REGULATIONS ON THE ADMINISTRATION OF ENVIRONMENTAL PROTECTION IN THE EXPLORATION AND DEVELOPMENT OF OFFSHORE PETROLEUM

Regulations of the People's Republic of China on the Administration of Environmental Protection in the Exploration and Development of Offshore Petroleum

Article 2 These Regulations are applicable to enterprises, institutions,
operators and individuals engaged in the exploration and development of
petroleum in the see areas under the jurisdiction of the People's Republic of
China, and the stationary and mobile platforms and other relevant facilities
they use.

Article 3 The departments in charge of environmental protection in
exploration and development of offshore petroleum are the State Oceanographic
Bureau of the People's Republic of China and its agencies, hereinafter
referred to as the "competent departments".

Article 4 Enterprises or operators, while compiling the overall programs
for developing oil (gas) fields, must compile a marine environmental impact
report and submit it to the Ministry of Urban and Rural Construction and
Environmental Protection of the People's Republic of China. The Ministry of
Urban and Rural Construction and Environmental Protection, in conjunction with
the State Oceanographic Bureau and the Ministry of Petroleum Industry, is to
organize examination and approval in accordance with the stipulations
governing the administration of environmental protection over the projects of
state capital construction.

Article 5 The marine environmental impact report shall include the
following:

(2) the natural environment and the conditions of marine resources of the
sea areas where the oil field is located;

(3) the types, composition, amount and the means of disposal of the waste
materials to be discharged in developing the oil field;

(4) an assessment of the impact on the marine environment; the possible
impact from development of offshore petroleum on the natural environment and
marine resources of the surrounding sea areas; the possible impact on the sea
fishery, shipping and other sea activities; measures for environmental
protection to be adopted to avoid and reduce various types of harmful impact;

(5) the impact that can not be avoided in the final outcome and the
graveness and causes of the impact;

(6) measures for preventing major oil pollution accidents; the
organization of prevention, provision of personnel, technical equipment and
communications and liaison.

Article 6 Enterprises, institutions and operators shall have the
capacity of dealing with emergencies with regard to the prevention and control
of oil pollution accidents, formulate emergency plans, have oil recovery
facilities and equipment for containing oil and eliminating oil commensurate
with the scale of exploration and development of offshore petroleum in which
they are engaged.

If oil-eliminating chemical agents are to be used, their brand names and
composition shall be reported to the competent departments for verification
and approval.

Article 7 The requirements for the pollution-prevention equipment of the
stationary and mobile platforms are:

(2) the oil extraction platforms shall be fitted with the equipment for
treating oil-polluted water; the oil content of the polluted water, after
treatment by this equipment, shall reach the discharge standards set by the
State;

(6) the above equipment shall go through the examination by the shipping
inspection agencies of the People's Republic of China and must satisfy the
standards before efficacy certiticates are issued.

Article 8 The stationary and mobile platforms that already started
petroleum exploration and development in the sea areas under the jurisdiction
of the People's Republic of China before March 1, 1983, if their
pollution-prevention equipment do not meet the stipulated requirements, shall
adopt effective measures to prevent pollution, and their pollution-prevention
facilities are to satisfy the stipulated requirements within three years of
the promulgation of these Regulations.

Article 9 The enterprises, institutions and operators shall possess civil
liability insurance or other financial guarantees to cover pollution damage.

Article 10 The stationary and mobile platforms shall be fitted with
anti-pollution record books in the format approved by the competent
departments.

Article 11 The oil-polluted water of stationary and mobile platforms may
not be directly discharged or after dilution. The oil content of the
oil-polluted water discharged after treatment must meet the State's relevant
standards of discharging oil-polluted water.

(1) residual oil, waste oil, oil-based mud, garbage containing oil and
other toxic residual liquid and dregs must be recovered, and may not be
discharged or cast off into the sea;

(2) the dumping of industrial garbage in large quantities is to be managed
in accordance with the stipulations of marine dumping of waste materials;
fragmentary industrial garbage may not be discarded into the fishery waters
and sea-lanes;

(3) domestic garbage that need to be discharged within 12 nautical miles
from the nearest land shall undergo pulverization treatment with the granules
less than 25 millimetres in diameter.

Article 13 Where exploration and development of offshore petroleum
require explosive demolitions by using explosives or other operations that are
harmful to fishery resources in the important fishery waters, effective
measures shall be adopted to avoid the spawning, breeding and fishing seasons
of the major fishes and shrimps of economic value; a report is to be made to
the competent departments before the operations and there shall be
clear signs and signals when the operations are under way.

The competent departments, on receiving the report, shall notify the
relevant units of the place and time of the operations in good time.

Article 14 Marine oil storage facilities and pipelines for the conveyance
of oil shall conform to anti-seepage, anti-leakage and anti-rotting
requirements, and shall constantly be checked and maintained in good
condition, so as to prevent oil leakage.

Article 15 In testing oil on the sea, oil and gas shall be fully burned
out in the combustion devices. With regard to the oils and oil-based mixtures
falling into the sea in the course of testing oil, effective measures shall be
adopted to treat them, and accurate records are to be kept.

Article 16 Enterprises, institutions and operators shall, immediately
upon detection of the occurrence of pollution accidents such as oil overflow
and oil leakage in operation, adopt measures for containing oil and oil
recovery to control, reduce and remove the pollution.

In case of occurrence of major pollution accidents such as oil overflow,
oil leakage and well blowout in large quantities, report shall immediately be
made to the competent departments, and effective measures are to be adopted to
control and remove the pollution, and the matter shall be subject to
investigation and handling by the competent departments.

(1) When oil pollution accidents occur, measures for recovery shall be
adopted; with regard to the small amount of oil that is actually beyond
recovery, it is permitted to use a small amount of oil-eliminating chemical
agents.

(2) With regard to the amount of irretrievable oil-eliminating chemical
agents (including the solvent) to be used, separate specific stipulations
shall be worked out by the competent departments according to different
conditions in different sea areas. The operators shall report to the competent
departments according to stipulations, and may only use these chemical agents
after approval has been obtained.

(3) In emergencies where oil floating on the surface of the sea may cause
fire or may gravely endanger human lives and property, and the matter is
unable to be handled with the method of recovery, but, by using
oil-eliminating chemical agents, pollution can be reduced and the consequences
of the accidents be contained, the amount of oil-eliminating chemical agents
used and the reporting procedures may go beyond the restrictions as stipulated
in paragraph (2) of this Article. However, a detailed report on the
circumstances of the accident and the circumstances of using oil-eliminating
agents shall be made to the competent departments afterwards.

(4) Only those oil-eliminating chemical agents which have been verified
and approved by the competent departments may be used.

Article 18 The operators shall make detailed and accurate entries of the
following circumstances in the anti-pollution record books of the platform:

(4) the occurrence of oil-pollution accidents such as oil spill, oil
leakage and well blowout and the handling;

Article 19 The enterprises and operators shall, within 15 days from the
end of each quarter of the year, make a comprehensive report in the format
approved by the competent departments on anti-pollution and the circumstances
of pollution accidents of that quarter.

The competent departments shall be informed in good time of the positions
of the stationery and mobile platforms.

Article 20 Government functionaries of the competent departments or the
personnel designated by them may board the stationery and mobile
platforms and other relevant facilities to conduct monitoring and
investigation, including:

(2) inspecting the fitting out, operating and using of various
anti-pollution equipment, facilities and materials;

(4) checking up on the anti-pollution record books and the relevant
operation records, making copies and extracts when necessary, and demanding
that the responsible persons of the platform sign their names in confirmation
of the copies and extracts in question as correct duplicates;

(5) gathering information about pollution accidents among the persons
concerned;

Article 21 The ships that conduct official business of the competent
departments shall have clear signs. Government functionaries or the designated
personnel, in carrying out official affairs, must wear official uniforms and
carry identity papers.

Those who are investigated shall provide facility for the aforesaid ships,
government functionaries and the designated personnel, and provide accurate
information and statements about the accidents.

Article 22 Units and individuals that have suffered pollution damage
caused by exploration and development of offshore petroleum and are to claim
compensation shall, in accordance with the stipulation of Article 32 of the
Environmental Protection Law of the People's Republic of China and the
stipulation of Article 42 of the Marine Environmental Protection Law of the
People's Republic of China, apply for handling to the competent departments
and claim compensation for the losses from the party that is responsible for
the pollution damage. The claimant shall submit a report on claiming
compensation for damage sustained; this report shall include the following:

(1) the time, place, scope and the objects of the pollution damage caused
by the exploration and development of offshore petroleum;

(2) a detailed list of the losses caused by pollution damage, including
the names of objects, quantity, unit price, method of calculating, and such
matters as the breeding or natural conditions;

(3) an appraisal by the relevant scientific research department or
endorsement by a notary office in confirmation of the damage actually
sustained;

(4) the original documents of evidence of the pollution damage, the
photographs of the related circumstances and other documents and materials of
testimony relevant to the claim for compensation shall be provided as complete
as possible.

Article 23 Units and individuals (those having commercial contracts
excluded) that demand reimbursement of the expenses for removing pollutants
stemming from the exploration and development of offshore petroleum shall, in
applying to the competent departments for attention to the case, submit a
report of claiming reimbursement of the expenses for removal to the competent
departments. This report shall include the following:

(2) the manpower, machines and tools and vessels employed, and the
quantities, the unit price and the method of calculating of the materials used
in effecting the removal;

(3) the administrative expenses, transport cost, and othe relevant
expenses in organizing the removal effort;

Article 24 Where devastating pollution accidents have occurred due to
force majeur, the enterprises, institutions and operators wishing to free
themselves from the indemnity liabilities thereof shall submit to the
competent departments a report which must be able to testify that the damage
resulting from the pollution accident falls under one of the circumstances
described in Article 43 of the Marine Environmental Protection Law of the
People's Republic of China, and that the accident remained unavoidable despite
rational measures promptly taken.

Article 25 In handling cases of disputes concerning liability for
compensation and the amount of compensation for the pollution damage in the
exploration and development of offshore petroleum, the competent departments
shall, on the basis of investigation and finding out the facts, resort to
mediation.

If a party does not want mediation or does not agree to handling of the
matter through mediation by the competent departments, the matter may be
handled in accordance with the stipulation of Article 42 of the Marine
Environmental Protection Law of the People's Republic of China.

Article 26 Where enterprises, institutions and operators violate the
Marine Environmental Protection Law of the People's Republic of China and
these Regulations, the competent departments may order that they take remedial
measures to rectify the situation within a given period of time, pay the
removal costs, and compensate the State for the damage; in cases of discharge
of pollutants in excess of the standard, the payment of a pollutant discharge
fee may be demanded.

Article 27 In cases where enterprises, institutions, operators and
individuals violate the Marine Environmental Protection Law of the People's
Republic of China and these Regulations, the competent departments may punish
the violators by giving warnings or imposing fines according to the
seriousness of the case.

(1) The maximum amount of a fine imposed on an enterprise, institution or
operator that has caused marine environmental pollution is 100,000 RMB yuan.

(2) The maximum amount of a fine imposed on an enterprise, institution and
operator that has contravened the relevant rules and regulations in the
following ways is 5,000 RMB yuan:

a. not reporting a major oil-pollution accident to the competent
departments according to stipulations;

(3) The maximum amount of a fine imposed on an enterprise, institution or
operator that has contravened the relevant rules and regulations in the
following ways is 1,000 RMB yuan:

a. not having the anti-pollution record book equipped according to
stipulations;

c. not reporting to or informing the competent departments of their real
situation according to stipulations;

d. obstructing the government functionaries or the designated personnel
from performing their official duties.

(4) With regard to the directly responsible persons, fines may be imposed
according to the seriousness of the case.

Article 28 If a party does not agree to the penalty by the competent
departments, the matter shall be handled in accordance with the stipulations
of Article 41 of the Marine Environmental Law of the People's Republic of
China.

Article 29 The competent departments shall grant commendations and
rewards to the units and individuals that on their own initiative report and
expose enterprises, institutions and operators that have concealed pollution
accidents in the exploration and development of offshore petroleum, or provide
evidence, or adopt measures to reduce the damage arising therefrom.

(1) "Stationary and mobile platforms" refers to the well drilling ships,
well drilling platforms and oil extraction platforms referred to in the
Marine Environmental Protection Law of the People's Republic of China, and
includes other platforms.

(2) "Exploration and development of offshore petroleum" refers to such
operational activities as exploration, development, production, storage and
pipeline conveyance.

(3) "Operators" refers to the entities that perform the operations of
exploration and development of offshore petroleum.

Article 31 These Regulations shall go into effect as of the date of
promulgation.

Category	ENVIRONMENTAL PROTECTION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1983-12-29	Effective Date	1983-12-29

Laws of the People's Republic of China

REGULATIONS ON THE ADMINISTRATION OF ENVIRONMENTAL PROTECTION IN THE EXPLORATION AND DEVELOPMENT OF OFFSHORE PETROLEUM