Platts

China has issued yet another warning to another oil company regarding oil and gas exploration activities in the disputed South China Sea -- this time directed at US oil major ExxonMobil.

"Any foreign company shall not engage in oil and gas activities in waters under Chinese jurisdiction. This position is clear and consistent," Chinese foreign ministry spokesman Hong Lei said at a regular briefing on Monday.

Late last week, ExxonMobil announced that it had discovered hydrocarbons in August in a well drilled off the coast of central Vietnam.

"We can confirm ExxonMobil Exploration and Production Vietnam Limited drilled its second exploration well offshore Da Nang in August 2011 and encountered hydrocarbons," company spokesman Patrick McGinn said in an email response to questions on the drilling.

ExxonMobil has a license from the Vietnamese government to explore offshore blocks 117, 118 and 119, an area within what Vietnam claims is its 200-mile exclusive economic zone under international maritime law.

The announcement came at a time when leaders in both countries have been trying to reduce tensions and could bring the bitter territorial dispute over the South China Sea back into focus.

Vietnam and China signed a six-point agreement on basic principles to settle maritime issues earlier this month after talks in Beijing by leaders from both countries. In September, Beijing issued a similar warning regarding plans by India's ONGC to explore in two Vietnam-licensed offshore oil blocks in the South China Sea.

"We have always opposed any other country conducting oil and gas exploration and development activities in waters under China's jurisdiction, and hope that the foreign company concerned does not get involved in the South China Sea dispute," Chinese foreign ministry spokeswoman Jiang Yu said then. China, the Philippines, Vietnam, Brunei, Malaysia and Taiwan have overlapping claims to parts of the South China Sea, which is believed to have vast oil and gas deposits. Shipping lanes in the South China Sea are vital for global trade.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8528108

Original article: [Chinese]
The Economic Observer

It's nearly a hundred days since the oil spill accident of Penglai 19-3, but it seems there's no hope of an end to the pollution in Bohai Bay. The oil spill revealed many loopholes within China’s marine law, policies, and regulations that need to be filled.

After crude oil had polluted 5,500 square kilometers, it turned out that the only possible punishment for the culprits was a 200,000 yuan administrative fine. At the time of the spill, the State Oceanic Administration (SOA) gave several orders to ConocoPhillips, a partner in the oil field project to investigate and block the source of the spill. However, the SOA, the highest marine regulator in China, seems to lack the technology, facilities, and faculty to investigate the issue itself.

Another problem has arisen for fishermen who suffered heavy economic losses due to the water contamination caused by the oil spill. The fishermen, who are in an extremely vulnerable position, have been refused compensation requests and cannot find an appraisal agency. Many NGOs, representing the fishermen, have drafted to sue, but have found that a public interest lawsuit, common in many other countries, has no legal basis in China.

The SOA, NGOs, media, and public have unanimously demanded an apology from ConocoPhillips. However, while the accident occurred more than two months ago, ConocoPhillips has ignore their demand. Furthermore, it is clear the company is unable to complete the “two requirements” required by the SOA. These requirements are a complete investigation of the oil spill with a risk assessment and the blocking of the spill's source. ConocoPhillips has gone so far as to submit a false report and seems unconcerned by any repercussions.

According to a marine expert, almost all supporting laws, regulations, policies, and rules regarding China’s economic development have focused on land rather than sea. There has been little regulation regarding marine environmental protection, a loophole ConocoPhillips has taken advantage of in economic development.

At the moment, China has only one Marine Environmental Protection Law, which is particularly outdated. This law states that the maximum administrative penalty for pollution caused by offshore oil exploration and development is only 200,000 yuan. This is the equivalent of approximately one percent of the daily income of ConocoPhillips from the oil field. New laws, regulations, and policies would not only deter the perpetrators, but could also protect the marine environment and those victims affected by marine pollution.

Regardless of the amount of compensation received after the next litigation, the consequences of mismanagement are innumerable. At this point, the effects of the oil spill have continued for more than one hundred days. The average depth of the Bohai Sea is only 18 meters making the water is relatively stagnant. The damage caused by the spill could last for decades, even centuries.

Normally, multiple departments regulate the environment of the Bohai Sea. However, the SOA alone is supervising the Penglai 19-3 oil spill accident, even though related departments have taken a negative stance towards ConocoPhillips on the issue.

The spillage has darkened the Bohai Sea, but we should respond by establishing a standard in ocean conservation, as well as harsher penalties and established rights protection, not just a small fine for the responsible party.

http://www.eeo.com.cn/ens/2011/1101/214794.shtml

Bloomberg News

CHINA, with the world's busiest port at Shanghai, may double the number of local companies allowed to sell tax-exempt marine fuel as demand from ships increases.

The Ministry of Commerce is formulating the plan after it received applications this year from five companies looking to sell bonded bunker fuel, Zhou Yiqing, manager of the bunker department at Sinopec Fuel Oil Sales Co, which owns a unit licensed to sell such supplies, said in Beijing yesterday.

China's demand for bunker, or fuel used to power ships, is rising along with the nation's growing need for raw materials and rising export of finished goods. The world's fastest-growing major economy may need more than 20 million tons of bunker fuel a year by 2015, Zhou said.

The five companies that applied for licenses include state-owned China National Aviation Fuel Group Corp, the country's biggest jet-fuel distributor, China Arts Huahai Import and Export Corp and Shanghai Fuel Co, Zhou said. Officials at the three companies didn't immediately respond to telephone calls from Bloomberg News.

Five Chinese firms are now licensed to sell bonded bunker fuel, Zhou said. The companies include China Marine Bunker (PetroChina) Co, also known as Chimbusco, and a unit of China Petroleum and Chemical Corp in Zhoushan, Zhejiang Province.

Web link: http://www.shanghaidaily.com/nsp/Business/2011/10/21/Local%2Bcompanies%2