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PetroChina Parent Chairman Censured by Government for Accidents

China National Petroleum Corp. chairman Jiang Jiemin. Photographer: Nelson Ching/Bloomberg
China National Petroleum Corp. chairman Jiang Jiemin. Photographer: Nelson Ching/Bloomberg

Nov. 25 (Bloomberg) -- China National Petroleum Corp., the parent of the country’s biggest energy company PetroChina Co., said its chairman was given a “disciplinary warning” by the government after accidents at Dalian port since July last year.

The State Council concluded that “CNPC and PetroChina didn’t do enough to ensure production safety at Dalian,” CNPC said in a statement posted on its website today. “Chairman Jiang Jiemin was given a disciplinary warning as punishment.”

The government is stepping up measures against industrial accidents and pollution after ConocoPhillips, part owner of China’s biggest offshore oilfield, caused the country’s worst spill since PetroChina leaked oil in Dalian last year. The State Council, or Cabinet, ordered disciplinary action to be taken against 29 CNPC executives, including Jiang, who is also the chairman of PetroChina, the Xinhua News Agency said yesterday.

“It’s very unusual to have such disciplinary punishment for such a top leader,” said Gordon Kwan, Mirae Asset Securities Ltd.’s head of regional energy research in Hong Kong. “If it can happen to CNPC, it can certainly happen to other refiners. The whole industry will be more cautious on safety.”

A fire broke out July 16, 2010, at Dalian’s Xingang port, partly operated by PetroChina, following a pipeline explosion. The blast led to an oil spill that polluted more than 183 square kilometers (70 square miles) off China’s northeastern coast, forcing the closure of berths and beaches.

The government in September shut ConocoPhillips’s Penglai 19-3 field after spills contaminated 870 square kilometers of Bohai Bay, also in northeastern China. The closure prompted Penglai’s co-owner Cnooc Ltd. to cut its production estimate.

Disciplinary Action

PetroChina has dropped 7.6 percent in Hong Kong this year, compared with the 23 percent decline in the benchmark Hang Seng Index. The stock fell 1.5 percent to HK$9.39 today, the lowest since Oct. 14.

Jiang’s punishment was the mildest on an eight-step scale of administrative penalties, according to the government’s website. CNPC Vice President Li Xinhua was among the senior and mid-rank officials receiving various degrees of disciplinary punishments, according to Xinhua.

“I don’t think Jiang will be removed,” Kwan said. “To fire a chairman with a strong track record of growing PetroChina’s oil production, which is key to China’s national energy security, will be a mistake. A warning is enough.”

A blaze was reported Oct. 24, 2010, at Dalian port when workers were dismantling an oil tank destroyed in the earlier fire. In July this year, a blaze struck a crude distillation unit at Dalian refinery near the port. That was followed by another fire in August at the 410,000 barrel-a-day refinery, PetroChina’s largest.

The Beijing-based company was fined 1 million yuan ($157,000) after spilling 100 metric tons of toxic chemicals into Songhua River in 2005. The leak forced cities in northeast China to cut water supplies to 3.8 million people for days.

Cnooc, ConocoPhillips

Cnooc’s Yang Hua resigned as chief executive officer Nov. 23, after the unit of state-owned China National Offshore Oil Corp. reduced its 2011 output estimate by as much as 9.3 percent.

The company lowered its expectations in August after the Bohai Bay spills in June. A venture co-owned by the Chinese explorer this month canceled a deal to buy BP Plc’s $7.1 billion stake in Pan American Energy LLC., Argentina’s largest oil exporter, trimming Cnooc’s production outlook.

The State Oceanic Administration, China’s maritime regulator, has hired lawyers to study the possibility of filing a lawsuit after the Bohai Bay spills.

To contact the reporter on this story: Aibing Guo in Hong Kong at

To contact the editor responsible for this story: Andrew Hobbs at

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