According to news from Japanese media, two leading oil companies in China and Japan ¨C PetroChina and ENEOS reached an agreement on the morning of the 7th in Tokyo to jointly set up a company that specializes in the oil refining business. The company is to utilize the redundant capacity of Japan to refine oil.  

This is the first time Chinese and Japanese oil companies join hand, hopefully promoting further cooperation between the two countries in refining and supplying oil products.  

It is reported that ENEOS had signed oil refinery contract with PetroChina since 2004 and has been exporting finished oil products to China. In the financial year of 2008, ENEOS¡¯

s refinery plants in Osaka and Sendai will be supplying PetroChina with 70,000 barrels of refined oil. 

The report claims that the reason for both parties to have decided to set up a joint venture company is to consolidate and strengthen this relationship. 

In recent years, the manufacturing industry and the power generation industry in China have been demanding more and more oil. But the demand for oil in Japan has been in decline. As a result, there is a surplus production capacity for their oil refinery plants.