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the spot market to purchase much more expensive supplies. But if China could increase supplies to Hong Kong at current prices to meet the shortfall that rould be the simplest solution.
Q.
There are existing contracts between China
and the oil companies for fuel supplies. The oil companies have already approached China for additional supplies but without success. It is believed that the Chinese themselves may be in a
supply squeeze,
10.
The Chinese-owned Far East Overseas Oil Company (FOS0) were granted a number of sites in 1974/75 on short-term tenancies to enable them to set up a distribution network in Hong Kong. There is now a problem about finding replacement sites which would become more important if we were to ask the Chinese to supply more oil. (The land question is covered in (e) of enclosure 2 to the brief on Land Policy.)
11.
The situation at the moment is fluid and it is possibly still premature to think in terms of The a government to government approach to Chine. situation should become clearer in a fortnight's time and it might then be appropriate to consider an official approach to the Chinese. Meanwhile it is recommended that II E should not raise the subject of a possible need for increased supplies although he could refer to it as a possibility if there is a general discussion of the world economic situation and the effect of the crisis in Iran.
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