Development and Prospects for China’s Oil and Natural Gas
Chapter 1: The Origins and Modern Development of China’s Oil and Gas Industry
OIL AND GAS BEFORE THE ESTABLISHMENT OF THE PEOPLE’S REPUBLIC OF CHINA Although small and economically insigniﬁcant, oil and gas were known in pre-modern China. Both oil and gas seeped or even gushed through the earth and the Chinese found ways to use them. For example, along the Yanshui River in Shanxi Province crude oil was used for fuel and other traditional uses included the lubrication of axles and the making of pitch to seal ships’ hulls.1 Even more remarkable was the development of natural gas in Sichuan Province. This was transported through bamboo pipes and burnt in the process of extracting salt from underground wells of salt water. The ﬁrst known use of the term we now use for oil – shiyou – was over 900 years ago, since when the term has been common usage in both China and Japan (see Photograph 1.1). In the modern age oil became of major importance when, in the form of kerosene, it began to be widely used as a lighting fuel. Western oil companies rushed to this new Asian market, importing large quantities of kerosene into both India and China. Shell oil company (Royal Dutch Shell) had a large oil market in Asian countries. From less than half a million gallons in 1870, imports from the USA alone to China reached 165 million gallons by 1920 as consumption rose, boosted by marketing campaigns which even included the free distribution of kerosene-burning lamps by the Standard Oil Company.2 This new industry was based...
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