Oil in the People's Republic of China: Industry Structure, Production, Exports 9780773592353

Table of contents :
Cover
Title
Copyright
Contents
Preface
Sources and Abbreviations
Part I. China's Oil Industry - A Summary
Part II. Oil Production by Regions
Part III. The Refineries
Part IV. Leading Cadres in the Oil Industry

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PRESS QUEEN'S UNIVERSITY

OIL IN THE PEOPLE'S REPUBLIC OF CHINA

Oil in the People's Republic of China Industry Structure, Production, Exports by WOLFGANG BARTKE

A Publication of the Institute of Asian Affairs, Hamburg

McGILL-QUEEN'S UNIVERSITY PRESS Montreal 1977

First published in English by C. Hurst & Co. (Publishers) Ltd., London. Published simultaneously in North America by McGill-Queen's University Press 1020 Pine Avenue West, Montreal II3A 1A2 German edition: Die Olwirtschaft der Volksrepublik China, Mitteilungen des Instituts fur Asienkunde, Hamburg, No. 72, 1975 Translated by Waldtraut Jarke © Institute of Asian Affairs, Hamburg, 1977 ISBN 0 7735 0309 9 Legal deposit 2nd quarter 1977 BibliotUque Nationale du Quebec Printed in Great Britain

CONTENTS Preface

7

Sources and Abbreviations

8

Part I.

China's Oil Industry - A Summary

Part II. Oil Production by Regions Part III. The Refineries Part IV. Leading Cadres in the Oil Industry

9 57 99 121

PREFACE The oil industry in the People's Republic of China is an important factor in the correct appraisal of China's future development, not only in the economic but also in the military field. This is the reason why it has been the object of great interest all over the world. Confusion regarding Chinese oil production is considerable, and has been increased by computer forecasts. The time has therefore come to allow the original Chinese sources to speak for themselves, because these are quite sufficient to allow us to obtain a reasonable picture. The primary intention of the present paper is to present all Chinese figures on the subject together including the production figures, both absolute and relative - to enable the interested reader to draw his own conclusions from the complete original Chinese material. This, after all, is the true basis from which we should start: there are no other sources that really count, and no appraisals and forecasts will make sense which do not start from this basis. At first sight the presentation of relative production figures, without any effective point of reference, may not seem meaningful; however, the worldwide confusion forces the author to add these relative figures, for only the complete Chinese material is fit, on the one hand, to demonstrate the difficulties of coping with the problem in hand and, on the other, to question the wild speculations on China's position as an oil power. The present volume begins with a Summary (Part I) in which a general explanation is given of the items treated in the subsequent chapters. In Parts II and III the reader will find the individual facts forming the basis of Part I, with the complete source material to which all world-wide speculations must be reduced. The volume contains all the relevant Chinese original sources. This is our essential starting-point.

-7-

SOURCES AND ABBREVIATIONS A Concise Geography of China, Foreign Language Press, Peking, 1964 A History of OPEC, by F.Ruhani, Praeger, 1971 A Simple Geography of China, Foreign Language Press, Peking, 1958 C.a. = CHINA aktuell, a monthly of the Institute of Asian Affairs, Hamburg ChH = China Handbook ChiB = China im Bild, a monthly in German of the People's Republic of China CNA = China News Analysis, a weekly, Hong Kong CiT = China in Transition, Peking, 1957 CR = China Reconstructs, a monthly in English, Shanghai CSM = Christian Science Monitor, Boston Current Background, Hong Kong EWiVRCh = Die Energiewirtschaft der V R China, by Heinz Harnisch and Hans-GOnther Gloria, published by Verlag Gluckauf GmbH, Essen FE ER = Far Eastern Economic Review, a weekly, Hong Kong IHT = International Herald Tribune Issues and Studies, a monthly, Taipei, Republic of China Jiji Press, Tokyo JMJP = Jen-min jih-pao (People's Daily), Peking KMJP = Kuang-ming jih-pao, a daily, Shanghai Koide, Yoshio, China's Oil Industry, in Pacific Community April 1974 Kyodo, Japanese News Agency Meyerhoff, A.A.: Developments in Mainland China, 1949-1968. Bull. Americ.Assoc. Petrol. Geology 54 (1970) No.8 p.1566 NCNA = New China News Agency, official news agency of the People's Republic of China in English NYT = New York Times NZZ = Neue Zile-cher Zeitung, Zurich PC = People's China, a fortnightly in English, Peking (no longer published) PR = Peking Rundschau, a weekly in German, Peking .... Radio relates to reports in Summary of World Broadcasts, Part 3, The Far East, published by the Monitoring Service of the British Broadcasting Corp., Reading, Berks. RAND Corp., Memorandum RM-311-PR, Communist China's Petroleum Industry, by K.C.Yeh, Santa Monica, Calif., 1962 Red Flag, an ideological monthly, Peking Stahlleitungsrohre, a publication of Mannesmannriihren-Werke, Duesseldorf, 1975 SYKT = Shih- y0 k'an-t'an (

;47

)= Petroleum Research, Peking, June 1958

SYKYTH = Shih-yu kung- yeh eung-hsin

I, Peking 13/1957

Ten Great Years, Foreign Language Press, Peking, 1960 The Commercial Daily, San Francisco TKP = Ta Kung Pao, Hong Kong Voprosy Ekonomiki (Economic Problems), Moscow WHChM = What's Happening on the Chinese Mainland, a bi-weekly newsletter Women of China, a monthly in English, Peking (no longer published)

Part I CHINA'S OIL INDUSTRY A Summary

Anybody predicting only ten years ago that China would enter the circle of oil-exporting countries in the mid-1970s would have been accused of letting his imagination run riot. All experts then considered China an oilpoor country, her scanty oil reserves being located not only far away from the centres of industry but also in regions with adverse climatic conditions. Oil having become a factor of vital importance for all economic and military purposes, China ranked rather low among the economic and military powers of the world. The foregone conclusion was that China, with her almost negligible oil resources - which, moreover, were hard to get at would find difficulty in enforcing her claim to become a world power. This portrayal, which was universal currency a mere decade ago, is now regarded as quite obsolete. The change which China has been undergoing in this particular field is a reflection of the changes in the condition of the country as a whole. The most important landmark in the process of re-education which the world had to undergo in respect of China was the official recognition of the People's Republic by the USA. This event caused the West to turn away from a position of ideological reserve to a more or less positive attitude towards the People's Republic. It seems inevitable that, following after two decades of denunciation, the attempts by the world to arrive at a more equitable judgment of China would lead to some exaggeration, even euphoria. Watchers of the Chinese scene who used to have some difficulty in arriving at reasonably correct conclusions from the negative pictures painted by ideological opponents, now often find themselves faced with a similar problem, but in reverse. Now, as then, our aim should be to keep strictly to the facts. Except for the first decade following the foundation of the People's Republic, no absolute figures have been published on the oil industry in Communist China. Since 1958, only relative figures have been announced. We must face the fact that China is the first world power to veil its economic development in a cloak of secrecy, even confusing the concerned China-watcher with contradictory information. This makes a reasonably accurate picture of the Chinese oil production particularly hard to obtain.

Despite all these difficulties, there can be no possible doubt regarding the excellent progress China's oil industry has made. We should note particularly that success in this field did not really become manifest until after the rupture with the Soviet Union, although the Russians had made vital contributions to the oil industry before 1960, thus helping to create the basis for successful development. However, the technical know-how which the Soviet Union had been imparting to China's oil industry in the early years must now be regarded as obsolete. In any case it was by relying on her own resources that China has developed into a modenaoil-producing country, and this deserves our highest respect. In the meantime it has also become indisputable that, in the foreseeable future, China will become one of the world's major oil-exporting countries. That this bright prospect may prove somewhat more remote than euphoric China-watchers have assumed does not curtail China's enormous achievements in this field. China's Mineral Oil Deposits

China is the oldest oil-producing country in the world: an oil and natural gas field, was exploited as early as 211 B.C. near Chiliuching in Szechuan province, and is still in operation today. It was in that field that the percussion-drilling method with cables was developed, - a method that continued to be employed in the oil industry until quite recently (1). Before the foundation of the People's Republic of China, the Chinese oil industry played a very inferior role. It had generally been regarded as incapable of development - this was on the strength of estimates made by the US National Geological Survey in 1920 (when China's oil reserves were assessed at a mere 100 million tons) and by Chinese geologists who, in 1937, assessed their country's oil reserves at 220 million tons. A change in this attitude began to occur when Soviet experts, especially Uvarov (2), arrived at more optimistic forecasts. The favourable results of oil extraction during the 1950s, which were mainly attained in Sinkiang and Chinghai, are due ultimately to the work of Soviet experts. All the necessary know-how, including the setting up of modern refineries, came from the Soviet Union, then the only country prepared to help China. The first steps in the exploration of the Taching oilfield were also probably still made under Soviet guidance. (1) Rohstoffwirtschaft International, "Die Energiewirtschaft der Volksrepublik China" (henceforth abbreviated EWiVRCh) by Heinz Harnisch and Hans Mather Gloria, Verlag Gluckauf GmbH, Essen 1973, p.52 (2) China in Transition, Peking 1957 -12-

Due to the vastness of the country, China's geological and tectonic structure is very variegated. Two principal elements of geotectonics may be distinguished: the Chinese Table, also called Chinese Shield, and the fold mountains surrounding the table. In view of this geotectonic structure, the chances for the occurrence of mineral oil resources in China were at first regarded as differing considerably according to the various regions. Despite this, large fields were detected in both of the principal geotectonic structures, as well as in the coastal areas. By 1968, sixteen major basins containing forty oil and fourten gas fields were being exploited" (see the map showing the oil and natural gas fields on pp.14/15). By 1974, this situation had not undergone any major change. Among the newly discovered oilfields the Takang field is the most important, while the others are extensions of those previously known. Speaking of oil reserves, the reader should first note that there are absolutely no Chinese figures for the extent of these deposits. When Li Jen-chttn, then Vice-Minister for the Oil Industry, stated in 1958 (i.e. at a time when China was still dependent on the Soviet Union) that, according to recent estimates of oil resources, an output of at least 100 million tons of oil seemed possible (1), this statement could not but meet with some scepticism, as the annual production was then (in 1957) no more than about 1.5 million tons. Since that time the deposits have proved capable of producing a far higher output. China has still not been completely explored geologically. While the general location of the oil-bearing basins is known, there are still many blanks on the maps of the various fields. This is particularly true of the offshore fields where prospecting has only just begun. These few remarks should suffice to show the speculative character of all estimates of China's oil reserves in the complete absence of Chinese statistics. This has induced the author to cite a few figures from the great number of estimates, in order to demonstrate this speculative character. Japanese sources estimated that in 1973 the reserves amounted to 20,000 million tons, with an increase to 30,000 million tons expected for the near future (2). The US Consulate-General in Hong Kong stated that the reserves in 1973 had been estimated at 50,000 million tons*(3). An American newspaper usually considered reliable mentioned a figure of between 8 and 10 billion (1) JMJP Aug 7, 1958 (2) Yoshio Koide in Pacific Community 4/1974, p.464 (3) Issues and Studies, Taipei 11/1974, p.67

-13-

......s.

f. 1........ •

i . ,..... .....! Hulunchih Basin .4' 1

..; 1 .. i '----

0 1. Sungliao Basin 1. • 'Fuhsin Basin .0 % "...... /

•

./.° • •••••■•• 0. 4°

1 ,..^9, ........... 4

.wOrdos Basin

North

Kuangsi-Kueichou Basin

Luichou Basin

-15.

tons (1). Ta Kung Pao, a Hong Kong paper friendly toward Peking, quoted the estimated published in the Japanese paper Mainichi Shimbun, namely that the reserves in 1972 amounted to "more than 3,000 million tons" (2). According to a statement by P.T.Ho (a scientist of Chinese origin living in the USA), China's reserves were thought to amount to one-third of the world's total reserves (3). The Chairman of the U.S. Commission for U.S. -China Trade mentioned reserves of between 40,000 and 45,000 million tons (4). Meyerhoff, in a paper on the situation in 1968 (published in 1970) gave a figure of no more than 779 million tons (Table A). Though the figures in Table A have meanwhile become obsolete, the table has retained its value as a detailed presentation of China's geological structures. The only vitally important oilfield not shown in the table is that of Takang, which forms part of the North China basin and was first mentioned by the Chinese press in 1973. The figures in the "Oil Reserves" column of the table should be amended accordingly, the increase for Takang being some 100 million tons, because Takang's economic importance has been repeatedly referred to as equal to Taching's. It should be noted that even the few estimates quoted here vary between 3,000 and 50,000 million tons. Which of the sources should be considered reliable and which unreliable is impossible to answer. Observers of the Chinese oil industry will therefore be well advised to consider all estimates with some caution, hoping that one day China may again publish precise figures. In principle we may assume that, in view of the rapid development of the Chinese oil industry, even the boldest estimates for the oil reserves need not be regarded as unrealistic. The Development of Crude Oil Production

When the People's Republic of China was founded in 1949, it had to start almost from zero. In 1943, when production had previously reached its peak, China's output of crude oil was 320,000 tons, but as a result of war destruction, it fell to 120,000 tons in 1949, and the 1943output was not reached again until 1951 (s.Table E). (1) CSM, Sep 15, 1973 (2) Issues and Studies, Taipei, 11/1974, p.67 (3) P.T.Ho, "Sizing Up the Characteristics and Achievements of New China by Historical Yardstick", in The Seventies 3/74 (4) The Commercial Daily, San Francisco, Mar 21, 1974

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Absolute figures for China's crude oil production were officially announced up till 1958. For all the subsequent years only relative figures are available from official sources. Hence an assessment of the present situation can only be made on the basis of the relative figures published during the past decade: these have been compiled in Table B. The Chinese press has not announced any other figures. Table B

China's Crude Oil Output Relative production figures (taken from the Chinese press)

TIME

PRODUCTION INCREASE

SOURCE

1966, Jan-Aut

24.8% more than in comparable period 1965

Peking R.,Sep 26-27,1966

1968, Aug

34% more than in January 1968

NCNA Sep 26, 1968

1969, Jan-Mar

64% more than in comparable period 1968

NCNA Apr 23,1969

1970, Jan-Aut

34% more than in comparable period 1969

PR Oct 27, 1970; NCNA Sep 23, 1970

1970, whole year

40.9% more than in 1969

NCNA Sep 26, 1972; PR Nov 28, 1972

1970

average annual growth rate since 1966 = more than 30%

NCNA Sep 9, 1971; PR Jan 25, 1972

1970

increase by 2.5 times over 1966

PR Oct 22, 1971

1971, Jan-Jun

34.9% more than in comparable period 1970

NCNA Sep 9, 1971

1971, whole y

27.2% more than in 1970

PR Jan 11, 1972

1971, whole y

28% more than in 1970

NCNA Jan 9, 1972; PR Jan 25, 1972

1971, whole y

28.6% more than in 1970

NCNA Sep 26, 1972; PR Nov 28, 1972

1971

average annual growth rate since 1963 = 24.5%

Peking R., Dec 5, 1972

1971

average annual growth rate since 1967 = more than 30%

PR Jan 25, 1972

1971

almost 21 times the 1949 output

PR Nov 28, 1972

1971

more than 300 times the 1949 output

PR Oct 3, 1972

1972, Jan-Aug

22.8% more than in comparable period 1971

NCNA Sep 27, 1972

1972, whole y

16% more than in 1971

NCNA Dec 26, 1972

1972

average annual growth rate since 1963 = 24.5%

Peking R., Dec 5, 1972

1972

1965 output trebled

PR Sep 30, 1973

1972

average annual growth rate since 1965 = 22%

PR Sep 30, 1973

1973, till Aug

monthly increase averaging 20% over Dec 1972

NCNA Sep 12, 1973

1973, Jan-Jun

more than in comparable period 1972

PR Sep 30, 1973

1973

more than four times as much as in 1965

NCNA Sep 18, 1974

1974, Jan-Jun

21.3% more than during comparable period 1973

NCNA Aug 8, 1974; Peking R. Aug 14, 1974

1974, whole y.

20% mare than in 1973

NCNA Jan 2, 1975

1974

six times more than in 1965

NCNA Jan 2, 1975

Speculations on China's oil production were beginning to run wild as a result of two statements which were ascribed to Chou En-lai, though never verified by the Chinese press - a point we wish to emphasize. The production figure for 1970, which Chou En-lai mentioned in a conversation with Edgar Snow, was 20 million tons and that for 1973, which he gave to the Japanese Foreign -21-

Minister then visiting China, was 50 million tons. The figure of 20 million tons for 1970 is almost identical with the estimates made by experts outside China. Some foreign estimates had been a. little higher, others a little lower but on the whole the figure for 1970 appears plausible. It will therefore be used as a basis for our consideration of China's oil output in this book. The figure of 50 million tons for 1973, however, does not fit in with the relative figures announced by the Chinese press. Starting with an output of 20 million tons in 1973 and using the relative growth rates for the period between 1971 and 1974 we have arrived at the production figures set out in Table C. Table C Year

Growth of Output in absolute figures, as calculated from the percentages officially announced in China (girvalshanRnOtuensced)

M illion Tons

1970

-

20

1971

26

1972

28 16

1973 1974

20 20

1975

20

30 36 43.5 53

from December 1972 till August 1973

There is only one gap in our presentation of the relative growth rates between 1970 and 1974, namely for the period September-December 1973 (see Table D). It appears reasonable, for the four months for which no data are available, to assume growth rates in accordance with those given for the period which precede and follow the gap. During the time between January 1971 and August 1973 the average growth rate was 21% , while during the period between January and December 1974 it was 20%. It therefore seems justifiable to fill the gap between September and December 1973 with linear growth rates derived from the earlier growth rates. The absolute figure, ascribed to Chou En-lai, of 50 million tons for 1973 would mean that, while China's crude oil production had been growing steadily by an average of 21% between January 1971 and August 1973, it had soared to 120% during the period September-December 1973 (corresponding to an absolute rise from 30 to 34 million tons between January and August 1973, and a jump in the absolute figures from 34 to 50 million tons between September and December 1973, falling again to approximately its previous level during the period January-December 1974. This does not seem to make any sense. -22-

The figure of 50 million tons ascribed to Chou En-lai would also contradict the average growth rate of 21% which the Chinese press announced for the period January 1971-August 1973. A rise from 20 million tons in 1970 to 50 million tons in 1973 would, however, mean a growth rate of 37%. Such a discrepancy is too great to appear plausible. Table D

The Relative Growth Rates of Production, as announced by the Chinese press (compared with the absolute figures for 1970 and 1973 as ascribed to Chou En-lai)

SO-

million tons

36.0

30

1971

1972

1973

1974

Explanations: extrapolated from the data published by the Chinese press on the basis of an output of 20 million tons for 1970, which appears plausible A-C Lineargrowth between 1970 and 1973, according to the statement allegedly made by Chou En-lai B-C Computation on the basis of 50 million tons, going backwards to the 20 million tons mentioned for 1970 and taking into consideration the relative growth rates announced by the Chinese press C The production figure for 1973 as ascribed to Chou En-lai D Linear calculation of the average growth rate of 20% announced for the period between January and August 1973 D-E Rise, in 1974, including crude oil exports A-B Values

D-F Rise in amount of crude oil available for inland use (exports not

considered)

If we accept the information released by the Chinese press, there is evidence that the output of crude oil had risen to no more than 36 million tons by 1973. According to Chinese sources, production rose by 20% in 1974; from this we can deduce that the output that year was 4- 5 million tons. Accordingly the achievement of 50 million tons before 1975 must be deemed to have been impossible. There is no basis whatever for any of the other estimates.

-23-

Observers of the Chinese economy have known for a long time that Chinese figures must be regarded with some scepticism. Since the Statistical Office disappeared during the Cultural Revolution, there is apparently no institution responsible for announcing reliable information to the Chinese press as a whole. This unfortunate situation seems to be the reason for discrepancies in Chinese press reports, of which Table B above contains some examples. 1. For 1971 the Chinese press anounced the following growth rates for crude oil production, as compared with 1970: 27.2%, 28%, and 28.6%. 2 Within a single month, "Peking Review" gave two divergent figures: (a)The crude oil production in 1971 was 21 times that of 1949. (b)The crude oil production in 1971 increased by 301 times over that of 1949. In 1949 China produced 0.121 million tons of crude oil (1). According to (a), this would make the figure for 1971 2.54 million tons; according to (b), 36 million tons. Both figures appear improbable. The first is far too low, the second too high. If the second figure were correct, this would mean that, on the basis of the figures allegedly announced by Chou En-lai, production had risen by 80% in the following year, though the mean growth rate calculated from the figures given by three sources is merely 27.9%. 3 Both NCNA (Sep 9, 1971) and PRe (Jan 25, 1972) announced that the average growth rate between 1966 and 1970 had been more than 30%. Using the plausible figure of 20 million tons for 1970 as a basis, we can go backwards and arrive at the following growth rates (taking "more than 30%" as 31%): 1967: 6.6 1969: 13.8 million tons 1968: 9.5 1966: 4.5. 4. For the period between 1967 and 1971, PRe announced an average annual growth rate of more than 30%. Starting with 20 million tons for 1970 and basing our calculation on Chinese sources, this means that the output in 1971 was 26 million tons. Taking the average growth rate of "more than 30%" to be 31%, we can go backwards and arrive at the following figures: 1970: 18 million tons (instead of 20, as supposedly 1968: 8.6 announced by Chou En-lai), 1969: 12.4 1967: 6. (1) Ten Great Years, Foreign Language Press, Peking, 1960

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5. The average annual growth rate for the period between 1963 and 1972, as announced by Peking Radio on December 5, 1972, was 24.5%. Starting with 20 million tons for 1970, we can go backwards and forwards to arrive at the following figures: 1972: 31 million tons 1971: 24.9 1970: 20 1969: 15.1 1968: 11.4 1967: 8.6 1966: 6.5 1965: 4.9 1964: 3.7 1963: 2.8 .

6. According to PRe of Sep 30, 1973, the mean annual growth rate of China's oil production for the period between 1965 and 1972 was 22%. Again starting with the plausible figure of 20 million tons for 1970, the following production figures may be assumed: 1972: 29.8 million tons 1971: 24.4 1970: 20

1969: 15.6 1965: 5.8

1968: 12.7

1967: 9.5

1966: 7.4

7. According to PRe of Sep 30, 1973, production in 1972 was three times higher than in 1965. Starting with the figures given under (5) and (6) above, the mean annual production may be calculated as having been 5.3 million tons. Multiplied by three, the figure for 1972 would be 15.9. 8. According to NCNA of January 2, 1975, the output in 1974 was six times higher than that of 1965. Again starting from the average for 1965 - 5.3 million tons - the output for 1974 may be calculated as having been 31.8 million tons. While the figures given in (1) and (2) must be dismissed as definitely incorrect, those specified under (3) to (8) may be summed up in a table as follows: Table E

Calculation Based on Contradictory Announcements in the Chinese press 3.

1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

4.5 6.6 9.5 13,8

4.

6 8.6 12.4 18 26

6.

7.

8.

4.9

5.8

(5.9)

(5.3)

6.5 8.6 11.4 15.1 20 24.9 31

7.4 9.5 12.7 15.6 20 24.4 29.8

5. 2.8 3.7

15.9 31.8

9.

20 26 30 36 43.5 53

Figures calculated from the relative growth rates announced by the Chinese press on the basis of 20 million tons for 1970

-25-

Since the figures in Table E, apart from the first and last in each column, have been arrived at by linear computation, those for the years in between should be regarded as approximations only. Though the table cannot be used for anything except to prove the inaccuracy of the figures announced by Chinese sources, it is remarkable that, starting from the plausible figure of 20 million tons for 1970, the figures in Cols. 5 and 6 are almost identical with those calculated from the annual growth rates announced for the period between 1970 and 1972 (Co1.9). If we want to forecast China's crude oil production in the near and foreseeable future, we shall have to consider several criteria. All our reflections should be based on the fact that China's geological conditions tend to make her one of the world's greatest oil-producing countries. The rapid development of new oilfields, however, is curbed by several factors, including particularly the inability of China's storage and refining facilities to keep up with her output of crude oil. Since self-reliance is one of the dominant principles of China's economic development - a concept that has become a model inspiring the countries of the Third World, whose protector China aspires to be - we must expect the development to be somewhat slow. According to the proven pattern, China's procedure for acquiring new knowledge in oil technology has been to order the smallest possible type of refinery. This has provided her with the complete know-how required for large refineries so that they will be able to build themselves according to the Western model. This is exactly what China has done. France was chosen to supply a small refinery, worth DM 160 million (11) (= US$ 65 million approx.), with an annual capacity of about 500,000 tons. While the principle of self-reliance is apt to slow down development - a drawback which China is deliberately putting up with for ideological reasons - exports may well prove to become a production-increasing component. In any case China's efforts (first observed in 1974) to find customers for her crude oil (see the chapter on oil exports) reveal that the Chinese intend to profit from their abundance of oil to earn foreign currency. However, this tendency is to some extent restrained by the shortage of transport and loading facilities. It is true that the completion of the 1,152km. pipeline from Taching in Heilungkiang province to the port of Chinhuangtao marks an important step on the way to the exporting of oil, but this is only a beginning because at present the port of Chinhuangtao is only capable of serving tankers carrying up to 30,000 tons. (1) NZZ Mar 13, 1975 -26-

The quays now under construction will be in a position to serve tankers carrying up to 70,000 tons (1). All this shows the extent to which development of the oil industry in China is still hampered by the shortage of refineries and shipping facilities. By 1975 China had become the fourteenth country to join the circle of oil producers, with a production of more than 50 million tons of crude oil per year.At this point it appears justifiable to set ChinesETowth rates in relation to the production of the thirteen other major oil-producing countries. Their annual growth ntes vary between 5.28% (Venezuela) and 28.3% (Libya). The latter occupies a unique position, as no less than thirty-seven companies, including such giants as Exxon, Mobil, Standard Oil, Texaco and BP, were engaged in the production of crude oil there during the 1960s. The annual growth rates of all the countries that have passed the 50-million-ton mark are specified as follows: Venezuela 5.28% (1946-72), Kuwait 5.95% (1955-72), the Soviet Union 11.37% (1954-72), Saudi Arabia 12.42% (1958-72), Iran 13.01% (1960-72) (2). If we accept what has been announced in the Chinese press, China's average annual growth rate for 1971-5 was 21%. After the 50-million-ton mark has been reached the curve will surely become flatter. That this expectation is justified may be seen from the fact that (in the first three months of 1975) Taching, China's main oilfield, reported an increase in production of 15.1%, as compared with the corresponding period in 1974 (3). When all the imponderables have been considered, a conservative estimate of China's crude oil production may be given as follows: having passed the 50-millionton mark, the annual growth rates will be falling from 20% to 15%, and probably even lower, in the decade to come. The output will therefore not reach the 100million-ton mark until about 1979 and the 200-millionton mark until 1985 or later. Table F contains a summary of several estimates of Chinese crude oil production. We have essentially limited the summary to the figures for the years up to and including 1972, because the figure of 50 million tons for 1973, ascribed to Chou En-lai, has produced confusion even among experts. A remarkable feature of the figures shown in this Table are the various breaks in the rise of production. The Great Leap Forward of 1959 and 1960 which in fact brought about a negative development of the Chinese economy, only affected estimates from the USA and Japan, while the interruption in development during the Cultural Revolution made itself felt in all estimates. All sources agree on the upward (1)Kyodo Jan 29, 1975 (2) Vaclav Smil: Communist Chinds Oil Exports, in Issues and Studies 3/1975 (3) NCNA 14, 1975

-27-

trend that has been in progress since 1968, and have accordingly given more or less identical values for 1969• Table F

Estimates of Crude Oil Production A PR China

Germany

B

USA

C

D

E

F

Gr.Britain Soviet Union Japan a

1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973

Taiwan b

0.121 0.2 0.305 0,436 0.622 0.789 0.966 1.163 1.458 2.264

(20)

3.7 4.5 5.26 5.83 6,5 6.9 8.67 12.37 10.39 12.40 14.5 20 26

3.7 4.6 4,5 _5 5.5 _6.9 8 10 10 11 14 18

23 26.7

3.7

5.8

9 12 10 11 15 20 25

(50)

20 25 29

3.68 5.2 5 6.25 7 8.4 10 12 10 12 14,5 18.2 22 25

3.7 5.2 5.4 6 7 8.5 9.5 11 8.5 9.5 11 14.5 18.5 21.5 25

3.7 5.2 5.4 6 7 7 8 11 10 12 16 20 25.6 29.7 35

The data for 8-Fa have been taken from Issues and Studies No.8 1974, Institute of International Relations, Republic o China

A

B

C D E

Fa Fb

Heinz Harnisch, Hans Gunther Gloria, "Die Energiewirtschaft der V R China", Verlag Gliickauf, Essen 1973. The sources cited for the above figures are: Die ErdOlwirtschaft der V R China, Bundesstelle fiir Autfenhandelsinformation, KOIn 1959. Petrol Press Service 38, 1971, pp.363 ff. Mining Annual Review 1971 Robert Michael Field, "An Economic Profile of Mainland China",Joint Economic Committee of the US Congress, May 1972 Werner Klatt, "China's Economy in 1972", in China Report, Vol.Vlll, Nos.1-4. China Report Vol.IX No.3, 1973. The China Study Centre, Delhi V.I.Akimov and M.Nokolsky, "Peking's Current Economic Situation", Sekai Josei, Japan, Apr 5, 1973, P.23, Novesti Mar 20, 1974 Keizo Takagi, "Peking's Oil Resources", Issues and Studies, Japanese edition, Nos.8-9, 1973 Chang Chun, "A Study of Peiping's Oil Industry", Chinese Communist Affairs Monthly, also published in Issues and Studies, May 1974 Kang Chung-mou, "A Study of Energy Sources on the China Mainland", Issues and Studies, April 1975, pp.60 ff.

Another fact worth noting is that the estimates from Taiwan vary considerably. The figures for 1973, as published in the May 1974 and April 1975 numbers of

- 28 -

Issues and Studies differ by no less than 10 million tons, and this discrepancy has not been explained. The Republic of China (Taiwan) - though usually considered a relatively reliable source for events in Mainland China, because documents obtained from the People's Republic by the Taiwanese secret service have generally proved authentic - seems to engage in speculation concerning the oil industry in the People's Republic- We can offer no other explanation for the discrepancies. In the light of Chou En-lai's disclosure of the plausible crude oil production figure of 20 million tons for 1970, the divergences of the figures contained in Col. F (a) and Col.F (b) for 1964 and later from those announced by other sources is so striking and so obviously the result of manipulation that there cannot be any doubt about their speculative character. In this particular case we can learn nothing from Taiwan. On the other hand, the estimates of all sources for 1971 and 1972 seem to make Chou En-lai's claim for 1973 appear highly improbable. Table G

50-

Linear Presentation of Crude Oil Production, 1949-74

million tone

ao

30-

20-

10-

1949 50 51 52 53 . 54 55 56 57. 58 59 60 61 62 63 84 85 66 87 68 60 70 71

73

/4

Table G gives a linear presentation of crude oil production between 1949 and 1975. It reveals the slow and steady growth before the Cultural Revolution, the decline during it, and the almost explosive rise which followed. The graph may almost be regarded as portraying the general ideological line pursued by China where mass campaigns are considered necessary for indoctrin-

-29-

ation and raising the political consciousness of the people; economic depressions are accepted in the hope that the wing thus gained will make achievements seem more brilliant in the future. There are no official announcements concerning the sectoral distribution of oil and oil products. Taking all imponderables into account we estimate that the distribution may be as follows:-

35

Industry Transport Agriculture Military

30

25 10

Refining Capacity Table H sets out the Chinese refineries, with production data based on five sources, and figures for development in 1960-72. The number of refineries totals twenty-three, with annual processing capacities in 1972 of between '50,000 and 5.5 million tons.

Table H PROVINCE Chinghai Heilungkiang Kansu Kiangsu Kirin Kuangtung Liaoning

Peking Shanghai Shantung Sinkiang

Szechuan

The Refineries and Their Capacities LOCATION Lenghu Yuch'iiantzu Anta (Taching) Lanchou Yiimen Nanking Szeping (NE No.8) Huatien (NE No.9) Mourning ** Chinchou**(NE No.6 Chinhsi (NE No.4) Fushun " (NE No.1) Fushun ** (NE No.2) Fushun " (NE No.3) Liita (NE No.7) Tungshihhunq Shanghai Shwa Karamai Tushantzu Turfan Nanchung I UT AL

A NUAL OUTPUT (in mi lion tons) 1968 1972 1972 1960 B C D A 0.3 0.1 0.5 0.1 5,5 0.6 3.3 2.3 2-3 1.1 ? 0.9 3* 1.0 0.3 0.05 0.3 1.0* 1.0 0.3 0.15 3.2 0.7 2.0 0.3 0.67 0.2 1.2 0.32 0.25 0.1 3,5 0.5 0.4 0.7

1975 E

3.0 ?

2.0

3.5

0.6 1.0 0.05 0.05

0.6 1.0 0,4 0.3

0.6 ? 0.3

3.5?

27:2

capacity planned **oil-scale processing refinery A RAND; NCNA Jun 23, 30, Dec 8, 1958; FEER Aug 27, 1959; PR Jan 8, 1960; CR XI/58, X/63; ChNA Mac 14, 1958 B EWiVRCh C WHChM Jan 15, 1974; Issues and Studies, April 1975 D NCNA Dec 31, 1972 E Kyodo Feb 24,1975

-30-

The most important refineries are those with capacities of 1 million tons and more (amounts in millions of tons): 1. Anta (Taching) 5.5 2.0 7. Fushun 2. Shanghai 8. Yemen 1.1 3-.5 9. Nanking 1.0 3. LUta 3.5 4. Lanchou 10. Mourning 1.0 3.3 3.2 11. Chinchou 1.0 5. Chinhsi 6. Peking 3.0 12. Tushantzu 1.0 TOTAL: 29.1 milliontons The twelve refineries specified above have 91% of the country's total refining capacity, while the other eleven miner refineries account for no more than 9%. The development of refining capacities was quickest in Taching where capacity rose from 0.6 million tons in 1968 to 5.5 million tons in 1972. During the same period the capacity of the Shanghai refinery rose from 2 to 3.5 million tons. A new refinery recently made its appearance in Peking with a capacity of 3 million tons. Another remarkable development took place in the Chinhsi refinery, whose capacity rose from 0.7 million tons in 1968 to 3.2 million tons in 1972. These are the most important refining centres. It may be assumed that further refineries are being built in the new oilfields of Takang and Shengli, both of which are probably being shaped according to the Taching model; hence, China's refining capacity may be expected to rise appreciably in the near future. Another point in the development of refineries that deserves attention is the apparent absence of new investment in Chinghai and Sinkiang. This suggests that since more promising fields have been explored in Taching, Takang and Shengli, development of the expensive fields in difficult geographical locations will no longer be encouraged. Though Columns B and C in Table H above are based on estimates, the figures indicated therein - in combination with the absolute figure for LUta (D) - result in a refinery capacity for 1972 that corresponds to the production of crude oil during that year. This means that until 1972 refinery capacity had been able to keep pace with crude production. Later this proved impracticable. Ever since 1973, the production figures have been ahead of refining capacity. This is why in 1973 China began to offer oil for sale to other countries. As it is easier to build up production capacity than refining facilities, the gap between the two will widen increasingly for as long as the rapid development in the production sector continues. This suggests the approximate extent of future oil exports. In 1974 China produced 20% more crude than in 1973

- 31 -

(1973: 36 million tons, 1974: 43.5 million tons). In 1974 the quantity of refined oil rose by 13% over 1973 (considering the amount of crude oil exported, for the first time, in 1974, this equals approximately 39 million tons). The difference of 4.5 million tons between the respective amounts of oil produced and refined corresponds almost exactly to the amount of oil exported in 1974 (see the chapter on oil exports). In 1975 there was again a gap between the growth of the production capacity (20%) and that of the refining capacity (13%) (1). Shale Oil Information on shale oil resources and extraction is rather contradictory. As to the resources, this is principally due to the fact that the country has by no means been fully prospected. Thus, for example, in 1958 Li Jen-chiln, then Vice-Minister for the Oil Industry (Since 1974 Vice-Chairman of the Planning Commission under the State Council) said that the oil shale resources in the whole of China amounted to 60,000 million tons (2). According to more recent announcements, the oil shale reserves in Manchuria (where the mountains over the opencast mines of Fushun also consist of oil shale) amount to 130 million tons and in Hopei province to 100,000 million tons. Other oil shale deposits have been found in 146 administrative units (3) spreading over Kuangtung, Shensi and Shansi provinces, as well as the Inner Mongolian Autonomous Region. Regarding the exploitation of the oil shale deposits, it can be said that most of the fields are of local importance only, and do not yield high-grade oil products In their endeavours to attain self-sufficiency during the Great Leap Forward, the central authorities had designed twenty-five shale oil refineries with production capacities ranging between 300 and 50,000 tonsa year each, the costs of construction being between 20,000 and 50 million Yilan. According to our present knowledge, there are only two fields of more than regional importance: Fushun and Mouming. Fushun was developed by the Japanese during their occupation, and was among the industrial plants which the Soviet Red Army dismantled in 1946. Its reconstruction took place in 1952-4. Three refineries are now in operation in Fushun (4). Mourning was opened up (1) (2)

NCNA Nov 30, 1975 (referred to the period Jan-Oct) JMJP Aug 7, 1958 (3) EWiVRCh p.58 (4) NCNA Nov 5,

1969

-32-

in 1957, and produced 1 million tons of crude in 1959 (1). The rate of oil extraction from shale in Fushun amounts to 25:1 (2), while estimates from the other fields cannot be checked. Lignite deposits of which there are also several thousand millions of tons are also said to be exploited wherever the oil content is between 10% and 20% (3). Pipelines By 1971 China had four pipelines with a total length of about 1,700km. The fact that three of them were in the interior of the country suggested that their importance was chiefly local, because the terminals are far away from all important consumer centres. The primary purpose to be achieved with these pipelines was to relieve the other means of transportation. It was only on completion of the Taching-Chinhuangtao pipeline, which made the total length of pipelines rise to almost 3,000 km, that a new era seemed to dawn. This pipeline not only reaches new and important consumer centres but also establishes a connection to Chinhuangtao, which has been chosen to become the principal port for the export of crude oil and will in future also handle the proportion of crude oil to be exported from the new oilfields of Shengli and Takang. TACHING-CHINHUANGTAO

The 1,152-km.-long pipeline was completed in spring 1974 after a construction time of just over two years (4). It crosses rivers at 260 points, railways at forty points, and highways at over 200 points (5). Pumping stations were established every 60 or 70 km. (6), their total number being nineteen (7). The pipeline comprises three parallel steel pipes, each having a calibre of about 70cm. (estimated from a photograph in ChiB 3/75, p.26). More than 200,000 tons of steel pipes were required for the construction of the pipeline (8). The pipes were manufactured in six new steel tubing plants specially built for this purpose (9). The following are some indicators enabling us to estimate the performance of this pipeline: (1)The announcement that it is 1,152km. long; (2)the fact that more than 200,000 tons of largecalibre steel pipes were laid; (1) Ta Kung Pao, Hong Kong, Mar 25, 1959 (2) NCNA Nov 5, 1969 (3) EWiVRCh p.58 (4) China im Bild 3/1975 (5) NCNA Jan 11, 1975 (6)China im Bild 3/1975 (7) NCNA Dec 27, 1974 (8) NCNA Dec 27, 1974 (9) NCNA Jan 11, 1975

-33-

(3) two photographs that appeared in China im Bild: (a)the first showing three workmen laying the pipes. We can see from the photograph that the pipeline consists of three parallel pipes with a calibre of about 70cm. (estimated from the height of the workers. nearby); (b)the second shows three parallel pipelines at the terminal in the port of Chinhuangtao, from which the oil is shipped. Those two photographs suggest that the Taching-Chinhuangtao pipeline consists of three parallel pipes with a calibre of about 70cm. each. However, this impression must be wrong. The fact that steel pipes weighing 200,000 tons are distributed over a length of 1,152km. implies that 173.6 tons of steel are used for 1 km. We should start from this basis in calculating the amount of steel used for three pipelines: 0.058 tons (= 58kg.) would have been used for every metre of steel piping. The specific gravity of steel pipes being 7.9, the walb must be assumed to be less than 40mm_ thibk. There is a discrepancy between this thickness and the weight in kg. of lm. The figures for seamless and welded steel tubes according to ANSI B 36.10, supplemented by dimensions according to API Std 5L, API Std LS and API Std 5 LX, 1971 editions, (1) are as follows: Diameter in mm 660 711 762

Thickness of wall in mm 6.4 6.4 6.4

Weight in kg/m 102 110 118

The first conclusion we can draw from this is that 200,000 tons of steel pipes cannot possibly have been used for a system of three parallel pipes, with tube calibres of 70cm, to cover a distance of 1,152km. Even assuming that a system of three parallel pipes only exists between Taching and Tiehling (about 400km.) while the distance between Tiehling and Chinhuangtao is covered by a two-pipe system, we would arrive at a pipe length of 2,700km. and a km/m. weight of 74kg. This,too, cannot possibly be correct. We are led to the conclusion that there is a line of three pipes between Taching and Tiehling and one of two pipes between Tiehling and Chinhuangtao. The calibre of none of the pipes can be more than 50cm. There is another pipeline, parallel to that discussed above,which terminates at Tiehling, about 100km. north of Shenyang (2). It has not yet been possible to find out its (1) Mannesmannr6hren-Werke, "Stahlleitungsrohre n , Dusseldorf 1975 (2) NCNA Dec 27, 1974 -34-

purpose; possibly a new refinery is being built at Tiehling. CHINHUANGTAO-PEKING This pipeline was completed in June 1975. It is 355km. long and forms part of the 1,507km. long "underground artery" linking the Taching oilfield and North China. It ends at Tungfanghung (The East Is Red) oil refinery of the Peking General Petrochemical Works. The more than 40,000 pieces of equipment for this pipeline, such as steel pipes, big motors, oil pumps, transformers, and auxiliary equipment, were made and processed by 240 factories in various parts of China (1). KARAMAI-URUMCHI This pipeline was put into operation in October 1973.It has a length of 296km. In Urumchi the oil is loaded on trains. Construction of the pipeline began in March 1972. It has more than 30,000 welded joints (2). YUMEN-LANCHOU This 880-km.-long pipeline was completed in 1964 (3). It not only facilitated the transporting to the Lanchou refineries of the crude produced in YOmen and the greater part of that produced in Sinkiang - effected by rail before the pipeline was built - but also helped to reduce costs. KARAMAI-TUSHANTZU Over 174km. (elsewhere: 147km. (4)) are covered by two pipelines having a calibre of 40cm. or 61cm. respectively (5). The pipeline was put into operation in January 1959 after construction lasting seven months(6). The capacity, as planned in 1959, was between 0.4 and 0.5 million tons (7). SHENYANG-LUTA The 350km.-long pipeline (8) has not yet been mentioned in the Chinese press. Before the completion of the Taching refinery, it served for transporting the crude produced in Taching to the Liita refinery, which had previously been transported to Shenyang by rail. In view of the rapid rise of production in Taching, the pipeline has also gained importance as a feeder for the exporting of oil via the port of Mita. NANCHUNG AND LIJNGNOSZE-CHUNGKING (9) The Chinese press has also not referred to the existence of these pipelines. It is assumed that the first (1) NCNA Jul 8, 1975 (2) Urumchi Radio, Sep 28, 1975 (3) FEER Oct 14, 1965 (4) NCNA May 4, 1958 (5)EWiVRCh p.61(6) NCNA Jan 15, 1959 (7) NCNA May 4, 1958 (8) EWiVRCh p.61 (9) NCNA Jan 15, 1959

- 35 -

portion of the pipelines installed was that covering the 60km. between Lungnilsze and the Nanchung refinery, and that the 300km. long line to Chungking was then added because the Nanchung refinery proved unable to cope with all the crude produced at Lungniisze and Nanchung, and the new line afforded the possibility of transporting oil to the refineries at Nanking and Shanghai by river craft. Foreign Aid "Soviet experts are working in all sectors of the Chinese oil industry, including e.g. geology, geopnysic-4 drilling technique, oil extraction, refining, shale oil processing, and construction" (1). "The greater part of the machinery installed in the oil fields and refineries is China-made" (2). These two contradictory quotations - one dating from 1957 and the other from 1963 are characteristic of the two stages in the development of the oil industry (and industry as a whole) in China. The first stage was marked by assistance from the Soviet Union and some East European countries on which China was totally dependent after the trade embargo of 1950. Even though, after the severance of Sino-Soviet relations, China referred to this assistance as having been half-hearted and too small, it had previously been highly praised. The first stage ended with the abrupt withdrawal of Soviet help. The second phase is characterized by China endeavouring to avoid every possibility of excessive dependence on other countries and pressure from them. However, because China still needed technical know-how which only foreign countries could provide, she had to buy it from the western industrial nations. The first stage of Soviet assistance had covered all sectors of the oil industry: The most important projects were the refineries of Lanchou and Mourning and the Fushun oil shale mines. Sinkiang provides a good example of Soviet involvement in this field. Between 1952 and 1958 the Soviet Union supplied China with 240,000 tons of equipment for prospecting, drilling and refining in various oil projects. (The high esteem in which Soviet aid was held at that time may be understood from, for example, the fact that in the Hall of Sino-Soviet Friendship at Karamai a permanent exhibition serving for the demonstration of Soviet aid was inaugurated in June 1958. In 1953-7 alone, 51.4% of the whole production capacity had been installed with Soviet assistance (3). Table J gives details of the Soviet aid projects. (1) Ta Kung Pao, Oct 23, 1957 (2) Peking Radio Sep 29, 1963 (3)Voprosy Ekonomiki (Economic Problems), Moscow 9/1959 - 36 -

Table J

Oil Drilling and Pipe Equipment supplied by the Soviet Union, 1955-61 (in millions of roubles) (old roubles until 1960, new roubles in 1961 and later

Items Supplied

1955

1956

1957

1958

1959

1960

1961

Oil-drilling equipment, total

52.7

76.7

51.2

43.6

30.4

22.5

-

19 27.2

29 30.9

99

266

127

(111

-

11.8

7.5

12.7

9.5

-

6.7

2.4

0.2

0.9

1.9

2.0

0.7

-

Single items, as e.g. Derricks Drilling machines Turbo drills Case-hardened parts

0.7

2.7

4.0

0.6

Drilling bits

3.1

6.1

6.9

2.4

Percussion drilling eq.

0.6

0.2

0.8

Deep-well pumps

0.1

0.7

1.2

1.7

9.5

Seismic equipment

2.3

4.5

Sampling equipment

1.3

4.6

4.3

0.1

15.5

17.3

9.9

4.5

0.4

19.6

29.0

7.2

45.0

57.5

54.4

2.9

1.6

0.2

75.2

107.2

58.6

88.6

87.9

76.9

Miscellaneous Pipes Legs for drilling pipes TOTAL

1.7 -

-

0.62

Compiled according to RAND p.23 and FEER Nov 22, 1962, p.408 f.

One of the essential contributions made by the Soviets was the training of experts. Among the 8,000 skilled workers, 6,500 students and 1,000 experts trained in the Soviet Union between 1950 and 1958 (1) were many experts for the oil industry (2). In addition, 450 Soviet experts had helped to develop the Chinese oil industry in 1950-9 (3). Next to the Soviet Union, Czechoslovakia, Hungary, Poland and the German Democratic Republic also helped with material and technology. Thus, for example, East German technicians worked in the North East No.5 Refinery in Chinchou to teach the Chinese the technique of low-temperature distillation (4). Rumanian technicians not only supplied oil equipment but also the technical know-how for the production of petroleum products and oil equipment, as well as other information (5). The (1) JMJP Feb 14 3 1959 (2) RAND Corp., Memorandum RM-3160 -PR, Communist China's Petroleum Industry, by K.C.Yeh, Sta. Monica, Calif., 1962 (henceforth RAND) (3) Wang Chih-yOn, The Petroleum Industry in the People's Era, in "Current Background" No.599, Oct 23, 1959, Hong Kong (4) lien-chieh (Oil Refining), Peking, 8/1967 (5) Vnesheekonomicheskiye svyazi Kitayskoy Marodny Respubliki (Foreign Trade Relations of the PR China), Vol.III, No. 30, Moscow 1958

-37-

first item of Rumanian assistance was the despatch in 1954 of a drilling team for service in the YUmen oilfield where they were teaching the Chinese deep-drilling techniques (1) which later proved particularly useful in Taching. The equipment, modern oil machinery and scientific instruments supplied by all those countries during the period between 1950 and 1959 totalled 70,000 tons and more than 2 million tons of other material(2). Though the Soviet Union did not immediately stop its technical aid after 1960 (executive plans for SinoSoviet cooperation in science and technology were still signed as late as October 6, 1961 (3), June 1962 (4), and June 19, 1963 (5), with the oil industry being explicitly mentioned in some of them), China's dependence on the Soviet Union - particularly over the supply of spare parts - continued only for a short transitional period. In 1964 the last tie definitely ceased to exist. According to a statement made by Po Yi-p'o, then VicePremier and leading economic cadre, the Soviet Union was at that time supplying no material that China herself could not have produced (6). During the second stage, which is still going on, China has been placing her orders with a few chosen partners. By February 1974, six industrial countries had received orders for goods worth US$ 546.6 million, as specified in Table K. The column entitled "Item" suggests that China's primary concern has been to obtain the technical know-how. All suppliers are aware that what China chiefly wants is to get hold of Western techniques, in order to imitate them. The most prominent project among these imports is the oil refinery China ordered from France in 1973. It is worth US$ 300 million and accounts for 55% of all imports during the second stage. In this instance China bought the smallest possible model of a large-scale enterprise, which will provide her with the latest technical knowhow. Development during Stages 1 and 2 shows that the wide range of technology necessary for a modern oilproducing country is now available to China. (1) NCNA Apr 5, 1955(2) Wang Chih-yUn: The Petroleum Industry in the People's Era, in "Current Background" No.599, Oct 23, 1959, Hong Kong (3) NCNA Oct 6, 1961 (4) JMJP Jun 20, 1962(5) JMJP Jun 20, 1963 (6) FEER Feb 19, 1964 (Po interviewed by the US writer Anna Louise Strong)

-38-

Oil Exports

China made her debut among the oil-exporting countries in 1974. As the first Chinese offers for the supply of oil were being made at a time when the industrial nations had been stirred up by the energy crisis, and many countries, including in particular Japan, foresaw gloomy times for their economies, speculation regarding China's possibilities as an oil-exporting country was rife. It is difficult to forecast China's future role as an oil exporter. The first difficulty is that China publishes no figures for oil production or estimates of her oil reserves that might be used as a basis for such forecasts. Another problem is that we do not know whether or not it is China's intention to restrain her own economic development, in which petroleum surely plays a key role (in China the per capita consumption of oil in 1973 was 45 litres, while in West Germany it was 2,300 litres). China's offers to export oil are of paramount political importance. This may be seen inter alia from the fact that Japan spontaneously broke off her negotiations with the Soviet Union for the construction of a pipeline to the Yellow Sea which had been going on for years and which were to secure to Japan large-scale oil supplies; this was after China had been taunting Japan with her own increased oil exports. There can be no doubt that China will use her newlydiscovered abundance of petroleum primarily to develop her own economy. At any rate it has been the general impression that China has been offering for export only such quantities of crude oil as she has been unable to use at home, due to the shortage of storing and refining capacity. That these facilities would be unable to keep pace with the stormy development may be seen, for example, from the fact that in Taching, China's great oil-producing region, the productive capacity in 1973 exceeded that of 1972 by 64.4%, while actual production was only 22% higher (1). The gap between the amounts of oil produced and those of oil refined is also illustrated by the fact that China's crude oil production in 1974 rose by 20% as compared with 1973, while during the same period the quantity of refined oil rose by a mere 13% (2). It can (1) NCflA Jan 4, 1974 (2) NCNA Jan 2, 1975

-39-

therefore be expected that the volume of China's oil exports in the years to come will depend decisively on the development of her own processing and storing facilities, oil being used as a political weapon only within the limits defined by the discrepancy between the productive and refining capacities. Some facts follow which relate to the recent history of China as an oil-exporting country. The first exportoffer, amounting to 0.2million tons of crude oil was made to Japan in January 1973. Though this amounted to only 0.1% of Japan's oil needs, the offer appeared to Japan as a silver lining on the black cloud of its oil starvation (1). This hopeful prospect was soon somewhat blighted by the fact that China was demanding a price of US$ 3.7-3.8 for one barrel of oil, while Japan paid Indonesia US$ 3.3 for oil of identical quality (2). In November 1973, China offered Hong Kong more diesel oil (3), and made its first advances to the Philippines (4). In March 1974, when the Chinese had offered to supply Japan with 1.5 million tons of crude oil for 1974 at a price of US$ 15 per barrel (5), six Japanese trading companies and twelve refineries founded a Council for the Importing of Chinese Crude Oil (6). Japan, which had started with a price offer of US$ 11.7 (the price then agreed upon with Indonesia) had to accept the fact that the Chinese were not prepared to make more than nominal price concessions (7) and the price eventually agreed upon for 1 million tons to be delivered by December 1974 was US$ 14.8 per barrel. In June 1974 the Vice-President of the Japanese International Oil Trading Company announced that China had agreed to supply Japan with 4 million tons of oil in 1974, including 2.5 million tons from Taching (8). In August 1974 the Japanese notified Peking that in the long term they were prepared to buy an annual quantity of 30 million tons of crude oil. At the same time they offered cooperation in the development of the loading capacities in the ports of shipment and the supply of tankers (9). In October 1974 China reduced her crude oil price to US$ 12.8 per barrel, and promised Japan to supply her with crude oil to the extent of 8 million tons in 1975 (10). In the same month China declared her preparedness to supply Australia with crude oil in 1975 and 1976 (11) (1) C.a.1973, p.18 (2) C.a.1973, p.56 (3)IHT Nov 26, 1973 (4) FAZ Nov 29, 1973 (5) JT Mar 14, 1974 (6) Nikei Mar 14, 1974 (7) C.a.1974, p.225 (8) C.a.1974, p.409 (9) Kyodo Aug 23, 1974 (10) C.a.1974, p.682 f. (11) Melbourne Radio, Oct 13, 1974, cit. SWB 4728

40-

though no quantities were indicated. At the same time the first batch of Chinese crude oil was shipped to the Philippines - 125,000 barrels out of a promised total of 1,000 million barrels. For 1975 the Philippines counted on oil deliveries of the order of 0.75 million tons (1). Meanwhile the agreements between China and Japan for 1974 had risen to a total of 4.9 million tons of crude. In view of the high price demanded and the fact that her stores were fully stocked, Japan was obliged to reduce the quantity ordered by 0.9 million tons (2) so that the quantity of oil actually imported in 1974 was 4 million tons. Of these 3 million tons were imported through the International Oil Trading Company (Kokusai Sekiyu) and 1 million through the Japan-China Oil Import Company (3). In 1974 China also delivered minor amounts of oil to Thailand. Reports on that transaction were published not only by the Thai press but also by Western papers. The background was exclusively political, the offer to supply Thailand with oil being a Chinese gesture of goodwill to one of the last countries in Asia that had not made up its mind to enter into diplomatic relations with Peking. In January 1974 China offered to send 50,000 tons of diesel oil to meet at least part of Thailand's most urgent needs (her daily requirement is 8,000 tons, of which only 7,000 are covered by other suppliers)(4). In February 1974 China promised Thailand another 75,000 tons of diesel oil (5). The price for the two consignments was fixed at a relatively low level as between friends (6) - a fact which again suggests the political character of China's action. In January 1975 China promised Thailand another 75,000 tons of diesel oil (7). In 1975 China fulfilled her promise to supply Japan with crude oil to the extent of about 8 million tons by signing a contract for 5.4 million tons at a price of US$ 12.1 per barrel fob (8). While this is more than the price paid for oil imported from Middle Eastern countries, it is 50 cents less than that paid for Indonesian oil (9). The contract on the sale of 5.4 million tons was concluded between China and the International Oil Trading Company (10). In March 1975 another contract for 1.5 million tons was concluded with the Japan(1) Manila Radio, cit.SWB/W 798 (2) Kyodo Dec 26, 1974 cit.SWB/W 807 (3) as before (4) Bangkok R. Jan 15, 1974 (5) Bangkok R. Feb 17,•1974 cit. SWB 4531 (6) Voice of the People of Thailand, Apr 25, 1974 (7) Bangkok R., Jan 1, 1975, cit SWB 4802 (8) Kyodo Feb 19, 1975, cit SWB 4835 (9) SWB/W 812 (10) Kyodo Feb 19, 1975, cit. SWB/W 815

- 41 -

China Oil Import Council (1). The amount of crude China actually supplied to Japan in 1975 was 7.8 million tons (2). Japan's interest in Chinese promises for more oil continued through 1975 though the high paraffin content in Chinese oil makes processing rather difficult. Japan was hoping to obtain definite promises for a rise in oil exports from about 8 million tons to 50 million tons in 1980 (2). However, China refused to make such long-term promises and Japan's interest in Chinese oil abruptly abated at the end of 1975. This was probably not only due to price considerations but also to Japan's fear that future political developments might render long-term arrangements impossible. In 1975 China also made her first offer to Australia (3) but no contracts have been concluded yet. Future oil exports must be expected to be related to the annual rise in production and China's own processing capacity. If we go back to the thirteen above-mentioned countries each of which produces more than 50 million tons of crude per year, we have a basis for comparing the growth rates of oil production. Having reached the 50-million-ton mark, those countries settled at growth rates of between 5.28% (Venezuela) and 28.3% (Libya)(4), the latter far surpassing the average of 11-13%. All imponderables considered, China's oil exports in the years to come will be somewhere between 10% and 20% of the total output of crude oil. Oil Imports

Before 1949 China had to import almost all petroleum products. Minor amounts of crude oil were processed in the Dairen (Talien) refinery. On the introduction of the trade embargo in 1950, China obtained her oil largely from the Soviet Union - a situation that continued throughout the following decade (5). The imports showed a steady growth from 0.6 million tons in 1952 to 3 million tons in 1959 (see Table L). The importance of those oil imports may be concluded from the fact that in 1953 they amounted tq 6.4% and in 1956 to 11.7% of the total of Chinese imports from the Soviet Union (6). The break between Peking and Moscow in 1960 was making itself felt in a decrease of China's import from the Soviet Union and her search for new oil suppliers. (1) Kyodo Mar 10, 1975, cit. SWB/W 818 (2) Kyodo Dec 25, 1975 (3) Melbourne Radio Jun 10, 1975 (4) F.Ruhani, A History of OPEC, Praeger 1971, pp.93ff. (5) RAND p.42 (6) CNA Mar 14, 1958

-42-

Table K

Oil-Producing and Refining Facilities Purchased by China from Foreign Countries

COUNTRY

ITEM PURCHASED

France

gas liquidation installation and oil prospecting equipment oil-refining equipment oil-refining equipment oil-drilling equipment equipment for oil processing and fractional distillation and separation of hydrocarbons oil-producing equipm oil and oil-shale refining equipment oil-drilling equipment deep-water drilling vessels petrochemical plant oil-refining equipment 8 oil-drilling vessels gear designed to control pressure in wells during drilling

Italy France West Germany

Italy

Japan France Denmark USA

CAPACITY

COST

MANUFACTURER/

D AT E of Contract

TECHNIP

Dec 1963

8.96 ENI and SNAM 1.5 MELL-SPEICHIM 4.86 MELL-SPEICHIM 12.5

Dec 1963 Jan 1964 Dec 1965 Jul 1964

m ( nii i yoSni SUPPLIER 1.2

2m.t p.a. 0.5m.tp.a.

180,000 barr.

50-60m.

5.6

SNAM

Jun 1965

ENI

Sep 1965 Oct 1965 Sep 1972

95 95 300 20 2

Total

WECO RUCKER & Co.

May 1973 Sep 1973 Dec 1973 Feb 1974

546.6

Sources:

Chukoku Yoran, compiled by the Institute for Chinese Economy, Jiji News Agency, Japan, Aug 10, 1972 Sekai Shuho, the 1974 New Year Issue, Ta Kung Pao, Hong Kong Dec 5, 1973, US News and World Report, Feb 4, 1974, cit. Issues and Studies No.8 1974

As the imports from the Soviet Union decreased, those from other countries rose. This shows more than anything China's consequent efforts to free herself completely from Moscow's apron-strings. However, despite her ardent desire to become independent, this was almost impossible until 1968, because China still lacked the technical know-how in the field of some processed oil products. It is evident, however, that China has been trying to gain a foothold in other markets ever since 1960. In December 1960 she bought 50,000 tons of petroleum products from the Singapore Shell Company (1). In January 1961 she ordered oil products via Hong Kong worth HK$ 1 million (2). Shortly afterwards China entered into talks with Japanese firms (3) but this attempt failed. In December 1961 she took up negotiations with (1) FEER Jan 3, 1961 (2) FEER Aug 24, 1961 (3) Kyodo Apr 29, 1961

-43-

China's Oil Imports, in 1,000 tons

Table L Year

Crude

Petrol

(Kerosene

'Diesel oil 1 Oil

SOVIET

Lubricating Grease

Paraffin

I Total

UNION

Crude Oil and Refined Petroleum Products

ALBANIA & ROMANIA

IRAN

UNNAMED COUNTRIES

TOTAL

1952

608

608

1953

834

834

904

1954 1955

378

634

1956

397

1957

380

1958

672

1959 1960

904

264

233

641

240

377

573

373

380

90

5

1803

640

333

663

196

2

2507

636

1256

380

557

211

6

3

3048

568

1055

386

709

212

7

3

2940

unknown*

199

728

3867

1961

1325.2

512.2

814

221.8

2928.2

unknown*

199

279

3406.2

1962

765

488

378

212

72 74

2

1582

2

1732

unknown*

276

1858 1732 1803

unknown*

752

3259 3048

1860

426

199

576

3061

1963

-1398-

1398

335

199

1055

2987

1964

- 501 -

501

238

199

1356

2294

1965

-

38-

38

237

199

531

1005

1966

-

40-

40

235

199

1967 1968

1-

474

7

7

1

1

* The imports are contained in the column "Unnamed Countries" Commencing with 1963 the figures for the Soviet Union cover all refined oil products

Compiled according to RAND p.43; FEE R Nov 22, 1960, p.408 and Oct 3, 1963; Meyerhof, f, "Development in Mainland China", Bu Iletin of American Association of Petroleum Geologists, 1970, p.1669; Issues and Studies May 1974, p.53

Great Britain over the supply of fuel for some Viscount aircraft she had recently ordered (1). All these endeavours showed China's anxiety lest she might be unable to meet her oil requirements. The exploration of the Taching,oilfield in 1962 seems to have calmed her fears. By this time Peking must have realized that China would be definitely independent of oil imports within a couple of years. Apart from negligible imports in 1967 and 1968, this aim was practically reached towards the end of 1966. China in the Concert of the Oil-Producing Countries

As may be seen from Table M, China ranked fifteenth in the list of oil-producing countries in 1972 when her crude production had reached 30 million tons. As to growth rate, China, with her oil production increasing by 16% between 1971 and 1972, occupies the sixth place after Algeria (43.1%), Saudi Arabia (27.7%), Indonesia (21.3%1 Nigeria (18.8%) and Canada (16.6%). The 30 million tons China produced in 1972 represented 1.1% of the world's total output. China's growth rates in the years between 1972 and 1974 lead us to expect that she will make her way upwards in the list of oil-producing countries. She will probably rise to fourteenth place in 1975, and may reach tenth place in 1980 when her output is expected to about 4% of world production. Natural Gas

The first exploitation of natural gas in China took place 1900 years ago. The natural gas then produced in Szechuan province by the deep-drilling method was used as fuel for the evaporation of salt lakes near Tuchiangyen (2). Before the foundation of the People's Republic, China's natural gas resources were already exploited for industrial and heating purposes. The amount of natural gas produced in 1947 was about 55 million cubic metres (3). This quantity was apparently still about the same in 1957 (4). It is believed that production did not rise until after 1958 when several new natural gas deposits had been discovered. (1) New York Times Dec 18, 1961 (2) China im Bild 10/ 1958 (3) China Handbook 1950, Rockport Press, New York 1950 (4) RAND p.56

-45-

China in the Concert of the Oil-Producing Countries * as of 1972 Output in million tons

Table M

1972 OUTPUT

COUNTRY

PERCENT. of WORLD PRODUCTION

1971 OUTPUT

GROWTH RATE in % BETWEEN 1971 and 1972

1. USA

532

20.5

530

2. Soviet Union

349

15.2

377

0.3

3. Saudi Arabia

285.5

11.0

223.5

27.7

4. Iran

254

9.8

227

11.8

5. Venezuela

167.4

6.4

185

9.5

6. Kuwait

152

5.8

147

3.6

7. Libya

105

4.0

132

- 20.6

4.5

8. Nigeria

89.5

3.4

75

18.8

9. Canada

87.5

3.4

75

16.6

10. Iraq

67

2.6

84

- 20.2

11. Indonesia

54

2.1

44.5

21.3

12. Algeria 13. United Arab Emirates

52 50

2.0 1.9

36 44.8

43.1 11.6

14. Kuwait (Neutral Zone)

30.3

1.2

29

4.1

15. PR China

30

1.1

26

16.0

16. Qatar

23.3

0.9

20

15.3

17. Mexico

22.6

0.9

22

3.1

18. Argentina

22.1

0.9

21.5

3.1

19. Australia

15

0.6

14.3

5.4

20. Romania

14

0.5

13.8

1.5

21. Oman

13.6

0.5

14.1

- 3.6

22. Egypt

11

0.4

14.7

-25.2

23. Columbia

10.4

0.4

11.1

- 6.5

TOTAL

2599

• taken from Issues and Studies 1 /1974

100,0

2472

5.1

Natural gas is now produced in no less than twenty provinces, viz. Chekiang, Chinghai, Fukien, Heilungkiang, Hopei, Hunan, Hupei, Inner Mongolia, Kansu, Kiangsu, Kirin, Kuangsi, Kuangtung, Kueichou, Liaoning, Shantung, Sinkiang, Szechuan, Tibet and YUnnan (1). The most important deposits are in Szechuan province. They were estimated at 100,000 million cubic metres as early as 1958 (2), most of them being in the area around Nanchung (3). The number of natural gas fields exploited rose by fourfold between 1957 and 1963, while the amount of gas produced rose seventeenfold (4). In 1972 Szechuan province produced twice as much as in 1965 from "dozens of natural gas fields" (5). By then more than 1,000km. of gas pipelines had been laid to supply towns, factories and mines with natural gas (6), including the Chungking Iron and Steel Combine (7). Another source says that output trebled between 1965 and 1972 (8). Other large deposits are in the area surrounding Shanghai where they extend over 5,000 sq.km. and are found in beds at depths of between 10m. and 16.(9). By the end of 1959, 9,000 wells had been drilled 2,000 of which struck gas (10). Between November 1958 and December 1959, 15 million cubic metres of gas were produced and used in the chemical industry for heating purposes and as raw material (11).During the four years between August 1958 and August 1962, 60 million cubic metres of gas were found in this field (12). While the natural gas deposits of Szechuan and Shanghai are in the vicinity of industrial and densely populated areas, the deposits of Tsaidam in Chinghai province in the Tibetan highlands are in a remote region. Though the gas deposits discovered in 1958, above all in the Mohai-Hsiao-Tsaidam area, where 270,000 cubic metres came to the surface daily were found to be considerable (13), their exploitation proved unprofitable. The same is true of the fields near Mahai and YUnch- tiantzu, the latter yielding a daily amount of 1 million cubic metres of gas towards the end of 1958 (14). The nearest (1) NCNA Jul 6, 1953; Sep 28, 1956; Oct 16, 1956; Apr 30, 1958; Jul 10, 1958; Apr 29, 1959; JMJP Aug 7, 1955; Peking Review, Aug 5, 1958; PR Jan 12, 1960: Apr 30, 1971; Ta Kung Pao, Hong Kong, Sep 13, 1973 (2) JMJP Aug 7, 1958 (3) JMJP Aug 24, 1958 (4) NCNA Oct 7, 1963 (5) NCNA Sep 9, 1973 (6) NCNA Sep 9, 1973 (7) NCNA Oct 7, 1963 (8) NCNA Sep 16, 1973 (9) NCNA Nov 28, 1958 (10) NCNA Jan 12, 1960 (11) NCNA Jan 12, 1960 (12) FEER Aug 30, 1962 (13) NCNA Jul 29, 1958 (14) NCNA Dec 8, 1958

-47-

CC

Table N

China's Natural Gas Resources a

PROVINCE/ BASIN

NAME OF FIELD

YEAR OF DISCOVERY

Chinghai

Hsiaolienshan

1956-1958

Lower Pliocene

Tsaidam

Mahai

1956-1958

Miocene (continental)

Chunhsiao Series 400-700

14.2

Yenhu

1956-1958

Lower Pliocene (continental)

Huanhou Series 300-500

42.5

GEOLOGICAL FORMATION

(continental)

HORIZON OF EXTRACTION (Depth in m) Huanhou Series 300-400

RESOURCES (Maximum Exploitable Quantity) in million tons 24.1

Kiangsu

"Shanghai"

1100

Quaternary and Pliocene (fluvial)

unknown 25-70

unknown

Szechuan

Chiliuching

211 B.C,

iviiddle Triassic (marine)

Chialingchiang strata 400-1200

28.3

Huanchiachan

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

25.5

Shengtengshan

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1000-1400

28.3

Tengchingkuan

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

56.6

Huanykuanshan

1955-1956

Middle Triassic (marine)

Chialingchiang strata 500-100

85.0

Shihyukou-Tunghai

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1500-2000

Yenkaohsi

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

28.3

Nahsi

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

22.1

Chanytianpa

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

22.1

Kaomutin

1955-1956

Middle Triassic (marine)

Chialingchiang strata 1200

198.2

22.1 TOTAL about 600.0

taken from "Die Energiewirtschaft der Volksrepublik China", p.134 f.

industrial centre which might profit from Tsaidam gas is Lanchou, about 1,000km. away. In view of the distance and above all the adverse climatic conditions (the greater part of a gas pipeline would have to be laid in ground permanently frozen to depths of up to 20m., with a thaw of only 1 or 2m. in summer), these resources could not be exploited. Apart from the gas fields in Szechuan and near Shanghai, which are close to large industrial projects, the majority of the Chinese gas fields are of local importance though their contribution to the development of the Chinese economy should by no means be underestimated. The estimated exploitable reserves are approximately 600,000 million cubic metres, 520,000 million of them in the Szechuan basin (1). That China has made great progress in the output of natural gas may be concluded from the fact that the growth rate between 1973 and 1974 had fallen to about 15% (2), while between 1970 and 1971 it was still 25% (3). This made the production in 1974 three times higher than that of 1965 (4) - the same as indicated for 1972 (see above). The History of the Ministries in Charge of the Petroleum Industry

As may be seen in Table 0, the administration of the petroleum industry has experienced several separations and unifications during the twenty years of its life after the foundation of the People's Republic, each of these changes reflecting a change in economic policy. In 1955 the Petroleum Ministry separated from the Fuel Ministry, which had been formed soon after the foundation of the People's Republic. This was at a time when Soviet advisers were China's instructors in the oil industry. The reorganization of the petroleum administration at that time should be seen in connection with the reorganization of the government administration, which was placed on a broad basis as late as 1954 when the First National People's Congress had been elected. In that first form the Petroleum Ministry continued to exist for at least fifteen years, i.e. until the Cultural Revolution, during which - as we know - the greater part of all organizations, including the government administration, were destroyed. Only eighteen out (1) Meyerhoff, -Developments in Mainland China 1949-1968" Bulletin American Assn. Petroleum Geologists 54 (1970No.8 cit.EWiVRCh p.56 (2) NCNA Jan 2, 1975 (3) JMJP Jan 7, 1972 (4) NCNA Jan 2, 1975

-49-

Table 0

The Development of the Present Ministry for the Oil and Chemical Industries

THE MINISTRIES RESPONSIBLE FOR THE OIL INDUSTRY

for Ministry the Fuel Industry

1949

1955, July

I MINISTRY FOR THE COAL INDUSTRY

Ministry for the Petroleum Industry Ministry for the Fuel and Chemical Industries

1970, Dec

1975 , Jan

1

MINISTRY FOR THE COAL INDUSTRY

Ministry for the Oil and Chemical Industries

MINISTRY FOR THE CHEMICAL INDUSTRY

of the former total of forty ministries rose from the ashes left by the Cultural Revolution. This shows that one of the advantages gained from that phenomenon was that the inflated government administration became more efficient. This was clearly revealed in the reduction in the number of ministries. As a result, the old Petroleum Ministry was combined in 1970 with the Ministries for the Coal and Chemical Industries to form a new Ministry for the Fuel and Chemical Industries. There cannot be any doubt that this union resulted from the adoption of a political line, without much consideration being given to the practical requirements of the industry. In 1970 China was already producing 20 million tons of crude and had thus reached a stage at which the differences in the processing of coal and oil had become so great that they had hardly anything in common. It may therefore be regarded as a logical consequence, and the victory of practical considerations over the simplifying political line, that in January 1975 the Fourth National People's Congress took the Ministry of the Coal Industry out of the combined ministry, leaving what is now the Ministry for the Oil and Chemical Industries the only combination of two closely connected departments that seems to make sense.

Petroleum Research Institutions With one exception, all our knowledge of the research institutions (institutes) and schools (colleges) existing in the field of the petroleum industry dates back to pre-Cultural Revolution days, i.e. till 1965. This is because China's information agencies are observing strict secrecy so that only occasional flashes of information have thrown light on industrial development. It seems justified, however, to assume that the institutions known to exist before 1965 have survived, and a brief outline is given below. PETROLEUM RESEARCH INSTITUTES Three (two?) petroleum research institutes have been found to exist under the Academy of Sciences: a. Dairen (Luta) This institute was founded in 1952. Of the research workers employed there, only two are known by name: Wu Chih and Chiang Ping-nan (1). In 1958 the institute succeeded in producing 191 grams of synthetic petrol per cubic metre of gas (carbon monoxide plus hydrogen), with ferrous compounds replacing cobalt as a catalyst(2). (1) NCNA Oct 28, 1957 (2) JMJP Aug 10, 1958

-51 -

b. Lanchou No details concerning this institute have been found. c. Location unknown, possibly Peking, or institute identical with Dairen. Until 1964 the director of this institute was Chang TayU. d. Other research institutions The YUmen Oil Administration had installed thirty petroleum laboratories by the summer of 1961. Their task was to analyze subterranean deposits and provide the technicians with exact geological data (1). In 1960, a National Petroleum Research Academy was mentioned (2), without giving the location of that institution. PETROLEUM COLLEGES In 1965 the number of petroleum colleges in China totalled five. In contrast to the institutes which are entrusted with research work, the colleges are responsible for teaching. a. Peking The oldest and most important one of the five petroleum colleges is that in Peking. It was founded in 1953 (3). The curriculum is divided into four groups of subjects, with one department for each of them, and each department divided into several sections: Department of Oil Geology: Geological research on petroleum and natural gas, geophysical prospecting for oil and natural gas Department of Drilling: Production techniques for oil and natural gas, and for synthetic petrol Department of Engineering,. Transportation and storage of Machinery and Oilfield oil and natural gas Equipment: Department for Management and Administration (n7 Until February 1963 the director of the college was Ts'ao Pen-hsi (5). We have been unable to find out the name of his successor,but we do know that Chiao Hao was appointed deputy director in March 1962 (5) and Chu Yachieh in September 1963 (6). Neither of them has been (1) JMJP Jul 23, 1961 (2) PR Jan 12, 1960 (3) NCNA Nov 4, 1963 (4) Leo A.Orleans: "Professional Manpower and Education in Communist China", Library of Congress, NSF61-3 (5) JMJP Apr 5, 1962 (6) JMJP Oct 8, 1963

-52-

mentioned after the Cultural Revolution. During the period 1953-63, 6,000 specialists were trained in the college, half of them with a special training for prospecting and mineralogy, oil drilling techniques, or oilfield management. Other graduates of the college have been employed in the building of oilproducing and oil-refining plants (1, 2). b. Northeast China The exact location of this college has not been detected, but is believed to be in Dairen. Nor has the director's name been disclosed, while we know the names of the four deputy directors, viz. Chen Chi, Chen Kuojun, Li Chen-ching and Tang Hai. All were appointed in March 1962 (3) but none of them has been mentioned after the Cultural Revolution. c. Sian The headof this college in the capital of Shensi province was Yang Lin who was appointed in January 1959 (4) and the deputy head, Tuan Te-min (5). Neither has appeared in public since the Cultural Revolution. d. Sinkiang A petroleum college was opened in 1958 in a location not yet ascertained (probably Karamai). The students of this college engage in practical work in the Karamai oilfield during the last year of their professional training (6). e. Szechuan The location of the college in Szechuan has not yet been identified. It is, however, believed to be in Chengtu, the capital of Szechuan province. Between January 1959 and February 1963, Ma Tsai was principal of the college (7). We do not know the name of the present principal. Though no details regarding the curriculi of the colleges specified under (b) to (e) have been disclosed, it is assumed that the subjects taught are about the same as in Peking. OTHER CENTRES OF INSTRUCTION a. Ytimen Colle•e of En•ineerin• This college started courses in July 1958. It was then divided up into seven sections: geology, drilling techniques, mining, industrial chemistry, mechanics,oilfield construction and industrial management. Each of (1) NCNA Nov 4, 1963 (2) Peking Radio, Nov 3, 1963 (3) JMJP Apr 5, 1962 (4) JMJP Mar 26, 1959 (5) JMJP Nov 28, 1963 (6) FEER Jan 19, 1961 (7) JMJP Mar 26, 1959; Mar 1, 1963

-53.

the courses ran for two years, theoretical instruction being combined with practical training in the oilfields. In 1958, 700 students were to take up their studies in the college. Chiao Li-jen, at that time director and Party secretary of the YUmen oilfield administration, was appointed principal of the college in 1958 (1). b. Tientsin Technical University Among the seven principal departments of this university there is one for chemistry, with a sub-section for fuel chemistry. c. Kiangsi Industrial and Workers- University This university was founded in February 1960 for the training of instructors, with the object of developing industry. Among the subjects taught is the petroleum industry. These are the details announced before the Cultural Revolution. It can safely be assumed that in the meantime the existing institutions for research and learning have been expanded, and that new institutions have been founded in this field. The only new institution identified after .the Cultural Revolution, in 1972, is the Society for Petroleum Research and Extraction (2). Conclusions

One of the conclusions, though a marginal one, that I have been led to draw from my studies of China s oil industry seems sufficiently important to be mentioned here. China's oil production will probably grow at a slower rate than is generally expected. The 100-millionton mark cannot possibly be reached before 1979, or the 200-million-ton mark before 1985. Anybody arriving at different results cannot have closely scrutinized the figures announced by Chinese sources. However, there can be no doubt that within the next decade China is sure to make her way into the circle of the ten greatest oilproducing countries. The analysis of the figures announced by the Chinese press over the past ten years - most of them relative figures - has also led to the recognition that there is no central authority to which the various Chinese media can refer. This is the only conclusion to be drawn from the divergent announcements (it is a fact that the Bureau of Statistics, known to have existed before the Cultural Revolution, has not been mentioned since). (1) NCNA Jun 28, 1958 (2) NCNA May 16, 1972

-54-

The forecasts made all over the world since 1974 on China's oil production tend to be exaggerated because they all go back to the figure, ascribed to Chou En-lai, of 50 million tons of oil produced in 1973 - which has never been verified by the Chinese press. This figure is untenable. China's actual output of crude in 1973 can have been no more than 36 million tons. The complete absence of Chinese figures for China's oil reserves must also be accepted as a fact. Foreign estimates vary between 3,000 and 50,000 million tons. This is speculation without any solid basis. The exploration of the known oilfields is not yet complete, nor can we exclude the possibility of new ones being discovered in other parts of the country. The forecasts are totally unfounded. The total capacity of all refineries, twenty-two of which are known to exist, was about 39 million tons in 1974. Twelve of these refineries have annual capacities of 1 million tons and more, and account for 91% of the amount of crude oil refined, the other ten refineries together dealing with the remaining 9%. Since 1973 the refineries have been unable to keep pace with the rapid development in the oilfields. In view of this difficulty, some of the wells were closed and the export market was opened for crude oil. In 1974 the crude which could not be processed for lack of refining facilities was exported. It can safely be assumed that, at least for the next years, the exportation of crude will develop with the increasing discrepancy between the output of crude oil and the refining capacity. China's pipelines cover a total length of about 2,900 km. The most important one, having a length of 1,152km. and connecting Taching with the export harbour or Chinhuangtao, was completed in 1974. The earlier pipelines had been of local importance only. So far Chinhuangtao can serve tankers of up to 30,000 tons, but new quays with loading capacity for ships of up to 70,000 tons were under construction early in 1975. During the first decade of the People's Republic, the development of its oil industry was almost entirely dependent on assistance from the Soviet Union. Apart from the technical know-how, the aid supplied by the Soviet Union until 1960, the year when Sino-Soviet friendship broke up, was worth about 500 million (old) roubles. After the termination of Soviet aid, China started to buy equipment for the oil industry from six Western industrial nations in 1963, and by 1972 the value of this

-55-

equipment had reached about US$ 550 million altogether. For oil imports, too, China had been dependent on the Soviet Union during the first ten years after 1949. In 1960, when the rupture between China and the Soviet Union became apparent, the oil imports had reached 3 million tons. As the quantity of oil imported from the Soviet Union was declining as a result of the rupture, imports from other countries rose. Eventually, however, when China's oil industry had developed sufficiently, she ceased to need oil from other countries and in 1966 she had practically attained self-sufficiency. A mere eight years later China was in a position to offer crude oil for export. Apart from some minor oil exports in 1973, the era of China as an oil-exporting country began in 1974 when she exported more than 4 million tons of crude. This figure was expected to double in 1975. China's position as an oil-exporting country in the future will depend on the development of technology and on her political ambitions. As to the former, it is assumed that China will export only such quantities of crude oil as she is unable to process herself. As to the political ambitions, she may possibly use her oil exports to make certain countries economically dependent on her for oil, with the ultimate aim of extending this dependence to the political field. In the case of Japan, China is already well on the way: she caused Japan, by offering her crude oil, to stop negotiations with the Soviet Union which had been in progress for a long time over a project of Soviet-Japanese cooperation in a big pipeline project in Siberia in exchange for Soviet promises to supply Japan with oil later. It is evident that China can export oil only at the expense of a more rapid development of her own economy. Some figures may suffice to show the present situation: in China, per capita oil consumption in 1973 was 45 libres, whereas in West Germany it was 2.3 tons. In 1972 China ranked 15th in the list of oil-producing countries and its output then amounted to 1.1% of the world's output. In 1975 China rose to the 14th place in the list; by 1980 she may reach the 10th place, and will then produce 4% of the total oil output of the world. "Oil for the lamps of China"- this was the motto of capitalist merchants some fifty years ago. Today Chinese oil is about to flow into the economies of capitalist countries.

-56-

Part II OIL PRODUCTION BY REGIONS

Chinchou In 1962 the discovery of a new large oilfield was mentioned by implication in the Chinese press. It was not until February 1964, however, when. Chao An-po, leader of a Chinese goodwill delegation to Japan, disclosed some information on this oilfield, that its precise location became known. It is west of Chinchou, Liaoning province, on the Gulf of Peichihli, and was discovered in 1962. According to estimates by Japanese experts, the field, when fully developed, will yield 3 million tons of crude annually (1). It is strange that Chinchou should never have been mentioned in the Chinese press as the location of an oilfield. This seems to justify the doubts which have been expressed as to its actual existence. However, the existence there of a refinery, which had already been built by the Japanese, is not doubted.

(1) Kyodo, Feb 15, 1964

-58-

Karamai

t

4*

The Karamai oilfield is located between the Tienshan and Altai mountains, in the southwestern part of the Dsungari Basin, 180km. from the Soviet frontier. In the Uighur language, Karamai means "black oil". As early as 1951, a geological research team had assumed the existence of oil-hearing formations in the Karamai region. They had discovered tar on the surface of the desert soil and this, according to general opinion at that time, meant that oliferous strata had come to the Surface by erosion, and dried there. In 1954 research work was resumed under the direction of the Soviet specialist Uvarov, who had compared the tectonic structure in the Karamai region with similar structures in the Soviet Union, and had arrived at the conclusion that there must be considerable oil deposits there. His assumption was confirmed, and the first test well was drilled in summer 1955 and proved successful three months later (1). The oil deposits detected were in Mesozoic and Paleozoic formations (2). In spring and summer 1956 a great number of test wells were sunk, and by August 1956 twenty of them had struck oil after drilling times of not more than one month. In the beginning the daily output of these wells was between 10 and 20 tons (3). According to Chinese announcements in 1956, the geological formations found in the Karamai region offered favourable conditions for drilling. By mid-1956, wells had been drilled in an area of about 25 sq.km. (4). At the same time specialists had begun to make relatively shallow drillings near Urhu (Chinese name: Wuerhhot, *44), about 100km. north of Karamai, where oil deposits were scattered over a length of about 35km.(5). The initial belief that the whole region between Karamai and Urho, including the region east of that line, might bear oil (6) has obviously proved incorrect, as it has never been confirmed. Next to Urho, the most important oilfields in this region are HeiyUshan ), Paichien t' an (452 A;11i) .;it and Paik'ouch'un 4t ) (7). Technicians workers and administrators were called to the new oilfields from all parts of China. During the period between April and September 1956 alone, 6,000 of them had come, 70% of them being members of the Communist Party or the Communist Youth League (8). In (1) CiT pp.139ff, (2) NCNA Feb 15, 1960 (3) CiT pp.139ff. (4) PC Aug 16, 1956, p.29 (5) PC Aug 16, 1956, p.29 (6) PC Aug 16, 1956, p.29 (7) Issues and Studies, April 1975, p.70 (8) ChNa, Mar 14, 1958, p.4

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PR Mongolia SOVIET UNION

Location of Karamai September 1956, the "Karamai Mining Directorate" was founded as the head organization for seventeen subdivisions to handle problems of prospecting, drilling, valuation, employment of derricks, and security. At the same time, geological and chemical research laboratories were established (1). However, it was not until 1958 that actual production started in the Karamai field. In May 1958, construction began on a pipeline from Karamai to the Tushantzu refineries (2): The line which was put into operation in January 1959 (3), has a length of 147km., and is capable of transporting 400,000 or 500,000 tons of crude annually.

(t.14)

(1) JMJP Sep 5, 1956 (2) NCNA May 4, 1958 (3) NCNA Jan 15, 1959

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Before the completion of the pipeline, the oil had to be transported on lorries so that the transport of 1 ton of crude oil then cost 44 yilan, as compared with 4 yUan after completion (1). Lorries were, however, still playing an important part in the shipment of crude oil in 1962. In this connection it was stated that the transport facilities of the Karamai oilfield had been developed, with new loading and discharging equipment being added early in 1962 to ensure the continuous flow of crude to the nearest railway station (2). In 1958 a great number of new test wells were drilled in the Karamai region and in May four of them, struck oil - one 60km. and two others 100km. from Karamai (3). At the same time plans were announced for the exploration of minor oil deposits that had not been considered worthwhile before. In addition, it was proposed to exploit oil sand deposits near Karamai and Urho, which were spread over an area of about 250 sq.km., their oil content being between 6% and 13% (4). In July 1958 a test well struck oil at a depth of 800m, near Chiku (5): this was probably the region which, according to an announcement made shortly afterwards, was eventually expected to produce 34 million tons of crude (6) - a target which, if attained at all, will probably not be reached in the near future. In 1958 Karamai produced between about 60,000 and 70,000 tons of crude (7) - just enough to meet local requirements. In fact, Sinkiang's total output of crude in 1958 amounted to a mere 0.33 million tons (8) The first shipment of oil produced in Karamai to other parts of the country was effected in 1959. For that year the quantity to be shipped was fixed at 200,000 tons (9)which clearly reveals how slow progress was. New pipelines were laid in 1959, one from Karamai to Kachinchu, 24km. long (10), and another one parallel to the Karamai-Tushantzu pipeline, establishing a direct connection with the local railway station. The plan for 1960 envisaged the construction of a 74km.-long irrigation canal to ensure the water supply of the oilfield. The canal was to be completed by July 1960 and the quantity of water daily supplied to the oilfield was to be 63 tons (11). After 1960 the number of official reports on Karamai and all other industrial regions declined remarkably. It is believed that this (1) (4) Aug (9) 15,

NCNA May NCNA Jun 7 , 1958 NCNA Feb 1960

4, 1958 (2) ChiB 7/62 (3) NCNA Jun 11, 1958 28, 1968 (5) NCNA Jul 30, 1958 (6) NCNA (7) NCNA Aug 28, 1959(8) FEER Oct 14, 1970 5, 1959 (10) NCNA Apr 3, 1959 (11) NCNA Feb

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was due to the withdrawal of Soviet experts - an event that brought about a complete change, forcing the Chinese economy to reorganize itself. Since that time announcements have been rare, mostly giving relative output figures that do not permit a comprehensive presentation of the situation. No announcements were made on Karamai between October 1960 and June 1961, during which time the installations seem to have been severely damaged. In June 1961 it was announced that a number of oilwells had been restored, and "normal production" was resumed early in 1961. At the same time specialists were ordered to Karamai to carry out further repairs (1). Not until five years later did the Chinese press disclose the nature of these disturbances. According to reports, the conclusions regarding the oil-bearing formations which had been drawn from prospecting (still with Soviet assistance) had not been satisfactory, and due to the application of the waterinjection method (introduced by the Soviets),some oil-wells had been flooded (2). There can be no doubt that the true cause of the disturbance was the abrupt withdrawal of the Soviet specialists following the rupture between Peking and Moscow. These specialists took all the plans and diagrams with them, leaving the Chinese helpless in some respects. Even neutral observers cannot avoid blaming the Russians for the disturbances in Karamai. By December 28, 1961, Karamai had obtained 103% fulfilment of the 1961 plans for crude oil production. The drilling and processing targets were fulfilled 107% and 102.1% respectively (3). The plans had not been published. Between January and May 1963, twenty-five new wells were drilled in Karamai (4). By September, extension work on a refinery, a power station and the high-voltage network was completed, and fifteen other projects were under construction (5). A new canal carrying water to the centre of the oilfield was completed (6). At the end of the year the Sinkiang Petroleum Administration announced that the annual plans for crude, petrol, diesel oil and kerosene had been fulfilled twenty days ahead of schedule (7), and that the production costs had been reduced by 6% below the planned level (8). In 1963 Karamai's crude oil output amounted to about 1.5 million (1) NCNA Jun 7, 1961 (2) NCNA Apr 28, 1966 (3) JMJP Jan 2, 1962 (4) JMJP Jul 6, 1963 (5) NCNA Sep 25, 1963 (6) Peking Radio Sep 24, 1963 (7) NCNA Dec 20, 1963 (8) Urumchi Radio, Dec 14, 1963

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tons (1). According to earlier announcements, an output Qf 4.5 million tons of crude oil had been planned for

1962 (2) - a target which was certainly not reached. The production target for 1962, the last year of the second Five-Year Plan (3), of 3 million tons, which had been mentioned in summer 1958, also seems too high to have been reached. In the summer of 1958, Karamai was officially declared a town, and a mayor and a people's council were elected. Its population (at that time) of 43,000 was scattered over an area of 5,000 sq.km. By 1960 the population had reached 60,000. Of the skilled workers trained in Karamei between 1958 and 1961, 4,000 were nationals of the Uighur, Kazak and Uzbek minorities. One-tenth of them were trained to become specialists in drilling, refining, geology and oil machinery (4). Not until 1958 did the Chinese press mention real production in its reports (5). Since that time the annual plans for production, refining and prospecting have always been overfulfilled (6). In 1965 the output exceeded that of 1962 by 2.6 times (7). Little has been disclosed on Karamai since the beginning of the Cultural Revolution. However, what the Chinese press has announced will be recorded here so as to demonstrate once again China's information policy and to offer the reader the possibility of drawing his own conclusions from the little information available. During the first four months of 1966, Sinkiang's oil production was twice as high as in the same period of 1965 (8). 330 technical innovations, many of them of major importance, have been introduced in Karamai since 1967. The costs of maintaining the complicated oil and gas transportation system, first introduced by foreign people (meaning the Soviets), were reduced to one-tenth of what they had been formerly (9). The production plans for 1968 were fulfilled (10). By August 1969 all plans for crude production, refining and transportation had been fulfilled or even overfulfilled (11). On August 19, 1969, a repair team went to well No.2424, which had produced neither oil nor gas since it had first been explored: when the team had removed two pieces of pipe, a sudden outburst of gas threw the other parts of the drill pipe 60m. into the air (12). (1) FEER Oct 14, 1974 (2) RAND p.12 (3) NCNA Jun 28,1958 (4) JMJP Jul 4, 1961 (5) NCNA Sep 30, 1965 (6) NCNA Sep 30, 1965 (7) NCNA Apr 28, 1966 (8) Urumchi Radio May 8, 1966 (9) NCNA Oct 8, 1 968 (10) NCNA Dec 28, 1968 (11) Urumchi Radio Sep 25 , 1969 (12) Urumchi Radio Oct 29, 1969

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The No.2 Oilfield under the Sinkiang Oil Administration fulfilled the planned targets for 1969 ahead of schedule, and overfulfilled the plan during the first four months of 1970 (1). Following repair work, some "dead" wells were reactivated and the output of some wells of poor performance increased (2). Yumen oil workers, by making their practical experience known to the Sinkiang workers, helped to raise production in the Sinkiang oilfields (3). The production plans of the Sinkiang Oil Administration for drilling, refining and machine production were fulfilled 43-118 days ahead of schedule (4). During the first six months of 1970, the target for the output of crude oil was overfulfilled by 50%, as compared with the same period in 1969, oil refining having risen by 15.1% during the same period. The output of petrol, paraffin, diesel oil and lubricating oil rose considerably (5). In 1970 about 100 wells that had been closed as unprofitable by the "bourgeois technicians" (meaning Liu Shao-ch'i'c followers) were reactivated (6). The plans for the production, drilling and refining of oil during the first six months of 1971 were fulfilled. The output of oil between January and May 1971 was 48% higher than during the corresponding period of 1970 (7). Between January and August 1971 the output of crude oil rose by 23% as compared with the same period in 1970 (8). For the period between January and September 1971 the output exceeded that of the same time in 1970 by 20.9%. For the same period the amount of crude oil processed rose by 8.9% (9). In 1971 the output of crude oil was 157% higher than in 1970 (10). In 1972 the drilling teams found a way to continue drilling operations throughout the winter season. Between January and Larch 1972 they drilled a total of 10,000m. (11). In 1973 the Karamai field experienced a new boom in oil production (12). By mid-August 1974 the daily output had surpassed that of July 1974 by 1,000 tons (13). At the end of August 1974, production was found to have surpassed that of July 1974 by 45% (14). By mid-December 1974 the production targets for 1974 had been fulfilled. In the winter season of 1974/5 the practice of closing some wells in winter was abandoned, resulting in an increase of production (15). (1) Urumchi Radio , May 8, 1970 (2) NCNA May 24, 1970 (3) Urumchi R. Jul 5, 1970 (4) Urumchi R. Dec 6, 1970 (5) Urumchi R. Jul 26 , 1970 (6) NCNA May 13, 1971 (7) Urumchi R. Jun 21, 1971 ( 8) Urumchi R. Sep 24, 1971 (9) Urumchi R., Oct 28, 1971 (10) Urumchi R. Mar 13, 1972 (11) Urumchi R. Apr 21, 19 72 (12) NCNA Sep 12, 1973 (13) Urumchi R. Aug 29, 1974 14) Urumchi R. Sep 13, 1974 (15) Urumchi R. Dec 16, 1974

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The lack of reliability of even the relative figures may be seen from the list of all figures given in the Chinese press, as shown in the following table. The fall in the growth rate of oil production from 48%, as announced for January-May 1971, to 23%, as announced for January-August, and to 20.9% for January-September appears already rather incredible, but the alleged growth rate of 157% for the whole year of 1971, as compared with 1970, makes no sense at all. In 1975 the Chinese press announced, for the first time, a genuine production figure: Karamai produces more than 1 million tons annually (1). Karamai - Crude Oil Production Output

Period absolute 1958

Source

.Figures relative

60-70,000 t p.a.

1965

NCNA Auu 28. 1959 2.6 times more than in 1962

NCNA Apr 28. 1966 twice as much as in same period 1965 Urumchi R.Mav 81966

1966, Jan-Apr 1970, Jan-Jun

50% more than in same period 1969

Urumchi R.Jul 26,1970

1971, Jan-May

48% more than in same period 1970

Urumchi R. Jun 21,1971

1971, Jan-Aug

23% more than in same period 1970

Urumchi R. Sep 24,1971

1971, Jan-Sep 1971, Jan-Dec

20.9% more than in same period 1970 Urumchi R. Oct 28,1971 157% more than in 1970 Urumchi R. Mar 13,1972 ore than in same PerrWiiaS5n1

1975, Jan-Oct 1975

65% more than in 1974

1975

(1) NCNA Oct

NCNA Oct 20, 1975 NCNA Oct 1, 1975

more than 1m. t pa.

1, 1975

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NCNA Dec 29, 1975

Mounting 1( A2 The oil shale field of Mourning, Kuangtung province, covers an area of Lloo sq.km. The development began towards the end of 1957 when a railway track was laid between Lienchiang, a place at the Litang-Tsanchiang railway line (1). In 1959 about 1 million tons of crude (2) were produced in Mourning as a result of the dry distilling process (3).

Shengli

*4

The exploration of the Shengli oil field near the Bay of Pohai (4) at the mouth of the Huangho river in Shantung province began in 1964 (5). The field extends over a length of about 50km., between Lichin ( 4J 4 ), Chanhua ( ff ), Yanghsin ( pa fg ), Huimin (01 f4), Linyi ( ), Pohsing ( tt ) and Kuangjae' )(6). The deposits in this field are estimated (r at 2,000 million tons (7), which would make them equal to those in Taching. Though Shengli is one of the major Chinese oilfields, the information available on this field is still sparse. Chinese reports on events in this field did not begin until 1973 - a circumstance that perhaps suggests that the output may not have been worth mentioning before. In 1971, 10,000 workers began to explore a new zone of the oilfield (8). In 1973 wells yielding huge quantities of oil were drilled, and new rich oil deposits were discovered (9) . In the same year a drilling brigade, having drilled 150,105m., set a new national record, with 105 new oilwells being opened up (10). This again shows what strange results the Chinese media will arrive at in their endeavour to avoid disclosing (1) Issues and Studies, April 1975, p.70 (2) Ta Kung Pao, Hong Kong, Mar 25, 1959 (3) ChNA 885, p.6 (4)NCNA Nov 4, 1974 (5) NCNA Dec 28, 1973 (5) Kyodo Feb 24,1975 cit. SWB/W 816, Mar 5, 1975 (6) Issues and Studies, Apr 1975, p.70 (7) CS XI No.11/13 (8)NCNA Nov 4,1974 (9)NCNA Sep 12, 1973 (10) NCNA Feb 17, 1974

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absolute figures, replacing them by percentages. The report continues: "In the 105 oilwells an average of 1.08 wells was drilled by each brigade member." In plain language this means that the brigade consisting of ninety-seven members explored 105 wells. The output of crude produced in 1973 was thirteen times higher than in 1965 (1). According to Japanese sources, the Shengli oilfield is China's second largest (after Taching?) (2). The output of crude between January and June 1974 was 12.2% higher than in the corresponding period in 1973 (3). In 1974 the amount of crude produced in Shengli was 16% higher than in 1973, representing a fifteenfold increase over the amount in 1965 (4). The oil produced in Shengli is brought to the surface by means of pumps and by means of the injection method, and is transported to Tsingtao by pipelines. Part of the oil is refined locally for petrochemical purposes (5). As regards the quality of the oil produced in Shengli, its sulphur content varies, the freezing point being between-20° and +10°C. (6). In 1974 about 5 million tons of crude were produced in Shengli (7). Shengli produced its crude oil output by 42% in the first half of 1975 (8). By September 15, 1975, the crude oil output had increased by more than 40% compared with that of the same period in 1974 (9). Crude oil production in the first months rose by 40% (10). The total crude oil output shows a 34% increase over 1974 (11). Shengli - Crude Oil Production Period

Output Figures

So urce

1973

13 times more than in 1965

Peking Radio,May 15,1976

12.2% more than in the same period 1973

NCNA Aug 8, 1974

Jan-Dec 1975,Jan-Jun

16% more than in 1973 15 times more than in 1965

NCNA Jan 5, 1975 NCNA Jan 5, 1975

43% more than in the same period 1974

1975

34% more than in 1974

NCNA Jul 6, 1975 NCNA Jan 1, 1976

1974, Jan-Jun Jan-Dec

(1) Peking Radio May 15, 1974 (2) Kyodo Jun 18, 1974 (3) NCNA Aug 8, 1974 (4) NCNA Jan 5, 1975 (5) Kyodo Feb 24, 1975, cit.SWB/W 816, Mar 5, 19 75 (6) as before (7) Issues and Studies, April 1975, p. 71 (8) NCNA Jul 6 1975 (9) Tsinan Radio, Sep 27, 197 5 (10) NCNA Nov 30, 1975 (11) NCNA Jan 1, 1976

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Szechwan Oa Pi The Chinese reports on oil deposits found in Szechuan province exclusively cover the year 1958. In March of that year the discovery of the first three deposits was announced in Szechuan, followed by the discovery of three more beds said to be as abundant as the first (1). The deposits were found in Mesozoic and Paleozoic formations (2). The first oil-bearing formation was struck by drilling operations at Lungnuszu where oil shot to the surface in a gush more than 30m. high, on March 12, 1958, producing 40 tons in the first forty minutes. The following day the well produced 189 tons in two and a half hours (3). As early as May 1958 the first oil was shipped to the Shanghai refinery via Chungking. It was then announced that the new wells would deliver 100,000 tons of crude oil to Shanghai (4). By June 14 formations believed to be oil-bearing had been investigated and fourteen test wells had been drilled i the districts of Lungniiszu (71;* 4'), Nanchung ( ) and P'englai (4 lk ) covering an area of 2,000 sq.km. altogether 5): Early in July three new test wells in the Lungnilszu area struck oil in depths of between 1,176m. and 1,450m. At the same time, the first tanks with storage capacity of 4,000 tons each were set up near the wells (6). By the end of June the number of oilwells in operation totalled fifty of which twenty were near Lungnitszu. By the end of 1958 200 wells were expected to be productive (7). The oil was found to be of first quality, of high density and low liquidity and to contain only minor amounts of impurities, such as sulphur, colloids and bitumen (8). In the summer of 1958 it was announced that the Central Szechuan deposits covered an area of 1,000 sq. km., outside which seventeen more deposits were detected at the same time (9) in Jurassic and Triassic formations, at depths of between 300m. and 2,000m. (10). In August it was announced that a test well had struck oil in the fourth of the oil deposits discovered in Central Szechuan, between Chialingchiang and Chuchiang (11). Furthermore, workers drilling at four places near Nanchung struck oil, which gushed up under high pressure (12). This deposit was referred to as one (1) NCNA May 14, 1958 (2) JMJP Aug 7, 1958 (3) CR XI/58 p.20 (4) NCNA May 23, 1958 (5) NCNA Jun 4, 1958 (6)JMJP Jun 4, 1958 (7) CR XI/58 p.20 (8) as before (9) as before (10) as before (11) NCNA Aug 9, 1958 (12) JMJP Aug 24, 1958

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of the world's largest oilfields. At the beginning of drilling operations, 200 tons of oil came to the surface every day (1). In September. 1958 it was announced that extensive deposits of oil-bearing sand had been found in the eastern part of Szechuan province. Two wells struck oil at Hsianghouszu (2). These discoveries, which seemed at first very promising, led the authorities to make projects for some refineries. In addition to a great number of small refineries, it was intended to build one refinery with an annual capacity of 90,000 tons at Shuining (3). On Jul 1, 1958, the construction of another refinery expected to process 300,000 tons of crude oil annually began at Nanchung (4). It was envisaged that operations in this refinery would start in 1959 (5). While it had been announced in summer 1958 that the oil deposits in Central Szechuan were among the largest in China and that they were four times richer than had originally been calculated (6), permitting production of several million tons per year (7), no announcements were made on these deposits after September 1958, which suggests that their exploitation has probably shown them to be short of expectations. The Central Szechuan region now appears to be important only for its natural gas reserves.

(1) JMJP Aug 7, 1959 (2) NCNA Sep 17, 1958 (3) JMJP Jul 4, 1958 (4) as before (5) CR XI/58 p.20 (6) JMJP Aug 24, 1958 (7) CR xi/58 p.20

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Taching rg, The Taching oilfield was first mentioned by the Chinese press in 1964 (1), though its location remained unknown for some time. Eventually it was found to be located in Heilungkiang province, approximately 48°N. and 128°E. between Tawahung (4. A45t ) and Chingan ( # 4), two places combined in fact and name to form Taching. Taching was soon given wide publicity and the Chinese press was continually referring to it as the model of industrial development by self-reliance, in the same way as Tachai is referred to as a nationwide model in the agricultural sector. The Chinese press has continued ever since to publish a host of reports on Taching. At first these chiefly described the inclement conditions of work in this northernregion of China during the cold season. Later, the reports concentrated on unsually good performances of working teams or individual workers. Taching's economic importance being the chief matter of interest in the present context, we have summed up the relevant facts, as gleaned from a great variety of reports. We are doing so without comment, but will try to assess the economic importance of Taching, in view of the known facts, in an analysis at the end of the chapter. Technical details Drilling began in 1960 (2). During the initial stage, 50 tons of water were required for one well and some of it had to be brought to Taching in trucks (3). In 1961 the first oil was produced. In 1963 a number of wells was in operation and large-scale production began (4, 5). The extraction of oil had been preceded by a comprehensive process of scientific exploration. Thus the first plan for simultaneous water injection was prepared at the basis of 1.7 million analyses of drilling samples collected within one year (6). Ninety-one special research groups were employed in the solution of technical and scientific problems (7). Thus, the prospecting operations which provided the authorities with a general outline of the formations had essentially been completed in 1962 (8). (1) JMJP Apr 20, 1964 (2) Women of China 5/65 p.11f. (3) CR 7/64 p.5 (4) NCNA Jan 1, 1966 (5) NCNA Jan 2, 1973 (6) NCNA Jan 10, 1966 (7) as before (8) NCNA Jan 2, 1973

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In contrast to other oil-producing countries where late water flooding is used for the maintenance of oil pressure - without as a rule preventing the reduction of pressure in the oil pool - the new method of early water flooding was adopted by Taching workers and proved much more efficient than the old methods. Careful studies of the specific conditions in each bed of the formation resulted in the application of different measures of controlled water flooding in the various zones. This was quite contrary to the widespread opinion that it was impossible to investigate each section of a formation separately. It proved unnecessary to be content with uncontrolled water flooding, which is liable to result in the closure of certain wells after some time (1). Owing to the method employed in Taching, it has been possible to keep the oil pressure in the sediments of the whole region at its old level. Hence the productivity of the various wells has remained substantially equal (2, 3). Another feat was the introduction of a special highspeed drilling technique. The average monthly drilling speed achieved per drilling machine in Taching is unequalled in the world under comparable conditions. The average rate of core recovery is 98.8%. In a test with a long-barrelled core sampler, a 64.47m.-long core was obtained which brought the rate of core recovery to an all-time high of 99.15% (4). The majority of oilfields in the world as a whole still use a drilling assembly of the old "Christmas tree" type introduced decades ago. The Taching workers, who felt that this assembly was too heavy and clumsy, developed a new, smaller type of "Christmas tree". The weight of the new equipment is no more than one-third of that of the old type. In addition, its operation is largely automatic and therefore requires fewer operators (5). In 1964 and 1965, three new types of refining installations of high technical standard were developed (6). The distilling towers of the refinery weigh between 100 and 200 tons,and some of them are more than 40m. high (7). In 1968, thirty varieties of petroleum products, including kerosene for aircraft, were produced in the refinery (8). In 1966 two drilling teams set national records, each of them exceeding the 60,000m.-depth mark in 7 months (1) NCNA Jan 1, 1966 (2) CR 7/64 p.5 (3) NCNA Jan 2, 1973 (4) NCNA Jan 10, 1966 (5) as before (6) NCNA Jan 10, 1966 (7) NCNA Oct 12, 1966 (8) NCNA May 10, 1969

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and 21 days. This was far superior to the Soviet record of 40,816m. reached by the I.B.Poljakovski drilling team in 1965. The Chinese model teams exploited twenty-five wells of high quality, and the daily drilling operations were carried out with a single drilling bit 1,000m. length (1). The No.1202 drilling team which took part in these operations set a new world record of 100,101m. in 1966. During the ten years between 1960 and 1969, the team drilled a total of 376,980m. (2). In 1971 the No.1205 drilling team set a new record of 127,000m. (3) The oil produced in Taching contains a high proportion of paraffin way and has a high viscosity and a high solidification point (4). On the other hand, the sulphur content of Taching's crude oil is only 0.2% (5). In January 1973 it was decided to exploit a new zone which had already been found and explored in 1960. It has a large oil-bearing formation under high pressure. By December forty-three successful drillings had been made. In the subsoil of this zone the oil pressure is very high. It also contains vast natural gas deposits, and is the first Chinese oilfield found to be under high gas pressure. The whole oil-bearing formation is covered by gas. From the surface down to a depth of several hundred metres, there is natural gas in several beds under high pressure, and drilling therefore had to be carried out with great caution (6). The new zone is located at a distance of between 50km. and 100km. from the other Taching fields (7). The surplus profit paid to the state in 1969 surpassed the cost of all investment made during the decade of Taching's exploration (8). In 1974 the Party Secretariat commended 373 progressive production units and 15,597 model workers (9) which, it can thus be assumed, is less than the total of workers in Taching. At the end of 1974, a pipeline 1,152km. long between Taching and the port of Chinhuangtao on Pohai Bay was completed, with a parallel line ending in Tiehling in Liaoning province(10). This pipeline traverses difficult terrain, mountain chains, 160 rivers, 40 railway lines and more than 200 roads (11). Nineteen pumping stations (1) NCNA Sep 14, 1966 (2) NCNA Apr 22, 1970 (3) NCNA Jan 9, 1972 (4) NCNA Jan 2, 1973 (5) Kyodo Nov 5, 1974 cit. SWB/W 803 (6) NCNA Apr 30, 1974 (7) NCNA May 16, 1974 (8) NCNA Oct 3, 1970 (9) NCNA Dec 15, 1974 (10) NCNA Dec 27, 1974 (11) NCNA Jan 11, 1975

•72.

equipped with machines for the generation of pressure and heat ensure the continuous flow of crude oil. The pipeline was built in two stages, the first beginning in winter 1970 and the second on October 1, 1973. The parallel line to Tiehling was laid between September 1973 and October 1974. Pipes weighing more than 200,000 tons were required and 14 million tons of earth and rock were moved during construction of the pipeline. To avaid damage to agriculture, operations were chiefly carried out in winter (1). Announcements on Tachai's output Between January and August 1966, output was 26.5% higher than in the corresponding period of 1965 (2). In 1969 it rose to 37% above that of 1968 (3). Between January.and May 1971, it was 33.3% higher than in the same period of 1970 (4). Output in 1970 was 150% higher than in 1965 (5). In 1971 it was 20% higher than in 1970 (6), in 1971 25% higher than in 1970 (7), and in 1971 150% higher than before the Cultural Revolution (1965?) (8). Between January and April 1972 production was 21% higher than in the corresponding period of 1971 (9). Since Taching was first explored in January 1960, the output of crude oil registered an average annual growth rate of 35% (10), or 35.2% (11). Between January and August 1972, output was 20% higher than in the corresponding period of 1971 (12), and in September 1972 the newly founded 5th Production Department surpassed the daily output of 6,300 tons for the first time (13). In 1971 output was five times higher than in 1963 (14). Between January and November 1972 it was 16.2% higher than in the corresponding period of 1971 (15). In 1972 it was 16% higher than in 1971 (16) and 14% higher than in 1971 (17). Production between January and March 1973 was higher than in the corresponding period of 1972 (18). In 1973 the output was 10% higher than in 1972 (19). Between January and April 1974 it was 26% higher than in the corresponding period of 1973 (20) and hence, five times higher than in the corresponding period of 1965 (21). (1) NCNA Dec 27, 1974 (2) NCNA Sep 27, 1966 (3) NCNA Feb 10, 1970 (4) NCNA Jun 20, 1971 (5) PRu Dec 28, 1971 (6) Peking Radio Feb 12, 1972 (7) (8) aa.beforei(9) NCNA Apr 19, 1972 (10) JMJP Sep 16, 1972 (11) NCNA Jan 2, 1973 (12) JMJP Sep 16, 1972 (13) ae before (14) NCNA Jan 2, 1973 (15) as before (16) NCNA Dec 26, 1973 (17) NeNkaah 2, 1973 (18) NCNA Apr 22,1973 (19) NCNA Jan 4, 1974 (20) NCNA Apr 30, 1974 (21) as before

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Between 1960 and 1973 the production registered an average annual rise of 31% (1). In 1973 output was four times higher than it had been in 1965 (2). During the first quarter of 1974, the output was 27% higher than in the corresponding period of the preceding year (3). At the end of 1973 the production capacity was 64.4% higher than in 1972 (4). In 1974 output was five times higher than in 1965 (5). During the period from January 1 to December 11, 1974, the output of crude was 22% higher than in the corresponding time of the preceding year (6). Between 1965 and 1974 the annual output of crude oil rose by an average of 31% (7). In the first six months of 1974 the output of crude oil rose by 24.7% as compared with the same period in 1973 (8). During the whole year of 1974 it surpassed the 1973 output by 22%. According to foreign estimates the output in 1973 was 8.2 million tons (10) and in 1974, 15 million tons (11) two figures which are incompatible with the growth rate of 22% announced for 1973/4. During the first three months of 1975 Taching produced 15.1% more crude oil than in the corresponding period of the preceding year (12). By 1974 the crude output had risen to 1,400% of that in 1965. During the same period the mean annual growth rate of oil production was 37.7% (13). Early in 1975 Taching produced five times more crude than 1965 (14). In the first three months of 1975 the crude output rose by 15.1% over the same time in 1974 (15). During the first six months of 1975 the growth rate of crude production over the comparable period in 1974 was 14.9% (16). The crude oil production in 1975 was 5.5 times higher than in 1965 (17). Conditions of life Between 1963 and 1965 houses providing living space of more than 1 million sq.m. were built for the Taching workers. In autumn and winter 1960 alone, 300,000 sq.m. of floor space were provided (18). In 1964 several million jin (1 jin = 650 g.) of grain and vegetables were harvested and 15.000 pigs and other animals, raised (1) SWB/W 706 (2) NCNA Mar 28, 1974 (3) NCNA Apr 6, 1974

(4) NCNA Jan 4, 1974 (5) Harbin Radio Sep 20, 1974 (6) NCNA Dec 15, 1974 (7) Peking Radio cit. SWB/W 804, Dec 4, 1974 (8) NCNA Aug 8, 1974 (9) NCNA Jan 2, 1975 (10) NZZ Mar 13, 1975 (11) Issues and Studies, April 1975, p.71 (12) Harbin Radio, Apr 6, 1975, cit. SWB/W 824, Apr 30, 1975 (13) Red Flag 5/1975 (14) Wuhan Radio Mar 18, 1975 cit.SWB/W 824 (15) Harbin Radio Apr 6, 1975, cit. SWB/W 824 (16) NCNA Jul 7, 1975 (17) NCNA Dec 20, 1975 (18) NCNA Jan 9, 1966

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(1). In 1966 all residential quarters in Taching had schools, nurseries, dining halls and shops. In the central districts there were hospitals, middle schools, department stores, post offices, hairdressers'and tailors'shops, and tractor stations, as well as official buildings with large halls for conferences or film and theatre perforiances. In addition to the primary schools there were sixteen secondary schools, combining study and practical work, where students could specialize in geology, oil drilling techniques, agricultural machinery, education, finance or medicine (2). In addition, an Institute of Petrochemistry has been established(3). The municipality and the petroleum industry in Taching come under one administration which is in charge of oil production, agriculture, services, public security and civilian affairs (4). In Taching winter temperatures of -300C. are not infrequent (5). There are no densely populated towns in the Taching region. A widely branching road system connects the various hamlets with each other. They give the region an appearance that is at once urban and rural. Industry and agriculture, town and countryside are integrated (6). Thousands of mou of wasteland were cultivated and wheat and soya beans grown. In a special farm where more than 1,000 people work, deer are raised. The vegetables required by Taching s population are grown locally (7). In the "Red Satellite" settlement,are residences for 1,400 workers and their families. They live in the central hamlet and five villages at a distance of between 1 and 1.5km. from the centre. Oilwells and corn fields, covering 6,000 mou, lie side by side. Dependent on the number of its members, each familiy has two or three rooms. Natural gas is supplied for heating and cooking. Like every other settlement, "Red Satellite" has a grain shop, a department store and a group of tailors. There is a kindergarten for children between the ages of two months and seven years. In the central hamlet there is a screw factory where 150 workers and their dependents have found employment; this factory makes all the screws required by the Taching oilfield. In addition there is a food-processing factory, a distillery, a factory making soya bean curd and soya bean sauce, a dining-hall for the workers, a bookshop, a post office, a photographic studio, a public bath, and a radio repair shop. More than 1,500 children attend middle school over a period of nine years. For medical care there is a hospital with fifty beds (8). In the (1) Women of China 5/65 p.111. (2) NCNA Apr 6, 1966 (3) (3) PRu Jan 4 , 1971 (4) NCNA Apr 6, 1966 (5) PRu Dec 28, 1971 (6) as before (7) as before (8) as before

75-

Taching oil region there are numerous settlements resembling "Red Satellite" (1) which as a rule cover an area of about 30 sq.km. (2). Taching - Crude Oil Production Relative figures taken from the Chinese press Rise as compared with preceding year (in %)

Period

Rise as compared with same period of preceding year lin %l

Rise over earlier years

Average annual growth rates % since

26.5

1966,Jan-Aug 37

1969

150% more than 196E

1970 33

1971,Jan-May 20

1971

25 5 times more than 1CIR'l 150%more than 1965 2i

1972,Jan-Apr -Aug

20

-Nov

16.2 16

1972

10

1973

1960

35

1960

35.2

1960

31

1965

31

1965

37.7

4 times more than 1965 1974,Jan-Mar

27

-Apr

26

-Jun

24.7

-Aug

22.5 22

-Dec 11 -Dec

22 5 times more than 1965

-Dec 1974

1,400% more than 1965 5 times more than 1965

1975,beginn. Jan-Mar

15.1

Jan-Jun

14.9 5.5 times more than 1965

Jan-Dec

In 1973 the production capacity was 64% higher than in 1972 (1) PRu Jan 4, 1972 (2) NCNA Jan 2, 1973

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Though the chart gives nothing but percentages, it still allows us to draw some conclusions. First, the chart tends to cause one to doubt the correctness of the Chinese announcements. This is particularly true of the annual growth rate between 1970 and 1971 which has once been quoted as 20% and elsewhere as 25%. In particular, however, the figures which result froM comparing period of several months with the corresponding periods of the preceding year seem implausible. There are such figures for 1971, 1972 and 1974, and it is surprising to see that at the beginning of each year the output is high, falling appreciably as the year progresses. Thus for the period between January and May 1971 a growth rate of 33% was announced while the rate for the whole year is 20% or 25% so that the discrepancies are as high as 8-13%. In 1972 the growth rate for the period between January and April was 21%, that for January-August 20%, and that for JanuaryNovember 16.2%, the annual growth rate being announced as 16%. In 1974 the growth rates announced fell from 27% (January-March) to 26% (January-April), 24.7% (January-June), 22.5% (January-August), and 22% (January 1 -December 11), the rate for the whole year being 22%. There is no technical explanation why the output should fall in the course of one year. In fact we would expect the opposite development, because most of the oilfields are in the northern regions of the country where the cold during January and February would be more likely to hinder than to promote production. Looking at the column "Rise over preceding year", we note that the growth rates kept falling from 37% in 1969 to 10% in 1973. These figures appear reasonable, as it is obvious that the growth rates must become lower with the passage of time from zero. This makes the growth rate of 22% for 1974 over 1973 appear even more striking. One of the possible explanations is that the workers'morale may have risen as a result of the Anti-Lin Piao-Anti-Confucius Campaign. Other explanations would be (a) the exploration of new oilfields, and (b) the completion of the pipelines to Chinhuangtao and Tiehling which are likely to enhance oil exports. It must be assumed that the rapid development of the Taching field had soon outstripped the storage and refining capacities. In 1973 Taching produced only 10% more crude than in 1972 but the production capacity rose by 64.4% during the same period. Even in 1972 the output of crude rose by 16% while the refining capacity rose by no more than 5% (see "Refineries, Taching"). This can only mean that wells had to be closed down because storage facilities were insufficient for all the crude produced. This is a handicap that will be remedied

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by the pipelines which can help to transport the surplus of crude, i.e. the quantities in excess of China's own refining capacity, to the ports for exportation, thus earning foreign currency for China's economy.

Takang

A.

4

The oilfield of Takang is located in the vast marshlands extending 60km. southeast of Tientsin to the mouth of the Huangho river and thence into the continental shelf of the Bay of Pohai (1). It surpasses the oilfields of Taching and Shengli in the vast size of its oil deposits, in the expansion and depth of oil pools, and in the quality of the oil found there (2). However, the greater part of the Takang field is located below the sea bed and submarine oil extraction requires methods of which China has had little experience. The depth of the sea in the Bay of Pohai is only about 30t. The oil deposits in this region are below a Tertiary sedimentary formation more than 2,000m. thick. Therefore, both drilling and the construction of drilling stations is comparatively easy and inexpensive (3) The geological formations of the oilfield are variegated (4), because the individual strata are dissected by faults and great efforts are needed to find the law governing the changes in the faults (5). Some 10,000 comparative analyses of geological data eventually revealed the secrets of the faulted zone, and the once "forbidden" zones were developed to bring high yields (6). According to technical experience in foreign countries, oil had only been found in sandstone. Therefore, when some drilling teams struck biogenetic limestone, people declared that further drilling was useless. However, deep-drilling operations brought to light signs (1) Yoshio Koida: "China's Crude Oil Production", in Pacific Community, April 1974, pp.463ff.(2) Peking Radio Feb 10, 1974 (3) Yoshio Koida,loc.cit. (4) NCNA May 28, 1974 (5) as before (6) as before

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of oil and gas in biogenetic limestone. Further investigations showed that there were three biogenetic oil zones. Seven fields of this type, as well as oilbearing rock formations, are now producing oil. In general, it may be said that Takang has thick oil-bearing formations with rich deposits of oil and natural gas (1). The oil is of high quality (2), with a sulphur content of less than 0.08% (3). Prospecting in this region began in 1964 (4). Until 1972 operations were limited to geological investigations (5).(This announcement is contrary to others quoted under "Production" below). Drilling for oil in the coastal shelf seems to have begun before September 1973 when some derricks were observed off the mouth of the Huangho river. At about the same time a submarine drilling ship took up work in the waters off Tientsin harbour (6). Press reports implied that China has five submarine drilling installations, three of a comparatively old type but two of the new scaffold type imported from France and Italy which may be used in depths of up to 30m. (7). In 1969 China ordered the "Pailung", her first submarine drilling ship, for a price of 4,000 million yen, from the heavy machine factory of Ishikawajima-Harima through Toko Bussan. At about the same time negotiations began with Mitsubishi Heavy Industries for the construction of "Pailung 2", a drilling ship worth 6,000 million yen said to be equipped with US-developed gear. In April 1970, however, these negotiations were discontinued in accordance with the "Four Conditions" proclaimed by Chou En-lai, on the grounds that Mitsubishi was cooperating with Taiwan. In June 1970, another order was placed with Nippon Kaiyo Kussaku K.K. (Nippon Ocean Drilling Company), one of Mitsubishi's subsidiaries, and in September 1972 Japan delivered to China the "Fuji", a drilling vessel costing some 2,600 million yen. According to one of the representatives of Nippon Kaiyo Kussaku, then visiting China, two Chinese submarine drilling vessels "Hapin No.1" and "Hapin No.2", were then operating, both of them equipped with gear enabling drilling in water depths of up to 30m. and for drilling at depths of up to 2,000m.(8). (1) NCNA May 15, 1974 (2) as before (3) Yoshio Koida, loc.cit. (4) NCNA May 28, 1974 (5) PR Oct 5, 1973 (6) Yoshio Koida, loc.cit. (7) Yoshio Koida, loc.cit. (8) Yoshio Koida, loc.cit.

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In 1973 China speeded up the development and exploitation of the Takang oilfield. Since then the workers engaged in exploring and drilling operations have found that there are intensive and thick oil-bearing formations of good porosity in the oilfield (1). During the first quarter of 1974, the amount of crude produced was 28% higher than in the corresponding period in 1973 (2). During the first six months of 1974, the output was 22.5% higher than in the corresponding period in 1973 (3). Since 1967, the production of crude has increased annually by an average of 60.9% (4) or 50.9% (5) or 68.9% (6). During the period between January and September 1974 oil output was 20.8% higher than in the corresponding period in 1973 (7), while the rise had been 22.5% during the period from January till June (8). The output of crude oil in Takang rose by 24.7% in 1974, as compared with 1973 (9). The Takang oilfield has complicated geological formations. The coherence of the oil deposits is disturbed by unforeseeable geological features. Despite this, the oil workers have overcome the difficulties, particularly in the production of oil from deeper formations. In 1974 they sank hundreds of wells in newly discovered zones, a great number of which, at depths of 3,000m., have proved very valuable (10). The oil intended for export is shipped from the port of Chinhuangtao, which has loading facilities for tankers with a carrying capacity of 30,000 tons. A new pier serving tankers of between 50,000 tons and 70,000 tons was under construction early in 1975 (11). A group of Japanese members of parliament who were offered the opportunity to visit Takang were given the following information on the spot: The oil produced in Takang has a paraffin content of between 7 and 14% and a sulphur content of somewhat more than 0.2%. The oilbearing formations which vary in thickness are found in depths of between 1,000m. and 3,000m. Takang's 10,000 workers operate in eight categories of work, viz. prospecting and geological exploration, oil drilling, refining, construction, transport, irrigation and power, planning, scientific research. The Japanese visitors estimated the daily output at between 5,000 and 6,000 tons (=1.8-2 million tons per annum) (12). The output (1) NCNA Dec 28, 1973 (2) NCNA May 15, 1974 (3) NCNA Aug 11, 1974 (4) NCNA Oct 4, 1974 (5) SWB 4754 (6)NCNA Dec 19, 1974 (7) SWB 4754 (8) NCNA Aug 8, 1974 (9) NCNA Jan 1, 1975 (10) NCNA Dec 19,1975 (11) Kyodo Jan 29, 1975 (12) Kyodo Nov 5, 1974, cit.SWB/W 803

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of crude oil in 1974 was estimated at about 3 million tons (1) - an estimate that should be regarded with some caution. Some announcements on crude oil production Takang overfulfilled the quotas set by the government for 1968 and 1969. In 1970 the oil drilling plans were fulfilled ahead of schedule by 202 days, and those for oil extraction by 101 days. As compared with 1969, the output of crude doubled in 1970 (2). Owing to intensive repair work, the performance of the first wells ever opened in Takang rose by 15% in the spring of 1974 (3). The average annual growth rate of crude production between 1967 and 1973 was 60% (4). The crude oil production capacity for 1973/4 was 90% above that of 1972

(5). Takang - Crude Oil Production Period

Rise in Production

1970 1973

100% increase over 1969 50.9% more than in 1967 60.9% more than in 1967 68.9% more than in 1967 28% more than in the comparable period of 1973 22.5% more than in the comparable period of 1973 20.8% more than in the comparable period of 1973 24.7% more than in 1973 90% more than in 1972

1974,Jan-Mar Jan-Jun Jan-Sep Jan-Sep 1973-1974

The figures given for 1973 differ by no less than 18% and are therefore useless. The values for 1974 are approximations and seem to deserve some credibility. If we start with the 100% rise in the output of crude oil between 1969 and 1970 and consider the 24% rise between 1973 and 1974, we find that the actual difference between zero and the 1970 output is small.

(1) JIJI Press Nov 6, 1974 (2) NCNA May 28, 1974 (3) as before (4) SWB/W 841 (5) NCNA Nov 20, 1975

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Tarim In October 1958 the first oil was found in test wells in the Tarim Basin near Ichikrik. During the first twelve hours 25 tons of crude oil came to the surface, followed by 100 tons within a couple of hours. It was then supposed that an even greater oil horizon might exist below the formation at that time attained by drilling operations (1). Most of the places referred to in connection ,a;idth those assumptions, such as Kuche ( j fr ) and Wensu ( qg ), had already been mentioned in the mid-1950s (2). The Kuche deposits were again referred to as promising early in 1959 (3). Neither the Tarim nor the Turfan deposits (mentioned below) has ever been mentioned again after the drilling of test wells, a fact that allows the conclusion that they have both proved not to be worth exploiting.

(1) NCNA Oct 17, 1958 (2) ChNA Mar 14, 1958, p.5 (3) NCNA Feb 1, 1959

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Tsaidam

• ,k

Tsaidam is a Mongolian word meaning salt marshes. The Tsaidam Basin, in the northeastern part of Chinghai province, covers about 210,000 sq.km. To the North the Basin is delimited by the Astin Mountains (2,71 °F .t om . ) and to the south by the Kunlun Mountains ( G ). Its average height above sea level is about 3,000 m.(1); its lowest point is 2,700 m. There are some fertile regions, particularly around the lakes. To the southeast of the Basin, there is extensive marshland, with rivers fed mainly by melted snow and ice from the high mountain ranges (2). The annual precipitation in the Basin is no more than about 100 mm. (3). Before the foundation of the People's Republic in 1949, the total population in the Tsaidam Basin did not exceed 10,000. In addition to the old administrative centre of Tsagan Usu, several towns have meanwhile been founded, such as Ihetschedam, Lenghu, Nangya, Golmo and Delingha(4). Whereas the agricultural area in the Tsaidam Basin covered a mere 670 hectares (before 1949), it had risen to 40,000 hectares by 1973. In the old days nothing but barley used to be grown but now a large quantity of fruit and vegetables, such as water melons, tomatoes, cucumbers and apples, can be reaped (4). As the region is situated 3,000 m. above sea level, it is to be supposed that these fruits and vegetables are grown in hothouses heated by the gas which is a by-product of oil production. The Tsaidam Basin is connected with the Chinese road system by several highways, which themselves have a total length of nearly 2,000km. (5). (a)the Tunhuang-Golmo highway which starts at Tunhuang (Kansu province), crossing the Chilien mountains, Mahai, the Tsaidam Basin and the Greater Gobi, on its way to Yenhai. It was completed in December 1954 (6). (b)the Chinghai-Tibet highway. It forms part of the Chinghai-Sinkiang highway and crosses the Tsaidam Basin. Its starting point is Sining, the capital of Chinghai province (7). (c)the Chaka-Kansen highway which is 900 km long. It starts at Chaka, a place at the Chinghai-Tibet highway, and proceeds via Tsagan Usu, Golmo, Tartin, Mangyai, YUchuanke to Kansen at the Chinghai-Sinkiang highway (8). (1) ChNA, Mar 14, 1958 (2) A Simple Geography of China, Foreign Language Press, Peking, 19580 p.200 (3) A Concise Geography of China, FLP, Peking, 1964, p.191 (4) ChiB 6/ 74 (5) Ta Kung Pao, Hong Kong, Nov 4-11, 1971 (6) Chinghai JP Jan 19, 1955 (7) NCNA May 26, 1955 (8)China News Service, Sining, Aug 12, 1955

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(d) the Taoputu-Mangyai highway. It crosses the northern part of the Tsaidam Basin to reach Lenghu, where a 506km.-long road, completed in 1956, branches off to Shanseti. This road connects the Chinghai-Sinkiang-Chaka-Kansen highway and the Tunchuang-Golmo highway with the most important oilfields in the Tsaidam Basin (1). Oil prospecting began in 1954. The Tsaidam Basin was then only known as a desert (2). The first test wells were drilled in May 1955 (3), by which time various oil sand fields and seventy other oil-bearing structures had been discovered (4). In 1955 a great number of oilbearing formations were found, including an oil-bearing sandstone formation with a thickness of 100m. Another drilling operation struck oil after twenty days,and yielded 600 litres of crude per day (5). By September 1956 nearly 100 oil-bearing formations had been explored. The first test well in the northern part of the Tsaidam Basin yielded high-grade crude oil. By that time oil was produced by twelve further test wells. The largest of the oil-bearing formations that had been discovered by that time extends over an area of more than 1,000 sq.km.(6). In October 1957 the first refinery was put into operation producing petrol, kerosene and lubricating oil (7). By that time the following centres of oil production had been developed in the Tsaidam Basin: )in the western part of the YUCH'UANTZU ( Tsaidam Basin. It was in this field that the first oil was produced in 1955. During the following years, prospecting was continued but few reports on these operations appeared. In July 1957 it was stated that the No.9 well had struck oil and that the oil had gushed up in a 10m.-high fountain; the oil of this well was reported to be blended with water but of good quality. The Yuch'ilantzu field was regarded as particularly promising until 1957. In the autumn of 1957 a small refinery with an intended annual capacity of 3,000 tons was built (8). In the summer of 1958 the test wells Nos.1, 2, and 5 in the Yuch'ilantzu region struck oil (9). In August the same year oil was detected at a depth of 579m., wIlich at first came to the surface at the rate of 27 tons per hour (10). (1) 10, Jan (8) Aug

NCNA Sep 1971 (3) 24, 1956 ChNA Mar 27, 1958

5, 1956 (2) Ta Kung Pao, Hong Kong, Nov 4NCNA Jan 24, 1955 (4) as before (5) NCNA (6) NCNA Sep 28, 1956 (7) NCNA Oct 1,1957 14, 1958 (9) NCNA Jul 29, 1958 (10) JMJP

-84-

LENGHU ( 4 ), situated in the northern section of the Tsaidam Basin, provisional terminal of the LanchouChinghai railway line (1). In this sector drilling began in 1955. In 1956 the first oil-bearing formation was detected, with prospecting and drilling very active. Most of the deposits in this region are relatively shallow (2). However, two deep wells drilled in 1957 also struck an oil-bearing sand formation (3). In the summer of 1958 another deep well was sunk and after seven months crude oil of good quality was detected at a depth of 872m. (4). A well drilled in the autumn of 1958 turned out to be the richest of the district, with an output of 240 tons of crude oil in 14 hours. The pool is at a depth of 604m.(5). Towards the end of the year it was announced that two of the eight test wells in Bed No.5 had been yielding more than 200 tons of crude daily, one of them as much as 800 tons on a single day. At the same time the Chinghai Petroleum Exploration Department decided to make the Lenghu region the centre of exploration (6). In March 1959 the first consignment of twenty-three tankers, carrying oil from Lenghu, left Kansu province by way of the Lanchou-Sinkiang railway for the Lanchou refinery where it was to be processed (7). At the same time 10,000 workers were engaged in test drilling operations in the Lenghu region. Meanwhile the first local pipeline, 20km. long, had been constructed. It was intended to build a refinery, further production plants and a number of workers'flats to be ready by the end of 1959 (8). During the second half of 1959, nearly 100 oilwells were sunk in the No.5 Bed of Lenghu, their daily production totalling 1,600 tons (= annual production of 280,000 tons) (9). By that time refineries with an annual processing capacity of 300,000 tons had been completed (10). Early in 1959 several oil tanks and a 10km.-long pipeline were put into operation (11). By the beginning of 1960, thirteen oil and natural gas fields had been discovered (12). The Lenghu deposits are not very deep and the oil-bearing formations are comparatively thick (13). The development of the Lenghu oilfields had made further progress by 1973 (14). YUSHASHAN (5e;47 d1). A test well in this region struck oil at a depth of 1,070m. in the summer of 1958, the (1) NCNA Dec' 8 1958 (2) ChNA, Mar 14, 1958 (3) JMJP Sep 18, 1957 (4) NCNA Jul 14, 1958 (5) NCNA Dec 8, 1958 (6) as before (7) as before (8)NCNA Apr 2, 1959 (9) NCNA Jan 20, 1960 (10) NCNA Jul 27, 1958 (11) FEER Oct 14, 1965 (12) NCNA Feb 23, 1960 (13) JMJP May 20, 1959 (14) NCNA Mar 11, 1973

- 85 -

crude oil yield during the first eight hours being 2.5 tons. The pressure in the deposits proved to be low (1). In addition to the fields of Lenghu, Yuch'Uantzu and Mahai, that of Yushashan was considered in late 1958 to be one of the most promising in the Tsaidam Basin (2). As early as 1957, seven wells had struck oil at a depth of about 100m.(3). Within a short time, the town of Yushashan developed from scratch and in 1958 its population had reached several thousands. The production plants built by 1958 included a 600kW. power station, a repair shop for machines and motor vehicles, a laboratory and a small oil refinery with an annual capacity of 250,000 tons. At that time it was also planned to build an automatic refinery with the same capacity (4). Near Shihtzukou, one of the fields in the Yushashan district, the No.2 test well produced 150 tons of crude daily in July 1958 (corresponding to an annual output of 18,000 tons). The local oil horizon is at a depth of between 900 and 1,070m. At the time when oil was first struck there, this deposit was considered the largest in the Tsaidam Basin. By the end of 1958, all the eight test wells drilled had struck oil (5). The deposits of Shihtzukou were estimated in 1958 at 30 million tons (6). Among the oil4roducing places in the Tsaidam Basin are Mahai ( .j ) (7), YUk'a ( ) and Mangyai ). Mahai seems to be chiefly noted for its ( natural gas resources (8). At Yuk'a which is in the eastern part of the basin, oil was first struck at a depth of about 250m. in July 1958 (9). This place has never been mentioned again. The Mangyai deposits, where oil had been struck in a relatively shallow formation in 1958, are said to cover an area of 400 sq.km.(10). Since there has only been one announcement concerning this field, it can be assumed not to have come up to expectations and to have been abandoned. By the autumn of 1958, more than 200 wells had been drilled successfully in the Tsaidam Basin, striking either oil or natural gas (11). The oil deposits are distributed over two coherent fields. According to announcements made in late 1958, eight further oilfields were thought worthy of exploitation. At that time the resources of Tsaidam (1) NCNA Jul 27, 1958 (2) NCNA Dec 8, 1958 (3) ChNA Mar 14, 1958, p.4 (4) NCNA Jun 12, 1958 (5)NCNA Dec 8,1958 (6) NCNA Sep 17, 1958 (7) NCNA Dec 8, 1958 (8) NCNA Jul 29, 1958 (9) as before (10) NCNA Dec 8, 1958 (11) NCNA Sep 17, 1958

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were estimated to be much larger than the largest then known to exist in YUmen. In the fields of Lenghu and Yushashan, the oil content in the various formations is more than twice that in the Karamei oilfield. By the end of 1958 the number of potentially oilbearing formations in the Tsaidam Basin totalled 120. Of the 291 test wells then drilled in forty-one formations, only sixty-two failed to produce oil or gas. This great success led to the conclusion that the whole Tsaidam Basin might be one coherent oilfield. For 1959 the output in the Tsaidam Basin was planned at 500,000 tons (1). In August 1959 the daily output surpassed the 1,000-ton mark for the first time (2). At the beginning of 1960, all reports on oil extraction in the Tsaidam Basin ceased. It is assumed that, owing to the withdrawal of the Soviet experts in the summer of that year and to climatic and transport difficulties, the promising development could not be maintained. The next years probably served for consolidation rather than development, so that the output in this region probably did not increase again until 1963. In the centre of the Tsaidam Basin, the town of Tatsaitan (A-4A0 ) was founded in what was once a desert. Within two years three main streets, shops, schools, hospitals, cinemas, theatres and scientific institutions sprang up; twenty state farms (3) were established to supply the town with food. At the beginning of 1959, 32,000 hectares were under cultivation, with another 40,000 hectares to be added in the course of the year (4). At the beginning of 1960, there were five main roads and thirty-five secondary roads in the Tsaidam Basin, the total length being 5,000 km. The roads interconnected nine towns and counties, 125 factories and mines, twenty-one state farms and more than forty settlements. The roads can be used throughout the year (5). By mid-1958, twenty-two factories had been installed in the Tsaidam Basin (6), and by the beginning of 1960, this number had risen to more than 300 (7). Not until 1971 were the reports on the Tsaidam Basin, which had ceased in 1960, resumed. In the interval only some minor news items were released, such as the announcement that counter-revolutionary revisionists had declared the oilfields in the western part of the Basin to be unworthy of exploitation and that therefore all local operations had been abandoned, or that the wor(1) NCNA Dec 8, 1958 (2) NCNA Sep 5, 1959 (3) ChiB 11/ 1959 (4) NCNA Apr 15, 1959 (5) NCNA Jan 4, 1960 (6) JMJP Jun 30, 1958 (7) NCNA Jan 21, 1960

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kers charged with oil prospecting had adopted Taching's spirit of self-reliance during the Cultural Revolution. The few details known from this period suggest that the oilfields, which are chiefly based on oil-bearing sand formations, had temporarily suspended operation. The reports on the Tsaidam Basin oilfields from 1971 onwards differ from announcements made before 1960 in that the various oilfields are no longer dealt with separately but rather as a unity. Even in this more general form they may well serve to show the economic importance of the Tsaidam Basin for China's oil industry. In the western part of the Tsaidam Basin a new oilfield was explored within 18 months. Roads with a total length of 100km. and a refinery were constructed in this region. The oil reserves there were estimated to amount to several times the quantities expected in the old oil centre (1). In 1971, the output of the "old" oilfields under the Chinghai Petroleum Administration surpassed that of 1970 by 19% (2). In 1972 the increase in the output of the old wells accounted for 10% of the total production of the Tsaidam Basin (3). The 1970 output was 3% higher than in 1969. During the January-August 1971 period, production was up on the same period in 1970 by 9.1% (4). During the first six months of 1972 the oil production plans were overfulfilled by 1% (5). In 1972 the workers engaged in prospecting found new oil deposits (6). Since the opening of the oilfield in Minho hsien in 1970, eight wells produced 600 tons of crude, which were processed to yield 200 tons of petroleum products (7). In the West Tsaidam oilfield, workers of the Lenhu refinery built a "refining workshop", with a capacity of 30,000 tons, within 75 days. In 1972, two oil storage tanks, each with a capacity of 500 cubic metres, were also built (8). During 1970-2 the oil-producing capacity in Chinghai province doubled, due to the discovery of a new oilfield and the development of the Lenghu field. The development of the second (sic!) oilfield began in June 1972 (This may well be the field in West Tsaidam), and it recently started production(9). The output of crude in the whole Tsaidam Basin trebled between 1970 and 1972. Owing to extensive prospecting work, oil-bearing formations four times greater than those known in 1965 had been detected by the end of that period (10). (1) NCNA May 4, 1971 (2) Sining Radio, Sep 27, 1971 (3) NCNA Mar 17, 1973 (4) Sining Radio, Sep 9, 1971 (5) Sining Radio, Jul 16, 1972 (6) Sining Radio, Sep 16,1972 (7) Sining Radio, Sep 24, 1972 (8) Sining Radio, Oct 9, 1972 (9) NCNA Mar 11, 1973 (10) NCNA Mar 17, 1973

.88.

The Chinese announcements on the oilfields in the Tsaidam Basin suggest that, of all the oilfields explored in the late 1950s, only that of Lenghu has continued to be considered worthy of exploitation, together with the deposits discovered in the western part of the Basin in 1970. An inclement climate complicates the technical conditions for oil production, so that only such fields are now exploited as would seem to justify the employment of advanced technical equipment despite China's shortage of technical equipment. Production details from Chinese sources IUSHASHAN: In August 1959 the daily output passed 1,000 tons for the first time (1), making the annual output for 1959 soar to about 250,000 tons. SHIHTZUKOU: Output of No.2 test well in July 1958: 150 tons daily (= c.54,000 tons annually) (2) 1971: 19% more than in 1970 in the "old" oilfields (3) 1970: 3% more than in 1969 (4) 1971, Jan-Aug: 9.1% more than in the same period in 1970 (5) 1972: oil-producing capacity of 1970 doubled (6). 1972: crude output trebled over that of 1970 (7). LENGHU: Nearly 100 oil wells were producing 1,600 tons daily during the second half of 1959 (=annual output of 288,000 tons) (8).

TOTAL OF TSAIDAM BASIN

YEAR

LENGHU

YUSHASHAN

1959 1960-9 1970 1971

550,000 tons No

250,000 tons details known

1972

3% more than in 1969 Jan-Aug: 9.1% more than in Jan-Aug 1970 19% more than in 1970 twice as much as 1970 three times as much as 1970

(1) NCNA Sep 5, 1959 (2) NCNA Dec 8, 1958 (3) Sining Radio, Sep 27, 1971 (4) Sining R. Sep 9, 1971 (5) as before (6) NCNA Mar 11, 1973 (7) as before (8) NCNA Jan 20, 196 0

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Turfan In the summer of 1958 the first test wells were drilled in the Turfan Basin. It was intended to investigate ten oil-bearing formations in this region (1). On November 7, 1958, oil was struck near Shengchinkou and gushed to the surface in a fountain 30m. high. In this region the oil horizon is at a depth of between 500 and 700m., extending laterally over a 120km.-long strip of land (2) and covering a surface of about 230 sq.km. The Turfan Basin is situated near the Lansin railway which connects Lanchou and Sinkiang. The exploitation of its resources comes under the nmen Petroleum Administration, which announced the plan for 1959 with a crude oil production of 109,000 tons and an output of processed oil of 30,000 tons (3). Despite these promising beginnings of exploitation, the formation does not seem to have proved worthwhile, as no announcements have been made since.

Tushantzu

i*

This oilfield, which is in the Sinkiang Autonomous Region, was one of the first to be reopened after the revolution in 1949. Work was begun with Soviet assistance directly after the foundation of the Joint SinoSoviet Petroleum Company (4). This field is obviously rather small, and lost its interest when new fields were discovered near Karamai. It may even be doubted whether Tushantzu is still exploited, as it has never again been mentioned. On the other hand, the refinery built in Tushantzu gained interest, as it is the one closest to the Karamai field. In 1974 1,100 workers worked in this refinery (5).

(1) NCNA Jun 5, 1958 (2) NCNA Nov 11, 1958 (3) NCNA Feb 1, 1959 (4) RAND p.21

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Yench'ang

j

Though Yench'ang in Shensi province is one of the oldest oil-producing regions (1), so little has been said on this oilfield that we are probably justified in assuming that it has become insignificant, an assumption confirmed by the size of the local refinery which has an annual capacity of only 17,000 tons (2). In fact the Chinese press has made only three announcements since 1966, and even these give no substantial facts. The first announcement deals with the occupations of the oil-workers dependents (3), the second, with the fulfillment of the oil output target for 1971 twenty-five days ahead of schedule (4) and the third with the 30% rise in the output of crude and oil products in January-August 1972, compared with the corresponding period in 1971(5). The last-mentioned announcement also includes some technical details which illustrates the minor economic interest of this oilfield. The relevant passage reads: "The oil pool is shallow so that the oil must be pumped up. As a result the output is low" (6).

(1 The oilfield of Yemen in Kansu province is Chinas oldest petroleum field. It is on a high plateau, 2,800m. above sea level (7), and was discovered in 1936. Drilling began in 1939. The principal deposits are near Laochunmiao ( At 7 ). In 1949, when Soviet and East European specialists came to Yilmen, the yields were low (8). Oil is usually found in combination with water and gas. This combination is stored in a sort of compression chamber, with gas forming the upper layer. If a deposit (1) NCNA Nov 9, 1972 (2) FEER, Oct 14, 1965 (3) Sian Radio, Mar 21, 1966 (4) Sian 'Radio, Jan 5, 1972 (5) NCNA Nov 9, 1972 (6) as before (7) JMJP Mar 18, 1970 (8) ChNA, Mar 14, 1958

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is struck by drilling, the oil is forced out by the pressure of either gas or water. If the drilling gear hits the top layer of the deposits, the gas is free to escape first. Unless this is prevented, the compressing power of the gas is lost and the oil must be pumped out at considerable cost. This is what happened in LaochUnmiao. Chinese and foreign experts had assumed that the YUmen oilfield would turn out to be "gas-driven", and had proceeded accordingly, with large quantities of gas being allowed to escape unused. As a result many wells remained without pressure and the oil ceased to flow until a member of the Soviet Academy of Sciences appeared on the scene and discovered that the oilfield belonged to the "waterdriven" type. Following this, the wells were flooded with water so that pressure was built up artificially and the oil could be pumped out of the sandstone formations (1). This method had its drawbacks, and some wells were overflooded during the first six months of 1955 (2). The specific geological conditions prevailing in this field had been ascertained in 1954. At that time, however, there were some responsible cadres who wanted to exploit the deposits of LaochUnmiao at the greatest possible speed so as to meet China's most pressing demands for oil. As a result, oil could be extracted for a relatively short time only and production ceased to be possible after one year (3). A passage on YUmen in a report submitted by the Bureau of Mines of the US Home Department in 1948 ran approximately as follows: "... The oil deposits are concentrated in a long curved basin extending over a length of about 1,100km. in a northwesterly direction. In the eastern part they are about 150km. wide but towards the west they dwindle to a width of between 100km. and a few km. The oil-bearing formations are in loose sandstone and in conglomerates from the Upper Cretaceous and the Lower Tertiary ages. The origin of the oil must presumably be dated to Permian or Jurassic formations... Four oil-bearing formations have been found altogether. The only one explored so far is in the vicinity of YUmen. The oil extracted there has a paraffin content of 15.5%, and the extraction meets with great difficulties because of the low temperatures in this region. It has not yet been possible to make an estimate of the reserves which, however, may be considered promising"(4). (1) ChNA Mar 14, 1958, p.2 (partly cited in JMJP Oct 29, 1956) (2) JMJP Aug 17, 1956 (3) JMJP Mar 18, 1970 (4) ChNA Feb 2, 1962

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In 1952 post-war production started with Soviet assistance but it was not until 1953 that work was pushed ahead by all means available (1). Up to 1956 the oil extracted was found to be of poor quality and the problems of distillation and purification had not then been solved. The results achieved with a small electric distilling plant of Romanian origin (2) were not published. The purifying process was improved early in 1956 (3). Between 1953 and 1957 the oil drilling company carried out extensive new drillings. In this period a great number of teams drilled more than 5,000m. annually. A derrick crane achieved a monthly average of 583m. In 19561957 the company drilled wells in six rock formations, five of which produced gas or crude (4). The poor drilling performance was explained by miscalculations and the low quality of the equipment used(5). Soviet specialists and some Romanians worked on the field. In 1956 a railway track was laid to connect the LaochUnmiao field with the Lanchou-Sinkiang railway line (6). The importance which the YUmen deposits had at that time may be gathered from the fact that, in 1956, 637,000 tons (7) of China's total crude output of 1,163,000 tons (or 55% of the total) were produced there. Early in 1957 a new well at Yaerhhsia (It /174) in the Chiuch'Uan Basin ( ;IL ) struck oil at a depth of 2,600m. The oil gushed out in a 20m.-high fountain (8). In the spring of 1958 a submarine system comprising one main canal and three tributaries was completed to ensure the field's water supply,which had previously depended on a small river (9) which was no longer adequate to meet the growing demand. The inadequate water supply had been one of the chief obstacles to the production of oil. In 1956 there had still been complaints over the shortage of water and it had been stated that, even if the threefold quantity of water were available, the supply would still be inadequate (10). In summer 1958 new oil deposits were detected near Yaerhhsia, at a depth of 2,300m. Within twentyfour hours, nearly 1,300 tons of petroleum came to the surface. In this connection it was announced that 80% of the wells drilled in this region had struck oil (11). The output of crude was expected to rise to 30,000 tons (1) JMJP Jan 14, 1956 (2) JMJP Dec 7, 1955 (3) JMJP Jun 25, 1956 (4) JMJP Feb 3, 1957 (5) JMJP Feb 8, 1957 (6) Issues and Studies, April 1975, p.69f. (7) JMJP Dec 24, 1956 (8) ChNA Feb 2, 1962 (9) NCNA May 9, 1958 (10)JMJP Oct 29, 1956 (11) NCNA Jun 3, 1958

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by the end of 1958 (1). In July what was then the deepest well in China was drilled near Yaerhhsia, to a depth of 3,210m.(2). At that time the newly discovered deposits at Yaerhhsia and Paiyangho (4i*t i:f) were estimated to be twice as large as the known LaochUnmiao deposits, and plans were made to open up these regions by new roads and pipelines (3).This is the region where the so-called highspeed drilling methods were tested in 1959, making possible drilling to a depth of 1,000m. within less than six days. Some of the wells thus drilled yielded more than 1,000 tons of crude daily (4). In view of the promising results achieved at Yaerhhsia, the 1959 production plans for the whole oilfield of YUmen were doubled, compared with the preceding year (5). In the whole field the drilling and extracting performance was to be doubled in 1959 (6). Under the Great Leap Forward campaign (1958/9), the relatively unproductive deposits in shallow beds gained a new interest. More than 100,000 tons were extracted from these formations by simple methods during 1958 and 1959 (7), though nothing was said on the quality of the oil thus produced. Production was probably discontinued in 1960 or later. For 1962 a general increase in production was envisaged (8). The production plans for that year (which had not been published), were fulfilled by December 21. The costs of crude oil production in 1962 were cut by 4%. The performance of repair workers at the wells improved and so enabled a rise in output of 30,000 tons to occur (9). However, the output of 10 million tons planned for 1962 was not reached (10). In 1963 the production targets, which had not been published, were overfulfilled by 3.7% (11). YUmen, which is 400m. above sea level, has developed from a small place to a flourishing industrial town where some tens of thousands of persons were already living by 1960 (12). In 1969 the population of the town and surrounding villages had risen to 120,000 (13). Between 1949 and 1963 the YUmen Petroleum Administration spent 2 million yUan annually on medical care for the workers and on accident protection. In addition to a (1) NCNA Jun 8, 1958 (2) JMJP Jul 16, 1958 (3) NCNA Jul 28, 1958 (4) JMJP Apr 4, 1959 (5) NCNA Apr 12, 1959 (6) NCNA Feb 21, 1959 (7) NCNA Jul 29, 1960 (8) JMJP Jan 10, 1962 (9) NCNA Dec 28, 1962 (10) SYKT 15/58 p.14 (11) Peking Radio, Dec 25, 1963 (12) NCNA Nov 6, 1960 (13) JMJP Sep 16, 1969

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modern hospital, fifteen health stations and a sanatorium of 300 beds were installed. At the same time, apartments with a total floor-space of 200,000 sq.m. were built for the workers. The rent for these quarters amounted to 3% of a worker's earnings (1). The fact that tens of thousands of workers and technicians were sent from YUmen to all the other oilfields for prospecting, extracting and processing in 1953 and later is an indication of YUmen's great importance. More than half of these workers were specialists in geological prospecting and oilfield exploration. Almost all chief engineers, technicians and skilled workers of the Lanchou refinery came from YUmen, and one of the oil refineries was equipped with machinery and experts from YUmen (2). The Institute of Petroleum Production is in the C.hungping district of YUmen municipality (3). In 1963 the crude oil output of the YUmen oilfield was about 1.8 million tons (4). The daily output of crude in 1966 was 47% up on the 1965 output (5). In the Shihyukou oilfield, the daily output in 1968 was 71.4% higher than before the Cultural Revolution (1965?) (6). As early as June 1969 the Shihyukou oilfield had already fulfilled 62% of its production target for the whole year (7). At about that time the old derrick plants which had been intended for scrapping wererepaired and put into operation again(8). In 1969 it was announced that the YUmen oil region had been enlarged by one-third in the years past. Compared with before the Cultural Revolution, the output had more than doubled by the time the announcement was made (9). In 1969 YUmen produced petrol, kerosene, Diesel oil and lubricating oil (10). The practice of reduced drilling during the winter season when the ground was frozen was abandoned. A great number of wells that used to interrupt their work during the winter season continued to produce oil without interruption (11). "The Shihyukou oilfield is under the Petroleum Administration of YUmen, China's first petroleum base. Before the Cultural Revolution, control was in the hands of bourgeois reactionary technical 'authorities' and production was at a standstill ... Lack of spare parts (1) NCNA Feb 1, 1964 (2) NCNA Mar 9, 1964 (3)NCNA Sep 13, 1964 (4) FEER Oct 14, 1965 (5) NCNA Dec 13, 1966 (6) Peking Radio, Dec 20, 1968 (7) NCNA Sep 7, 1969 (8) as before (9) NCNA Oct 9, 1969 (10) NCNA Feb 9, 1970 (11) as before

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rendered (a great part of the equipment) useless ... so a number of wells that were out of order remained unrepaired... (This was changed during the Cultural Revolution when a number of workers, struggling hard, succeeded in repairing many wells within six months)... The oilwells were given a new lease of life. However, because coal supplies were insufficient at the time, the pipeline froze in many places and the crude oil could not flow out. The pipeline had to be heated by coal, because when the bourgeois reactionary technical "authorities" drew up the original plans, they had made no provision for the utilization of natural gas ... (Thus, the workers) decided that, although there was not much natural gas, it could be accumulated for utilization. They worked together to collect natural gas little by little from every well. When new pipes were not available, they dug up old disused ones from underground and welded them together. Because they had no experience with natural gas, they did not dry the pipes well, and when it grew very cold, all the twenty-odd pipes froze up. Braving the severe cold, the workers dug out the pipes, heated them, got rid of the water, and added filters to every section of the pipeline... The No.4 District (of the Shihyukou oilfield) had long been claimed by the "specialists" and "authorities"as being barren of oil... Later the workers sank twenty-one new wells in the district and struck oil every time... After drilling was completed in 1955, the No.55 well was closed by the bourgeois "authorities" after only three days of trial-extraction. (During the Cultural Revolution) the No.2 oil-extracting team resolved to reopen the well... After they had taken technical measures, the No.55 well became the most productive in the whole team ... The (Shihyukou) field as a whole fulfilled the 1969 production plan for crude oil 104 days ahead of schedule..." (1). "Workers of the Yilmen oilfields... have made tremendous improvements in extraction from thirty-year-old wells which bourgeois technical "authorities" described as useless (and closed)... As a result output has gone up steadily year by year. The variety of oil products has nearly doubled since the Cultural Revolution... The output of crude oil was 17% at the end of August 1970 above that of the same period last year." (2). By the end of 1972, the nmen oilfield had fulfilled 71.1% of the oil production targets and 83% of the drilling targets (3). (1) NCNA Mar 22, 1970 (2) NCNA Oct 17, 1970 (3) NCNA Sep 28, 1972

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In the Shihyukou oilfield, the output of crude oil was doubled over that of 1965 (1). In the Yumen oilfields 140 closed wells were revised, e.g. by pumping water into the oil-bearing layers to increase the pressure (2). By the end of July 1974, YUmen had fulfilled 62% of the production plans for that year, corresponding to a 6% increase in output over the same period in 1973 (3). In 1973 the output of crude had been ten times higher than before the foundation of the People's Republic (4). It again rose in 1974 (5), and was estimated to amount to more than 1 million tons throughout the year (6). The total of workers in the whole Ytimen oilfield was about 20,000 (7). Ir January 1975 crude oil production had risen by 4.6% over that in January 1974; in February 1975 the increase was 5.48% (8). In November 1975 the growth rate of crude production over the comparable period in 1974

was 6.4% (9). Yiimen - Crude Oil Production YEAR

YOMEN, TOTAL

1

SHIHYUKOU only

1956 19571965 1966 1967 1968 1969 1970

0.637

1971 1972 1973 1974 1975

100% more than in 1965 No details known ten times higher than before 'LiberationT1949) Jan-Jul: 6% more than in same period 1973 Jan-Nov: 6.4% more than in same period 1974

•

No

details

No

details

No

details

47% more than in 1965

known I known 71.4% more than in 1965 known

17% more than in 1969* 12.3% more than in 1969 "

referredto January•Augutt

** referred to January-March

(1) NCNA Oct 21, 1971 (2) NCNA Dec 26, 1972 (3) NCNA Sep 10, 1974 (4)Lanchou Radio, Sep 30, 1974 (5) NCNA Jan 2, 1975 (6) Issues and Studies, April 1975, p.70 (7) as before (8) Lanchou Radio, Apr 13, 1975 (9) Lanchou Radio Dec 16, 1975

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Part III

THE REFINERIES

Chinchou

11.1

In Chinchou, Liaoning province, oil had already been extracted by the Japanese (1). The Chinese projects carried out after 1949 probably served for the expansion of the Japanese plants. In the summer of 1958 it was announced that a refinery was to be built to process oil shale. Specialists for the construction of the refinery were sent to Chinchou by the No.1 Northeast China Refinery at Fushun (2). A report on the discovery of large new oil deposits in the Chinchou region in 1962 (3) suggests that the refinery may have been expanded in the meantime. The next two references to the Chinchou refinery are from 1969. It was announced that in January and February the production of petrol and diesel oil rose appreciably (4) and that the No.6 petroleum refinery of Chinchou had overfulfilled its production target for the first six months of 1969, 42 days ahead of schedule (5). It is believed that this refinery is comparatively small having an annual capacity of either 10,000 tons(6) or 115,000 tons (7). In fact,there are two refineries (Nos.5 and 6) in Chinchou. The Chinese reports never specified to which of the two they were referring. It is assumed that in 1972 the expanded ex-Japanese plant had a capacity of 1 million tons per annum, while a more recent refinery had a capacity of 0.15 million tons per annum.

Chintud The No.4 Refinery at Chinhsi, Liaoning province, was built before 1949 (8). The announcement that in 1972 it had quadrupled its output compared with 1971 (9) suggests that by that time the plant had been expanded, resulting in a marked rise in production. The annual capacity in 1968 was 0.7 million tons (10), the estimate for 1972 was 3.2 million tons (11). (1) ChNA Mar 14, 1958, p.1 (2) NCNA Jun 30, 1958 (3) Kyodo Feb 15, 1964 (4) Shenyang Radio, Mar 26, 1969 (5) Shenyang Radio, June 28, 1969 (6) Die Energiewirtschaft der VR China, loc.cit., p.62 (7) WHChM Jan 15, 1974 (8) Issues and Studies, April 1975, p.68 (9) NCNA Dec 31, 1972 (10) Die Energiewirtschaft der VR China, loc.cit., p.62 (11) WHChM Jan 15, 1974

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Fushun 41t1 In Fushun, Liaoning province, there are three refineries which process oil shale. No.1 Refinery was built by the Japanese in 1928. With its capacity of 550.000 tons annually, it was the world's largest oil shale refinery in 1945(1). During the war wide parts of it were destroyed (2), and after the war it was dismantled by the Soviets (3) to be eventually rebuilt by the Chinese in the early 1950s. In 1964, 7,000 persons worked in the refinery, of whom 10% were women working in three shifts. In the spring of 1964 more than forty varieties of oil products were produced, the principal ones being kerosene, diesel oil, paraffin and coke from oil residue. (In 1963) the refinery produced 300,000 tons of crude, i.e. five times more than in 1949. The output of diesel oil was 190,000 tons (twentyeight times more than in 1949) and of kerosene, 99,000 tons (fifty-five times more than in 1949) (4). An announcement according to which the refinery produced 675,000 tons as early as 1957 (5) must be doubted. In 1963 the growth rates were 5% for crude oil and 20% for diesel oil. For 1964 it was planned to expand production so as to reach a "far higher" output than in the preceding year (6). While the amount of oil shale required for the production of one ton of oil was 31 tons in 1949, it had fallen to 25 tons by 1964 (7). Apparently this favourable result was only attained in or after 1963. In 1958 it was still announced that the oil content of the shale had fallen and moreover, that, due to the delivery of inadequate quantities of oil shale to the refinery, the annual output had been only 430,000 tons, so that o v 64% of the plant's capacity had been utilized (8). Probably the supply situation improved during the next years, a new open-air oil shale mine having been put into operation in 1958. In 1968 the No.1 petroleum refinery fulfilled its production targets for its eight principal products between 14 and 50 days ahead of schedule (9). The refinery is China's largest petroleum synthesizing plant (10), and is one of three forty-year-old refineries in Fushun municipality (11). In 1970 the refinery workers started operating a distilling plant which worked under normal (1) Issues and Studies, April 1975, p.70 (2) FEER May 21, 1964 (3) ChiB 11/63 (4) FEER May 21, 1964 (5) KMJP Jul 6, 1957 (6) FEER May 21, 1964 (7) as before (8) KMJP Sep 7, 1959 (9) Shenyang Radio Dec 21, 1968 (10) NCNA Apr 18, 1970 (11) NCNA Jun 29, 1972

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atmospheric pressure. Its daily capacity was 1,700 tons so that the processing capacity rose by 47%. The additional capacity corresponds to the performance of a new refinery with an annual output of 300,000 tons (1). Between 1970 and 1973 the refinery overfulfilled its annual production plan year by year. As compared with the time preceding the Cultural Revolution(1965) , the crude oil processing capacity rose by 200%. The refinery workers repaired a distilling plant with an annual capacity of 2 million tons. Since 1970 the refinery has introduced 440 technical innovations and rebuilt seven major plants. Between January and October 1973 the output quota for petrol, paraffin, diesel oil and lubricating oil was only 3.1% higher than in the corresponding time in 1972. At the same time the production value of 10,000 tons of processed oil was 191,000 yttan higher than in the same period of 1972 (2). In 1973 the refining capacity was three times higher than in 1964. Originally the refinery which had been built by the Japanese in the 1930s included a normal and low-pressure cracking tower distillery which carried out the refining process in a single operation, with an annual capacity of 300,000 tons. Following several improvements the refining capacity had doubled by the beginning of the Cultural Revolution (3). An attempt in 1964 to expand the refinery still further seems to have failed for political reasons: "The refinery refused in 1964 to make further improvements though the government had placed nearly 2 million yuan at its disposal for this purpose" (4). It was not until 1970 that the workers made improvements on the normal and low-pressure distillery. The key to the rise in the refinery's capacity was the increase in the capacity of the heating furnace. Owing to the improvements then made, the refining capacity of the plant rose by 47% and reached 2 million tons per annum (5). In the gigantic refining plant where hydrocarbon vapours are obtained, no less than 2 tons of heating oil and major quantities of water, power and steam were required for the preparation of only 1 ton of hydrocarbon vapours. The production costs exceeded the value of the output. Within six months, the workers succeeded in changing the construction of the plant in such a way that the annual refining capacity for steam-treated (1) NCNA Jun 29, 1972 (2) NCNA Dec 2, 1973 (3) NCNA Mar 3, 1974 (4) as before (5) as before

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hydx'ocarbons rose to 2 million tons. The old foreign boilers from the 1930s had poor heating power and steam production. Within two months the boilers were so improved that the steam production per hour was 2.5 times higher than originally envisaged, the heat performance rising from 87% to 93%. In 1970 the workers of the refinery were ordered to build a new plant with an annual capacity of 15,000 t of special lubricants for which they were given 10 million ytian and 1,500 tons of rolled steel. The large plant was erected and put into operation within six months (1). No.2 Refinery had also been built by the Japanese (2). In 1955 its annual capacity was 202,000 tons (3). The total value of the output of the three Fushun refineries (Nos.1-3) in 1971 was 33% higher than in 1969. During JanuaryMay 1972 it was 21.4% higher than in the corresponding period in 1971 (4). In 1972 a shale oil processing plant was modernized and as a result the processing capacity trebled (5).The annual capacity was estimated at 320,000 tons for 1972 (6). No.3 Refinery had also been built by the Japanese (7). Structures to expand the plant were erected in cooperation with workers from the No.1 refinery, and the annual capacity was expected to rise to 100,000 tons in 1958 (8). In 1969 the No.3 refinery fulfilled its production targets 17 days ahead of schedule (9). The annual capacity for 1972 was estimated at 250,000 tons (10).

(1) NCNA Mar 3, 1974 (2) NCNA Jun 29, 1972 (3) KMJP Sep 6, 1957 (4) NCNA Jun 29, 1972 (5) as before (6) WHChM Jan 15, 1974 (7) NCNA Jun 29, 1972 (8) NCNA Jun 30, 1958 (9) Snenyang Radio, Dec 30, 1969 (10) WHChM Jan 15, 1974

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Karamai

ti A

Lumhou

4.1.1

f ;-In 1968 the plans for crude oil refining were fulfilled (1). Between January and August 1969 the targets for oil refining were overfulfilled (2). During the first quarter of 1969 the production plans for lubricating oil were fulfilled 25 days ahead of schedule (3). In 1970 the No.1 Refinery fulfilled the plans for crude processing ahead of schedule (4). In the first six months of 1971 the crude oil processing targets were reached (5). Between January and September 1971 the quantity of oil refined was 8.9% higher than in the corresponding period in 1970 (6). A number of oil products produced by the refinery reached world standard (7). The capacity of the refinery is estimated at 0.6 million tons per year (8).

The Lanchou refinery in Kansu province was China's largest and most modern refinery in 1960 (9). Construction had begun in 1956. It is one of the 141 large industrial projects erected with Soviet assistance under the agreements of 1953 and 1954 (10). Twentyeight groups of Soviet experts and technicians took part in the first stage of construction (11). One of their tasks was to train Chinese specialists. They also wrote a large quantity of technical manuals for their Chinese colleagues. The Soviet group of experts was headed by M.D.Jegolov (12). The first section of the refinery which is situated in the Western outskirts of Lanchou city, on the righthand border of the Huangho,river (13), was completed in October 1958, 15 months ahead of schedule (14) to (1) NCNA Dec 28, 1968 (2) Urumchi Radio, Sep 25, 1969 (3) Urumchi R., Mar 21, 1969 (4) Urumchi R. Nov 30, 1970 (5) Urumchi R., Jun 21, 1971 (6) Urumchi R., Oct 28, 1971 (7) Urumchi R. Mar 13, 1972 (8) EWi VRCh and WHChM Jan 15, 1974 (9) PR Jan 12, 1960, p.13 (10) FEER Jan 19, 1961, p.111(11) ChNA Feb 2, 1962, p.6, says that 90 Soviet engineers took part in construction (12) CR XI/59 (13) ChiB 11/59 (14) CR XI/59

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start trial production. By the end of 1958 the production was expected to amount to several tens of thousands of tons. The plant, which is highly mechanized and automatically controlled in many parts, is largely (85%) (1) equipped with Soviet machinery (2). The refinery was completed in November 1959 (3) and the official inauguration took place on January 20, 1960. The ceremony was attended by several Soviet representatives, among them S.J.Fomin, Counsellor to the USSR's Peking Embassy (4). The first stage of construction included sixteen plants, among them a cracking plant for the preparation of high-grade aircraft fuel (built at a cost of about US$ 28 million, a propane plant for the preparation of high-quality lubricating oils and a plant for the processing of natural gas (5). In 1959 the length of the pipes laid on the site of the refinery totalled 1,380km. In one place there are no less than seventy parallel pipelines (6). The Soviet Union was not only responsible for the planning and construction of the refinery but also supplied and installed the modern, highly mechanized and automated processing plant (7). A mere two months after the refinery had gone into operation, plans were made for its expansion on a large scale (8). In 1960 the refinery produced more than 100 by-products in addition to top-quality fuel and lubricating oils (9). The crude processed in the refinery in that year came mainly from Mmen, Kansu province, but also from Karamai, Sinkiang province (10), and the Tsaidam Basin, Chinghai province (11). In 1963 ten new plants were under construction within the framework of an expansion project. They had been designed exclusively by Chinese specialists, and were to be equipped with Chinese-made machinery (12). While in 1958 the annual capacity of the refinery had only been 1 million tons (13), its performance was increased to 2-3 million tons in 1962 (14). In autumn 1963 it was announced that the refinery had started trial production for six new petroleum products. At the same time the plants of the refinery were extended in accordance with ten new projects for which all the machinery and other equipment came from China (15). Between January and August 1963 the refinery's (1) FEER Jan 19, 1961 (2) JMJP Oct 9, 1958 (3) NCNA Nov 10, 1959 (4) (4) NCNA Jan 21, 1960 (5) FEER Jan 19, 1961 p.110 (6) CR XI/59 (7) FEER Sep 23, 1965 (8) NCNA Apr 10, 1960 (9) FEER Jan 19, 1961 p.110 (10) PR Jan 12, 1960 p.13 (11)ChiB 11/59 (12) NCNA Sep 25, 1963 (13) FEER Nov 19, 1959 (14) RAND p.63 (15) NCNA Sep 25, 1963

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output of petrol, kerosene and lubricating and other oils was 24,000 tons higher than envisaged in the plan. At the same time the production costs were cut to 3.09% below the planned level (1). The quantity of crude processed in the refinery falls considerably during the cold season (2) and this period is therefore generally utilized for repair work (3). The principal significance of the Lanchou refinery is that it has enabled China to process her crude oil closer to the oil fields of Karamai, Yttmen,and Tsaidam. Before the Lanchou refinery was completed, the crude oil had to be transported to the Ltita and Shanghai refineries over thousands of kilometres, with transport costs as high as about 33 yilan per ton, nearly half the production cost at the oilfield (4). On completion of the refinery, it was also possible for the first time to prepare aircraft fuel and special lubricating oils in China (5). "The Lanchou refinery has developed from an enterprise designed and equipped by foreigners in which only a small number of products could be prepared, to a refinery in the grand Chinese style which is in a position to make a great variety of first-quality oil products. It was originally equipped to produce a single variety only, but it can now (1965) produce three varieties simultaneously. The variety of finished products has also been increased from sixteen to many times that number. Instead of the ordinary oil products originally envisaged, the refinery can now produce high-grade oil products for industry, agriculture and other consumers. The factory which used to serve for oil processing is now a large combine capable of refining oil, preparing chemical products, making machinery and instruments, and providing scientists with research work" (6). Almost all the chief engineers, technicians and skilled workers now working in the Lanchou refinery have come from YUmen, China's oldest oil centre (7). In 1965 the production plans for the principal products - petrol, kerosene, diesel oil, and lubricating oil - were fulfilled 20 days ahead of schedule (8). During the same year six new installations went into operation which raised the quality of the old products and permitted the production of new ones. At the same time production increased considerably. One of the (1) Lanchou Radio, Sep 23, 1963 (2) ChNA Feb 2, 1962 p. 6 (3) JMJP Dec 28, 1960 (4) SYKYTH p.38 (5) RAND p.6 (6) Sian Radio, Dec 16, 1965 (7) NCNA Mar 9, 1964 (8) Lanchou Radio, Dec 22, 1965

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new installations serving for the removal of impurities from crude oil has helped to improve the quality of lubricating oil and extend its life-span. New oil tanks were also built (1). In 1966 the refinery succeeded in preparing a liquid sealing gland. When piping joints, electric cables, etc. are coated with even a thin film of this gland, a tightsealing effect is now assured (2). During 1961-6 the refinery, which had gone into operation in 1959, overfulfilled its production plans year after year (3). From the viewpoint of oil technology standards, Lanchou is one of the world's most modern refineries (4). A urea-dewaxing installation, designed and built from start to finish by Chinese technicians, went into operation during the "Great Leap Forward" and has since produced a special oil remarkable for its low solidifying point (5). During the time between January and August 1966 the output of refined oil was higher than in any other year since the refinery started operation (6). By 1969 the refinery had introduced thirty technological innovations, including a high-grade anticorrosive agent, cable oil and a novel type of catalyst, opening up new possibilities of preparing high-quality petrol (7). In 1971 it produced more than 160 varieties of oil products. It was envisaged at that time that their number would shortly be increased to 300 (8). In January-May 1972 it overfulfilled its production targets for petrol, diesel oil, paraffin and lubricating oil by 19,000 tons (9). In 1972 the amount of crude oil refined fell by 3.7%, as compared with 1971; even so the profit rose by 8.6% (10). Owing to technical innovations, the refining capacity was doubled (probably compared with before the Cultural Revolution, i.e.1965) (11). Between 1962 and 1972 there was an eightfold increase in refining capacity (12). RAND, p.63, (see above) estimated that the refining capacity would amount to 2-3 million tons in 1962. An eightfold increase of this figure would mean an annual capacity of 20 million tons - which seems implausible, because Sinkiang, Chinghai and Kansu, whose crude output is exclusively processed in the Lanchou refinery, do not produce even half this amount of crude oil. (1) NCNA Dec 30, 1965 (2) NCNA Jan 8, 1966 (3) Peking Radio, Mar 16, 1966 (4) NCNA Mar 22, 1966 (5) NCNA Jul 9 1966 (6) NCNA Sep 13, 1966 (7) NCNA Dec 24, 1969 (8) KCNA Nov 22, 1971 (9) Lanchou Radio Jul 4, 1972 (10) Lanchou Radio Mar 16, 1973 (11) NCNA Jan 1, 1971 (12) NCNA Sep 26, 1972

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The Lanchou refinery has installations for catalytic cracking, coking, the preparation of lubricants, fractionation, thermal cracking, and polymerization (1). The 1968 capacity was estimated at 2.3 million tons per annum (2) and that for 1972 at 3.3 million tons (3). The amount of crude oil processed in 1975 at the Lanchou refinery was 48% higher than that of 1974 (4).

Lenghu On August 27, 1959, a refinery with an annual capacity of 300,000 tons went into operation in Lenghu, Chinghai province, one of the main oilfields in the Tsaidam Basin (5). This announcement contradicts another source according to which refineries with a total processing capacity of 300,000 tons existed in that region in 1960 (6). The last reference appears more plausible, because another source states that a refinery with an annual capacity of 120,000 tons had been built at Lenghu (7). It is assumed that a number of relatively small refineries exist in the Lenghu region among which that with a refining capacity of 120,000 tons is the largest. The next announcement, made ten years later, states that there is a refinery at Lenghu which had been designed and built by the local workers (8). The total refining capacity of Lenghu was estimated at about 500,000 tons in 1974 (9).

(1) Issues and Studies, April 1975, p.68f. (2) EWiVRCh (3) WHChM Jan 15, 1974 (4) NCNA Dec 30, 1975 (5) JMJP Aug 31, 1959 (6) NCNA Jan 20, 1960 (7) ChNA Feb 2, 1962 p.6 (8) PR May 28, 1971 (9) Issues and Studies, April 1975 p.70

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Luta The No.7 refinery in Luta (Lushun-Talien) in Liaoning province, which had an annual capacity of about 500,000 tons in 1960 (1), had been built by the Japanese during the 1930s. Before the completion of the Lanchou refinery, a portion of the crude oil from nmen and minor amounts of imported crude oil had been processed in Mita (2). The principal product of this refinery is light diesel oil of low freezing point which is produced especially for use in North China. Between January and August 1962, the refinery processed a surplus of crude oil over the planned target that would suffice to supply 1,300 tractors with fuel for one year (3). Owing to the adoption of new processing methods, the workers of the No.3 Hall of the refinery in 1962 (?) increased their daily output of diesel oil by 180 tons (4), equal to an annual surplus of 65,000 tons. In cooperation with the Institute of Physical Chemistry of the Academy of Sciences the refinery began early in 1964 to produce a number of hydrogenized products, such as sorbitol, isotrotanol and methyl furane. All these substances, which are by-products of the hydrogenation of glucose, acetone and furfurol, are used in the chemical industry. Recently the refinery also took up the production of dyestuffs for synthetic fibres (5). In 1969 the refinery fulfilled its production plans 60 days ahead of schedule, and then attained the highest annual output since it first went into operation more than thirty years ago (6). The mechanization of the refinery seems to have been continued in 1969, because the output rose despite a 40% reduction in the number of workers employed, and surpassed the monthly record of 1965 by 35% in May and June 1970. At the same time the costs of production were reduced by 37%, as compared with the time preceding the Cultural Revolution (7). In 1972 the output was 72% higher than in 1970. The refinery's working process was completely renovated and the amount of crude oil refined rose from 1.2 million tons in 1971 to 3.5 million tons in 1972 (8). (1) RAND p.63 (2) RAND p.43 (3) NCNA Sep 28, 1962 (4) CR X/63 (5) NCNA Feb 26, 1964 (6) Shenyang Radio, Jan 22, 1969 (7) NCNA Jul 21, 1970 (8) NCNA Dec 31, 1972

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This rise was due to the construction of large extensions in 1970 which also raised the annual processing capacity to 2 million tons (1). The daily capacity of (each ?) cracking unit was increased to 1,400 tons. In July 1972 the refinery's production work was interrupted by a typhoon but all the nine plants of the refinery resumed work within 48 hours (2). Between January and May 1973 the refinery overfulfilled its production plans for petrol, paraffin, diesel oil, lubricating oil, and paraffin wax (3).

Mourning

The only reference to the existence of a refinery in Mourning, Kuangtung province, was made by an American source. According to the announcement concerned, the annual capacity (actual or planned) in 1960 was 1 million tons (4), marking the conclusion of the first stage of development (5). We doubt that this information is correct, because in 1959 it had been planned to process 1..5 million tons of oil shale (6), the yield of which would be amere fraction of the above amount. In any case the annual capacity of the refinery was estimated at 1 million tons in 1972 (7).

(1) Peking Radio, Aug 11, 1973 (2) as before (3) as before (4) RAND p.63 (5) PEER, Jan 19, 1961 (6) NCNA Feb 21, 1959 (7) WHChM, Jan 15, 19.74

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NanchIng1. 0 On July 1, 1958, the construction of a refinery began (1) and it was envisaged that operations would start in 1959 (2). The planned annual capacity was 900,000 tons (3) but it is believed that no more than 300,000 tons can be produced (4).

Nanking

A 1:

This refinery was planned, with a capacity of 3 million tons, in 1958. The plans envisaged that the crude produced in Central Szechuan (since 1958) should be processed in that refinery. The plan also made provision for the preparation of high-grade aircraft fuel, petrol and kerosene, as well as lubricating oils and greases. In a branch factory connected with the principal plant, it was intended to prepare hydrogen, methane gas, ethylene, butylene, synthetic rubber, ammonia, sulphuric acid, and the like (5). The refinery was completed after 1960 (6). Its annual capacity is estimated at 1 million tons (7).

(1) JMJP Jul 4, 1958 (2) CR XI/58 (3) Issues and Studies, April 1975, p.70 (4) RAND p.63; WHChM Jan 15, 1974 (5) NCNA Jun 23, 1958 (6) Issues and Studies, April 1975, p.68 (7) WHChM Jan 15, 1974

Peking

ith

The construction of the petrochemical factory began in 1968. By October 1969 the installed capacity of the Tungfanghung refinery had reached 2.5 million tons per annum (1). By 1973 the performance had risen to an estimated 3 million tons (2) or 5 million tons (3). The plant has installations for catalytic cracking (4). The petrochemical complex, which covers an area of more than 30 square kilometres, is the biggest project undertaken in Peking since the foundation of the People's Republic. So far completed are eight plants and 18 sets of installations, auxiliary projects, such as railway sub-lines, polluted water-treatment devices and long distance oil and water pipelines plus welfare facilities with a total floor space of 300,000 square metres. In the Tungfanghung oil refinery belonging to the works crude oil processing capacity is now 80% more than designed capacity, the variety of products having increased from six to fifty-two (5).

Shanghai

The Shanghai refinery was built in 1950 (6), and in 1953 it was extended and modernized so that its annual capacity rose to eleven times that of 1950. An extension project completed about 1957 doubled the capacity compared with 1953 (7). In mid-1958 it was announced that another extension project was under way to multiply the capacity by the end of September 1958. The extension project was in connection with the exploration of new oilfields in Central Szechuan (8). In 1962 it was referred 'to as being among the most important refineries in China. In 1962, 140 of its engineers and technicians came from the ranks of the working masses (9)

(1) JMJP Mar 28, 1972 (2) WHChM, Jan 15, 1974 (3) Yoshio Koide, "China's Oil Production" in Pacific Community, April 1974 (4)WHChM Jan 15, 1974 (5) NCNA Oct 11, 1975 (6) NCNA Apr 22, 1971 (7) CR Aug 1, 1957 (8) NCNA Jul 21, 1958 (9) NCNA Apr 19, 1962

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In 1965, following a series of tests, the refinery workers succeeded in preparing a motor oil which remained liquid at temperatutes as low as -45°Centigrade (1). In 1970, the refining capacity of the Shanghai refinery had risen fourfold compared with 1966, and fifty times compared with 1950; and the variety of oil products produced by it doubled between 1966 and 1970. The capacity of the normal pressure distillery increased by two-thirds between 1967 and 1970 (2). In the first half of 1972 a huge plant for catalytic cracking went into operation to prepare not only huge amounts of petrol and diesel oil but also considerable quantities of petrol gas for use in the petrochemical industry(3)• At the beginning of 1974, the refining capacity was three times greater than in 1965 and twenty-six times greater than in 1950. As compared with 1965, the variety of oil products had increased tenfold and production by then included many products for use in industry, agriculture and in the armed forces, which had not been produced in China before (4). The fact that the Shanghai refinery processes imported as well as home-produced crude, may be concluded from the announcement that oil had been pumped to the refinery from two Chinese tankers, each carrying 100,000 tons, which had moored in the Huangpu river (5). In 1973 a huge new highly automated catalytic cracking plant went into operation (6). The annual capacity of the refinery was estimated at 2 million tons in 1968 (7) and 3.5 million tons in 1972 (8).

(1) NCNA Jan 8, 1966 (2) NCNA Apr 22, 1971 (3) Shanghai Radio, Sep 15, 1972 (4) Peking Radio, April 26, 1974 (5) as before (6) as before (7) EWiVRCh (8) WHChM Jan 15, 1974

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Shengli itIL 4d The refinery went into operation in 1967 and processed about 3.5 million tons of crude in 1974, when another refinery with an annual capacity of 2.5 million tons was expected soon to be completed (1). The Shengli refinery is located near Hsintien ( ) on the Tsingtao-Tsinan railway, and is connected with the oilfields by pipelines (2). The refining capacity of the petrochemical factory was raised to 0.6 million tons during the first six months of 1974 (3). The oil refinery of the Shengli general petrochemical works produces petroleum, kerosene, diesel oil, pitch and various oil products, as well as two dozen chemicals, including acrylonitrile and benzene. Construction of the works began in April 1966, and the first oil refining unit was installed 18 months later. Installation of the second refining unit began in February 1974 and was completed in March 1975, when it was immediately put into production (4).

Taching

There are apparently several refineries in Taching. FEER of February 24, 1966, quotes Hsinhua as saying that three new types of refinery installations of high standard had been built in the previous two years. In January-August 1966 the production of refined oil was 88.3% higher than in the corresponding period of 1965 (5) During the Cultural Revolution the refinery workers improved the technical process of an important refinery installation within an unusually short period, thus increasing its capacity by 150%. The distilling towers of the refineries weigh between 100 and 200 tons and Some are more than 40m. high (6). In 1968 the monthly oil processing plans were fulfilled or overfulfilled (1)Kyodo, Feb 24, 1975 cit. SWB/W 816, Mar 5, 1975 (2)Issues and Studies, April 1975, p.70f. (3) NCNA Aug 10, 1974 (4) NCNA Dec 19, 1975 (5) NCNA Sep 27, 1966 (6) NCNA Oct 12, 1966

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(1) and the production plans for oil refining were fulfilled ten days ahead of schedule (2). In the same year more than thirty oil products and by-products, including high-grade kerosene for use in aircraft, were prepared (3). The output of processed petroleum rose by 11% in 1969 compared with 1968 (4). In 1969 refining capacity doubled as compared with the time preceding the Cultural Revolution, i.e. 1965 (5). In JanuaryMay 1971, the output of refined oil was 4.2% higher than in the same period of 1970 (6). During the second half of 1970 the introduction of technical innovations allowed the doubling of the original capacity of the refinery, which had been built in one year in the early days of Taching's development (7). The production targets for petrol, paraffin, diesel oil and other products were fulfilled thirteen days ahead of schedule in 1971 (8). Between January and August 1972 the output of paraffin, petrol, coke, benzene, ammonium nitrate, and synthetic ammonia was higher than in the same period in 1971 (9). The production plans for the processing of crude oil were fulfilled seven days ahead of schedule in 1972(10). The amount of oil refined in 1972 was 5% higher than in 1971 (11). In 1973 the production of refined oil and petrochemical products rose over that of 1972 (12). Between January and April 1974 the production of refined oil and synthetic ammonia rose as compared with the corresponding time in 1973 (13). The Taching refinery started production in 1966 (14). By April 1974 it had almost doubled its originally planned capacity (15), In January-March 1974 the quantity of oil refined rose by 16% (16) or by 28% (1/), compared with the same period in 1973. In the same year the output of oil refined by August had increased 15% compared with the corresponding period in 1973 (18). The refinery has plants for catalytic cracking, coking, distillation, and thermal cracking (19).

(1) NCNA Oct 15, 1968 (2) NCNA Jan 2, 1969 (3) NCNA May 10, 1969 (4) NCNA Feb 10, 1970 (5) NCNA Oct 3, 1970 (6) NCNA Jun 20, 1971 (7) CR 6/71 (8) NCNA Jan 2, 1972 (9) NCNA Sep 20, 1972 (10) NCNA Jan 1, 1973 (11) NCNA Dec 26, 1972 (12) NCNA Jan 4, 1974 (13) NCNA Apr 30, 1974 (14) as before (15) as before (16) NCNA Apr 6, 1974 (17) NCNA Apr 21, 1974 (18) Sep 22, 1974 (19) Issues and Studies, April 1975, p.68

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Tientsin

A

The first big petrochemical works was set up in 1970. It covers oil refining, manufacture of oil products and rubber, meter and instrument making and altogether has ten workshops. The work took less than five years to build and its oil-refining capacity is more than three times the designed capacity (1).

Tushantzu 14; tJ The Tushantzu refinery in the Sinkiang Autonomous Region went into operation in 1958 (2). From 1950 onwards it had been on the list of joint Chinese-Soviet industrial ventures in Sinkiang, and in 1955 it was transferred to the sole control of the Chinese authorities. In 1954 the construction of a new fully automatic combine was undertaken. The equipment was the latest then available in the Soviet Union (3). In 1958 a 147-km.-long pipeline was completed to connect the oilfield of Karamai with the small refinery at Tushantzu (4). This reduced the transport costs for one ton of crude from 44 yilan to 4 yUan (5). The pipeline is capable of carrying 500,000 tons of crude every year (6). Oil tanks with a storage capacity of between 5,000 and 10,000 tons were constructed at the pipeline's pumping stations (7). An extension project was put in hand immediately after the completion of the refinery (8). In 1962 the refinery produced "tens of thousands of tons" of petrol and diesel oil. In the same year lubricating oils for agricultural machinery were produced for the first time (9).

(1) NCNA Oct 16, 1975 (2) RAND 0.9 (3) ChNA Mar 14, 1958 p.4 (4) FEER Oct 14, 1965 (5) RAND p.33 (6) FEER Jan 19, 1961 (7) FEER Aug 27, 1959 (8) as before (9) Urumchi Radio, Jan 31, 1963

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Wad

■RI

Between 1958 and 1974 there was only one reference to the refinery at Wuhsi, Kiangsu province. This was the announcement in 1965 that a new multipurpose lubricating oil and a high-grade special oil for lubrication had been included in the production programme. These types of oil are chiefly intended to ensure the normal functioning of machines and to prevent damage to their high-precision parts a8 low temperatures. These oils do not solidify at -30 C nor do they leak or become black at temperatures as high as 120°C. (1). This refinery is probably a small-scale enterprise.

Yuchitudzu In spring 1959 a refinery with an annual capacity of 100,000 tons (?) went into operation near Yuchilantzu in the Tsaidam Basin, Chinghai province (2). It has never again been mentioned in the Chinese press. In 1972 its capacity, together with that of Lenghu, was estimated at 0.5 million tons per year (3).

(1) Nanking Radio, Jan 25, 1966 (2) NCNA Apr 2, 1959 (3) WHChM Jan 14, 1974

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Yfimen

Two years after the exploration of the nmen oilfield in 1936, the construction of a refinery was undertaken. On completion its annual capacity was 100,000 tons (1). In 1958 the refinery, then one of China's most modern plants, produced thirty varieties of oil products, including petrol, kerosene, paraffin and fuel oil. Twenty of these thirty varieties were produced in China for the first time (2). By 1958 the Yilmen refinery had trained a large number of technicians and specialists, more than 6,000 of whom were sent to work in the refineries at Lanchou, Sinkiang, Dairen, Shanghai and in the Tsaidam Basin (3). Between January and July 1961 the quality of more than twenty products, including petrol and diesel oil, was improved. In the same period the installations of the refinery were carefully inspected by experienced technicians (4). In summer 1961 the refinery made plans with the object of improving the system of passing on experience gained by old workers to their young colleagues. Between 1958 and mid-1961 the number of experienced older workers taking part in new projects totalled 1,300 and young workers later had to take their place (5). In 1962 it was announced that the planned targets of the refinery had been overfulfilled in all years between 1958 and 1961. In 1961 the refinery instituted projects for the erection of new administrative buildings,and in connection with this announcement, the Chinese press mentioned for the first time that use was being made of foreign experience (6). Between 1958 and 1961 the number of different products of the refinery increased from forty-six to ninetyone (7). In January-May 1962 the production of by-products also increased; for example the production of medicinal petrolatum rose to 700 t8). In October 1963 the monthly production plans for ten principal products, including petrol, kerosene, diesel oil, and lubricating oil were overfulfilled by between 4.1 and 50% (8). In 1968 the refining targets were reached between twenty-one and sixty days ahead of schedule (9). (1) Issues and Studies, April 1975, p.69 (2) CR X/63 (3) ChNA Mar 14, 1958, p.3 (4) NCNA Aug 16, 1961 (5) JMJP Jul 20, 1961 (6) NCNA May 15, 1962 (?) NCNA May 15, 1962 and CR X/63 (8)Peking Radio, June 24, 1962 (9) Lanchou Radio, Nov 8, 1963

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In January 1970 the petrol, kerosene, lubricating oils and diesel oil produced met the quality standards in full, and consumption of coal and electricity was appreciably reduced (1). The variety of oil products produced almost doubled as compared with that before the Cultural Revolution (2). In the spring of 1972 a new refining plant comprising 140 parts, the heaviest weighing 164 tons, went into operation (3). About 1964 a 880-km.-long pipeline from YOmen to the refinery at Lanchou in Kansu province was completed(4). Its construction called for heavy investment and suggests that the refinery of Lanchou - then and probably still now, the most modern in China - was the most important refining centre for the oilfield of Mmen. This implies that the YOmen refinery is mediumsized. Its annual capacity was estimated at 1.1 million tons in 1972 (5).

(1) NCNA Feb 9, 1970 (2) NCNA Oct 17, 1970 (3) Lanchou Radio, May 26, 1972 and NCNA Dec 26, 1972 (4) FEER, Oct 14, 1965 (5) WHChM Jan 15, 1974

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Part IV LEADING CADRES IN THE OIL INDUSTRY

For those who want to understand all aspects of China's oil industry, it is also essential to know the responsible cadres of the ministry in charge of this industry. They are:Minister: Vice Ministers:

K- ang Shih-en Chang Chen Chang Wen-pin Li Kuo-tsai Li Yi-lin Sun Ching-wen Sun Hsiao-feng T'ao Tao

Below are given short biographies of the above cadres (as of August 1976). K'ang Shill-en

go

Present post: Minister for the Oil and Chemical Industries In 1937 K'ang, then a student, joined the 8th Route Army formed by the Communist combat units as a result of reorganization after the United Front with the Kuomintang forces had broken up. 1950, Mar: Identified as a member of the Finance and Economy Committee in the North West China Military and Administrative Council 1952, Jan: Identified as director of the Petroleum Administrative Bureau in the North West China Military and Administrative Council Aug: In the course of the "Three-Anti-Campaign" K'ang was criticized as a bourgeois individualist 1953, Jul: Appointed director of the Petroleum Administration Bureau in the Ministry for the Fuel Industry (till July 1955) 1955, Aug: Appointed assistant-minister in the Petroleum Ministry (till Oct, 1956)

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1955, Oct: Leader of an oil delegation to the Soviet Union 1956, Oct: Appointed deputy petroleum minister (till May 1967) 1964, Sep: Elected deputy of the Third National People's Congress for Heilungkiang Province 1966, Nov: During the Cultural Revolution K'ang was attacked as a partisan of Liu Shao-ch'i and Teng Hsiao-p'ing 1967, May: Last appearance in the Cultural Revolution 1971, May: First appearance after the Cultural Revolution 1973, Sep: Identified as a cadre in the Ministry for the Fuel and Chemical Industries (till Jan. 1975) 1975, Jan: Appointed Minister for the Oil and Chemical Industries Chang Chen

311.-

Present post: Vice-Minister for the Oil and Chemical Industries 1954, Aug. Appointed director of the Administrative Bureau for the Chemical Industry in the Ministry for the Heavy Industries 1956, Jul: Elected vice-chairman of the Preparatory Committee for the foundation of the Society for the Chemical Industry 1957, Mar: Appointed vice-minister in the Petroleum Ministry 1964 : Identified as vice-chairman of the Society for the Chemical Industry Dec: Leader of an economic and technical delegation to Romania 1965, Oct: Identified as chairman of the Chinese section of the Sino-Korean Committee for Scientific and Technical Cooperation; Leader of a scientific and technical delegation to Korea 1967 : Purged in the Cultural Revolution 1974, Sep: First appearance after the Cultural Revolution 1975, Nov: Identified as vice-minister for the oil and chemical industries ChangWenping

jL

Present post: Vice-Minister for the Oil and Chemical Industries 1965, Feb: Appointed vice-minister for the petroleum industry 1972, May: Leader of a petroleum study group going to Iran; identified as director of the Society for Petroleum Research and Exploration 1973, Oct: Identified as vice-minister for the oil and chemical industries -123-

LiKuoAsai

Present post: Vice-Minister for the Oil and Chemical Industries 1976, Jan: Identified as a cadre of the State Council May: Identified as vice-minister for the oil and chemical industries Li Yi-lin

Present post: Vice-Minister for the Oil and Chemical Industries 1964, Oct: Appointed vice-minister for the chemical industry; elected deputy of the Third National People's Congress for Kirin Province 1966, Mar: Leader of a trade delegation to the Leipzig (Germany) Fair 1967 : Disappeared in the Cultural Revolution 1974, Sep: First appearance after the Cultural Revolution Nov: Identified as vice-minister for the fuel and chemical industries (till Jan 1975) 1975, Nov: Identified as vice-minister for the oil and chemical industries Sun Ching-wen

4t

""1

Present post: Vice-Minister for the Oil and Chemical Industries Sun was born in Hopei Province. In 1949 he was head of the Propaganda Department of Chahar Province. 1950, Jun: Identified as mayor of Kalgan Jul: Elected member of the People's Republic of Chahar Province 1951 : Identified as vice-governor of Chahar Province (till 1954) 1952, Jan: Identified as Second Party Secretary of the CCP in Chahar Province (till 1954) 1954, Aug: Identified as director of the Urban Construction Office in the Ministry of Construction (till April 1955) Oct: Appointed member of the State Council Commission for Reconstruction (till Feb 1958) 1957, Jun: Appointed as vice-minister for urban construction (till Feb. 1958) 1958, Apr: Appointed vice-minister for building affairs (till September 1959) 1959, Sep: Appointed vice-minister for the petroleum industry (till Cultural Revolution) 1965, Apr: Appointed vice-chairman of the Commission for Investment Control (till Cultural Revolution) : Purged in the Cultural Revolution 1967 1975, Jun: First appearance after the Cultural Revolution.

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1975, Jun: Identified as vice-chairman of the revolutionary committee of Tientsin municipality Sep: Identified as member of the Standing Committee of the Tientsin Party Committee 1976, Apr: Identified as vice-minister for the oil and chemical industries Sun Hsiao-feng

4J.

e)E, 1;4,

Present post: Vice-Minister for the Oil and Chemical Industries 1965, Feb: Appointed vice-minister for the petroleum industry (till Dec 1970) 1967, Oct: Acting chairman of the Chinese section of the Sino-Romanian Committee for Scientific and Technical Cooperation 1968, Feb: Chairman of the Chinese section of the SinoAlbanian Committee for Scientific and Technical Cooperation 1969, Dec: Leader of a scientific and technical delegation to Albania 1970, Sep: Leader of a scientific and technical delegation to Albania 1971, Jan: Identified as vice-minister for the fuel and chemical industries (till Jan 1975) Dec: Leader of a scientific and technical delegation to Korea 1973, May: Leader of a scientific and technical delegation to Romania Oct: Leader of a scientific and technical delegation to Korea 1975, Jan: Identified as vice-minister for the oil and chemical industries T'ao Tao

1 - w.1

Present post: Vice-Minister for the Oil and Chemical Industries 1975, Nov: Identified in his present post.

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