China Sues ConocoPhillips Over Oil Spill
In June, ConocoPhillips was responsible for 3,200 barrels of oil and drilling fluids spilling into China’s largest offshore oil field, Pengai 19-3, in the Bohai Bay. The spill spread over 324 square miles. Now, the Chinese maritime authority is seeking damages, and suing ConocoPhillips for the spill.
China’s State Oceanic Administration is setting up a team of lawyers, to be ready by the end of the month, to sue for compensation. Apparently 49 Chinese law firms applied for the coveted opportunity to go after such a high profile multinational.
The Pengai field was codeveloped by both China National Offshore Oil Corporation (Cnooc) and ConocoPhillips, who serves as oprator.
Chinese citizens are expressing outrage at both ConocoPhillips and the Chinese government for not taking more action nor disseminating the facts of the spill to the public more openly. What’s worse, PetroChina’s activities in the region led to a similar spill just one year earlier at a port facility in the nearby city of Dalian. Oil from the most recent spills has reportedly been washing up on beaches in the nearby provinces of Hebei and Liaoning. Locals blame the spills for a slowdown in local tourism and negatively affecting aquatic farming industries.
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“As far as compensation goes, we will listen to any requests and follow Chinese law, but we have not received any notification of claims,” says ConocoPhillips spokesman John Roper. “Cleanup efforts are going very well. We are more than 95 percent finished with the cleanup of mineral oil-based drilling mud, and expect to reach our target of being 100 percent by the end of August.”
“If Cnooc is ruled to pay any form of compensation, we will certainly fulfill our commitment and do the right thing,” adds Cnooc chairman Wang Yilin. “Cnooc is a responsible company and we honor our long-term commitment to the country, people and the environment.”
China is reportedly going about legal proceedings for the case very carefully. While the country wishes to set a precedent to show that foreigners doing business in China must comply with Chinese law, they are also hesitant to act too harshly and scare away foreign energy investment. It will be interesting to note how this all plays out over the next several months.
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.