China National Offshore Oil Corp (CNOOC), the largest offshore oil producer in China, is likely to see its troubled Penglai 19-3 oil field in Bohai Bay return to work, the company told the Global Times Tuesday.
The Penglai 19-3 oil field, suspended due to oil seepage in 2011, could reopen if it gets approvals from all the relevant authorities, a staff member from the Investor Relations Department of CNOOC Ltd told the Global Times Tuesday on condition of anonymity, saying that the company will reveal more details when the time comes.
A plan for the second-phase development of Penglai 19-3 was approved by the National Development and Reform Commission (NDRC) in December, according an announcement posted by the National Energy Administration on its website.
Chen Guoqiang, an energy and environment lawyer from Zhejiang-based Sunshine Law Firm, told the Global Times that the plan must have already passed the environmental impact assessment of the State Oceanic Administration (SOA), which is a precondition for the NDRC's approval.
Besides these two approvals, some of the steps CNOOC must take to reopen the field, such as environmental precautions, will also be subject to the supervision of local governments, said Chen.
The Penglai 19-3 field is being jointly developed by CNOOC and ConocoPhillips China (COPC), a subsidiary of the US energy firm ConocoPhillips, and was suspended by the SOA in September 2011 for polluting an area of 840 square kilometers in North China's Bohai Sea.
COPC, the field's miner before suspension, was ordered to take full responsibility and pay 200,000 yuan ($32,180) in fines, according to the SOA.
The fine was not high in comparison with other similar cases, and some victims are still pursuing lawsuits against COPC hoping to win more compensation for losses caused by the oil spill, said Chen, adding that public dissatisfaction with the fine will make governments more prudent in supervising the resumption of Penglai 19-3 operations.
Greater supervision means CNOOC will have to be more careful, but the company should focus full efforts on reopening Penglai 19-3, otherwise it will have a hard time competing with major domestic rivals Sinopec Group and China National Petroleum Corp (CNPC), Gao Jian, an industry analyst from the domestic commodity information website sci99.com, told the Global Times Tuesday.
CNOOC largely relies on domestic offshore oil fields - most of which are difficult to exploit due to political factors - and Penglai 19-3 is believed to be China's largest currently exploitable offshore oil field, said Gao, adding that the company's oil pump capacity has decreased by 3 million tons due to the suspension.
CNOOC's oil production dropped by 4.6 percent year-on-year in the first half of 2012 to 161 million barrels, compared with Sinopec's 211 million barrels and CNPC's 425 million barrels over the same period.
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