Japan’s largest oil refiner JX Holdings and its rival TonenGeneral Sekiyu have confirmed to be in talks over a planned merger to be completed by 2017, Bloomberg informed.

The new company is to control more than half of the country’s gasoline market, if the deal is closed, and will seek annual cost savings of $814m within five years, Reuters reported.

“Due to the severe business environment surrounding the oil industry, we are considering the merger with TonenGeneral in order to strengthen the competitiveness of our petroleum business,” JX Holdings said in a statement.

The Japanese government supports the merger to slim down amid declining fuel demand, and dropping earnings. According to a Ministry of Economy, Trade, and Industry Ministry’s forecast, the demand for oil products will fall by 6.8 % by March 2020, Bloomberg wrote.