Petroleum has jumped to the number one position among Chinese exports to the United States, indicating its growing influence in the development of Sino-American relations.
U.S. Commerce Department figures show crude oil accounting for more than 15 percent of U.S. imports of Chinese goods through May 31. About $29.5 million in Chinese crude oil products had arrived by that date and the figure since has increased to about $42 million for the first half of the year, according to incomplete figures available here.
The Chinese oil, now powering generators in California, represents only a small fraction of total U.S. oil imports, but it indicates China's growing potential in the international oil market and increased U.S. interest in developing sources outside the Persian Gulf.
Vice President Mondale, now here for wide-ranging talks with the Chinese, is expected to touch on growing economic cooperation and mutual energy problems. The Chinese are upset about delays in extending promised U.S. trade benefits to them, and appear to see their growing oil production as a way to encourage American cooperation.
Through June, total Sino-American trade was just below $1 billion, nearly the total of trade for all 1978. The increased Chinese oil exports have helped the surge, along with heavy Chinese purchases of American corn, cotton and wheat totaling $278 million through May.
The jump in petroleum sales comes from a contract signed in November with the Chinese by Coastal States Gas Corp, to buy 3.6 million barrels of crude in 1979 -- about one-fifth of a day's consumption for the United States. The petroleum is being used by power stations of Pacific Gas and Electric Co. in San Francisco and Los Angeles Water and Power Co.
At least 10 American companies, along with several other foreign oil explorers, have signed agreements with the Chinese in recent months to conduct seismic surveys along China's eastern and southeastern coasts. Geologists have speculated for years that the area has rich oil potential.
Chinese Petroleum Ministry officials told visiting U.S. Sen. Henry Jackson (D-Wash.) this month that one southeastern offshore well had struck good quantities of highly marketable, low-sulphur oil, good for refining into gasoline.
China at the moment exports about 10 percent of the 730 million barrels of crude it produces each year. The annual production continues to increase, but at a somewhat declining rate, and the Chinese seem eager to bring in foreign experts to develop more untapped resources.
China's top exports to the United States had been textiles, fireworks, metal and even bamboo baskets, which do not have nearly the income potential of petroleum.
The Chinese need to increase sharply their export income to pay for increased imports of grain and foreign technical equipment needed to build up their economy.
"Oil will play a leading role in making that foreign exchange," Jackson said Friday. He added that Peking now was moving to bring in enough foreign technical experts and equipment to develop new onshore, as well as offshore, wells.
Japan purchases by far the most Chinese oil, despite complaints from some Japanese firms about the high wax content of oil from the major Chinese onshore field; Daqing. Chinese oil products also go to the Philippines, Thailand, Brazil, France and Italy.
A spokesman here for Sobin Chemicals Inc., cosigner of the Coastal States agreement, indicated that his company and Coastal have agreed to buy more Chinese petroleum but would not say how much or at what price. Other U.S. companies interested in purchases have approached the Chinese, and one is reportedly marketing Chinese oil in Asia, but not in the United States.
Peking appears to be dealing with Japanese, French and British companies in exploring the northern portion of its eastern coast, and leaving the area south of Taiwan to the Americans. Phillips Petroleum, Chevron, Texaco, Exxon and Mobil are conducting surveys between the southern tip of Taiwan and Hainan Island. The area south of Hainan toward the Paracel islands is being explored by Atlantic Richfield which concluded an agreement in the spring and reportedly has made progress toward completing its seismic surveys.
Standard Oil of Indiana, Cities Service, Union Oil of California and Pennzoil have an agreement to explore in the Tonkin Gulf between Hainan and Vietnamese waters.
The agreements stipulate that the American companies will conduct the surveys estimated to cost each company about $4 million, at their own expense and give them no automatic right to develop promising areas. Several American oil executives say, however, that they anticipate their participation now will give them an advantage when bidding on drill work begins probably in mid-1981.