Mudstone and coal are well developed in coal measures of Xinjiang north of the Altun fault, while in the Gansu -Qinghai -Ningxia region south of the fault lacustrine and swampy mudstone is well developed. The main hydrocarbon-generating macerals in the source rocks of the coal measures are exinite, alginite and desmocollinite. Organic matter is dominantly of type III kerogen. Mudstone in coal measures is generally fair to poor source rocks and less commonly good source rocks. Coals are generally poor source rocks. The hydrocarbon potential of Lower Jurassic source rocks is higher than that of Middle Jurassic ones. Crude oils from the coal measures are commonly mature, low-density, middle-waxy, low-chill point and low-sulfur ones. Oil source correlation indicates that mudstone in coal measures is a main source rock, while coals and carbonaceous mudstone are subordinate source rocks. The area favorable for oil generation are essentially piedmont (foreland) depressions which were depocenters during the Jurassic and then were buried deeply.