893.6363/4–1849: Telegram
The Consul General at Shanghai (Cabot) to the Secretary of State
[Received April 18—6:55 a. m.]
1231. Oil companies Shanghai now following general policies outlined Deptel 646, April 13.21 Companies refusing bulk sales third parties Hong Kong in order handle themselves and limit sales. Companies direct business North China delayed lack import permits and foreign exchange required prior Hong Kong shipment. Companies do not know where cargoes go on Hong Kong sales but no declarations for North Korea expected as buyers cannot obtain refund Hong Kong consumption tax on North Korea and deliveries.
Lower freight handling charges on bulk deliveries from Hong Kong afford automatic price differential over cost deliveries in drums which companies hope will encourage direct distribution via own facilities North China.
Stan Vac head office believes US company tanker inadvisable due possible adverse public press reactions USA and now exploring feasibility US British tanker owned by Molleross Company. If tanker [Page 1008] shipment made companies will require small tanker handle discharge Taku Bar to companies tank farms. Companies doubt Commie ability finance tanker deliveries and companies unwilling lay in stocks Tientsin without advance payment for present—placing North China, Manchuria on hand to mouth existence for hydrocarbon oils.
In view above circumstances, companies and ConGen doubt feasibility wisdom for present interfering with current Hong Kong sales which Commies might regard as embargo (when the preferability distribution Manchuria from Tientsin and to North Korea from south fully recognized as desirable ultimate objective) or which would give Commies incentive increase Soviet oil imports and stimulate creation Sino-Soviet oil distribution company and even attempt at monopoly.
ConGen told Tientsin Commies adopting very arbitrary attitude as to price on petroleum products so that 3,000 drums Texaco shipped from Hong Kong being returned that port. No mogas or kerosene shipments North China, Manchuria from Hong Kong past week with traders conducting “sit-down strike” against Commies.
Sent Department; repeated Seoul 15, Peiping 125. Pouched Nanking 706, Hong Kong 61, Canton Embassy 281.
- See No. 202, supra.↩