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Thursday, August 25, 2011

ConocoPhillips Faces Suit in China Over 2 Oil Spills

- ConocoPhillips Faces Suit in China Over 2 Oil Spills

Thursday, August 25, 2011
International Herald Tribune
by Edward Wong

The spills at the country's largest offshore oil field, developed by ConocoPhillips and China National Offshore Oil Corp., have released about 3,200 barrels of oil and drilling fluids into the sea.

The Chinese maritime authority is preparing to sue ConocoPhillips, the American oil company, over two oil spills that took place in June and engulfed large swaths of Bohai Bay in north China, according to a report by Xinhua, the state news agency.

The report, which appeared Wednesday, said the government agency, the State Oceanic Administration, was aiming to prepare a team of lawyers by the end of the month. It cited an agency spokesman as saying that 49 Chinese law firms had applied to provide legal assistance in the lawsuit, which would demand compensation.

The two spills at Penglai 19-3, the country's largest offshore oil field, covered at least 840 square kilometers in Bohai Bay and was the biggest oil disaster in China since a pipeline explosion in Dalian in July 2010 resulted in a leak into the Yellow Sea. About 3,200 barrels of oil and drilling fluids have spilled into Bohai Bay from the June accident. Penglai is being developed by ConocoPhillips and China National Offshore Oil Corp., commonly known as Cnooc.

John Roper, a spokesman for ConocoPhillips, which is based in Houston, said in an e-mail Thursday that the company had not received any notice of litigation.

"As far as compensation goes, we will listen to any requests and follow Chinese law, but we have not received any notification of claims," he said. "Cleanup efforts are going very well. We are more than 95 percent finished with the cleanup of mineral oil-based drilling mud and expect to reach our target of being 100 percent by the end of August."

Mr. Roper added that there was no more oil sheen on the surface of the water.

The Xinhua report said the oil spills had spread to beaches in the provinces of Hebei and Liaoning and were being blamed for a slowdown in local tourism and for economic damage to aquatic farming industries. The report also said "nine new oil spill sources" had been found in the bay as of last Saturday.

Mr. Roper said those nine seeps were not from new leaks but rather were residual oil and drilling mud from the June 17 spill that were now migrating to the surface. "Divers were only able to see them once the drilling mud was cleared away from the seafloor," he said. The seeps are small, are clustered together and are releasing a total volume of fluids of one to two liters per day "that is being immediately contained and cleaned up."

In Hong Kong on Wednesday, the chairman of Cnooc, Wang Yilin, addressed the compensation issue.

"If Cnooc is ruled to pay any form of compensation, we will certainly fulfill our commitment and do the right thing," Mr. Wang said at a news briefing after the company announced its first-half earnings, according to Bloomberg News. "Cnooc is a responsible company, and we honor our long-term commitment to the country, people and the environment."

Georg Storaker, president of ConocoPhillips China, said at a news conference in Beijing on Wednesday that the spill in Bohai Bay should not be compared with the disastrous spill in 2010 in the Gulf of Mexico for which BP was blamed.

(C) 2011 International Herald Tribune. via ProQuest Information and Learning Company; All Rights Reserved

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