Concerning Signing of an Agreement with the Government of Xinjiang about the Operation of the Dushanzi Refinery

[handwritten: from Minutes Nº 36

Decisions of the VKP(b) CC Politburo between 13 January and 26 April 1942

Decisions of 20 March 1942]

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318. "Concerning the signing of an agreement with the government of Xinjiang about the issue of the operation of the Dushanzi Refinery.

Approve the following USSR SNK decree:

"Permit Cde. I. N. Bakulin, the USSR general consul in Urumqi, and Cde. D. I. Neretin, the chief of the refinery construction in Xinjiang, to sign the Agreement to create a Mixed Soviet-Xinjiang Company to operate the Dushanzi Refinery on the following conditions:

1. The director and chief engineer of the refinery are appointed by the USSR People's Commissariat of the Petroleum Industry.

The deputy director of the refinery is appointed by the government of Xinjiang.

2. An Observation Council of two representatives is created on a parity basis, one from each party.

3. The expenses for the construction of the refinery are covered [thus]: 50% by the Soviet government and 50% by the government of Xinjiang.

4. The Soviet government grants the Xinjiang government a credit from 1 April 1942 through 1 April 1945 to cover its share of the expenses for the construction of the refinery before 1 January 1942.

The interest is calculated at a rate of 4.5% per annum.

The credit and the interest on the credit are to be paid in American dollars in equal parts over three years starting on 1 April 1942.

5. The Soviet government has the right to use the sums coming from the Xinjiang government to pay the interest and the credit, and also in the form of the Soviet share of the profits to buy gold, livestock (horses, cattle, sheep), and wool in Xinjiang for the purpose of export to the USSR and wool, with the exemption of these goods from export duty.

6. Half of the output produced by the refinery is bought by the USSR and half by the Xinjiang government.

7. The net profit of the Dushanzi Refinery is equally distributed between the contracting parties annually on approval of the annual report of the Administration of the refinery.

8. The government of Xinjiang is obligated to set aside the necessary plots of land for prospecting, the commercial production of oil, and exploration free of charge.

9. The materials and equipment imported from the USSR for the needs of the refinery are exempt from customs duty, taxes, and fees.

10. The security of the refinery is done by a guard force designated by the USSR People's Commissariat of the Petroleum Industry.

11. The Agreement is concluded for a term of 25 years. Xinjiang can buy back the refinery at the expiration of this period. The Xinjiang government is obligated not to sell and not to yield its right of redemption to foreigners".

Excerpts have been sent:

to Cdes. Molotov, Mikoyan, Sedin, and Chadayev.

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