The revelation means that one third of Japan's refining capacity has been operating illegally for years.

The newswire said the announcement has led to a shutdown of Nippon Oil's Osaka and Marifu refineries, which have a combined capacity of over 250,000bpd.

Nippon Oil discovered in July that inspection reports for its Marifu refinery had been falsified since 1998, while an inspection report for its Osaka refinery was falsified in 2000, company executive Isao Kakefuda said at a news briefing.

Workers had made up data provided in the inspection reports submitted to local and state authorities, without conducting some mandatory inspections, the company said.

The inspections should have looked at the critical, high-pressure gas facilities at the refineries and are required by Japanese law.

Nippon Oil decided to shut all units at the affected Osaka and Marifu refineries Monday, Kakefuda said.

The company was unable to give a timeframe for the re-opening of the refineries but Nippon Petroleum managing director Takahiko Yamaji told reporters that it would boost operations at its other refineries to cover the shortfall from the closure of the two plants.

Nippon Petroleum Refining, Nippon Oil's wholly owned refining arm, operates six refineries throughout Japan with a total refining capacity of almost 1.16 million bpd.

The shutdown has stirred rumors of supply problems as the country's gasoline demand is expected to pick up in August through early- September for the traditional summer driving season.

The news is another blow to the Japanese utility maintenance sector which is still reeling from last Augusts maintenance scandal where Tokyo Electric Power also confessed to falsified inspection reports and was forced to shut all of its 17 nuclear power reactors to conduct inspections. Thirteen of the reactors are still shut.

The Petroleum Association of Japan said in its latest statistics report that the country's gasoline stocks declined 2.2% on week to 2.22 million kilolitres as of July 26.