There are two types of oil reservoir in the Well Block Qie12 in Kunbei Oilfield of the Qaidam Basin，which are the basement oil reservoirs at the bottom and the E31 glutenite reservoir above the unconformity surface. There are no stable intercalations between them and they are a unified oil and gas system. Water flooding was done in E31 oil reservoir and oil test evaluation was made in the basement oil reservoir at the beginning of development in this area. In order to achieve effective production replacement of E31 oil reservoir，three main controlling factors of the basement oil reservoir productivity were summed up from the aspects of lithology，the degree of fracture development and the water flooding characteristics based on the understanding of the characteristics of the basement oil reservoir. And then the development mode of horizontal wells in this area was determined. The geological model of massive oil reservoir was established，and the well deployment plan was made and the tracking-while-drilling technology was formed. The research proved that both slate and granite are favorable reservoirs which have high weathering degree and well-developed fractures at the top of the basement. The water flooding in the E31 oil reservoir indicates advanced water injection in the basement oil reservoir. The analysis of the main controlling factors on the productivity is the theoretical basis of the efficient development in horizontal wells. Development results of the basement oil reservoir in the recent two years show that high efficient production with less wells has been realized under the background of low oil price，and large-scale development has been carried out in the basement oil reservoir for the first time in the Qaidam Basin.