China oil spill faces more scrutiny

Sept. 8, 2011 at 12:51 PM
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BEIJING, Sept. 8 (UPI) -- China has called for a thorough investigation into the spill at a Bohai Bay oilfield run by ConocoPhillips.

"Parties responsible for the accident must be made to contain the spill, clean up the mess and substantially alleviate the damages caused by pollution," the State Council, or Cabinet, said in a statement Wednesday.

"The cause of the accident must be identified, damage and losses must be defined, and those responsible must be punished according to the law."

China's decision follows the State Oceanic Administration's order last week to halt operations in Penglai 19-3, which is jointly owned by ConocoPhillips, with a 49 percent stake, and China National Offshore Oil Corp., with a 51 percent stake.

The spill covers an area of at least 2,125 square miles, SOA says.

ConocoPhillips said it would comply with the shut down, noting that it would have an impact on production from the field, one of China's largest. Penglai 19-3 averaged approximately 56,000 net barrels of crude oil per day in 2010, representing approximately 3 percent of the company's annual production.

ConocoPhillips said Wednesday it would establish a fund that will be "designed to address ConocoPhillips' responsibilities in accordance with relevant laws of China and to benefit the general environment in Bohai Bay." The company didn't specify the value of the fund.

"ConocoPhillips deeply regrets these incidents and apologizes for the impact that the incidents have had on the Chinese people and the environment," James Mulva, chairman and chief executive officer of ConocoPhillips, said in a statement.

But Beijing's response to the spill is seen as being harsh compared to last year's massive spill in Darian at a refinery co-owned by China National Petroleum Corporation in which China's media blackouts fueled public anger.

The "real reason" for the criticism of Conoco, said an unsigned editorial Thursday in The Wall Street Journal, "is to deflect this anger by showing that environmental concerns are being taken seriously."

"Conoco is a convenient whipping boy, since foreigners have limited political influence, unlike state companies whose bosses hold high rank in the Communist Party."

Yet the Chinese government's handling of the Bohai spill could be indicative of increasing environmental concerns and tighter regulation.

"The laws and regulations for environmental protection are constantly getting stronger, so you can't compare a spill that happens today to something that happened a year ago," Lin Boqiang, professor of energy economics at Xiamen University told the Financial Times.

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