China may seek over $15 mln from ConocoPhillips, CNOOC after spill

BEIJING Mon Aug 15, 2011 11:15pm EDT

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BEIJING Aug 16 (Reuters) - Chinese maritime authorities are considering demanding more than 100 million yuan ($15.6 million) in compensation from CNOOC Ltd and ConocoPhillips following a spill at a Bohai Bay oilfield jointly owned by the firms, a Chinese newspaper reported on Tuesday.

Citing unnamed sources, the Economic Information Daily said government officials were working on plans to deal with the ongoing spill at the Penglai 19-3 oilfield, China's biggest offshore oil field.

ConocoPhillips China, a subsidiary of Houston-based ConocoPhillips that operates the oilfield, said on Friday that as many as 2,500 barrels of oil and mud had leaked from the oilfield in the Bohai Bay, off the coast of northern China.

"Just considering compensation for damage to the marine environment, without considering damage to the aquatic breeding grounds of fisheries and to the tourist industry of seaside hotels and resorts, the State Oceanic Administration will launch a compensation plan for over 100 million yuan," said one of the sources, according to the newspaper, which is run by China's official Xinhua news agency.

"If the scope of the pollution expands, the scale of the compensation could also grow," the source said.

The report did not say how much of any compensation payments would be shouldered by ConocoPhillips or its Chinese unit.

"Now we're at the stage of liaising with CNOOC and ConocoPhillips China, but there has been no final decision on whether there will be litigation or mediation outside the courts," said the unnamed source, according to the paper.

ConocoPhillips has a 49 percent stake in the oilfield and acts as the operator, while China's offshore oil specialist CNOOC Ltd has the remainder.

Both ConocoPhillips China and CNOOC Ltd had no immediate comment on the newspaper report, when reached by Reuters on Tuesday.

Last month, the State Oceanic Administration said ConocoPhillips could be fined up to 200,000 yuan ($30,946) for the accident, according to law. But the company would probably have to pay out much more in compensation for ecological and economic damage.

The oil leaks, which started in June, have polluted 840 square kilometres of water, the Oceanic Administration has said.

The Administration has accused ConocoPhillips of being too slow to clean up the spill and demanded an apology. It has also asked the company to contain the oil spill, clean up polluted areas and conduct a thorough investigation before Aug 31 to eliminate further risks of oil spills.

$1 = 6.390 Chinese Yuan (Reporting by Chris Buckley and Judy Hua; Editing by Ken Wills)

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