- Title: AT SEA/CHINA: Oil spill by ConocoPhilips stirs worry from foreign firms in China
- Date: 9th September 2011
- Summary: BEIJING, CHINA (SEPTEMBER 8, 2011) (REUTERS) EXTERIOR OF CHINA'S FOREIGN MINISTRY BUILDING CHINESE NATIONAL FLAG (SOUNDBITE) (Mandarin) CHINESE FOREIGN MINISTRY SPOKESMAN LIU WEIMIN SAYING: "We also hope that foreign companies operating in China are enjoying equal treatment (with domestic companies) and at the same time fulfill their obligations." DUNCAN INNES-KER SENIOR EDITOR OF ECONOMIST INTELLIGENCE UNIT SPEAKING TO JOURNALIST HAND (SOUNDBITE) (English) SENIOR EDITOR OF ECONOMIST INTELLIGENCE UNIT DUNCAN INNES-KER SAYING: "The nature of these incidents is that there is no predictability in the government's response. Certainly the way the government has responded in this case is very different from, for example, the series of fires that there had been in the CNPC, the oil refining facility in Dalian. So there is a concern that the lack of predicability is a real problem. " ECONOMIST POSTER (SOUNDBITE) (English) SENIOR EDITOR OF ECONOMIST INTELLIGENCE UNIT DUNCAN INNES-KER SAYING: "I don't think, really, there will be any changes. Foreign companies in China are well aware of the sensitivities of the market they operate in. We see a number of companies not just in the energy sectors in this instance, but also in food retailing, like McDonalds and KFC, receiving criticism because it's perceived that the standards that they operate in China are lower than they operate in other countries. Now that is not necessarily the case, but when something happens, the Chinese public expect a higher standard from foreign companies. Whether or not that is fair or not is another question entirely of course."
- Embargoed: 24th September 2011 13:00
- Keywords:
- Location: At Sea, China
- City:
- Country: China
- Topics: Business,Accidents,Economic News,Politics
- Reuters ID: LVA5J75Z2DTBQQXXC2AIZZ18W7BH
- Story Text: China's decision to close of an offshore oil rig operated by U.S. energy giant ConocoPhillips' after an oil spill highlights the unpredictability of the Chinese government which is concerning to foreign companies, analyst says.
Chinese Premier Wenjiabao said Wednesday (September 7) that China will also establish a pre-warning mechanism for the bay's marine environment, and improve controls to prevent heavy metal pollution.
ConocoPhillips China said last month that as much as 3,200 barrels of oil and mud had leaked into the sea, and Chinese authorities said some 5,500 sq km (2,120 sq miles) of water had been polluted.
The oil company moved to repair its frayed relations with Chinese regulators, apologising for the spill and saying it will establish a fund to cover the clean-up costs. ConocoPhillips owns a 49 percent stake of the oil field and acts as the operator, while China's top offshore oil and gas producer CNOOC has a 51 percent stake.
All operations at an oil field in Bohai Bay had been shut down, as ordered by China's marine authority.
Liu Weimin, Chinese foreign ministry spokesman, urged foreign companies to take up responsibilities in operating in China.
"We also hope that foreign companies operating in China are enjoying equal treatment (with domestic companies) and at the same time fulfill their obligations," Liu told reporters in regular briefing.
Duncan Innes-Ker, senior editor of Economist Intelligence Unit, said the unpredictability of government responses are causing a thorny situation for foreign firms to operate in China.
"The nature of these incidents is that there is no predictability in the government's response. Certainly the way the government has responded in this case is very different from, for example, the series of fires that there had been in the CNPC, the oil refining facility in Dalian. So there is a concern that the lack of predicability is a real problem," he said.
A diesel tank storing about 800 tonnes of fuel in the plant located in northeastern Liaoning province caught fire last month, and a fire on July 16 in a heat exchanger forced the shutdown of a 200,000 barrel-per-day (bpd) crude unit.
Head of the the Dalian's refinery company was fired only after the second fire.
Innes-Ker said foreign firms in China, including ConocoPhillips, Unilever and Yum Brands, undergo tougher scrutiny by the Chinese public and state media.
"I don't think, really, there will be any changes. Foreign companies in China are well aware of the sensitivities of the market they operate in. We see a number of companies not just in the energy sectors in this instance, but also in food retailing, like McDonalds and KFC, receiving criticism because it's perceived that the standards that they operate in China are lower than they operate in other countries. Now that is not necessarily the case, but when something happens, the Chinese public expect a higher standard from foreign companies. Whether or not that is fair or not is another question entirely of course," Innes-Ker.
Japanese-style food chain Ajisen (China) Holdings Ltd came under fire for misleading advertising on the nutritional content of its pig-bone soup base in August, sending its shares down nearly 20 percent to 13-month lows. The firm, which was fined last year for using excessive amounts of additives, has apologised.
KFC, which had advertised that all its soy milk products were fresh, offered a public apology after a blogger on Chinese Weibo posted a photo of soy milk powder being carried into one of its outlets.
Beijing also said it would offer rewards to people who blow the whistle on food safety violations like the illegal use of additives or sale of meat from animals which die of disease, in its latest attempt to crack on the problem. - Copyright Holder: REUTERS
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