Counting the cost

PUBLISHED : Tuesday, 12 July, 2011, 12:00am
UPDATED : Tuesday, 12 July, 2011, 12:00am


Fish farmer Zhao Hongshun says he expects his stock will begin to die off any time now, when the wind direction changes.

The general manager of Qin Island Marine Fisheries in Changdao county, Shandong, Zhao runs the biggest aquaculture farm on Qin Island, the most outlying of the province's inhabited Bohai Sea islands - and the closest to last month's oil spills.

Fishermen, aquaculture farmers, scientists, seaside restaurant owners, beach resorts, government officials and environmental groups are waiting for the oil slicks caused by leaks at two offshore oil production platforms operated by ConocoPhillips to arrive at Qin and the mainland coast. They are anxious to collect evidence about their impact on local business and the environment.

US-based ConocoPhillips is facing an unprecedented coalition of compensation demands. The company is not only obliged to take full responsibility by law, but is also politically defenceless as a foreign company. Many mainlanders have taken BP's compensation fund for last year's Gulf of Mexico spill as a benchmark and are talking about billions of yuan.

The mainland's marine authorities confirmed on July 1 that there had been two spills at China's biggest offshore oilfield, Penglai 19-3, a month earlier, with the earliest one reported to the authorities on June 4. The government blamed ConocoPhillips.

ConocoPhillips said on July 1 that it had taken immediate action, under the supervision and guidance of the authorities. The sources of the pollution had been contained and clean-up work was close to completion, thanks to the 'active support' of the central government.

But a few days later, at a press conference in Beijing, the State Oceanic Administration announced an investigation of the US oil company and plans to demand compensation for the environmental damage caused by the spills. The authorities said 840 square kilometres of the Bohai Sea had been polluted, while ConocoPhillips' said there were 'no reports of impact to wildlife, fishing or shipping activities'.

Despite claims last week that the spills were 'basically under control', the State Oceanic Administration told China Central Television yesterday that they had not been stopped completely and that ConocoPhillips was acting too slowly.

Zhao, a former fisherman, says the Penglai 19-3 oilfield is at the mouth of Bohai Bay, where water currents are fastest. Even a small spill could contaminate hundreds of square kilometres of ocean within days. Clean-up efforts could detect some of the larger patches floating on top of the ocean, but nothing could contain them all.

Aquaculture businesses on Qin and other islands in Changdao county had not been affected yet, he said, because the wind had been blowing mostly to the east since the spills, keeping the oil from reaching the shoreline. But westerly winds would soon come to dominate, threatening to land a deadly blow to the county's pillar industry and on other parts of Shandong too.

His aquaculture farm would take the first hit.

Zhao said that his farm had grown to cover tens of thousands of hectares, producing fish, scallops and seaweed. He said they would all die once the polluted water arrived because they were very sensitive to oil pollution.

The stock in his farm is worth 300 million yuan (HK$360.7 million) and that is how much compensation he will be demanding from ConocoPhillips if his farm is affected by pollution.

He has prepared for that eventuality and says he is positive he will be able to get that much compensation. Since the spills hit the headlines on the mainland, Zhao has had many discussions with his company's lawyer, hired a camera crew and contacted local environmental authorities for equipment and advice on analysing water samples.

'As soon as the first oil sheen arrives, we will capture it on video,' Zhao said. 'As soon as the first batch of scallops die, we will take them to authorised laboratories for chemical analysis. As soon as we get a confirming report, we will take it to court.

'ConocoPhillips will pay. They are Americans.'

Zhao admits he would not be so confident if ConocoPhillips was a mainland oil giant. In 2008, a leak in an oil pipeline at Sinopec's Shengli oilfield killed lots of stock at his farm. The government suppressed the news, promising him compensation for only a fraction of his actual losses - and he has still not seen the money.

But this time the government has shown an unusual amount of interest in the health of his farm. Inspectors have visited almost every day, sampling dead fish or scallops. The State Oceanic Administration announced on its website on Saturday that it had completed the first round of checks on samples from Qin and some other islands and had yet to find traces of the Penglai 19-3 spills in the digestive systems of dead animals.

Lin Jianguo, director of the Chinese Academy of Fishery Sciences' Changdao experiment station, said such evidence would soon surface. Using highly sensitive equipment, researchers would have no difficulty finding chemical compounds with structures identical or similar to the pollutants collected at the site of the spills.

Detailed analysis was important, he said, because oil spills already affected fish stocks in the region on a regular basis, with leaks from oil tankers one of the major sources of pollution.

'Each spill accident has its own chemical fingerprint. It can't escape researchers' eyes,' he said.

Wang Shicheng, former deputy director of Shandong's Marine and Fisheries Department, said the provincial government could fine ConocoPhillips up to 200 million yuan, based on a tough provincial regulation on protecting the marine environment that was issued last year.

Wang told Shanghai news website last week that the lack of a national law or regulation that could hit ConocoPhillips with a huge fine was not a problem because the central government could ask Shandong to do the job. The largest fine that can be levied under national law is 200,000 yuan.

'Victims won't have any difficulty making a compensation claim,' Wang said. 'They only need to file a lawsuit at the maritime court.

'The Shandong government can be one of them.'

On July 4, 11 mainland environmental protection organisations sent an open letter to ConocoPhillips' China headquarters, demanding a public apology for the spills and the company's attempts to conceal them for almost a month. They included some of the biggest and most influential environmental groups on the mainland, such as Green Beagle, Friends of Nature and the Institute of Public and Environmental Affairs.

'It is shocking that ConocoPhillips China, as the party in charge of operations, and therefore directly responsible for causing the accident, would not inform the public of the pollution incident until weeks after the leakage occurred,' the letter said.

The same letter was sent to China National Offshore Oil Corporation (CNOOC), ConocoPhillips' mainland partner, which holds a 51 per cent interest in the Penglai 19-3 oilfield but was not directly involved in the drilling operation.

CNOOC said on its website that it would not share legal responsibility for the spill with ConocoPhillips.


The amount, in US dollars, BP put aside for compensation after last year's Gulf of Mexico oil spill

- 120,000 people are still waiting for cash