Taiwan will allow imports of oil products such as diesel and gasoline, opening the door to Exxon Mobil Corp, the world's largest oil company and other overseas producers to compete with state-owned Chinese Petroleum Corp (CPC,中油).
Exxon Mobil is the only major foreign player to have formed a joint venture with a local firm, the Pan Overseas Corp (匯僑實業) trading company. They will team up to supply 200 gas stations nationwide from a seven-tank storage facility at the Port of Taichung (台中港), in central Taiwan.
The joint venture, called Exxon Petroleum Taiwan Inc, expects to grab a 10 percent share of the nation's fuel market over the next four years, a Pan Overseas spokesman said.
The government began accepting applications from other potential importers yesterday.
Chinese Petroleum and the Formosa Plastics Corp (台塑集團) are currently the nation's only oil distributors, which is opening up industry as the nation joins the World Trade Organization.
The liberalization will mean domestic oil prices will be determined by the market unless there is a shortage of oil or volatility in prices, the Economic Ministry said in a statement.
The government has established an oil fund management committee which will take measures when faced with developments affecting the stability of oil prices or national security.
The fund will also assume the role of the CPC in ensuring that the nation has sufficient oil reserves, it added.
Analysts expect stiff competition following the second and final stage of the liberalization. The government liberalized imports of liquefied natural gas and aviation fuel in January 1999.
The state-run CPC controls some 75 percent of the nation's petroleum industry, with the rest taken up by rival Formosa. CPC reported net income of NT$8.33 billion last year.
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The CPC said it was confident of retaining a 70-percent share. Formosa wants to increase its share to 30 percent and predicted newcomers would grab a 10-15 percent share.
The government plans to sell more than half of its stake in CPC some time in the second half of next year.
``There will be downward pricing pressure'' if Chinese Petroleum and Formosa are exposed to rival sellers, said Murphy Huang, an analyst at Prudential Securities Investment Trust Co.
Still, motorists and companies may not see lower fuel bills immediately as Chinese Petroleum and Formosa have "established distribution channels."
Shares of Formosa Plastics, the flagship of Taiwan's largest industrial group, rose NT$0.20, or 0.6 percent, to NT$32.
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