China Clamps Down on Offshore Drilling After Disastrous Spill

Oil companies have been put on notice that China is not like the US when it comes to oil spills.

After what China calls a distastrous oil spill off its coast, the country is quickly enacting tough "zero-risk" environmental standards that oil companies say are almost impossible to reach.

In June, US-based ConocoPhillips spilled 3,223 barrels of crude oil and drilling fluids into Bohai Bay, the innermost gulf of the Yellow Sea, in northeast China. Although the spill was halted that month, the company has allowed small amounts to  continue leaking.  

Did we ever hear about "zero-risk" standards after BP’s spill in the Gulf of Mexico? In comparison, the BP Deepwater Horizon spill was the worst in history, leaking 4.9 million barrels into the Gulf of Mexico.

Due to public outcry, widespread media criticism and orders from the top, China’s State Oceanic Administration temporarily closed the oil field earlier this month and is preparing a lawsuit against ConocoPhillips.

The government ordered safety checks on all offshore oil activity by the end of this year, and approval of environmental impact plans for new wells has nearly stopped. In addition, companies must re-apply for certification of new equipment.

Premier Wen Jiabao says new drilling projects around Bohai Bay will be strictly regulated.

As a result of the closure and stricter environmental standards, China estimates domestic crude oil production – which has been growing by about 7% a year – will drop by half this year, to 50 thousand barrels per day.

ConocoPhillips was forced to apologize and create two funds to clean up the oil and to compensate for damages.

"It will be a transitional point for China’s offshore oil industry – China has reached a point that GDP is not the only barometer, it’s time to aim for more balanced development," Reuters reports a state spokesman as saying.

China Moves on Other Pollutants

China’s Ministry of Environmental Protection also announced it is tightening emission standards for its one of its largest pollution sources,  thermal power plants, reports Reuters.

Unlike the US, where House Republicans last week blocked the issuance of stronger standards for sulphur dioxide, nitrogen oxide and soot, China will restrict them, as well as mercury emissions from coal and gas plants – for the first time.

The standards go into effect January 1, 2012 (in the US, they wouldn’t take effect until 2017) and would require power companies to invest some $40 billion by 2015 in advanced technology.

China plans to invest $313 billion in its green economy over the next five years as part of its 5-Year Plan, Xie Zhenhua, vice minister of the National Development and Reform Commission told a newspaper there.

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