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ConocoPhillips to compensate for oil leaks

ConocoPhillips to compensate for oil leaks

Updated: 2012-04-28 07:41

By Zhou Yan and Zhao Yinan (China Daily)

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US energy giant ConocoPhillips China and its partner the China National Offshore Oil Corp have agreed to pay 1.68 billion yuan ($267 million) for the oil leaks off northern Bohai Bay, China's maritime watchdog announced on Friday.

ConocoPhillips China will pay 1.09 billion yuan in compensation for the oil spills, while China National Offshore Oil Corp and the Chinese unit of ConocoPhillips will pay 480 million yuan and 113 million yuan respectively for environmental protection efforts in Bohai Bay, according to the State Oceanic Administration.

ConocoPhillips to compensate for oil leaks

Such efforts include habitat restoration, reducing the discharge of oil pollutants, and monitoring and research on the impact of oil spills on the environment, the administration said on its website.

The two leaks in the Penglai 19-3 oilfield, the country's biggest offshore oilfield, released more than 700 barrels of crude oil into the waters and triggered widespread anger and criticism from the Chinese public about ConocoPhillips' inefficiency in dealing with the accidents.

It's the latest move after the two oil companies said in January that they had reached agreements with the Ministry of Agriculture to settle the fishery compensation, under which ConocoPhillips will provide 1 billion yuan to improve fishery resources in the waters. The two companies also promised to put a total of 350 million yuan to work on fishery resources recovery and conservation.

Both of the companies didn't clarify whether the latest funds announced on Friday are linked to the previous ones, but did confirm the administration's statement, without elaborating.

The government ordered the US company to suspend operation of the oilfield in September after claiming that the oil leaks were caused by "negligence."

Zhong Hua, chief financial officer of the China National Offshore Oil Corp, said on Tuesday that the company's net production in the first quarter declined by 6.3 percent year-on-year to 79.8 million barrels of oil equivalent, partly due to the suspension of production at the Penglai 19-3 oilfield. Even so, he said the company is confident it will realize its previous annual target of 330 to 340 million barrels of oil equivalent.

"The compensation amount is higher than expected. But it's not a matter of capital. More importantly, it's a turning point for the oil producers that they will pay if they leave environmental protection behind in pursuit of profit," said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.

"We hope the accidents, on the positive side, will help fill the absence of domestic laws and regulations on environment protection during oil and gas exploration and development activities," he said.

For the victims of the oil spill, the compensation has yet to materialize. Ma Rongbao, head of Panshan county's Sandaogou village, has seen his fish harvest halved so far this year. He said he hasn't received any claims and had no idea when the money would be allocated to him or how much he could receive.

"I can't be sure whether the lower harvest is caused by the oil pollution or by the bad weather. It would be hard to calculate the real loss," the 51-year-old said.

The added compensation is necessary since sea animals had been left out of the previous reimbursement plan, said Tian Jiguang, director of a non-governmental organization in Liaoning dedicated to protecting marine life.

Zhao Jingwei, a Beijing-based lawyer representing 107 households of fishermen in Hebei province, said how to allocate the money and who is to supervise the allocation are "crucial".

"It's all about execution of the plan," Lin said.

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