The deal, signed on 9th May, would see both parties jointly operate around 20 VLCCs, with loadings scheduled to start after this month, the companies said.
The agreement includes sharing vessel positions, as well as swapping the VLCCs between the two companies.
Both companies would also jointly work on bunker fuel procurement, as part of the alliance, which is to be called - Brighter Energy Alliance.
Under the terms of the alliance, which takes effect immediately, the companies said they aimed to optimise their crude oil purchases, plan production better and facilitate the interchange of refined products, including gasoline. In addition, they would also look at ways to reduce refining costs and implement measures in order to save energy and boost refining margins.
However, their product sale operations will not be changed in the near future and both companies will will continue to operate separately, they said in a joint statement.
The decision to align the businesses came shortly after Idemitsu's acquisition of 31.3% of Shell's stake in Showa Shell on 19th December, which took place after the green light from the Japan Fair Trade Commission for the consolidation between the two companies.
Last October, they indefinitely postponed their planned merger scheduled for April, 2017 in the face of strong opposition from the Idemitsu founding family, due to differences in corporate cultures and other factors.
They therefore decided to move ahead by first creating synergies in certain areas before the merger, senior company officials said at a joint press conference, according to Platts.