Independent gas stations may disappear in the near future, as the big players move to expand their market share nationwide via mer-gers or alliance strategies, market watchers said yesterday.
"Seeking to monopolize the oil market is definitely a trend in Taiwan," said Simon Tu (
To fight for market share, local oil companies including state-run Chinese Petroleum Corp (CPC, 中油), Formosa Petrochemical Corp (FPC,.台塑石化) and National Petroleum Corp (全國加油站) have staged price wars on and off for since the market was liberalized in 2000, leaving small operations few options but to be incorporated into the big oil firms, Tu said.
Another energy market watcher also said small oil companies can no longer survive as big brand names are gobbling up the oil market.
"Even [US] oil giant Esso has had a hard time in Taiwan, not to mention the independent gas stations," said Liu Szu-liang (
Early this month, Esso Taiwan decided to suspend its gas station expansion plan due to competition from local firms.
Among major oil companies, Chinese Petroleum supplies 70 percent of the market's oil products and has 1,600 gas stations, while Formosa supplies nearly 30 percent and runs 582 gas stations.
Formosa also has been planning to inflate its market share by expanding the number of its gas stations.
Although National operates only 72 stations, its market share has grown rapidly by launching several price wars. It reported NT$3.19 billion in revenue in the first quarter of the year, or 24 percent growth compared to the same period last year.
National also formed an alliance with North-Star Petroleum Co (
A Chinese-language newspaper reported yesterday that National said it is working to forge an alliance with Formosa that would put National in charge of an undisclosed number of Formosa stations.
But Formosa's public relations official Lin Ming-hsien (林明憲) denied the report, saying the company is focusing on a new gas station expansion plan.
National officials could not be reached for comment.
Whether the alliance plan is in the works or not, Chinese Petroleum's spokesman Liao Tsang-long (廖滄龍) said it shows that oil companies are looking to increase com-petitiveness by cooperating with suppliers to cut costs, since supply is exceeding demand.
CPC produces 770,000 barrels of oil per day and FPC produces 450,000, while daily demand is only 800,000 barrels, according to Chen Mao-yang (陳茂陽), a section director at Ministry of Economic Affairs' Energy Commission.
Liu also commented on the alleged partnership between Formosa and National, saying the announcement may be an attempt by National to probe Formosa's willingness toward the plan.
The plan shows even small independent chains like National may sooner or later join with the market leaders.
"To a certain degree, it's a warning to other small and medium-size oil companies to withdraw from the market," Liu said. "Monopolization of the oil market is unavoidable."
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