by John Coulter, China Trade Report, February, 1983 

Original as published can be viewed below at 2009-9-23

   THE joint venture between Geosource of the United States, a seismic oil exploration company, and the Chinese oil industry has ended its first year of operation with both sides much the wiser. The three-year project is designed to introduce modern seismic techniques in the Qaidam Basin of northwest China.

   In view of China’s urgent need for oil to fulfill development goal, and the proven record of the US-based multinational, both partners had high hopes of success. The Chinese side hoped for about 10,000kms of geophysical across-section maps of possible oilfields, plus a massive transfer of operating, maintenance and repair technology, while Geosource anticipated close to a third profit on this investment and an edge have been serious shortfalls on all counts.

  As was later revealed, the QPC was not unanimously convinced of a need for much of the imported equipment nor the foreign specialists. The QPC seismic exploration unit, hoping to avoid “contamination” from the foreigners, set up a special group in a distant town to handle them.

  The QPC seismic exploration unit has four field crews, each of several hundred workers, using mainly domestically manufactured equipment (though the vital field electronics are made by a Geosource subsidiary).These local crews each log an average 20-50 kms a month except during winter when they close down.

  Geosource undertook to provide three field crews, each consisting of about nine foreign experts and several-million US dollars-worth of high-technology equipment and machinery to be matched with about 100 local workers. Each crew guarantees to produce more than 100 kms a month, with provisions for adjustments for abnormalities such as bad weather and strikes.

  The targets are generally being met, but with excessive depreciation of equipment and a parallel impact on the morale and health of project staff.

  Soon after 40 foreign technicians, mechanics and administrators assembled in Lenghu, west Qinghai, with their US$12 million-worth of vehicles, instruments and equipment, problems became apparent.

  Helicopter service was one of the earliest problems. After being told years ago by Geosource that helicopter support would be needed to explore the oil-rich Huatugou sedimentary range, the Chinese insisted on buying and operating their own aircraft.

  When the time came to put the field crew to work, the CAAC pilots and service personnel turned out to be completely outside the control of foreign and Chinese crew managers. They disobeyed reasonable instructions, took hours meals and on one occasion left Geosource and QPC personnel in the mountains overnight in below-freezing conditions because the pilot flew to a nearby town without permission.

  The Chinese Government lost several monthly US$250.000 free payments because of the helicopter snafu. Fortunately for the project, in October last year, after standing by for several months, the helicopter unit returned with a new leader and a new attitude – and has worked well since.

  Problems also arose as a result of false images the two sides have of one another. The Chinese expected a foreign expert to be a man of propriety consonant with his formal qualifications. They were not prepared to deal with a western seismic oilman and his penchant for nose-thumbing at bureaucracy and officials.

  The foreigners were equally ill-prepared for dealing with the Chinese. From the “rednecks” to the managerial types, they all expected labour on relations to be excellent, based on their experience with industrious Overseas Chinese and their image of the communist system as disciplined and honest.

  In fact much of the labour on the project was unskilled and unwilling. Qinghai desert workers seem to be rejects from other places, and possibly the worst of these were assigned to work with the “foreign devils.”

  In a typical labour incident, a young and inexperienced but over-confident Chinese driver might climb into a new, expensive and complex drill vehicle and start doing something obviously wrong – say, bog it in sand then over-rev it and crash the gears.

  Theoretically, the leaders on both sides have now agreed, the Geosource mechanical supervisor should call on an interpreter to instruct the driver to operate the vehicle correctly. In practice, interpreters are often unavailable. What is likely of occur is a shouting and key-snatching match, and at worst, some manhandling, followed by a shutdown, reports and “criticism.”

  The Geosource man, with his professional provide, with explain his side – “when I hear that noise, I know something is going to give within seconds – last month 11 differentials on this kind of vehicle were damaged because of ignorant abuse.” The Chinese boss, defending his driver, is likely to reply: “But the foreigner swore at him.  In China after Liberation, workers are masters of their own destiny!”

  As yet there is no bonus system, nor any way to promote or fire workers. Labourers in the field receive about RMB 160 a month. This seems high compared with east coast wages, but in fact it is the same as salary received by colleagues working in the parent unit not involved with foreigners who work eight hours a day rather than 10, six days a week rather than seven, and rest for most of the winter months.

Workers sent to work with Geosource are further from home, in rougher terrain and have a higher productivity. Team and crew leaders get the same as workers so there is little enthusiasm for responsibility.

One progressive-minded QPC area manager agreed to a wage system structured on responsibility and productivity. Workers heard of the system and became excited. Two deadlines for starting the new system passed by. Finally the director of QPC, who is politically important enough to have attended the 12^th party congress, came to the field and denounced the scheme as anti-socialist. Relations with the workers after that worsened.

Geosource agreed to underwrite the resupply of spare parts which resulted in enormous costs, especially last winter when workers may have sabotaged equipment in order to stay indoors. Houston headquarters responded by sending in tougher managers to meet the Chinese head-on.

The new rationale behind day-to-day operations is that there is no point in worrying about the next contract if money cannot be made on this one.

In retrospect there was no easy way to find out the major problems without putting men and machines on the ground and getting fingers burnt. There are many clauses and operating procedures Geosource would now like to see in the contracts but they just did not occur to anyone until incidents actually occurred, ranging from a knifing and a handgun confrontation, to strikes, theft of foreigners’ belongings, equipment abuse, reckless use of dynamite, detonators and helicopters and drunkenness on the job.

Ironically, the hardnosed Texas oilmen and their rednecks were taken in. Said one, with his jaw set and lips tightened: “If we get another shot at a contract, we’ll be ready for ’em.”

Until recently, the author worked as crew manager for Geosource’s Qinghai Project.