“Transparency test in the Bohai Sea”

China Dialogue writes about the fallout from the Bohai Sea oil spill here. Initially it was covered up, and only admitted much later on when denials became useless:

Public concern has erupted in China over the handling of an oil slick in the Bohai Gulf, which has polluted an area six times the size of Singapore and raised fears for local economies reliant on fishing and tourism.

The progress of the incident – which originated in an oil field owned by US firm ConocoPhilips and China National Offshore Oil Corp (CNOOC) – from attempted cover-up to eventual exposure, shows that, while environmental awareness is growing among citizens, China’s companies and even its authorities are still thinking and reacting in the old way. Meanwhile, multinationals are adopting local practices and reminding us that China must strive to improve its systems of environmental management.

The Bohai spill started in the Penglai 19-3 oil field in early June and was brought to the attention of environmentalists and the media via microblogs on June 21. Investigative newspaper Southern Weekend published the first mainstream article on the event on June 30 and the following day CNOOC admitted there had been an incident. Four days later, the State Oceanic Administration (SOA) held a press briefing and – a month after it had first begun – the story finally became headline news.

Material gathered together from various sources indicates that a small quantity of oil started to leak into the sea at the oil field’s Platform B on June 4. This was followed, on June 17, by a small-scale accident in the oil well at Platform C. The responsible party was the operator of the oil-field, CPOC, but the company hid these incidents from the public. It was only after the maritime environmental authorities held a press conference on July 5 – to report their finding that CPOC held primarily responsibility for the leak – that the company spoke to the media and admitted the accident had occurred.

Not only did the delayed disclosure of information by the two responsible companies reek of a cover-up, but the information released was of poor quality – and actively misleading of the public and investors. According to media reports, CNOOC insiders stated on July 3 that the leak of crude oil had been brought under control, the clean-up operation was near complete and only about 200 square metres of ocean had been affected.

The corporate failure to be open with the public demonstrated here is, of course, shocking. But the disclosure of information by the maritime environmental authorities has also fallen short. On July 13, CPOC released a statement saying that, on the days that each of the oil-field accidents occurred, the company immediately reported the facts to the authorities. However, SOA did not hold a press conference or release the findings of its investigation until July 5, a full month after the first incident.

When CPOC’s parent company ConocoPhilips was asked by the media if it would similarly cover-up an oil spill in the United States for a whole month, its answer was: “This incident happened in China”. Clearly, the foundations and mechanisms of open information in China remain weak. If we want to make information disclosure by business and government the norm, we need to strengthen the legally binding requirement to do so and broaden the scope for environmental litigation and other means of redress.

Only then can China make companies understand that, by reducing the risks of compensation payouts, transparency is essential to their own interests – and bring about more proactive disclosure.

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