TOKYO ? Exxon Mobil Corp. is selling its Japanese refining and marketing business to partner TonenGeneral Sekiyu K.K. in a $3.9 billion deal that reflects a long-term decline in Japan's demand for fuel and a global strategy to refocus on exploration.
TonenGeneral Sekiyu will buy 99 percent of the shares of Exxon Mobil Yugen Kaisha, which refines and sells fuel and lubricants, the Japanese refiner said about the deal, announced Sunday. Exxon Mobil's stake in TonenGeneral will drop to 22 percent from 50 percent.
Large oil and gas companies have been shedding refining operations in recent years and turning to oil exploration and production in the hope of bigger profits. Tighter rules for car and truck fuel efficiency are expected to weigh on growth in demand for fuel in developed countries for years to come.
Sherman Glass, president of ExxonMobil Refining, told a press conference Monday in Tokyo that it was a restructuring move amid a changing global energy market, but said the company remained "very committed" to its refining ? or downstream ? operations.
"What we continue to do is try to restructure ? in some cases invest, in some cases divest and in some cases restructure ? to make it a strong group of operations in our downstream" business, Glass told reporters.
Exxon has a "long-term strategy of moving away from refining, where the margins are wafer thin, and into exploration," said Nicholas Smith, a strategist at CLSA in Tokyo. "Refining is something that anybody can do. You can buy the tech off the shelf."
TonenGeneral said the move would give it more flexibility and competitive in a challenging environment.
"The Japanese market is getting tougher," said Jun Mutoh, the company's managing director. "The decision-making within the company will be more effective in the newly integrated production-distribution operation."
TonenGeneral will continue to deliver products and services under the Esso, Mobil and General brands and continue to rely on Exxon Mobil's technology and technological support in the refining and petrochemicals businesses.
Other major oil companies are making similar moves.
Marathon Oil spun off its refining operations last July. This summer ConocoPhillips also plans to split itself in two, separating its refining operations from its more profitable oil and gas exploration and production business. BP and Shell are selling refineries in the U.S. and Western Europe.
Exploring and producing oil and gas offers investors a chance for faster growth. Also, oil prices are high and are expected to remain so, which has helped producer profits and funded a boom in new exploration.
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