CPC insists it's prepared for foreign competition

The head of Chinese Petroleum Corp (CPS, 中油) said yesterday the company was prepared for the entry of new competition from abroad.

"For the last three years we've been restructuring, cutting costs and lowering prices," said Chen Chao-wei (陳朝威), president of Chinese Petroleum. Chen said the company is in the best position to keep domestic competitors at bay and stave off foreign imports that will begin in January.

Chen made the comments after opening the state-run company's plush new Taipei headquarters yesterday.

Chen said he was confident that the company's well-established supply channels, brand name and infrastructure changes will be adequate to maintain its dominant position in the domestic oil market.

"Marketing and delivery channels are the most important areas in which we are strong, with over 1,700 outlets across the country," Chen said.

Chen said that competition from the only other domestic oil refiner, Formosa Petrochemical Corp (台塑石油), had been contained, with the firm only managing to take less than 20 percent of the domestic market.

"This new competitive spirit is reflected in the new building," Chen said.

CPS' headquarters, located at the east end of the upscale Hsinyi District, stands 23-stories tall and comes complete with an adjoining art center and theater.

The opening of the building marks the beginning of a busy period for the company.

Besides dealing with the arrival of competitive oil imports, the company is reportedly going to sign a joint exploration deal with China National Offshore Oil Co (CNOOC, 中國海洋石油) and see its privatization plan accelerated.

According to a report in the Asian Wall Street Journal, the deal -- which is still pending Taiwan government approval -- could be signed next week and drilling could commence in the Tainan Basin which lies in the Taiwan Strait by January.

Another significant development for Chinese Petroleum is the reported floating of a proposal by the Commission of National Corporations to accelerate the privatization of the company.

The Ministry of Economic Affairs is reportedly considering auctioning off a more than 50 percent stake in the company to foreign and local investors in a single sale.

The plan, which is yet to be approved by the Legislative Yuan, calls for the privatization of Chinese Petroleum in three stages over a period of between two and four years.