Chinese oil giant’s stock falls after spills

BEIJING — Shares of China National Offshore Oil Corp. have taken a hit as the fallout from a pair of June oil spills continues to weigh heavily on the company’s performance.

By Tuesday’s close in Hong Kong, the state-owned oil giant’s stock was down more than 10% since the start of the week. The decline comes amid growing criticism about the handling of 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.

On Aug. 31, ConocoPhillips told the State Oceanic Administration, China’s coastal regulator, that it had met that day’s 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 spills have received growing coverage in Chinese media, focusing largely on ConocoPhillips’ 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 long-standing 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 last week 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 projection for the year, Agence France-Presse reported.

The spills have reportedly polluted the coasts in three provinces, prompting fears that they will harm the area’s tourism and fishing industries. On Aug. 25, the State Oceanic Administration said it would file a lawsuit against ConocoPhillips seeking compensation for damage 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.

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