In the 1950s and 1960s, oil used in Tibet had to be transported by automobiles via the Qinghai-Tibet and Sichuan-Tibet highways. Owing to the excessively long distance, oil consumed on the way accounted for one-third of the total transported volume. In addition to the high costs, the transportation was full of danger.

On May 30, 1972, Premier Zhou Enlai gave the signal for the construction of an oil pipeline from Golmud in Qinghai to Lhasa to help solve the oil shortage problem confronting Tibet. The pipeline reached Lhasa in November 1976 and went into service in October 1977. The 1,080km-long pipeline is the longest of its kind in China, and the highest in the world. There are 11 pump stations, and one oil diversion station along the route. An oil depot was built in Lhasa. Construction of an oil tank farm began in 1984, and was completed the following year.

Over the past 20 years or so, more than 3 million tons of oil has been transported into Tibet through the pipeline. However, due to its aging equipment and some parts being eroded in recent years, it can no longer meet the needs of local economic development and border defense. In July 2002, the state decided to invest 327 million yuan to renovate 337 km of the pipeline and its six pump stations in five years.

Efforts will also be made to undertake construction of oil pipelines from Lhasa to Gonggar, Nyingchi and Xigaze, and from Gonggar to Zetang, so as to gradually form the pipeline transportation network centered on Lhasa.