893.6363 Manchuria/4

The Consul General at Mukden (Myers) to the Acting Secretary of State

No. 594

Sir: Referring to my despatch No. 584 of June 2, 1933, under the subject “Oil Monopoly in Manchuria” reporting upon the alleged intention of the new regime in Manchuria to establish an oil company, I have the honor to state that according to reliable information a joint Japanese-”Manchukuo” oil company is now being organized. This concern will be in the category of the so-called state controlled enterprises.

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According to the meagre information available, the company will be capitalized at about Yuan 10,000,000, two-thirds of which will be Japanese and one-third “Manchukuo”. As the South Manchuria Railway Company will control the company and will furnish a large proportion of the personnel, it is surmised that it will provide most of the Japanese share of the capital. Mr. Awano who was formerly head of the Mukden office of the South Manchuria Railway Company will be the chief director. The head office, it is presumed, will be located at Dairen for the time being. The location of the refinery is not known but was given as Hulutao in a recent press report. It was stated that the new company will import and refine foreign crude oil and use such domestic crude oil as may be produced. The company at the same time plans to develop the oil resources of the new state.

Although it was not mentioned, it is presumed that the “Manchukuo” contribution to the capital will consist of property.

The following news item which appeared in The Japan Chronicle of June 23, 1933, may be of interest in this connection:

“Manchukuo is reported to be making plans for the erection of an oil refinery at Hulutao, the new port which Manchukuo hopes to develop. This plant will have a daily capacity of 4,000 barrels of gasoline, and may commence operations with imported crude oil, probably from Russia. In the neighborhood of Hailar there are crude oil seepages and geologists are there to prospect and prepare for drilling this summer. If oil is brought in in paying quantities, another refinery may be built at Hailar. There are said to be two most important and promising oil fields in Manchukuo. One is near Chiufutan in Jehol Province. About 30 years ago the Standard Oil Company made boring tests there. The other field is at Dalainor, not far from Manchuli. Both Soviet and Chinese experts have looked over this field, and just before the Mukden incident of September 18th, 1931, the South Manchuria Railway Company planned to sink some test wells there. Now it is understood that drilling will start at once.”

This office is endeavoring to secure further information regarding this new project and will keep the Department currently advised thereof.

Respectfully yours,

M. S. Myers