BEIJING China's environment ministry will stop approving some new refining projects and upgrades of existing facilities by the country's top state-owned oil firms after the two failed to meet key pollution targets in 2012, it said on Thursday.
The Ministry of Environmental Protection (MEP) said China National Petroleum Corporation (CNPC) failed to meet targets to cut chemical oxygen demand in 2012, while Sinopec Group failed to meet a target to cut nitrogen oxide emissions.
Officials from the companies were not immediately available for comment, although the Communist Party mouthpiece People's Daily said the MEP's move would have no impact on 790,000 barrels per day of refining capacity now under construction.
The ministry said in a notice posted on its website (www.mep.gov.cn) that it would suspend approvals of environment impact assessments for all new refining projects from the two oil giants, apart from any upgrades that target fuel pollution specifications or other environmental renovations.
"Such tough punishment on the two oil majors is unprecedented - it is a warning to others," said Wang Tao, resident scholar at the Energy & Climate Program of the Carnegie-Tsinghua Center for Global Policy in Beijing.
"But the MEP has only suspended approval for their new refineries, and what we really need is for them to take strong measures to curb pollution from existing refineries," said Wang.
CNPC is the parent of PetroChina, China's dominant oil and gas producer. Sinopec Group is the parent of top Asian refiner Sinopec Corp.
The MEP and its local branches have struggled to impose their will on state-owned industrial enterprises, which are big sources of economic growth as well as pollution. But Beijing has promised to get tough on firms accused of ignoring environmental rules or approval procedures.
People's Daily said on Thursday the decision "demonstrated China's determination when it comes to pollution emissions."
The two firms were given time to rectify their problems after failing to meet emissions targets in 2011, but they did not install mandatory pollution controls at many of their facilities, the paper said. Several CNPC subsidiaries also supplied falsified emissions data to authorities, it said.
In May, the MEP said a subsidiary of CNPC, together with several state-owned power and steel enterprises, deliberately misused emissions control technology and submitted inaccurate data. A nationwide investigation into the problem is underway.
Measuring pollution remains one of the ministry's biggest challenges. It said earlier this month that it was planning to spend 40 billion yuan ($6.54 billion) over the 2011-2015 period to try to beef up its monitoring systems.
According to industry sources, big state-owned firms have been complaining to the National Energy Administration that the current emissions standards are too tough and that more incentives and subsidies are required to help them comply.
People's Daily said CNPC and Sinopec could not blame funding problems for these "extremely embarrassing circumstances" because they had both managed to meet tough pollution standards at their overseas projects.
"Central government-run enterprises have enough technology and funds to resolve these problems - the problems arise in the subsidiaries but the root cause is in the group companies," it quoted an official with the environmental ministry as saying.
(Editing by Richard Pullin and Tom Hogue)