China and the Global Energy Crisis
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China and the Global Energy Crisis

Development and Prospects for China’s Oil and Natural Gas

Tatsu Kambara and Christopher Howe

This book examines China’s record of oil and gas development, its refining capacity, and energy prospects. The authors conclude that there are no fundamental reasons for anxiety about China’s demands on the world energy economy, but they emphasize that its energy future will depend critically on a continuation of reform and internationalization. China and the Global Energy Crisis is a concise but detailed study of these issues.
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Chapter 1: The Origins and Modern Development of China’s Oil and Gas Industry

Tatsu Kambara and Christopher Howe


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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