TNAG-0947-FCO40-1166-Oil-developments-in-and-around-Hong-Kong-1980 — Page 97

From the

Senior British Trade Commissioner

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REGISTRY Action Takent

OIL DEVELOPMENT IN SOUTH CHINA

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GAMMON HOUSES HONG KONG

11 August 1980

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During my recent visit to China, Trevor Mound and I called on Wang Zhen hua, Director for Refining of the Petroleum Corporation. I took the opportunity to enquire about China's offshore development plans particularly in relation to the South China Sea.

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Wang said that he did not foresee any significant rise in offshore oil development before 1985 as the study of seismic data had not been completed and the exploration and exploitation stages were yet to come. He confirmed that the primary use of offshore development would be for the export of crude oil partly in the form of payment to the foreign partner in the joint ventures. implied that China's current internal demand would be met from onshore sources.

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I asked Wang how he envisaged the development of the South China sea in terms of service bases for the offshore rigs. He responded that China would need to build her own bases for routine servicing but that Hong Kong could have an important role to play as a back up source of advanced technological repair and service assistance - he remarked that at present there was no-where else on the coast which possessed such facilities or could act as a centre for employees of foreign partners. I suggested that Hong Kong would need to take the possible demand for such facilities into account when formulating its own development plans and that it would be helpful if the Petroleum Corporation could provide some indication of its forward thinking as offshore oil exploration developed in the area - Mr Wang took note.

4 I then asked Mr Wang whether China might supply crude oil to Hong Kong if the latter were ever to consider the construction of its own oil refinery. Mr Wang said that the needs of the Hong Kong market would need to be studied and that he had been impressed by a suggestion made by Mr Len Dunning, leader of the Hong Kong TDC delegation earlier in the week, that China and Hong Kong should jointly develop a petrochemical industry in Guangdong province in order to supply the needs of the Hong Kong industry. I commented that Hong Kong was a significant importer of plastic raw materials and suggested that this was another field in which the Guangdong authorities might begin to exchange views with the Hong Kong administration on their development planning and aspirations.

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