Cnooc: 'External Factors' Triggered Zhuhai Gas Leak, Pipeline Damage

HONG KONG (Dow Jones Newswires), Dec. 20, 2011

Cnooc Ltd. (CEO) said Tuesday the leak at an offshore production facility it reported Monday may be due to "external factors", which triggered the pipeline damage.

"According to the initial study, the natural gas leakage may be caused by damage on the pipeline by external factors. We have already prepared for conducting investigation on the cause of the incident," Cnooc said in a written reply to Dow Jones Newswires. But it didn't say how long it will take to repair the pipeline.

"The company maintains the appropriate insurance coverage of the operations related to the relevant oil and gas fields," Cnooc said.

The comments followed its announcement late Monday about an undersea natural-gas pipeline accident near Zhuhai, southern China, and a subsequent output halt that could cost it many millions of dollars. The company said Monday that a leak caused it to halt operations and cut output by 160 million cubic feet or 26,700 barrels of oil equivalent a day.

Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Ltd. (1938.HK), which supplied the pipeline to Cnooc, said Tuesday that the leak was due to human error.

"The leakage was caused by the construction work of a third party near the region, which accidentally damaged the pipes," a Chu Kong spokeswoman said. "It is assured that (Chu Kong's) pipes are of high quality, and the leakage was not due to natural causes."

Cnooc's share price fell 0.59% to HK$13.50 on the Hong Kong Stock Exchange Tuesday.

Copyright (c) 2011 Dow Jones & Company, Inc.


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