02-04-01 Taiwan's oil market will be totally liberalized and open to foreign imports by August or September at the earliest, according to the nation's top energy planning department. Chen Chao-yi, executive secretary of the Energy Commission said that the final reading of the long-debated Petroleum Management Law would occur by the end of the current legislative session that ends in May.
The consensus was reached after 21 meetings between lawmakers, officials and industry players. Chen said after the law is passed, "it will take around three months for full implementation of the law." According to local reports, Exxon-Mobil, one of the world's biggest oil conglomerates, is planning to establish around 10 service stations in northern and central Taiwan.
The market opening will further threaten the former state-run monopoly, the Chinese Petroleum Corp., which has already been forced to surrender around 15 % of the domestic oil market to newcomer Formosa Petrochemical.

Besides allowing firms to import oil, the law will also eliminate the 15,000 barrel minimum daily oil production capacity for companies wishing to enter the refining business and axe the 2.5 % import tax on crude oil for refiners. Opposition to this new measure has drawn strong opposition from Chinese Petroleum and Formosa, who want the high threshold to remain to keep smaller companies from eating into their market.
Under the law, companies can chose to classify themselves as either a petrochemical company or an oil refining company. Petrochemical companies that produce oil products will be allowed to sell their product overseas and to refinery companies, but not directly in the domestic market.
They will not be required to contribute oil and cash to national reserves that could be used in times of national crises. Companies choosing to be classified as oil refiners can sell their product directly into the market and import semi-or-completely-refined oil products but they must contribute to the national oil reserves.

Chen defended the move to drop the tax saying that it was unfair for petrochemical firms to pay no tax on imports of naphtha while oil refiners have to pay 2.5 % tax on crude. According to the Energy Commission's report, the elimination of the tax on crude imports will cause a tax revenue deficit of around NT$ 3.7 bn which would be offset by a 5 % increase on the excise duties for gasoline, diesel and six other oil products. Taiwan is preparing for WTO entry.