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Subsidy burden may push fuel market reform

With oil prices expected to remain above $100 per barrel into 2013, the fuel subsidy burdens shouldered by many Asian governments will speed up the pace of market deregulation and could cut oil demand growth, consultancy Wood Mackenzie believes

The firm estimates that refining and marketing companies in India, China, Malaysia, Indonesia, Taiwan and Vietnam made a combined loss in the range of $70 billion to $80bn last year as governments intervened to control consumer pricing. As a result, there is mounting pressure on governments to cut unsustainable subsidies and allow market forces to determine prices. This puts a downward risk on oil demand expansion in key markets, such as China, India, Indonesia and Malaysia, Sushant Gupta, senior Asian downstream analyst at Wood Mackenzie said. Asia is expected to account for much of the 1 million-1.5m barrels per day (b/d) world demand growth forecast by 2013. The bulk of oil demand is ex

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