Chinese oil giant's shares tumble in spill controversy
Shares of Chinese oil giant CNOOC Ltd. continued to tumble Tuesday as the fallout from a pair of June oil spills off the country's northern coast continued to weigh heavily on the company's performance.
Shares were down 2.1% in midday trading in Hong Kong after falling 8.9% Monday.
The sell-off comes amid growing criticism about the handling of the oil spills in China's northeastern Bohai Sea by CNOOC's partner, ConocoPhillips.
The U.S. oil company operated two platforms in an offshore oil field named Penglai 19-3, where an estimated 3,200 barrels of crude oil and drilling fluids were released into the sea in early June. The company, which co-owns the oil field with CNOOC, is accused of waiting weeks before disclosing the incidents.
Last Wednesday, ConocoPhillips told the State Oceanic Assn., China's coastal regulator, that it had met an Aug. 31 deadline for cleaning up the spills and sealing the leaks. But regulators ordered a shutdown two days later after a government investigation found that ConocoPhillips had done neither, according to a statement on CNOOC's website.
The controversy has received growing coverage in Chinese media, focusing largely on ConocoPhillip's role in the incidents.
On Monday, an editorial in the People's Daily, a Communist Party mouthpiece, accused ConocoPhillips of attempting to cover up the spills.
"Only by shouldering social responsibilities and being honest with the public and the environment can you truly solve this public relations crisis," the paper said.
ConocoPhillips dismissed the allegations.
"We have a longstanding commitment to comply with the law where we operate and to conduct all business activities with the highest ethical standards," the company told Bloomberg.
CNOOC said Friday that suspending operations in China's largest offshore oil field would reduce production by about 40,000 barrels a day.
Credit Suisse said CNOOC's total 2011 production would be diminished by 8 million barrels, or 2.3% of its projected net production for the year, according to Agence France-Presse.
Pollution caused by the spills has reportedly spread to coasts in three provinces, prompting fears that it will harm the area's tourism and fishing industries. On Aug. 25, the State Oceanic Assn. announced plans to file a lawsuit against ConocoPhillips seeking compensation for damages caused by the spills.
Wang Yamin, a professor of oceanography at Shandong University, said damage from the spills may be long-lasting.
"This is different from the BP leak in the Gulf of Mexico, because there the oil was only leaking from one point," he said. "In this case, the whole geological segment was damaged, making it very difficult to repair."
The BP spill was significantly larger, having released an estimated 4.9 million barrels of oil into the sea.
-- Jonathan Kaiman
Photo: An oil platform in the Penglai 19-3 oilfield in the Bohai Bay. Credit: Guo Xulei / Xinhua / Associated Press