Nippon Mitsubishi Oil Corp. and Teikoku Oil Co. have agreed to form a joint venture to retail natural gas in Japan, the two firms announced Monday.

The deal, which will make Nippon Mitsubishi the first oil distributor to enter the natural gas retail market following its November 1999 deregulation, is part of a broad tieup agreement the two firms announced in February. As part of the deal, Nippon Mitsubishi raised its stake in Teikoku Oil, a major oil and natural gas producer, from 3.9 percent to 16.47 percent.

The new venture, to be launched April 1 with capital of some 100 million yen, will combine Teikoku Oil's natural gas facilities and Nippon Mitsubishi's technology and marketing networks to provide natural gas to large-lot users, the firms said.

Nippon Mitsubishi will own 40 percent of the venture, with Nippon Petroleum Gas Co., a subsidiary of Nippon Mitsubishi, owning 10 percent. Teikoku Oil will own 50 percent of the venture.

Nippon Mitsubishi's move to expand its non-oil operations through the joint venture will likely intensify competition with existing gas firms such as Tokyo Gas Co., industry analysts said.

The new retail service is expected to undercut gas utilities on price and to supply gas equivalent to 10 percent of the amount supplied at present by Tokyo Gas Co., the Nihon Keizai Shimbun reported in its Monday morning edition.

Teikoku Oil currently supplies natural gas produced in Niigata Prefecture to gas utilities in Niigata, Nagano, Gunma and Saitama prefectures.