Formosa Petrochemical eyes market share

Formosa Petrochemical Corp (台塑石化), the nation's second-largest oil supplier, is expected to see a slight increase in market share, starting next month, from running 17 gas stations on the Sun Yat-sen Freeway.

"We estimate that the new outlets will help us to garner another 1.2 percent of market share from our current 30 percent," said Matiz Lin (林明憲), a Formosa Petrochemical public relations official, yesterday.

Formosa Petrochemical, the nation's only private refiner and upstream petrochemical producer, has the capacity to refine 450,000 barrels of crude oil a day at its plant in Mailiao.

The company started to produce ethylene in July 1999 and launched its oil products in September 2000, ending state-run Chinese Petroleum Corp's (CPC, 中油) decades-long monopoly.

Last month the Formosa Plastics Group subsidiary won the rights to operate the 17 stations for a five-year period from CPC, whose refinery can process 770,000 barrels a day.

The two companies compete in both the refinery and retail gas station sectors.

Formosa's market share of retail stations stood at 28.25 percent as of last October, compared to CPC's 71.42 percent. It expects to increase the figure to around 33 percent this year.

But in terms of volume sold, Formosa's market share is close to 30 percent, compared with CPC's 70 percent, Lin said.

To attract customers to the highway stations, Formosa will lower its oil prices by a small margin, and in addition will provide various giveaway programs and coupons, Lin said.

The price cut could become larger if the move triggers a price war, he added.

Lin said the company also plans to set up car-maintenance facilities at the highway stations to enhance its services.

Formosa Petrochemical shares rose NT$1 to close at NT$52.

The company had unaudited net income of NT$19 billion on sales of NT$237 billion last year, the company said in a statement to the Taiwan Stock Exchange yesterday.

The loss of the 17 stations will not impact CPC's business as they account for just 7 percent to 10 percent of its oil supplies annually, said a public relations official for the company who preferred not to be named.

Nevertheless, the changeover right may trigger a price war among the nation's three major oil suppliers.

To secure the loyalty of highway drivers and commuters, Chinese Petroleum this month began promoting its gas stations at various freeway intersections by offering coupons for those stations.

That promotion appears to have impacted smaller rival National Petroleum Corp (全國加油站), which runs more than 20 gas stations at intersections along the freeway.

National Petroleum said in a statement that it would offer more giveaways and coupons to customers visiting its stations, starting next month.

It did not elaborate further on its statement.