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ConocoPhillips to pay $191 million more to China over oil spill

By Greg Botelho, CNN
updated 6:48 PM EDT, Fri April 27, 2012
A Chinese official inspects a beach in northern China's Hebei province, on July 26, 2011, after an oil sludge washed ashore.
A Chinese official inspects a beach in northern China's Hebei province, on July 26, 2011, after an oil sludge washed ashore.
STORY HIGHLIGHTS
  • ConocoPhillips says it will pay $191 million to China over June oil spills
  • Another $160 settlement between China and the company announced in January
  • ConocoPhillips says 700 barrels spilled; state media say 2,400 square miles were polluted

(CNN) -- Months after agreeing to a $160 million settlement, ConocoPhillips and China announced that the energy giant will pay an additional $191 million in the wake of oil spills last year in north China's Bohai Bay.

Money from the latest agreement goes to the State Oceanic Administration, which overseas waters off China. It follows a separate deal, announced in January, in which ConocoPhillips agreed to give about $160 million to China's agricultural ministry, funds that are intended for fishermen and others affected by the incident.

The total payouts of $351 million stem from multiple incidents in June at a site about 80 kilometers (50 miles) off the coast of North China. Both involved "kickbacks from the (oil) reservoir from pressurizing it" -- the act of pumping water in, in order to force oil out -- according to ConocoPhillips spokesman John McLemore.

That led to the expulsion of about 700 barrels of oil into nearby waters, according to McLemore.

By comparison, the Exxon Valdez leaked about 250,000 barrels into Alaska's Prince William Sound in 1989, and nearly 5 million barrels of crude spewed into the Gulf of Mexico after the 2010 blowout of a well there.

A report in China's state-run Xinhua news agency said the pollution extended over roughly 2,400 square miles "of water since June, an area about nine times the size of Singapore, and caused huge losses in the tourism and aquatic farming industries of Liaoning and Hebei provinces."

Friday's settlement includes $173 million (1.09 billion yuan) "to resolve claims related to the possible impacts of the incidents on the Bohai Bay marine environment," ConocoPhillips said in a statement.

The energy company said it will also give about $18 million to "support environmental initiatives in Bohai Bay." The China National Offshore Oil Corporation will give another approximately $76 million to this same fund, reported Xinhua.

"The money will be spent, according to China's laws and rules, on the ecological construction in, and environmental protection of, the Bohai Sea, cleaning up petroleum pollutants in the sea, fixing damage to the marine ecological environment as well as monitoring and research on the impacts of oil spills to the ecosystem," the State Oceanic Administration said, according to Xinhua.

According to McLemore, "there's nothing left pending" as far as claims or potential settlements on the horizon related to the spill.

He added that there are no leaks or known problems now at what is called the Peng Lai 19-3 field.

The China National Offshore Oil Corporation owns a 51% stake and ConocoPhillips the remaining 49% in this field, which produces about 160,000 barrels of oil daily, according to Xinhua.

"It's running at a reduced rate while we're waiting for the (State Oceanic Administration) to say you can go back to full production," McLemore said

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