Tokyo, Dec 3 (IANS): Japan's largest oil refiner JX Holdings Inc. announced on Thursday that it agreed in principle to merge with its rival TonenGeneral Sekiyu K.K. with an aim to cut refinery costs to counter declining demand in the domestic market.

Through a share-swap, the agreement would enable the two companies to cut costs by integrating or abolishing some of their refineries as increasing number of Japanese consumers were driving fuel-efficient cars and the use of renewable energy in the country was booming, Xinhua news agency reported.

The merger of JX and TonenGeneral followed the integration announcement by the country's other two refiners Idemitsu Kosan Co. and the Showa Shell Sekiyu K.K. last month. 

Idemitsu and Showa Shell are expected to merge by April 2017.

JX and TonenGeneral, the No.3 distributor by sales, will have combined sales of 14.3 trillion yen (about $116 billion), compared with the 7.6 trillion yen of Idemitsu and Showa Shell combined.