The Japanese oil wholesalers aim to boost combined profit by around 25 billion yen ($226 million) through the partnership.
The refiners reached a basic agreement in November 2015 to merge their operations. But Idemitsu's founding family, which holds a 33.92% stake, opposed the move at the company's annual shareholders meeting in June 2016.
Tough negotiations with the family have prompted the duo to push back the merger timeline from the initially targeted April. With a resolution unlikely any time soon, management decided to move forward with specific areas of cooperation.
Idemitsu has refineries on the northern island of Hokkaido and in Chiba and Aichi prefectures. Showa Shell's refineries are in Chiba, Kanagawa, Mie and Yamaguchi prefectures. The refineries will now supply both companies in an effort to improve efficiency. Joint procurement of imported crude oil is also under consideration.
In December, Idemitsu purchased about 31% of Showa Shell after gaining approval from antitrust authorities. The development did nothing to alter the stance of Idemitsu's founding family.
In April, another oil refining tandem -- TonenGeneral Sekiyu and market leader JX Holdings -- will merge to create JXTG Holdings, which will control more than 50% of Japan's gasoline market. Idemitsu and Showa Shell each have a market share of around 15%.
Idemitsu continues to stress the need for reorganization in discussions with the founding family.