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Bohai Bay Oil Spill Ignites Information Disclosure Debate

07-19 15:55 Caijing

Publicly-listed CNOOC is under the spotlight amidst allegations that it may have violated principles of information disclosure.

By staff reporters Xu Chao, Wang Chen, Gao Shengke and Li Chenlei

On July 13, China’s State Oceanic Administration (SOA) ordered ConocoPhillips China (CPOC), a subsidiary of the U.S. oil giant, to immediately suspend its oil production operations in the B and C platforms of the Penglai 19-3 oilfield in China's Bohai Bay. The move came 39 days after two oil spills in the region polluted thousands of square kilometers of nearby seawater.

The oil spills occurred near the Penglai 19-3 oilfield on June 4 and June 17. The amount of oil leaked and the total size of the area affected are still unknown. But one thing is certain: the slick is the most serious offshore oil extraction incident in the industry’s 30 years of history.

The SOA said that operations would not be allowed to resume before the source of the spill was fully plugged and risks of another slick eliminated. But the incident has already had a strong negative impact, one which cannot be dispelled in the short term.  

Commenting on the spill, the SOA stated that by July 11, in addition to the 840 square kilometers of seawater that have been severely polluted, the water quality of 3,400 square kilometers of adjacent seawater has been downgraded from Grade 1 to Grades 3 and 4. The slick also contaminated 20 square kilometers of nearby marine sediment, causing its quality rating to be downgraded from Grade 1 to Grade 3.

Despite the severity of the incident, the SOA, CPOC and China National Offshore Oil Corp (CNOOC) Ltd., the state-run giant who operates the oilfield in an arrangement with CPOC, did not release complete information regarding the spill. However, public pressure and further escalation of the incident ultimately forced the SOA to hold a press conference on June 5. Still, the three parties have yet to provide full details of the incident.

During the SOA’s July 5 press briefing and the press conference held by CPOC and CNOOC on July 6, the three parties all stated that the spill recovery and cleanup work had already been completed. The parties announced that the two spills were “basically under control” and that the leak point in platform C had been plugged with cement within 48 hours of the spill.

But on July 10, a joint supervision team from the SOA and China Marine Surveillance inspected the platforms and discovered that platform C still had a small amount of leakage. Moreover, satellite remote sensing info obtained on July 11 showed that oil is still spilling out of platforms B and C. And an undersea probe showed that there are still signs of oil leakage around platform B. 

Publicly-listed CNOOC is under the spotlight amidst allegations that it may have violated principles of information disclosure. “ConocoPhillips, as a large international oil company, should have introduced good international practices such as information disclosure. But now it is clear that they are just 'doing as the Romans do'," said Ma Jun, director of the Institute of Public and Environmental Affairs.

In the past 10 years, around 53 percent of China's increased oil production has come from offshore operations. By the end of 2009, Bohai Bay had a total of 20 oil fields and 165 drilling platforms.

Increased incidences of pollution have accompanied offshore oil and gas development. In 2008, 12 small-scale oil pollution incidents occurred in the Bohai Bay area. In 2009, four oil pollution incidents occurred, including two accidents involving crude oil and two involving fuel oil.

Full article in Chinese: http://magazine.caijing.com.cn/2011-07-18/110778057.html

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