Oil giant Conoco sets up 2nd spill fund

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ConocoPhillips China said on Sept 19 that it will establish a second fund with its partner, China National Offshore Oil Corporation, to address environmental issues in Bohai Bay amid a continuing oil spill.

The establishment of an earlier fund was announced on Sept 16 to pay compensation for damages caused by the spill.

John McLemore, ConocoPhillips spokesman, told China Daily that the new fund is dedicated to environmental issues while the first fund is solely for compensation.

McLemore declined to specify the size of the fund or when the two funds would be launched. "It is too early to discuss details," he said.

In the statement, released on Sept 19, the US energy giant said that, regarding the funds, the company will work with government departments and that efforts to clean up the spill will continue until the leak is plugged.

The spill started at the Penglai 19-3 oilfield on June 4. The State Oceanic Administration (SOA) said on Sept 17 fresh spots of oil can still be found near the oilfield.

The spill has polluted more than 5,500 square kilometers of Bohai Bay with more than 700 barrels of oil released into the sea, according to statistics released by the company.

The contaminated area is seven times the size of Singapore.

Dead scallops and shrimp in the area near the leak indicate that the pollution may be greater than reported, according to an energy expert.

Wu Shiguo, director of the Maritime Oil and Gas Research Center at the Chinese Academy of Sciences, said that the spill is worse than ConocoPhillips has said.

Yang Jizhen, chairman of the Laoting Fisheries Association in Hebei province, said that the latest estimate of losses to the fishing industry exceeds 350 million yuan ($53.8 million).

Yang felt pessimistic, even with the compensation fund, because "proving the link between the leak and the dead scallops and shrimp" will be difficult for fishermen, especially as the leak was covered up from the public for more than a month.

Hundreds of fishermen are waiting for a lawsuit to be filed by the SOA, but no timetable has been released so far.

Marine experts and lawyers are also targeting the SOA for the delay in filing a lawsuit against ConocoPhillips China.

Wang Yamin, an associate professor from the marine college of Shandong University, said ConocoPhillips China is trying to avoid going to court by establishing the environmental and compensation funds.

"The SOA should have started legal procedures more quickly and after that the court should have frozen ConocoPhillips China's assets for compensation according to the damages caused," Wang said.

Jia Fangyi, an attorney at the Beijing-based Great Wall Law Firm, suggested that the SOA should file a criminal case against the oil company for severe pollution and called for 10-billion-yuan compensation for the oil leak.

But an insider at the SOA's legal consultancy team said on Sept 12 that no matter what compensation measures ConocoPhillips takes the lawsuit will proceed after evidence is collected and analyzed.

The SOA ordered the energy company to suspend all production from Sept 2 at the Penglai 19-3 oilfield.

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