SMUGGLING OF KEROSENE AND DIESEL OIL TO COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00423R001900780001-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 16, 2016
• Document Release Date: October 14, 2004
• Sequence Number: 1
• Publication Date: May 26, 1955
• Content Type: REPORT

Approved For Releass2005/04/22: CIA-RDP83-00423R0019b80001-5 S0-14-/04O
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SEEBOTTOM OF PAGE FOR ADDITIONAL SPECIAL CONTROLS, IF ANY
INFORMATION REPORT
This material contains information affecting the
National Defense of the United States within the
meaning of the Espionage Laws, Title 18, U. S. C.
PREPARED AND DISSEMINATED BY
Secs. 793 and 794, the transmission or revelation
CENTRAL INTELLIGENCE AGENCY
of which in any manner to an unauthorized per-
son is prohibited by law.
COUNTRY
Hongkong 25X1
F
SUBJECT
Smuggling of Kerosene and Diesel Oil to
DATE DISTRIBUTED
2 6 MAY 1955
Communist China
NO. OF PAGES
NO. OF ENCLS.
2
9t
SUPPLEMENT TO REPORT #
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THIS IS UNEVALUATED INFORMATION
~.. The following is a translation of an article appearing P
a Chinese Language newspaper on 21 Apr 55: &
Communists Stop Buying Liquid Fuel
End of Smuggling Activities
Recently Chinese Communists have been eagerly searching for stocks of liquid
fuel in Hong Kong. Failing to absorb in stocks openly from oil companies
,
they had to scrap small quantities of supplies from oil merchants causing
the prices of kerosene and light diesel oil to soar which seriously affected
Hong Kong's normal market transactions in general and supplies for outskirt
areas in particular.
It is learned that Communists intensive activities on oil purchasing reached
its peak about a month ago when all smugglers reaped high profits. Such
activities calmed down considerably during the first part of this month
.
Any transactions in small quantities during this period were just for the
sake of fulfilling the alleged "contracts". Up to the middle of the month
,
all activities of this nature were reported to be almost ceased. All
smugglers were said to have packed up.
Concurrently, the three leading petroleum oil companies in Hong Kong, Caltex
SVOC and shell announced their joint reduction in '
price of oil products on
19 April, 1955 (kerosene by
$0.05 per gallon and diesel oil by $5.00 per
ton including all grades). It is speculated that the up and down in official
prices of oil products has much to do with the Communists oil purchasing
activities.
Regarding the reason that Communists ceased buying oil in Hong Kong, it is
learned from a well kn
own source that this was only a temporary measure.
There were huge supplies of petroleum, oils arriving in the mainland through
overland from USSR. Stocks smuggling into South China ports by big oil
tankers were also said to be in good quantities. Consequently, Communists
oil purchasin
acti
iti
g
v
es in Hong Kong are now brought to a standstill.
2
This newspaper is pro-Nationalist. Our own information from watching the
market does not support this story that the pressure is no longer being
exerted for illegal exports. We believe that exports are still going on
but that the
are n
t
i
y
o
s
gnificant either in a military or economic sense.
When the
e
p
rsons concerned are obliged to move around through the city in
order to pick u
a
ll
p
ga
on here or five gallons there and when they must m
very carefully and surreptitiously, it is obvious that n
l
b
o su
s tal ]4 4
quantities could be moved across the border.
fta~s_
-O -N-F-I-D E N T T A L
DISTRIBUTION
AIR FBI
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 Approved For Release 005/04/22 : CIA-RDP83-00423RO0190 80001-5
The reduction in posted prices mentioned in this article, of course, has
no connection at all with the efforts to purchase for illegal exports.
The price reduction was initiated by Shell apparently because of lower
c i f costs and. was met by ourselves subsequently.
4. There are increasing reports that substantial quantities of fuel are
moving into South China through the Communist transshipping base at Lap
Lap Mei Island, which is located half way between Hong Kong and Macao
in Communist China territory.
(29 Apr 55)
5. The following is a free translation of an article which appeared in
Sing Tao Jih Pao of 24 Apr 55:
Huge Stock of Jet Fuel Transported Into China
Six Big Vessels Assemble At Lap Sai Nei
A large stock of jet-plane fuel is now approaching the Communist entreport
island, Lap Sap Mei, 25 miles distant from Hong Kong, passing through Bocca
Tigris to enter Whampao, a South China port. About a month ago, tens of
thousand tons of jet-plane fuel were sneaked into the Bamboo Curtain through
this loophole in the United Nations' Embargo policy. Six oil tankers and
freighters of different nationalities at various times helped transport the
essential strategic products into the Chinese Mainland from Europe. Certain
vessels even hoisted flags of the nations who play an important role under
the United Nations Embargo policy.
A most reliable source disclosed that six big vessels ranging from five
thousand to eight thousand tons arrived at Lap Sap Mei from Europe since
IApril, and up to yesterday, there were still two vessels discharging part
of the jet fuel in order to lighten the draft to enable the vessels to
enter Whampao via Pearl River. The flags hoisted by these six vessels indicate
their nationalities: Polish (2) Czechoslovakian (1) Russian (2) and one from
an unidentified Western country.
One of the two Polish vessels was Carpaty which had once slipped through the
vigilance of the US Pacific fleet and secretly arrived at Whampao. In
February this year, this vessel loaded over ten thousand tons of jet fuel
from Europe. Part of its cargo was discharged at Lap Sap Mei before she was
able to reach Whampao for complete clearance of the load.
Within the period of only two months,. Carpaty called at the Far East again
with a full load of jet fuel. At the latest report, this vessel is still
discharging considerable quantity of fuel off Lap Sap Mei and it is predicted
that her next port will be Whampao.
What surprises others is that of these six vessels undertaking transportation
of strategic products one flies the flag of the Western countries. The trade
position of Hong Kong is now being seriously affected on account of its rigid
compliance with the Embargo policy of the United Nations; whereas, vessels
flying flags of Western countries are helping the Communist alliance to
transport war strategic materials- to the Chinese Mainland from Europe.
Communist gun boats have recently extended their surveillance off Lap Sap
Mei sea. Any craft sailing into the Communist surveillance area will be
bombarded or strafed. Fishing vessels both from Hong Kong and Macao are now
Particularly careful in their sailing routes.
6. Effective measures are being taken by the Preventive Service of the Hong
Kong government in connection with attempts to smuggle kerosene and other
commodities out of the Colony to Communist China.
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