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ConocoPhillips sets up 2nd China oil spill fund

ConocoPhillips sets up 2nd China oil spill fund

September 20th, 2011 in News

SHANGHAI (AP) - ConocoPhillips plans a new fund to address environmental problems in China's Bohai Bay, following harsh criticism from marine authorities and environmentalists over oil spills in the heavily polluted sea.

The Houston-based company's announcement of the fund did not include any details regarding its size or specific uses. The company earlier said it would set up a separate fund to pay compensation for damage from the spills, which began in June in Penglai 19-3, China's largest oil field.

Small seeps from the spills are continuing, according to a report Monday on the State Oceanic Administration's website.

The government ordered ConocoPhillips China, which operates the Penglai 19-3 oil field with state-owned partner China National Offshore Oil Corp., to stop all production pending a full cleanup and review to ensure no more oil seeps into the sea.

But last week it allowed Conoco to resume pumping of some oil meant to relieve pressure thought to be causing oil and drilling fluid to seep through faults from the offshore reservoir.

Conoco said it was setting up the two oil spill funds "in recognition of its obligations to the people and the government of China, and as part of its commitment to a long term relationship with them."

The company has contended that any oil still seeping from the wells, which have been sealed, is residual from the earlier spills, which released about 700 barrels of oil and 2,500 barrels of mineral oil-based drilling mud - used as a lubricant for drilling. But its earlier report that it had completely cleaned up and stopped the spills by a late August deadline was rejected by the authorities.

It said it was continuing to sample and study the sea floor and clean up any residual seeps.

"This work will continue until ConocoPhillips, CNOOC and Chinese authorities are satisfied that the clean up is complete," it said.