China’s Maritime Regulator Tightens Monitoring of Oilfields

China’s maritime regulator tightened monitoring of offshore energy exploration by companies including China National Offshore Oil Corp. and ConocoPhillips (COP) as the country tackled its second oil spill in a year.

The State Oceanic Administration wants oil and gas explorers operating off the coast to implement checks on all drilling and production infrastructure immediately, Director Liu Cigui said in a statement on the administration’s website today.

The regulator held talks with more than 10 offshore field operators on July 8 after two leaks at Conoco’s Penglai 19-3 field spilled oil last month in an area of as much as 840 square kilometers (324 square miles) in northeastern China. Drilling companies have been told to review their emergency protocols, China Petrochemical Corp. said in a report in its online newsletter yesterday.

The State Oceanic Administration still found “small amounts” of oil leaking from Penglai 19-3, the official Xinhua News Agency said yesterday. Donna Xue, a Beijing-based spokesman for the Houston-based company, couldn’t immediately confirm if the reported oil leak in Bohai Bay was new, and said Conoco is investigating the regulator’s claim.

The leaks discovered at Platform B on June 4 and at Platform C on June 17 have been plugged, Xue said on July 7. The company’s China unit said in a statement on July 6 that there’s no oil sheen in the areas operated by Conoco and the clean-up is close to completion.

Government Checks

Conoco operates Penglai 19-3, 19-9 and 25-6 fields that had a combined output of 56,000 barrels of oil a day in 2010, according to the company’s website. Conoco, which also extracts oil at Panyu 4-2, 5-1 and 11-6 fields in South China Sea, produced 68,000 barrels a day of crude in China last year. The fields are jointly owned with Cnooc Ltd. (883), the country’s biggest offshore energy explorer.

The State Oceanic Administration said July 8 that offshore energy explorers must review the environmental impact of their operations and re-examine emergency protocols. The agency’s Director Liu, who visited Platform B and C at Penglai 19-3 on July 10, urged offshore drillers to conduct checks for possible leaks, according to a statement from the regulator yesterday.

The leaks at Penglai followed a pipeline explosion at Xingang port in Dalian, Liaoning province, on July 16 last year that caused about 1,500 metric tons (11,000 barrels) of oil to spill into the Yellow Sea. The blast forced the closure of the oil terminal at Xingang, partly owned by PetroChina Co., and delayed deliveries to refineries.

The Gulf of Mexico disaster last year leaked 4.9 million barrels of crude, the U.S. government estimated. The worst U.S. offshore spill led to a moratorium on operations in deep water and prompted regulators to overhaul safety rules.

--Chua Baizhen. Editors: Ryan Woo, Amit Prakash.

To contact the reporter on this story: Chua Baizhen in Beijing at bchua14@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.

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