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Japan's JX to shut oil refinery operation in Muroran: Nikkei

TOKYO (Reuters) - Japan's top refiner JX Nippon Oil & Energy Corp <5020.T> plans to stop refining oil at its Muroran unit on the northern island of Hokkaido by March 2014, the Nikkei business daily said on Sunday.

JX Nippon Oil will cut about 13 percent of its group refining capacity, which is equivalent to output of 180,000 barrels per day (bpd), the report said.

The firm said in a statement dated on Sunday that it is considering cutting group refining capacity by 200,000 barrels per day by the end of March 2014 but no details have been decided.

Aiming to boost Japan's capacity to handle cheaper, heavier oils, the government introduced new rules in 2010 that forced oil refiners to either close existing crude distillation units or build new secondary units to process heavy residue.

Idemitsu Kosan Co <5019.T> and Cosmo Oil Co <5007.T> have already decided to shut down their refineries, and the total reduction of oil refining by those firms plus JX is likely to reach 440,000 barrels per day, or about 10 percent of Japan's oil refining output, the Nikkei said.

JX Nippon Oil, a wholly owned downstream oil subsidiary of JX Holdings Inc, operates eight refineries in Japan.

The firm, created in April 2010 through the merger of Nippon Oil and Nippon Mining Holdings, has a market share of around 36 percent of domestic oil sales.

(Reporting by Kaori Kaneko; Editing by Daniel Magnowski)

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