Abstract: Oil reservoirs with certain scale have been formed in the east section of Dinan salient, the Junggar Basin. The crude oils are characterized by high density and high viscosity. Several hydrocarbon-generation sags have been found in the region. Many sets of source rocks exist in the longitudinal direction, and they all have hydrocarbon supplying possibility. According to the physical and geochemical properties of crude oils, it has been concluded that the crude oils in the study area are characterized by light carbon isotope and high abundance of C₂₈ sterane. The sterane has higher maturity than crude oils themselves and Permian source rocks from the Wucaiwan Sag. The saturated hydrocarbon chromatograms of crude oils and reservoir extracts are incomplete with severe damage of light components and n-alkanes, which can be explained by biodegradation effect on mature hydrocarbon sourced from Permian of the Dongdaohaizi Sag. The analyses of natural gas composistions and carbon isotopes have indicated that the natural gas is dry gas with heavier ethane carbon isotope and lighter methane carbon isotope, and is associated with biodegraded oil. It is the mixture of crude oil degraded by bacteria and the product of high-over mature stage of Carboniferous. The next exploration direction should be extended to the Dongdaohaizi Sag, and the preserve conditions in the downward inclined part of structure are better. The common plugging of degraded heavy oil and tight reservoir could form lithologic trap, which is beneficial to capture oil and gas of high mature stage in the sag.