Average daily production of Baku fields in 1896 and 1897.

Stocks of all products at Baku December 31, 1896 and 1897.

PETROLEUM IN CHINA.

The bulk of the petroleum trade between Batum and China has hitherto been in the hands of a number of different firms. Since February 1, 1898, the trade has been consolidated into one corporation, known as the Shell Transport and Trading Company, Limited. It has a capital of $9,000,000 in 18,000 shares of $500 each, privately subscribed by the various firms interested in the combination. These firms are the Borneo Company, of the Straits Settlements; Speidel & Co., of Saigon; Ker, Bolton & Co., of the Philippines; Anold, Karberg & Co., of Hongkong and the China ports; M. Samuel & Co., of Japan; Best & Co., of Madras; Graham & Co., of Bremen; A. Rùnge & Co., of London; Lane & MacAndrew, of London; and several other British firms.

This powerful combination possesses huge resources in carrying, storing, and distributing stock, and has a network of stations in all the principal centers in India, the Straits Settlements, China, Hongkong, and Japan. It has also fourteen tank steamers, which are kept constantly employed in carrying oil to the various stations. These tank ships are of 25,000 tons each. In addition, the company possesses 200,000 acres of petroleum-producing land in Borneo. It is also constructing, in Borneo, one of the largest oil refineries in the world, at an expense of £200,000 ($973,300).

In the consular district of Canton, in all the principal cities of the provinces of Kwangtung and Kwangsi, kerosene oil is used. by the natives.

American oil dealers can not ignore the competition of Russian and Langkat oil. The Langkat oil is what dealers here call "low grade," but is cheap and popular in China and is already being "pushed" by British and German agents at the newly opened ports on the West River.

Agents of Batum and Dutch oil are also actively pushing the sale of their products in the commercial centers of the densely populated provinces of the Canton district.

Great injury is done to American oil interests by the sale of Dutch and Batum oil packed in American tins and boxes.

A large and constantly growing trade in oil is carried on in these provinces by natives and by British and German agents for Batum and Dutch oil, while our American oil interests are being neglected. The American kerosene companies should have active agents here. There are many millions of consumers in this district, and an enormous trade is being done in oil and other foreign products. At Wuchow, 220 miles west of Canton, Americans now have the right

to reside and carry on business with the same freedom they have here in Canton; but no Americans have yet located at Wuchow, and consequently the British and German firms are pushing their inferior brands of oil in this distributing center for the Kwangtung, Kwangsi, Kweichou, and Yunan provinces.

In the year 1896, there were imported to Canton 216,945 gallons of American kerosene, against 8,990 gallons of Russian oil. Last year (1897) the importation of Russian oil greatly increased. This year the prospects are better, since the opening of the West River to foreign trade. Previous to the opening of Wuchow, on the West River (in June, 1897), very little oil reached that city, because it had to be carried by Chinese in native craft, and the owners or dealers were compelled to pay large sums of money at the native or likin tax offices en route. These stations are located at intervals of only a few miles apart, and the several "squeezes," or payments required by the local authorities, made the oil very expensive. As soon as the port was opened, the Imperial Maritime Customs established a branch office there, and foreign products were at once able to reach Wuchow on payment of half duty (21⁄2 per cent), in addition to the regular import rate, 5 per cent, of the Chinese customs.

Action should be taken immediately to protect American interests in Wuchow, and I am sure that any reasonable expenditure incurred in pushing our oil in these markets can not fail to result in lasting benefit. There are more than 400,000,000 people in China to supply with light. They have hitherto depended on the native bean oil and tallow candles, and are quick to appreciate the advantages of kerosene. Every possible effort should be made to hold the trade in this article.

CANTON, February 14, 1898.

EDWARD BEdloe,

Consul.

JAPANESE PETROLEUM PRODUCTION.

I transmit a clipping from the Kobé Chronicle of February 28 (an English journal published at this port) containing a statement. of the location and output of the oil wells in Japan, so far as they have been discovered, which seems to refute the extended claims hitherto made as to yield and quality of production.

HIOGO, March 2, 1898.

SAMUEL S. LYON,

Consul.

SOME FACTS REGARDING JAPANESE PETROLEUM.

From time to time, references are made in the vernacular journals to the existence of petroleum in the province of Echigo, and we therefore consider it will prove

interesting to many of our readers if some account of the extent and value of these deposits be given. For purposes of convenience, we may divide the districts where kerosene is found into four. The first is situated between 5 and 6 miles from the town of Nagaoka, and in this district there are some sixty wells at work, situated on steep hillsides. During 1894 and 1895, the wells were very productive, the outturn being about 30,000 gallons a day. Latest reports, however, show that the production is decreasing, and it does not now exceed 10,000 gallons per day. Pumping has to be maintained continually in these wells, which vary from 600 to 1,500 feet in depth; and in some the flow is so trifling that pumping can only be carried on intermittently. This inadequate flow of oil appears to be a characteristic of most of the Japanese wells. Not far from the wells above mentioned, another petroleum-yielding area was discovered about two years ago. The first wells, sunk to from 400 to 600 feet, gave very good returns even before pumps were fitted; but after a few months the flow slackened, and, though pumping has now been resorted to, the production appears to be rapidly decreasing. In these new wells the quality is fairly good, and in some excellent, the analysis showing 70 to 75 per cent of illuminating petroleum, while the wells first mentioned do not average more than 54 per cent. But the method of refining the oil is very ineffective, the process being carried on in small private stills, and, the product being thus of uneven quality, it is found necessary to mix it with from 40 to 50 per cent of American oil before it can be used for illuminating purposes. A new refinery, however, is in process of construction at Nagaoka, with machinery made in Japan, capable of dealing with from 7,500 to 8,000 gallons of crude oil daily; and it is asserted that the oil in this refinery will be brought up to the American standard. There is also a refinery, with a capacity of 4,000 gallons a day, at Niigata, where a part of the crude oil is effectively treated.

The second district from which oil is obtained is situated at Idzumosaki and Amasemachi in the province of Echigo. The same results have followed the working of the wells in this district as in that first named. When the existence of petroleum was discovered on the seashore, a company was floated and land reclaimed, upon which some fifty or sixty wells were sunk. Before ten years had passed, however, the production showed a great falling off, and not only have many of the wells been abandoned, but the new wells sunk have given very poor returns. It is doubtful if the whole outturn of this district exceeds 5,000 gallons per day. Possibly, if deeper boring were attempted, the results would be improved. The deepest well in this locality is 2,400 feet, and from this the best oil is obtained, the others varying in depth from 400 to 1,800 feet. In quality, indeed, there is great diversity among these wells, some producing only 45 per cent of illuminating oil, while the best reach a limit of 75 per cent, the oil being treated in a good, though small, refinery on the spot. But it seems clear that the district is almost worked out, and the pumping machinery employed is continually being removed to other localities.

The Japan Petroleum Company has control of a district situated from 10 to 12 miles from that first mentioned, where there is an output of not more than 1,500 gallons per day. The product is of an inferior quality, and there are expectations that this district will shortly be abandoned as not worth further development. Some 40 miles, again, distant from the first district named is to be found a number of wells where, though the flow is superior to all the others mentioned, the quality is exceedingly poor. The outturn is about 25 per cent of illuminating oil, and 40 to 50 per cent of lubricating oil. The latter is difficult to dispose of, as it is sold unrefined, and factories with complicated machinery use only the American product, to avoid the clogging of the wheels that results from employing the Japanese lubricant. Even when employed for lubricating big wheels and rough

machinery, the Japanese oil is mixed with American before use. It costs about half the price of the latter product.

It has been stated that the total output of the Echigo fields is from 650,000 to 700,000 cases refined yearly; but, as already pointed out, the production is decreasing. About twelve months ago, two American experts arrived in Japan to prospect the oil fields, about which there was considerable writing at the time in the Japanese journals. They remained in Japan for more than six months and made a close investigation of the yield in the different oil regions; but eventually they returned to America convinced, it is said, that the oil was not sufficiently plentiful to warrant being treated with expensive machinery. However this may be, nothing practical seems to have come of their visit. Presuming that the yield of the Echigo wells is from 650,000 to 700,000 cases, this represents only one-eighth part of the total import of foreign petroleum, which in 1896 amounted to 5,462,000 cases. Thus, taking everything into consideration, it does not seem that there is likely to be much competition between the foreign and the Japanese product, 80 per cent of the latter being consumed by Echigo and the surrounding provinces alone, while the remainder is placed at a disadvantage, owing to difficulty of transport. At the wells the price of crude oil varies from 2.50 yen ($1.25) per koku (about 50 gallons) to 6.15 yen ($3.07), according to quality. The refined article is sold retail in the districts of production at from 2 to 2.05 yen ($1 to $1.02) per case; but when it comes into competition with American, Russian, and Langkat oil at Osaka, it is found necessary to sell the Echigo product at 1.85 to 1.90 yen (92 to 95 cents) per case, notwithstanding that the cost of freight, insurance, and leakage from Niigata, the port of shipment, to Osaka must reach to 15 sen (7 cents) per case at least. Unless, therefore, there are discoveries of oil fields with a much greater output than those of Echigo, it would seem that the foreign product is not likely to be displaced by the Japanese. From information that has reached us, it would seem that American, Langkat, and Baku oil have more to fear from another quarter. We learn that a Franch expert has recently been investigating the oil fields in Saghalien and has made a very favorable report, with the result that a French company is being formed to develop the petroleum fields of this island, which are said to be of very wide

extent.

PETROLEUM IN THE DUTCH EAST INDIES.

The following paragraph appeared recently in a New York paper: American petroleum has already been practically driven out of the Dutch East Indies by the native product, and the use of the latter is spreading into other Eastern countries.

On seeing the above, I at once sent to the Standard Oil office here to request the figures of importations of American, Russian, and Sumatra oils for 1896 and 1897.

Their reply gives figures as follows:

Imports of oil into Java.