Sinopec Latest Victim of Environmental Scrutiny 中石化管道工程因环保计划不足被叫停

The days when China’s big state-owned energy firms could do whatever they wanted without regard for the environment may be in the past, as reflected by a new setback for Sinopec (HKEx: 386; NYSE: SNP), China’s top oil refiner. China’s environmental protection agency, exercising its newfound authority following a new call to protect the environment, has officially ordered Sinopec to halt work on a 2 billion yuan pipeline it was building in the southern city of Zhanjiang, citing lack of a sufficient environmental protection plan. (government announcement) The news will hardly be welcome for Sinopec, and spotlights the growing risk that the company and fellow energy majors PetroChina (Shanghai: 601857; HKEx: 857; NYSE: PTR) and CNOOC (HKEX: 883; NYSE: CEO) will face in the future from an increasingly assertive regulator empowered by Beijing’s to clean up China’s badly polluted environment. This setback for Sinopec, which was first suggested in mid-November (English article), is just the latest in a growing string of government actions that have seen polluting factories, many of them inefficiently run using outdated equipment, shut down over the last year after their damaging ways were exposed. In one of the highest profile cases, CNOOC and US partner ConocoPhillips (NYSE: COP) have been dogged for much of the past half year by persistent leaks at their joint venture oil drilling operation in the Bohai Bay off the northeast Chinese coast. (previous post) A steady stream of reports about environmental damage from the leaks have appeared in the Chinese media, prompting CNOOC and ConocoPhillips to set up funds to clean up the mess and compensate victims. What all of this says is that all the energy majors will face the very real prospect of environmental liability in all of their future domestic operations, which will undoubtedly create major new costs that will put further pressure on their already-strained bottom lines.

Bottom line: The suspension of work on a Sinopec pipeline under government orders spotlights the growing exposure that energy firms are facing from environmental liability.

Related postings 相关文章:

◙ Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空

◙ Stumbling CNOOC Replaces Chief Executive 中海油换将李凡荣接棒CEO

◙ CNOOC Woes Spotlight Environmental Perils