CPC won't raise fuel prices soon

The Chinese Petroleum Corp (中油) is resisting the pressure to raise prices at the pump due to higher crude prices in an effort to stay competitive against its upstart rival Formosa Petrochemical Corp (台塑石油).

Senior management at Chinese Petroleum, Taiwan's state-owned oil company, have decided to temporarily put off an internal recommendation to raise prices at the pump in line with a weakening New Taiwan dollar and higher crude oil costs which are hovering around US$30 a barrel for deliveries in July.

Chinese Petroleum chairman Chen Chao-wei (陳朝威) has said his company will "hold out" against raising prices so as not to exacerbate the hard economic times.

The move is also quite obviously intended to avoid being undercut at the pump by Formosa, which has repeatedly demonstrated its willingness to keep prices low following hikes by Chinese Petroleum.

In addition to the low price plan, Chinese Petroleum is expanding its plan to build more gas stations around the country to counter Formosa's successful campaign to woo franchise stations away from supply contracts with the state-run giant.

Chinese Petroleum is planning to spend around NT$5 billion over the next three years to build 35 new service stations and upgrade the equipment and facilities at 45 existing stations. According to reports, the plan should be completed by June 2004.

"Chinese Petroleum is going all the way," said an executive to ensure it maintains a dominant position in the domestic oil market.

Currently, Formosa, which only began diesel and gasoline sales in the domestic market last September, already supplies nearly 450 stations around the country, accounting for over 25 percent of the retail market.

Formosa has said recently that it has set its sights on supplying around 300 stations that should be built by the end of the year, hoping to boost its market share to over 30 percent by 2002.

Competition in the domestic market is heating up following the government's liberalization measures which were made in advance of anticipated competition from foreign competitors when Taiwan eventually gains WTO entry.

Meanwhile, Chinese Petroleum executives said that all of the company's four refineries were operating normally after a 6.2-magnitude earthquake struck Taiwan yesterday morning, the second major tremor in less than 24 hours.

The executive said that after checking equipment at their refineries, the company's daily refining capacity of 770,000 barrels per day has not been affected by the quake.