To the surprise of virtually no one in the know, CALTEX CORP. has decided to end its 50-year participation in Japan's oil-refining industry. The slow growth of the oil business and the elusiveness of profits were the decisive factors. The joint venture of CHEVRON CORP. and TEXACO INC. agreed to sell its half interest in refiner KOA OIL CO., LTD. to NIPPON MITSUBISHI OIL CORP., Japan's top distributor of oil products and the sole marketer of the midsize refiner's output, for roughly $217.8 million. Koa Oil, in which Caltex has been the majority owner since 1951, operates a 127,000- barrel-per-day refinery in Marifu, Yamaguchi prefecture and a 125,000-barrel-per-day refinery in Osaka. In FY 1998, it lost $88.3 million. A three-year restructuring program now is underway. Despite the sale of its stake to Nippon Mitsubishi Oil, which currently owns 5.8 percent of the refiner, Caltex will continue to supply crude oil to Koa Oil. The company's coming exit from Japan's oil-refining industry was signaled in March 1996 when Caltex sold its 50 percent share in NIPPON PETROLEUM REFINING CO., LTD. to one of the firms that formed Nippon Mitsubishi Oil this past spring. With the completion of the sale of Koa Oil, scheduled for late August to mid-September, Caltex's business in Japan will be limited to lubricants.
An exchange rate of ¥120=$1.00 was used in this report.aaaaaa