TonenGeneral President Jun Mutoh will be the new vice president. JX Holdings chairman, Yasushi Kimura, will be the chairman.

The other two oil firms making up Japans top four, Idemitsu Kosan Co. and Showa Shell Sekiyu KK, are also negotiating a tie-up.