PETROLEUM IN THE ASIATIC SATELLITES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A000200020014-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 35
• Document Creation Date: December 21, 2016
• Document Release Date: September 4, 2007
• Sequence Number: 14
• Publication Date: June 24, 1952
• Content Type: IR

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3%'CURM TIJP`aH TIOi1
PROVISIONAL I i " IGT TUC 5 RUM
P-JROL, u N i TIE T, BL(I,
III T x^"iTO Siii'TT,'
TROT CIA/ RR HL17 (IILA)
24 June 1952
h.~E
DOCIRVIENTNO.
NO CHANGE IN CLASS.
' i DECLASSIFIED
CLASS. CHANGE.o T':: TS
NEXT REVIEWDATE:
AUTH: HR 70-2
DATE;2-1!0'7L_ REVIEWER:
Note
The data and o ncluaton in this report
do not necessarily represent the final
position of C and should be re rded as
provisional only and subject to rov:1sion{,
&Utional data or corn non.-ts which wy be
available to the user are solicited,
This material contains information affecting the
nationtal, def enso of the ?hitod States b,.thin the
meaning of the espionage law., Title 18, U$C, Sees.
793 and 794, the transmission or revelation of
'which in any manner to an unauthorized person is
prohibited by laaey,
C=RU Z,IG"TCE AG:21CY
Office of search and Reports
ARMY review(s)
I completed.
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-W-9 report is one of a sari of p visio poems pwtahilng to
p trl In the Soviet Bloc, The entice mass is laty to oo-wer a
$ a s s s of patrols n natunl gas,, synth is liquid f s in the Soviet
Blo0 The ports are p t as int alter step w1l ti
p tim t t- , ce on the a j t and not as a f UW sty, In the
1 a n t i of the a a a i l b l e i tionv v io reports ard aunts
.ivvv r"vaT& by ?t ? lmt lva um utillsed along
with t is of rwcareh a a ti yis by , s of the s . of 07A.,
It Is lnt -4Cwt this sc ries of mpo s will 80 the f l
yes 7s a
a,. op t tai. bass for a ntri tiona arA iti .o CI. a of
c ~ i . a tiva bt st i ? 1 i t all ~ ,
b Faa it state the cal ic of tea spmfie data ad gaps in
'gam eats p~i;ririt aatttio
c Pdi ' the ale for a broad sty pate i a 14 the Soi
w -d v mN sties dlrftted t towared s i is witl .
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JMMATY and Cmal ions
Q
19
O S
Ta1altj 1. Suoply of Petrole ni Products in Asiatic Satellites
bYL Sources and Estimated Civilian GoncumptAcm
1. Petroleum Production and Exploration a s o a a a m a a m o e a a a 8
?Tabl( 2. Fa able Pro ective MI Basins in China m . a a a . a
Tablc 3 Estimated Cr1e Oil Prod tion in the Aadatie
Satellites by rears and Production Poreoa fee
19,52-53 a .a a e u a a m a o a o a a p 6 a c p v o e m a 16
Petroleum Refining o o... m a a a a a a a a a a. a a o a a a 17
Table 4. Petroleum Refineries in China b a. d m a a c a c o a c
3. Shale, Oilp Synthetic ZigdA Puelei and Potroleuat Substitutes m a
T blo 5. Shale Oil v d Synthetic LiWaid e1 Plante in Mdnao
1s
operating in l 53. ? v m m ? a a a a a m o a a a m a a 24
4. CI VU. Ccm tion and Distribution e o e o a a a a 4 a s a w a a m
b1c: 6a A ram Auk Im to of Petrolev Products from
Western Somme Into China . (excluding ! 1n a)
5 o Pstrcie Storag a a a se o u
26
Ta ct 7. Distribution of Petro1cuun Stc raga at Ocean Te m1s
and Palk Static as of December 1941 m. a m. a a m a 29
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CZAAM PR-17 (111-A)
(ORR Project 52)
3t i TIOR
:ai
s, Aatr.:;ie; Sate .li.'teet of the USSR axe deficient in petrol+ o These tries
have al e.ta depended upon imports to meet must of their needs for petroleum prod tem.
thane ,aaeda have never been large, comprising ieae then one percent of the
w L&vtde con option of such products.
11 5 stari t7 the importation of petiole m prod ete into tdhat are nov the
ulatic Satellites has been I*ndle d almost entiraty by US and Ii itirh of ct pea de g
to that th-m:-rr=t bsrgo. ar3 ebi to of peatrole products to Cc=mnlct China
Irm . non moist ooureea has chi radie ally the fir of such profte'a i the
Asiatic Setell.jtee4
Throe oweeptiona to this historic pattern should be noted.-
ao In Manchuria prior to World War ii, the Japanese developed indi w
cour ea for peatrelemi products Avom oil shale and em l. equal to the X ehasu dawad
of about 2009,0W taw enmally.
,foe
ba Outer Mongolia Me been aligned a ne .sally with the USSR so that t .e
very email dA=rA there for petrole m pr cts has boon r*ox y fined t7 Impai-Is
from the Soviet U . a
Sinkiang t fe rlY called Cb nese Ttmkestan, has had rose racial. e
eeeme is ties with the adjoining provinces of the U SR in Central -Asia a had
re-
celved patron imp from that dir tien,
e4 Asiatic Satealli t comprise Ohio with I hh~P wear Mongolic and Sinka?gIII , OwtAr Pic), i eax eIliaeta a le?s Renubltc) M e,nd d o t zorma
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&K9
OIU2 sA/i.w
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In recent years: Sinkiang and the adjoining; rrevlnce of Kansu have developed
significs..rt oil pr?cteuction. However,, they are becE wing so oriented economically 4nd_
politically toward the USSR that this entire far northwest region of China is being
integrated more into the Soviet Union than into China. This area contains the only
proved oil s?eserves in China& and its future oil prospects are far superior to those
of the remainder of the Asiatic Satellites, The USSR has been active in developing
the petroleum resources of Sinkiang and Kansum The production from the oilfields near
Vlusu in Sinkiang and near Yumen in Kansug now supplies petroleum products to those
provinces, and may eventually allow exports to adjacent USSR regions from Alma Ata
on the West to the Altai Mountain area in the eart:, cohere extensive uranium mining
operations have been reported.
For the present, and short-term futures the folly ing conclu*ions on the petroleum
situation in the Asiatic Satellites appear to be valid on the ba5i s of supporting
data gitrcxi herein:-
as As a whole the Asiatic Satellites are a liability rather than an asset
to the. Soviet bloc w ithh respect to petroleum..
b? The "no . " civilian demand for potrc levaa products in the Asiatic
E
Satellites is about 2 million tons annually (Ta.ble 1 .,, 1947). This is very low
compared with other comparable world regions, E,.nd w ould expand ra=pidly under favorable
c and.itionao For example, in l'94.7 it was estima-ted that consumption of petroleum
protracts in Chins would be 2,5 million tone in 1952, 14`
~.~ The "normal" civilian consumption of petroleum, products in the Asiatic
Satollites can be reduced drastically without disruption of the civilian economy
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F' ie X51 cis 3 c: n taar:ptic7xr. a?a; is is oatir-atad at 1009000 tons antxual.ly of petroleum:
products, (Table I ;o Thio is trout ono fourth of the assumed "norri.l" rate.
d Cur: ont r,?:jtrictod :itilien consumptien of petroleum products in the Asiatic
L'ateiiites -sn bpi r..rthel-? red r.-ed by atrir:genl: ccntrol oQ and by forcing; the extensive
use of substitute e.'ue .
a,, Currently tt a principal source of petrc.:ieum products for the Asiatic Se.tellite
_a from the USSR, via tho Tracts-4iberian railway. As the far eastern regions of the
USSR are de-iicient in p `;fol ew .. supplying the Asiatic Satellites impoves an additional
transport burden on the Trans-` Iberian railway.
Secondary rouxc- , of? petroleum products for the I?.siEtic Satellites in 1962 a&.-
zinc. >hipr ente ;'rori European Satellites,
(2) Smugg I ?ag of petroleur products t hroughi the embal g:o,
Potr?r fam productsi from indigenous sour,:cs such &, pc-troici-~m depusl-?5
l=il a tc l,e , -;ynthe r c liquid fuels, and bonzol :C rya cok .ng glantao Also not---oletiri
s Ltutos from i, izultura2 sources are widely used in Chian, f'.1t-though the ~. ;gr ga :>
volume is i?eiati, ;tly finall at the present time;,
Barring t t lifting of the embargo on petroleum prochxcts from non-Cezrffaunist
sources 1.:z a a..or _:tcivilian demand for potro~oum products in the Asiatic Sn'tel'i."T I'll o3
~,,1. 1.1,? S r; ).lion tons annually cannot be met before 1115?? The synttxheticc liquid .v:r.s
~.ztr bu) G by the Japanese in Manchuria were riot successful on a large sc le and
yhe rebu.,idi ig and expansion of the shale oil inchistry (;o supply any substantial
-part t,. the total demand for petroleum products will take 3 to 5 years. The oilf folds
of Si.rikiay.?g and Kansu can be ieveloped in the n xv 5 years, with the direct and s ,O, -
stantial aid of the fitI'sR 9 to yield 2 million tmas enY u . l y of petroleum products,
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scary , wevfz to distrihuto the se pro~'~~cts in the Asiatic satell to> ' :o'k`.d
rel,aire a 2000-mile ?ip line over ragged country (tile a l400-miio liuc over amoti":
orrain would deliver them to Alma Ata in tho UA:Sc M Also exist: r>. hig ,rays c 4
be 1: ,orc vec1 to transport substantie,3. quantities of netr'olouri prod ct;s from Sinkiang
as'.d Kau into the ac., acent regions in the USSR but the- o i ` no adequate highvivy Czz
sail transt or-tation beyond Lenchosvi. the capital of K ;nsxu in the direction of Chine
proper,, These facts together with the deliberate orientation by the Soviets of
Sinkiang end Kaxsu toward the USSR will tend to limit the availability of petroleum
products from those provinces to China proper or to North Korea.
The estimated. availability and civil consumption of petroleum products in the
Asiatic Satellites for the years 1950 to 1953 follows.-
AXIOM
Calendar Years
Fiscal
Sour:?cea
j9u
1957
19-52
1953
Imports - Western
200
150
50
50
In port - Soviet bloc
S86
517
763
? 50
Indigenous crude 04 1
1.15
149
x:02
250
Indigenous - other
40
54
=t3
100
Indicated total availability
741,
970
1103
1150
Est-(mated civili:sn consumption
500
500
600
650
Fable 1. sur, i r1rer the supply of petroaormn products in the -Asiatic Satellites
th respect to sources, and also shows the estimated civil consumption of Such
products. Most of the consumption was in Chine proper including 1. cnohuria,
s+rith minor consumption in Inner Mongolia; Sinkiang, and Outer 4io oliar Korean
imports and consumption of petroleum products ;re not included in Table I as they
=t xsot be broken close between North Korea and Eouth Korea, In 193Z.3-7 lsore x
A
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C-r r petroim=
a t.
? 9`1Ut,e
:yam )Patlmted ConT(Pt.
7..: o P?itr of ;>.m Product
ctrrc;{ : B1_oo crude sy:..h a
oil 0i 1 ?.
f.925 to
;:zit~l 968
?332 to 1937
~~38 to 1941
X42 t
945
.n x-55" 1sa
`3V' . 0
?`'rc 42
xa
lie,
;, - k 30.
.31 381 81 23
2c0 $8.3 115 4
Indicated
3 113t:r.In d
Total c1niii .
349
938
1'25
6. 11 149 M . 9970
1200
50 gr~; k,i .302 113
timate , based unm P ovioun trem13 tr.r erg a u> rr do x s ated in t t-
5a-
;nz
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.r pe ?tsa of petrol J
e,mi anw'?ped 2"0 thouusal"d tons {: armally accord .azg to a mirne,g .a ~ ?>d
pubLe ti can i s ued in 1945 by he :nti Clod The Pole igm Trade of Kowa",,
Some secondary
data have been derived from these and of r,r sources, or estimated by interpolation
in a fear cases vdiere such data for c ;rAtaia years 'ere unavailable,
The data rhovraa for 1952 and 1953 are estimated by extrapolati oTi with the follcwrn g
s *;umption s
an Conti tion of present embargo s, n' St movement of petroleum prodir,ts
from Uestern seurce3 into Cornmunimt China,
'b. That imports of petroleum products fro:n the Soviet Bloc will be limited to
x:000 tons daily in 1952, and that such Imports will decrease slightly in 1953 as
more petroleum products from indigenous sources becoano available.
co Continued effort by Communist China Frith continued aid from USSR to restore
and expand the output of petroleum products from indigenous soureea z, with emphasis
on i nchurian shale oil,
Continued effort by the USSR to increase the output of petroleum prodax; trs
from oil deposits in Sinkiax ; and K rm.su,
co Increases of 100,E tons per year in civil consumption as increased quantities
of petroleum products from indigenous sources become available.
The data in Table 1 for 1948 and prior are considered to be correct within a
zaximum range of plus or minus 10 percent with -the exception of imports from the
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Soviet Bloc, for whioh the only Pirm figure is for one year - 1936. The annual totals
for. 1949 to 1951 are thought to be within a 20 percent range, but soma items may 5e
in error up to 50 percent. The forecasts for 1952 and 1955 are siripiy judg nt estimates
based upon the foregoing asgumptionso
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1. otrole um Ptoduotion and !~iIora_icm.
Although very :insignificant quantities of oil have been produced for hundreds
of years in Chirac, the cumulative production to date is less than one, million metric
tons compared with a cumulative world total of nearly ten thousand million metric
tons. The other -karma, Asiatic Steflites of worth Korea and Outer Lion ;olia have no
oil production although a prosp;active oil bearing area is reported in Outer id igolia
near the Sinkiang border.
Reconx .seance geology has indicated about 20 sedirientary basins in the Asiatic
Satellites which are worth investigating for possible oil deposits, With. the exception
of one or two in Outer Iongolia$ all of those basins are in China. Geological ocraf l..-
tiono are unfavorable for oil occurrence in North Korea,
On the basis of limited geological studies to date,, 6 sedimentary basins, as
listed in Table 2, are considered favorable for oil ecoloration,
Three additional basins,. Turfsn Basin in Sinkiang, Tsaidam j3asin in Mang,
and South Kansu Basin in Kansu,, all in northwest China may also be favorable for oil
exploration based on what is known of the general geology of VU G region. In addition
there are possible oil bearing areas in Manchuria, although tests there by the J&paneae
were unfavorable,
The Red Basin of Szechwan covering most of the province of Szechwan has bee-a
studied intermittently for the past 30 years for evaluation of its petroleum
ibilities 1T/ For over 2000 years salts, evaporated from brine produced from
wells drilled in the Red Basin,, has been the most important mineral produced in this
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TAM 2
Favera'le Prospective sins in Chin
Basin, Provinco and
oil ications
Area
Sq.
(',rude F,-sti.nated Oil Reserves - M1Mai TMW_
oil prom.
1951
:led Basin; Szechwan Province;
b seepages & small quantities
of oil & gas produced from
salt brine wells. Good
structures but known geologic
6sction unfavorable. Deep test
drilling justified to
evaluate section below
5000 feet
609000
Worth Shensi; Shensi Province;
seepages & some oil
produced from a few teat
wells,, No good structures
but geologic section 8fl QDO
justified exploration
Tsun ari; Sinkiang Province;
s an su Oil Field has
produced 120$00(0 tons of oil.
since discovery in 1958;
numerous oil & gas seepages#
good structures & favorable
geologic section justifies
extensive exploration 700000
Tarim; Sinkiang Province; 2 or
more "native" oilfields producing
small quantities of ail. from
hand-dug pits; oil & gas seepages
plus indications of good
structures & a favorable geologic
section for western one-third;
geology of eastern t ro. thirds unknown
but justifies thorough exploration
Western one-third 7091
Eastern two-thirds 130,000
North Kausu: Kansu Province;
Laochunm: ao Oil Field has
produced 840,000 tons of
oil since discover( in 1939;
oil and gas seepages, good
structure & favorable but
limited geologic section;
additional exploration fully
justified.
40,000
Totals 450,000
Less than
1,000 metric
tons from
brine %Tells
and haxu.-dug
pits.
Less than
1000 metric
tons from
"native" oil-
fields with
hand-dug
wells
400
184 5 50
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region,, The annual -Production of salt has reached 300,000 tons; r:eoting a Iarre part
of Chinas s demand for this product. Chinese historical aacounits indicate that
natural gas has been produced with the brine in somo wells for nearly 2000 years,
and small quantities of oil have been mentioned as ccmin?; with the gas and brine
for the past 500 years. 18/ In addition, some natural oil seepages occur in the
Red Basin. These favorable indications of commercial oil deposits are somewhat
offset by an unfavorable geologic sections insofar as it has been mapped or test-ed?
Howeverg some good structures have been mapped, and test vrefls of 5000 feet or hero
to explore the deeper sedimentary beds assumed to be present, are fully justified
from a geological standpoint. Ecenomically the discovery and development of
commercial oil deposits in the Red Basin of Szechwan would be more valuable to
China than oil deposits in any one of the other four basins considered herein. There
is a relatively lw go local demand for petroleum products in the Chungking-Chengtu
area and the Yangtee River provides relatively good transport to the coastal region
and Shanghai.
The North Shensi basin in Shensi province lies some 500 miles northerly from tie
Red Basin of Szechwan and is in the same major geoo:synelino. These trio basins were
separated by a trsnsvertiao mountain range formed by can uplift in the early Permian
so that the sedimentary beds laid down since that time are completely different in
the two basins and are of non-marine origin in the 2?orth Shensi Basin. Numerous oil.
seepages occur in this basin, and since 1906 occasional test wells have shown
initial yields up to 60 barrels of oil per day, indicating the presence of marine
source beds underlying the non-marine series. Iicrwaver?,, structural conditions as
revealed by surface geology era unfavorable 'or larger highly productive deposits.
10 -
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This probably accountd for the small discovery wells in this basin and the rapid decline
of production from such wells0 19 Additional investigations, imluding geophi'sical
surveys, are warranted in the North Shensi basin in order to evaluate more fully the
structural conditions thereQ
Three basins in northwest China, Ts-uagariD Tarim., and North Kau, are the most.
important present and prospective sources for petroleum in China, The first two are
in the province of Sinkiang and the third one in the adjoining province of Rasu,
Two oil fields, the only commercial field in China by western standards, occu in
this region, one in the Tzungari basin and the other in the North Kansu basin,
The first commercial oilfield developed in China was in the T.zungari Basin of
Sinkiang in 1938 when an estimated 2500 tons of crude oil was produced from a few
shallor, welle, 120 to 360 meters deep, drilled with a small drilling rig and personnel
brought in from the USSR 20/. This discovery of t he Tushantzu Oil Field near Wusu
was the climax of oil prospecting operations by the USSR in Sinkiang starting in :.935
ander an agreement with the Sinkiang provincial governor, By 1943 abo7't 30 wells
had been drilled and an estimated 40,000 tons of crude oil produced and processed
in a small refinery built at the field by the Russians, In 1943 the pro-Communist,
governor of Sinkian ; was replaced with a Nationelist Chinese appointee and the
Russians capped the wells, dismantled the equipment including the refinery and
withdrew from Sinkiang, In 1944 the Chinese 11Na :ic ialiata restored a few wells tv
ling
intermittent production which was processed in a "native" refinery capable of hand
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6 tons per days
it is believed that this Tushentzu Oil Field and small refinery operated
throughout the period 1944-1949 supplying local demands for petroleum products, 21
In i.4rch 1950 a Sino-Soviet agreement was signed provirl.mg for the, development of
the petroleum resources of Sinkiang by the USSR ar,.d very active developments have
been reported since that time with reference to oil and other minerala including
Urw-iium6 22 23 It is estimated that about l20p000 tons of oil have been prodt:ced
from the Tushantzu Field to 1 January 1.952,1 with 1951 production estimated to be
33,000 metric tons,, and proved reserves of at least 2 million metric tons4
Along the southern side of the Tzungari Easing in the some structural trend.
with the producing Tushantzu anticline, a number of other favorable structures have
beer noted and two of them have been briefly described, 20 Alt;haugl no tats have
been drilled on those structuresa, the proved production at Tushsntzu, plus numerous
,ai1 seepages along the south edge of the Tzungari basin Where the oil reservoir
rocks outcrop, indicate probable reserves of not less than. 10 million tons for these
knoown structures on the south side of the basin, In view of the favorable goolcic
conditions (source rocks, reservoir rocks, structural conditions end oil seepages)
it is reasonable to assume that an adequate progrm of exploration comprising geo-
logical and geophysical surveys and numerous test wells g will reveal oil reserves
comparable to those discovered in similar sedimentary basins in the United States,
For the 70,000 square miles of the Tiux.grari Basin, the possible pr tent ial reserves
are of the order of 400 million tons on this tasis,y or about ten times the current
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a anal oil production of the USSR, Possible rear?res of this fa, sei,tuddva,ould
comprise a valuable addition to the oil reserv' s of the adjoining Soviet Urniono
The Tarim Basin in Sinkiang is the largest prospnotive oil-boar ng basin in
Chum . Preliminary investigation has revealed a section of several thousand meb,~rs
of sedimentary beds expl.osed around the ,~estern part of the basin,. Most of the isec-
tion is reported as being of marine origin and including source rocks and reservoir
rocks suitable for the origin and accumulation of oil? Structural folds have bean
identified at two localities near Ran and Tarltrk on the northern side of, the basin.
It is likely that many more taurface evidences of suitable structures can be found
around the northern and western sides of the basin and geophysical methods
reveal numerous hidden structures within the basin,., particularly in the vrestern one-
third. By far the most significant .moan indications of commercial oil deposits in
the Tarim Basin are then oil seepages and shallow wells and pits which h.aave yielded
illiiinating oils for local consumption for hundreds of years. Tr o such T'oilfio"ds"
near the ancient ct ravvn route from Ttarf to Icuushgar, have been briefly described. 20
The an field north of Rucha comprises about 20 hat -dug wells up to 70 feet deep in
which salt water and oil accumulates and from which the oil is intermittently Lex;over-ed
by skimming and ba{. ,ingm The Tarlak field north of Aqsu is another small native
enterprise from which oil is recovered from hatad-dug pits Other oil seepages west
of Ka:ahg:Ar and sou` est of Yarkand have been r:kentioned as sources of lllurdnating
oil for local use. Although the total production from these native oil fields a!7otx-.d
she north and west sides of the Tarim Basin probably does not, exceed 5 or 10 metric
13
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tons of oil arziu . ly , the occurrence of these active oil and gas seeyagos is strong
ovideuce of commercial oil deposits in this part of the basin, comprisiiing about
one-third of the total area,, or 704000 square miles, This Is equal. to the entire area
of the Tzungari basin and the possible potential oil reserves are of the cars order
of magnitude or 400 million tons, Tho eastern two-thirds of the Tarim Brusin --!.q
covered by the drifting sand dunes of the Takla desert, described as one of
the most desolate and barren spots on earth, Geologic conditions we teak .oven,, but
because of the known favorable conditions for oil in the western part of this basin,
gas well as in the Tzungari Basin to the north and in the North Kenai) basin to the
oastq this vast area is good prospective oil terx ita y@ Comprehensive geological
and geophysical surveys9 probably followed by extensive structure drilling, vdll be
necessary in order to evaluate the oil prospects of this 150,000 square miles in the
Tarim Basins 20 2
The North Kansu Basin lies iaanediatoly east of the Tarim Basin, being separated
by a low divide, In some classifications it is included as an eastern extension
of the Tarim Basin. 25 It is a long, narrow basin comprising the northva-ester?n half
of the so-called Kansu corridor oonnocting Sinkiang with China proper, About 175
miles from the Sinkiang border on the highway southeast through the province of
I nsu , is the city of Yumen and 3c me 35 miler. beyond Yuman to the southeast is the
Laochurmiao Oil Field, the largest oil -field in China with a cumulative prodiction 25X1
to I January 1952 of about 840,040 tons of oil,
the Laochun iac+ Oil Field was discovered by tff
Chinese Nationalists in 1939 in their effort to tir-avelop indigenous sources for
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trolours products. 12 The discovery well was completed in a shallows zone at a
depth. of 82 metes sG By 1941 a total of 7 wells had been completed in this shailaN
zone., but productivity was 1cvr and all these shallow wells were abandoned in 1942
after producing a 'Getal of 4,400 tons of aJ3.. In 1941 a deeper zone was discovered
25X1
at 435 meters, and a total of 25 wells had been completed by 1947
Seven additional wells were completed in 1948 egad about 30 since that time to
make a total of 55 wells completed in the - deeper 'zone to I January 1952e 263/
Some of theses wells may have be en completed in a third zone reported to have boon
discovered in 1948 at a depth of 740 to 1300 meters* 27 Production in 1951 is sotimdtad
at 1500000 metric tons and about one-half of the 1100 acres proved area has boon drilled.
1l The remaining -proved reserves in the exploited zones of the heochuniiiao Field are
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b eemoitu1ating: the 5 sedimentary basins in Chyme in which positive evidence of
oil i.s 2rnov n to exist and in which full.- r-caie exploratory operations are justif i di .
Total area 5 basins .-- 450"000 square miles
Number of proved oil fields ?-- 2
Cumulative production to date - 960 thousand metric tons
Estimatei reserves _ millions metric ;ions
Prayed 5
Probable 30
Possible 870
It is significant that commercial production and proved reserves as well as
most of the prospective oil reserves in Chip. a occur in the far northwest provinc s of
Sinkiang and Kansu. This area is relatively inaccessible from the densely populated
regions of China but it adjoins the USSR with ahem it has economic,, racial, cultural
and political ties.
Table 3 shows the production by years of the Pushantzu and Laochunmiao Oil
Fields, the only fields in the Asiatic Satelli?~es?
Table 3. Est ted crude ail production in the Asiatic Satellites by years
and rroducti on forecast for 1.952.53.
Next ! Crude Oil ?d1ti In the A tle atalUtea
by Yom and Fradwtim Feet tom 1952'.53
Year
` u.shantzu Field
Laochiamtkao, Field
Total
.1938
3
1939
7
0
3
1940
6
I
8
1941
10
8
17
27
1.942
1943
11
4
5
66
1944
2
67
1945
2
i9
71
1946
2
66
68
1947
2
70
72
1948
2
51
53
1949
2
75
1,00
102
1950
26
its
142
1951
33
15O
183
1952
60
175
235
1953
1.20
2^5
345
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2? Petroleum Refinin{a.
.'here are indications that illuminating oil has bean distilled in small quantitlos
in native stills for many yearn possibly for hundreds of yearsA, in China, However,
the few modern oil refineries in China have been built and operated principally by
foreigners? Following their occupation of Manchuria in 1932 the Japanese built refineries G
shale oil plants, and synthetic liquid fuel plants in that region, to produce petroleum
products from imported crude, oil shale and coal. After their discovery of thh
Tuthentsu Oil Field in Sinkiang in 1938, the Russians built a refinery there and
operated it on crude oil from that field. The only case of full-scale petroleum
production and refining operations by the Chinese without continuous foreign supervision,
is the Laochunnsiao Oil Field and refinery velar Yum n in Keesu province.
Table 4 mu rires available information on petroleum refineries in China. Insofar
as the data reveal, there are only 2 full-scale petroleum refineries currently operating
at capacity in the ftsiatio Satellites, Both are in the far northwest region of China
(Sinkiang and Kansu provinces) and are under Russian supervision, processing oil
produced there. Two small, inconsequential refineries are listed in Table 4 in Shensi
and Ssechwan Provinces. Although larger than other native stills, they are probably
representative of numerous small batch stills operating in China on oil recovered from
oil seepages or shallow wells, and producing minor quantities of petroleum products for
local use. One or more of the 3 refineries in Manchuria shown in Table 4 nay be operating
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TAB 4
Petx ilow R `4a erie s
Country-Province; Plant, name, location
and
roce,ss: pr~sen951t.tus______
Sinkiang - Tushantou Field
Refinery near also. `m'g?Te continuous
distillation unit probably enlarged in
1951,
Production tsf petroleum products
T atimatecr
Annual
Production
Annual
Production
Forecast
19jr
d7 53
23
28
50
10'1
90
120
150
200
.1
1
2
2
1
?
Maximum
. ranual
Production
1960 25
Kansu - Laochunmiao Field
Refinery near omen -n-ftnuous combination
distillation and cracking unit expanded in
1950-51. 1950 90
Shensi - Yenchang Field
Small she 3 s i t wilt in 1911. Kerosine
only produced in 1951, 1951 1
Szechuan
nco armed report gives refinery at
Ch ?ung-Ch' ing with throughput ii:t
rate of 3 thousand metric tone annually,
June-Sept. 1950. 1950 1
Manchuria Liaoning; Chin-hsi Re 'finery,
MrIlt-ao.-MOc ping ari` i ?`is fie ~ acx yea
scheduled to start in 1950 'on imported crude?
Present Status un1a(ic.n. 1943 15
Manchuria - Kwentun -Pai.~
modern apanese pie-war refinery of
150,000 tons annual ce;pacity was
reported operating an imported crude in
1949. A smAller refinery completed in 1945
to process 50ffi0O0 tons annually of shale
oil was also reported operating on crude oil
imported from western sources in 1949.
Present status unkncem.a
115 149 202 302
.N %f ted annual production for Tusiaantzu and Lt oche ciao believed w ithin 25% correct,
Nominal estimates shorn for Shensi and Saechuan may be grossly erroneous but the ciua -
ties are small. There is probaably some current production from M; nchunian refineries,
but there is no basis for making estimates,
/ Production forecasts are estimated on basin of :assumptions given in Slzmiary and
Conclusions,
qWl.8o
150 ? 7 ? 7
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on. crude oil imported from the S aviet Bloc, but it ;is reasonable to assume that praestica;ly
all of such imports are selected refined products rather than crude oil,, At .y rd;a
':'hese 3 refineries represent excess petroleum retlaing capacity under the existing
embargo, of up to 2000100 tons annually.
A refinery at Gens an, near Wonsan in North Korea, had a rated pre-war capacity
of 250.000 tons of crude oil annually. It operated on imported crude. It was reported
acs being worn out and obsolete in 1946 and was reparted destroyed in 1950 by bombing
shortly after the Korean war started. 45/
Following their discovery of the Tushantzu Oil Field in Sinkiang in 1938,
the Russians built a+ refinery at that site to process the oil, ""hen the Russiens mcwod
out of Sinkiang in 194 they capped the wells and dismantled aaid rern ved all oquip na. t,
including the refinery, However, they left a small batch still, capable or handl
about 6 tons of oil daftly which the Chinese rationalists operated on. oil produced from
a few flowing wells in the Tushantzu Field, which th?ry uncapped. Following the defeat
of the Chinese Nationalists in 1949 the Russians returned to Sinkiang and ro-opened
the Tushantsu Field under a Russian dominated company formed for developing the oil
resources of Sinkiang, in accordance with the term;; of the Sino?,Soviet ri;re,emeiAt of
March 1950. There is considerable evidence that tie oil resources of north cost Chin
in SiriJd.eng and the adjoining province of Kensu are being aggressively dove .loped, aul
it is assumed that adequate refining facilities h&> re been installed by the Russians at
or near the Tushaanta,u Field to process oil prodhe ed in that area. Based upon. tie esti.-
water crude oil production of 33D000 tons in 1951 from the Taushentzu Oil Fie-old,,. the
petroleum products from this source are estimated co be 28,000 tons in 1951.,
. 19 a-
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The L.ochunmiao YOil FYeld and refinery near lumen in Kensu province is the on:y
example of full-scale petroleum production and refining operations by the Chinese
without continuous foreign. supervision. Foii.mring; the discovery of the field in 1939
a sh:.11 and pipe still refi?aer?y ryas built wit`~x a crude oil capacity of 4000 barrels
per day, equivalent to. 20,000 metric tans annually. Hm-lover, it never operated at
more than 50%* of its throughput capacity and residue ran as high as 70% of the oracle
oil i. bput? Some of this residual oil was used locally but a large part of it, con-
taining valuable lu be stock, was damped in the Shih Yu Rivera 21 This original
refinery was partly destroyed by fire and a small combination continuous distillat.on
and cracking plant was installed and on test operation in 1947? It was designed for
an input of 2000 barrels per day of crude oil s equivalent to 100,000 metric tons
annually. The crude oil was to be topped with a yield of 40 percent distillates
(including 20,'a straight-run gasoline) and the reziainder was cracked for additional
gasolinei. After the area was taken over by the Chinese Communists the USSR sent in
techn. cianr to aid the Chinese in the operation of the Laoohunnu.ao Field and refinery 35
In 1950 the Soviets installed avacuum distillation and de-waxing plant and additional
t ankcsge,thoreby increasing the range and quality of petroleum products, and they
started construction of a plant for reduction of heavy residual oil to increase
further the quantity of such products. The oiiidc: ci r i z ted to have been
150,OCO tons in 1951., and the output of petroleum products at 120.000 tons.
'niere is a sraal1 refinery in the so-called Yenohang Field in Shensi Province built
about 40 years ago by the Standard Oil Company of New York (now Socony-Vacuum) to
process crude oil produced from test wells drilled in that area. The wells were arall
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and the entire operation was abandoned as non-ce rr.er,,-ia;.fl Hcwrever, the rafiniaag
equipment was not re ao ?ed and has been operated intermittently by the Chi-a.ese,e an s: e.l:l
quantities of crude oil from local sources accuarulaatede During World yfar 11 the
Chinese Cor rnuniats produced soma, gasoline and keros~.ne in this refinery, and a recent
?eport; states kerosine was refined in 1951 from c ucle oil produced from a test well
which started producing in June 1951 28 11aere are no quantitative data on this
operation but from past records of test wells in this area it is not believed that the
production of petroleum products from wells in V is ares will exceed 2 thousand toils
annually by 1953.
In zechuan Province shall quantities of oil produced from salad brine wello and
other minor sources,, have been processed in native stills for rraemy years. An imeo;ifi mad
report mentions a refinery operating at Ch' ung--C.h? ing (Chxngking?) in the suam; of
1950 at a rate of 3 f housaad tena annually, This is believed to be a substantially
t
x
~.l~'
higher rate than other nat.vaa stills in the region.. It probably operates intermittently
in Manchuria, t.'ae Chin-hsr Refinery near Hulaats.o in Lianas ing province was built
by the Japanese With a crpaaci-t4r of 125,000 tons vauiuaally of crude oil., a ad was opted
on imported crude discharged from tankers at the port of Hulatao and thence to the
refinery by pipeline, It comprised a pipe-otili and fractionating unit, a thqrraal
cracking unit,, a continuous sulfuric acid treating unit, and as re-run still, This
refinery was largely dismantles? by the Savlets after 7 orld War II but was later re;;toned
to operate at about 50j of its pre-war capacity, or 60,x000 tons annually. It was
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scheduled to go on streex in 1950 on imported crude. Undoubtedly the embargo on imports
of pe;trole m into China has adversely affected the operation of this refinery hit its
r:rresent operating status it not novin.
At Dairen in Kwe.ntung province, Iiannchuria the Japanese built a petroleum disti.lla-
tiara and cracking pleat in 1935 with a capacity of 150,000 tons ,annually,. One report
indicates the ultimate capacity was 250j,'3u tons annually of crude oil and a cracking
capacity of 100D? ?? tons annually. The Japanese opc,ratod the refinery on imported
s
crude oil and it it believed to be now operated by the Russians on Sakhalin crude,
although Dairen was to have been returned to the Chinese C omnunists under the terms
of the 1950 Soviet-Chinese Communist treaty of friendship and mutual assistae,d 12 13
Another small refinery at Dairen was completed in 1945 by the Japanese end was to
operate on an input of 100,000 tons annually of shale oil from Fushun.. 13/ After
World - ar II it was probably operated by the Russians on irvorted crude as the
Fustian shale plants were dismantled. The present operating status of this plant is
not known
The present capacity and operating status of the 3 petroleum refineries in
1.1 nchuria described above, cannot be accurately determined. However it appears certa,izk
that there is excess refining capacity in these 3 plants,, since the placing of the
-)mbar o on shipping petroleum to Communist China;, as they are dependent on imported
crude.
In 1929 Japenes-3 industrialists undertook the exploitation of the oil shale doposit
22
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it rush=, i,iaoniri ! rovinces, 1k~PCYich i AD '1`hi.s in a surface dopo?it overlying coal
rieasures which must t e stripped In order to mine the underlying coal. For this reason
the cost of mining the oil shale could be chergeti to the coal, which made the reco~rery
of oil from the shalt, commercially sttractivo. The deposit contains 5.4 billion tons
of oil. whale which ib estimated to contain 300 m _11ion tons of shale oil. Such reserves
are negligible compared to US shale oil reserves in Colorado, but to the Japanese they
represented over 50 times their annual petroleum requiro,nentm. After Japan occupied
Manchuria in 1932 this Fushun oil shale deposit eras aggressively developed reaching a
production of 1258000 bons of crude shale oil in 1938.
FFpvuaion of retorting
facilities in 1942 enabled the Japanese to reach a. peals: production of 1978000 tons of
crude shale oil in 19438 yielding 167,000 tons o' petroleum produotsa 13/
In 1938 the JapeAnese instigated an extensive; program to supplement -their liquid
fuel supplies by producing synthetic liquid f uela from coal sir lar to Germany's prcg ram.
During the next 7 years a total of 7 synthetic plants were built on German designs
using the same processes used in Gerxriany. Although these plants had a combined thoorre-
? ;ical capacity of nearly 2008000 tons zually:, the peak annual production,, reached in
1944, was less than 109000 tons. These plants wore generally unsuccessful in operation
and were still largely, in the experimental stage at the end of World '"ar IIo 13f
The :.ianchurian t,hale oil and synthet:Le liquid fuel plants were partly orwholly
dismantled by the Russians immediately following Jtorld 1 ar Us As a result the yield
of petroleum products from such plats declined from a World War II peak approaahi-N.,,
2008000 tons annually to less than 10,000 tons annually in 1945. 1.4 Limited restoration
-23,=
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cif: some plants since that time has gradually increased output to an estimated
54,000 tons of petroleum products in 1951a 32/ T ;ble 5 shows data on these shale
oil and synthetic liquid fuel plants which havo been restored. Plthough the Chinese
Cornunists annouccred extensive plans for rebuilding these Manchurian plants for producing
petroleum products, relatively little progress has been made despite some technical help
from the USSR It it probable that the Korean 'iar? has retarded this reconstruction
>d ? ;e sr:- in Manchuria, rhich called for re oration of pre-Avar industrial levels b r :'~ 53e 34,<
ft? i.c 4 ow " aatjer Liquid ?,aka in ~p ~~.t~r in 19$
PA
ant nano, location., process and
Production of Petroleum Products
Estimated Annual Athual Production
Pro ducti or For ec;st
u. hun Shale Oil llaset D Liaoning province,
sac ii m ea ?z c War II capacity,
197.000 tons shale oil annually. Can probably
be restored to yield about 125,000 tons
annually of shale oil yielding 105,000 tons of
petroleum products?
Kirin Sni le Oil Flat -m d possible synthetic
i i:~iu `~tz?1 g~ an -~ 7a~.s~ Japanese built a coal
tar hydre'genatiorA plaza; here with a planned
capacity of about 15,000 tons annually. This
plant was dismantled by the Russians, A new srrall
shale oil plant was scheduled to start operations
to 1950 and an expertme.ntal synthetic liquid
fuel plant was planned. 29/ 3/
a
2.
30 42 80 90
10
12
20
25
40
54
100
115
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Csmmunist China plans to build 3 hydrogenation plants for production of gasoline,
including aviaticr i gasoline,, using coal as the ram. material,., In 1951 about 50 tons of
coal was shipped from China to the Soviet Zone of Ct;rmany for experimental purpm ca
and fear plant design by Kraftstaff U Industriobau, a part of WB In_dustrienwurf,
46/ In January 1952 it was reported that design for 3 such plants were completed, and
had been submitted to the Chinese Coiwnunist GoTernmcrto The plants each have a designed
.capacity of 150,000 tons annually of aviation ge.sol: ne , or a total of 450.000 ton,:
,annually, according to this report, 47J It appears unlikely that any. of these proposed
,plants will be completed and producing before 1955.
Petroleum substitutes from agricultural, sources are of importance to the
Chinese economy when the supply of petroleum products is restricted or shut off as
it was during World tear II., In 1944 some 6000 tons of petroleum substitutes were
produced by 35 registered vegetable oil cracking plants in Nationalist. China 311y
and it has been estimated. that as much as 25 percent of China" s total liquid fuel
requirements during World 17ar II were net by petroleum substitutes from agricultural
sources, irl
petroleum substitutes in China are derived from
a3 different vegetable oils all yielding about 30 percent of original volume in :icuid
fuels ranging from gasoline to diesel oil substitutes, and including some lubricants.,
These vegetable oil substitutes are claimed to be cheapor then imported petroleum
products, 37 Because of the large number of small plants involved, fluctuations in
output and other variables,, it is not possible to estimate the current or potential
production of petroleum substitutes from agricultural sources. lbwever, under severe
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S-D-C-R7E-T
rationing or complete lack of petroleum products, the production of petroleum
substitutes can be expanded to meet most of the minimum essential civilian needs in
China.
4. Civi. Cozasurnnilioxl and Uistriixua.ian.
There are two outstanding characteristics regarding the civil consumption of
petroleum products in China and the Asiatic Satellites; first the extrez ly low
per capita consumption, and second, the fact that despite its low level, the normal
civilian requirements for petroleum products can be reduced drastically in time of
war without seriously reducing the effectiveness of the civilian economy, This
reduction can be effected largely by using substitutes for petroleum products obtained
from numerous small vegetable oil cracking plants and alcohol plants, and the sub-
stitution of manpower for motive power in some transport operations, This was
demonstrated in '."orld War 11 when total consumption declined to 28 percent of the
pro-war (1932-37) level as reflected in Table 1.
As shown in Table 1, estimated current civilian consumption of 500 thousand tons 25X1
anxlual ly of petroleum products. is about One-fourth that of 1947.
Chinese agricultural and industrial output has not
been adversely affected by lack of petroleum products due to the Korean war and the
embargo on Commtmist China. which are the primary causes for the current reduction in
civilian consumption of such products,
China is essentially an agricultural, economy based on human labor, t-lans for
indixstri.alization proposed by the Chinese Nationalists and more recently by the
26-
LR- _161
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Chinese Communists have not yet materialized to the point where scarcity of petroleum.
products seriously cripples the economy. Lubricants for the railroads and for textile
mills appear to be the only critical petroleum products, and the limited quititi?ss
needed can be obtained in some manner.from various sources,
because of disruption of interior transport in World War II9 making it impossible
to ship coal to Shanghai and other coastal cities, electric per plants in those
cities used imported fuel oil in the post-war period* However, when the Chinese
Communists obtained control, these plants were converted back to coal, as the transport
system had been partly restored, so that imports of fuel oil were drastically reduced
in 1949.50.
The majority of transportation in the Asiatic Satellites is still by primitive
means. The thin network of railroads and airways and extremely limited motor transport,,
:supplement rather than supplant the ancient methods which have been in use for centuries.
A&1 On the China mainland in 1937 there was a total of 54,530 commercial and
passenger motor vehicles, and this figure had increased to only 56,030 such vehicles
in 1947, 45 Although diesel power has been used on some Yangtse river boats
and other inland waterways vessels, wind power is still predominant and can be
resorted to almost exclusively when diesel fuel is not available.
The domestic use of kerosine as an iliuminant is well established in the Asiatic
Satellites. Imports of kerosine into China in 1935 were 312,000 tons and comprised
35 percent of total imports of petroleum products. Practically the same quantity? or
308,000 tons of kerosine wero imported in 1947 but it then comprised only 16 percent
of the total, V+hen kerosine is not available it is replaced completely by substitutes
from indigenous sources - chiefly vegetable oils,, 44/
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S.:E.C.R-E ??
The geographical consumption of petroleum products in China is concentrated,
rather than diffused over the entire country,, In 1946-4? it appears that about
three-fourths of all petroleum products conswaed, in China were used in the Shanghs:i
area. With the reduction in the use of fuel oil in electric power plants since that
time, the pattern of consumption of petroleum products is somewhat more diffused but
still confined almost entirely to the coastal areas.
TAIU^ 6
voi'c'e :Tr. -x-ta c Putr cm PX Altactt fx r!eotc a i' -act.
Time Interval Gasoline Kerosine Diesel & Lubricating Greases Total
1925 to 1929
1930 to 1933 101 525 237
1934 to 1937 127
1938 to 1941 93 184 170 33
1942 to 1945 4 4 4
1946 263
1947
1948
341 338 51 1 858
238 313
308 2158
158
865
Table 6 shows the imports from western sources into China
1 451
0 i3
2 874
2 1944
1362
roleum producte
,from 1925 to 1948 by- products ? imports of petroleum products into anchuria are pot
included in Table 6,, As indicated in Table 1, such imports Into the Asiatic. Satellites
represented 85 percent to 99 percent of the total supply during the period covered
so that Table 6 reflects the historical consumption pattern of petroleum products in
- 28 q.
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China- In the 1925-29 period korosine comprised 75 percent of the total imports of
petroleum products while in 1948 it comprised only 10 percent of such products, The
near y four==fold increase in diesel and Thai oil imports in 1947 over 1946 is duo to
converting electric x~o~rar plants from coal to Axel oil. Since 1947 those plants '.nave
been reconverted to coal bot cruse of lack of oil. Not enough data are now available to
thaw the consumption by products since 1948.
5. ?a::trulewa atora;e~
Petroleum storage at ocean terminals and bulk oil stations in the Asiatic
Satellites was equal. to about 900 thousand metric tens prior to World 'Clar IId
ilost of this storage is listed in Table 7 which represents petroleiva storage in
China9 :lenchuria and Korea north of the 3;,th parallel as of December 1941, .
S-F..Cet I T
TIJTMI~~' -7
" Jil i'#[7 3 :3b Pto ci i 4 ru `ti a_Ooc ,1;"(;3 Taus 1, F 'may
r:t o:' c-nT) 7 194
Area or
Re ion
g on
Pz vimces
Con nt v
Numbor of
Storuk;o Sito^
Number of storage
to .ka
Storage cure. ci ty
Thous xfl ;ric
tone
Shanghai area
Kia ngaua Cliekiong
and. Arihunei
26
154
345
Hanker area
Hupeh
8 _
48
Southern
China
Fukien.,Kwangtung,
llunaan.Kiatagai,
Kwwangsi
97
154
Ck ungking area Szechwan
3
Dale-en area
Manchuria
4
24
Yingkow area
Genza-n
T& ohurla
N.Korea
67 354
. Table 7 in a recapitu]aatioa by areas data given on pages T-210 to T-214 of
Petroleum Facilities of China, Lunch ria and Korea, prepared by The Enemy oil Cormxa1tteo
for the Fuels *ad Lubricants Division, Office of the Quartermaster Gene-al, July 1945,
Aft'll
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Table 7 does not include storage capacity at about 300 minor oil depots and packck.ged
oil warehouses having an average tank storage capacity of about 100 tons or an aggre-
gate of about 30$000 tons of tank storage,,
During World War II total bulk storage in use declined from an estimated pre-war
figure of 900,000 toys to only 250,000 tons because of war devastation and lack of
maintenance. After the war this storage was restored and rebuilt to a present
estimated capacity of 800,000 tons. 44 It is assumed that the location and capacity
distribution of 'his storage follows the pre..-war pattern shown in Table 7, and is
believed to be of about the saw order of magnitude. /nothor source estimated
petroleum storage in China in 1950 to be 900,000 tons. AB/
Prior to V orld War II about ono.-half the petroleum storage capacity in the -c:ountrias
now comprising the Asiatic Satellites was owned by the Socony Vacuum Oil Company
P:1ost of the remainder was ovrnod by the Asiatic Petroleum Company (Shell) and Texas
Company, with minor installations: owned by a half-dozen native companies. In the
post-war period, prior to Communist control, two changes in ownership occurred. The
Texas Company's properties were absorbed by Caltex, representing Te:.as Company and
Standard of California ownership, and the Chinese Petroleum Corporative, created by
the National Resources Commission, became active in all phases of China's petroleum
industry including storage and distribution of products,,.
In 1951 the Chinese Communist Government took over all foreign oil company proper-
ties in China, consisting principally of petroleum storage facilities. Actual stocks
of petroleum products in China were estimated to be only 60,000 tons as of September 309
1950. 36/ This probably represented minimum working.stocks,, and it is indicated
stocks were at the minimum working level when the facilities were confiscaat-cd by the
ca 30
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CotmnMist" 49/.Lo/
Thole is no evidence to indicate that stocks of petroleum products in the
Asiatic Satellites were above rainimurn working lovels in January 1952,. If normal
or desirable varking stocks are equal to 3 months supply., it is assumed that efforts
may be made to raise stocks of petroleum products in the Asiatic Satellites to
2.01) or 300 thousand tons.,
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