A tie up with Singapore Petroleum Company Ltd (SPC) will Tiger secure an independant supply of refined oil products. "Tiger Oil is the big winner in this deal. It has received the backing from a major firm in its bid to at least maintain its small market share," said ABN Amro analyst Patricia Ahn.

SPC announced on Tuesday it had paid about 29 billion won for a 40.2 stake in Tiger to gain "a key foothold in the recently deregulated Korean domestic petroleum market."

SPC said South Korea offered "excellent steady long term growth in line with Korea's economic growth rate of 6-7 per cent per annum". "Refiners may not have to worry about losing their market share in the short-term, but they should not expect to squeeze Tiger Oil out of the domestic petroleum market," said Samsung Securities analyst JJ Kim. Analysts said major oil refiners, which control about 98 per cent of the domestic market, were not expected to lose any market share in the near term. This is despite a sharp rise in the number of independant gasoline stations, which leapt to 354 at the end of September from 226 at the end of 1999, according to figures from state-run Korea National Oil Corp (KNOC).

Tiger Oil and 12 other independant petroleum product importing companies combined hold the remaining 2 per cent share. Mr Kim said the big majors would fiercely protect their market share because the biggest margins come from domestic sales rather than exports. "About 70 per cent for every $1 in sales comes from the domestic market. This explains why refiners are reluctant to loosen their grip on the domestic market," said Mr Kim. ABN Amro's Mr Ahn said brand loyalty would also hamper the smaller players from making big inroads into the Korean market.

(Reuters)