China Orders ConocoPhillips to Halt Output at Bohai Bay Oilfield

September 2, 2011

China’s State Oceanic Administration (SOA) has ordered a subsidiary of ConocoPhillips to halt all operations at the Penglai 19-3 oilfield in northern China’s Bohai Bay, saying the company has failed to seal a leak that has lasted more than two months.

The administration said in a statement posted on its website (www.soa.gov.cn) that ConocoPhillips had been ordered to stop injection, drilling and production of oil and gas at the country’s largest offshore oilfield.

“If the current situation continues, there could be risks of more damage to the seabed and of new oil spills,” it said, adding that oil continues to drift across the surface of the water, and oil mud on the seabed has not yet been cleaned up.

The statement said that a team of inspectors “unanimously agreed” that ConocoPhillips had not fulfilled the requirements imposed on it at the end of July.

“Because ConocoPhillips has not fulfilled its responsibility as a reasonable and prudent operator, the oil spill at the Penglai 19-3 oilfield is designated as an accident caused by negligence,” the statement said.

ConocoPhillips has been requested to draw up a new environmental impact assessment report for the oilfield, and will only be allowed to resume operations once the report has been approved by government.

The SOA again stressed that it would represent China in efforts to seek compensation from ConocoPhillips for the ecological damage caused by the spill.

The U.S. company said on Wednesday that it had complied with all the requirements imposed by the administration by sealing off all the leaks before an Aug. 31 deadline.

The oil leak, which started in June, has polluted 5,500 square kilometers [3437 sq.miles] of water and has been described by the SOA as “the most serious marine ecological incident in China”.

The Penglai 19-3 oilfield has seven production platforms, with total output of 8.4 million tons per year (168,000 bpd), about 20 percent of total crude oil production in Bohai Bay.

ConocoPhillips owns a 49 percent stake in the oilfield and acts as the operator, while China’s top offshore oil and gas producer CNOOC Ltd has a 51 percent stake

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