Privatization of CPC may be troubled

Chinese Petroleum reported net income of NT$8.33 billion last year.

The strategic investors the government is hoping for are big international oil firms.

"Those most interested in investing in Chinese Petroleum will not be average investors -- they will be strategic investors such as international oil companies," Wu said.

Within the last couple of years, mergers in the sector have included Exxon and Mobil, Chevron and Texaco and British Petroleum's purchase of Amco and Arco. Heightened competitiveness may, nevertheless, take its toll on Chinese Petroleum's dominant position and subsequently investor sentiment.

"It is estimated that Chinese Petroleum's market share will fall below 50 percent within three years -- a situation that will make it difficult to attract foreign investors," Hsu said.

According to Chen Chao-wei (陳朝威), president of Chinese Petroleum, the corporation has already lost around 20 percent of the total domestic oil market to its only local rival, Formosa.

The company is preparing for tougher times and has already been courted by foreign groups interested in establishing cooperative ventures, Chen said. Offering their services to Chinese Petroleum in this endeavor, foreign underwriters such as Goldman Sachs and Merril Lynch have visited relevant government agencies in preparation for making their initial bids, Wu said.