ConocoPhillips moved to repair its frayed relations with Chinese regulators last week, offering an apology for a crude oil spill in northern China's Bohai Bay.
"ConocoPhillips deeply regrets these incidents and apologizes for the impact that the incidents have had on the Chinese people and the environment," said Chief Executive James Mulva.
ConocoPhillips also said it would establish a fund to cover the clean-up costs, aiming in particular to address its legal responsibilities and benefit the general environment in Bohai Bay.
The company said it would work with the authorities on details of setting up and operating the fund. It did not give any idea of how large the fund would be.
Meanwhile, a ConocoPhillips subsidiary said all operations at the Penglai 19-3 oil field had been shut down, as ordered by China's State Oceanic Administration, after the firm failed to stop leaks that have lasted nearly 3 months.
Despite the apology, fund, and shutdown, China's top leaders still ordered an investigation into the oil spills that have drawn intense criticism from marine authorities and environmentalists.
"We must completely identify the cause of the accident, identify the damage and losses caused by the accident, and determine who shall be held responsible to maintain the legitimate rights and interests of all parties damaged," the government said on its web site.
Among other damaged parties, fishermen in Shandong, Hebei, and Liaoning provinces that border Bohai Bay, east of Beijing, claim that oil from the leak has killed a large part of their prized harvest of seafood such as scallops.
Chinese authorities are not ready to let ConocoPhillips off the hook, saying that the firm failed to meet an Aug. 31 deadline for permanently staunching and cleaning up the spills. The company says it met the deadline.
State media attacks
The Chinese government has not been content to pursue an investigation of the problem. It has also used Chinese state media to accuse ConocoPhillips of displaying "indifference" and issuing misleading statements about the spill.
The state-owned People's Daily reported that ConocoPhillips was ordered to halt production after repeated "delays, negligence, cover-ups, and cheating," while the New China News Agency said that ConocoPhillips is "facing the wrath of the Chinese public."
Putting matters into perspective, the Penglai 19-3 oil field operated by ConocoPhillips has leaked an estimated 700 bbl of oil and 2,500 bbl of mineral oil-based drilling mud since June. That's far less than the volume of oil spilled last year from BP PLC's Macondo well in the Gulf of Mexico.
Is this a tempest in a tea cup? Certainly, the Chinese authorities appear to be doing little more than whipping up a cup of hong cha—red tea—at the expense of ConocoPhillips.