China Petroleum & Chemical Corporation, or Sinopec Ltd, is a Beijing-based oil and gas company which is listed in Hong Kong, Shanghai and New York (NYSE: SNP). It is one of the world’s biggest companies by revenue. Sinopec Ltd’s parent, Sinopec Group is one of China’s biggest petroleum groups.
Sinopec says it warned officials of danger before Qingdao tragedy
The company says it warned officials that urbanisation was hampering repairs on the crude oil pipe network in Qingdao
China Petroleum & Chemical warned the authorities two years ago that urbanisation was hampering repair work on a crude oil pipeline in Qingdao, Shandong province. A blast last week at the pipeline killed 55 people.
The pipeline had "several safety hazards", Beijing-based Sinopec said in a September 2011 report, submitted to the Environmental Protection Bureau in Weifang, a city near Qingdao.
The report describes the 27-year-old pipeline as originally built in a sparsely populated suburb. Qingdao is now home to 7.66 million people.
The November 22 crude oil spill and blast, the deadliest since at least 2005 according to the Xinhua, highlights the challenges facing officials in balancing safety with urbanisation, as it rushes to add homes, railways and factories.
Premier Li Keqiang has championed urbanisation as a "huge engine" of future economic expansion and revive growth.
"On paper, more urbanisation is good, but it ignores the lack of government oversight and poor construction quality," said Ding Xueliang, a professor who studies mainland modernisation at Hong Kong University of Science and Technology. "The explosion in Qingdao is a huge lesson."
Sinopec shares fell 5.1 per cent in the two days after the accident.
"Originally, the pipeline was located on the outskirts and it has now become a bustling downtown district," Sinopec wrote in its September 2011 report.
The company cited "many buildings" and a "densely populated" area as impediments to conducting pipeline repairs.
Sinopec stopped 306 cases, including building projects, that illegally interfered with its pipeline operations in the first nine months, one of the company's pipeline units said in a report.
The mainland's urban population growth is projected to accelerate to 33 million people a year moving to cities, according to a UBS report this month. That compares with 18.7 million people a year during the past 12 years. More than half of the population lives in cities, and urban dwellers surpassed rural residents for the first time in 2011.
The National Development and Reform Commission, the top economic planner, in September last year approved 2,018 kilometres of roads, 25 subway and inter-city rail projects and nine sewage-treatment plants.
The rail projects alone are worth more than 800 billion yuan (HK$1.01 trillion), says HSBC.
"The government has been at pains to ensure that it is seen as responding seriously to this incident," said Olivia Boyd, an energy analyst at IHS Global Insight. "We may see stronger policy action on industrial safety in industries beyond oil and gas pipelines going forward."
President Xi Jinping has vowed to boost work safety and increase inspections in the wake of the disaster.
"A large-scale work safety check should be launched, with inspectors going deep into the production sites anonymously and unannounced," Xi said.
In a separate incident, a crane at a high-speed rail construction site fell and caused a petroleum spill at a Sinopec pipeline in the Guizhou province on Tuesday, Xinhua reported. All residents within 2km of the leak were evacuated and the spill is being investigated.