Chinese Petroleum claimed it is unable to lower prices due to prearranged rates with Indonesia and Malaysia that it is bound to until 2010.

Almost a fifth of Taipower's generation requirements come from natural gas and the company bought four billion cubic metres of natural gas last year from Chinese Petroleum at around $US0.25 per cubic metre.

Taipower has recently signed a new deal with a Qatar supplier that will see it paying only around $US0.17 a cubic metre, but not until 2008.

The company spends around $US1 billion a year on natural gas and is considering issuing a call for public bids from other natural gas suppliers. However, for this to happen, Taipower's head of public affairs, Huang Huei-yu, admits that the utility needs government approval.

This year Chinese Petroleum expects to purchase around 5.5 million metric tonnes of gas with 1.7 million of that being supplied to Taipower's Tatan power unit. Chinese Petroleum, which also sells natural gas to household users, owns Taiwan's only LNG receiving terminal.