CNOOC Problems Keep Coming in Penglai 蓬莱中海油问题继续出现
Oil exploration giant CNOOC (HKEx: 883; NYSE: CEO) is probably starting to wish it had never partnered with ConocoPhillips (NYSE: COP) to develop oil fields in the Bohai Bay off the northeast China coast, following word that yet another leak has occurred at the problematic project. Frankly speaking, it’s hard to determine how bad the latest spill was at the Penglai oil fields being developed by ConocoPhillips in this troubled joint venture with CNOOC. The latest announcement from CNOOC indicates the spill was relatively minor, with around half a ton of oil leaked into the sea, all of which has already been cleaned up. (company announcement) But it’s natural to try and downplay this kind of thing and sometimes leave out important information, as I learned last week when car maker BYD (HKEx: 1211; Shenzhen: 002594) released a statement on one of its electric taxis that caught fire after a high speed crash, but conveniently omitted the information that 3 people were burned to death in the accident. (previous post) The Penglai oil leaks have provided a non-stop series of headaches for both CNOOC and ConocoPhillips since they first began last year, polluting big areas of ocean and shoreline and leading to calls for the companies to clean up the mess and pay damages to people whose livelihoods had been affected. ConocoPhillips ultimately agreed to pay more than $300 million to settle all the claims, a relatively modest amount for an accident of that magnitude, and CNOOC is also paying a smaller amount. (previous post) It’s possible that CNOOC has just become extremely cautious after all the controversy, and that’s the reason for its latest announcement about what may be a very small spill. Then again, it’s also possible that there’s more to the story than CNOOC and ConocoPhillips are saying, in which case the companies could have a very long summer ahead of them with more clean-ups and negative publicity. At the very least, the pair could be forced to shut down production at Penglai to show they are addressing any safety and environmental concerns and ensuring that the leaks come to an end once and for all. The pair already implemented a similar shutdown for several months last year while they stopped the leaks and cleaned up the spill, causing CNOOC to miss its oil production targets for 2012 by a relatively big margin. A similar shutdown, even if it’s just for a few weeks, could result in similar lost production, along with more negative publicity if the Chinese media decide to start reporting on the problem. Since we really do have very limited information in this case, I won’t make too many predictions except to say that I think there is probably more to this story than the simple company announcement indicates. If that’s true, look for more problems at Penglai during the summer, and possibly for CNOOC to make some downward revisions to its 2012 output target as a result.
Bottom line: The latest spill at the Penglai oil field indicates the problematic project continues to have problems, potentially forcing CNOOC to lower its 2012 output target.
Related postings 相关文章:
◙ ConocoPhillips Avoids Major Liability for Spill 康菲对渤海漏油事件赔偿额较低
◙ Stumbling CNOOC Replaces Chief Executive 中海油换将李凡荣接棒CEO
◙ CNOOC Parent Comes to Rescue
