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Sinopec agrees to pay compensation over Qingdao pipeline blasts

16 January 2014

China's largest oil refiner Sinopec said on January 13 that it will pay compensation for the fatal pipeline explosions in the eastern city of Qingdao that killed 62 people and injured another 136 last November. A number of Sinopec staff are also facing charges following the incident.

Sinopec said in a statement reported by Xinhua that it will bear corresponding compensation liabilities according to the investigation results of the State Council and will pay its share of compensation, without specifying the amount.

The State Council's report showed that the blast has caused a direct economic loss of 751.72 million yuan ($123 m). A lack of responsibility in major hazard inspection and weak emergency response from both pipeline operator Sinopec and local government departments are blamed for the accident.

Some 63 Sinopec and local government staff have been penalised over the fatal pipeline explosion, with 15 charged for alleged crimes and a further 48 receiving punishments for violating Communist Party or administrative discipline, Xinhua said.

Amongst those punished were Fu Chengyu, board chairman of Sinopec, who received a demerit administrative sanction, and Qingdao mayor Zhang Xinqi, who received a warning administrative sanction.

Sinopec said it will bear in mind lessons from the deadly accident and continue to overhaul safety hazards in its pipeline network to ensure safe operation of its facilities.
The company said it had decided to mark November 22 each year as a warning day to strengthen awareness of safety production.

Two days earlier the State Administration of Work Safety (SAWS), China's occupational safety watchdog, unveiled the results of an investigation into the incident. The report concluded the direct reason for the accident was drilling operations by repair staff that produced sparks and caused an explosion fuelled by oil leaked from a pipeline owned by a subsidiary of Sinopec.

The major cause of the accident was corrosion that wore down the pipeline, leading to the break. Meanwhile, work on a sewage cover plate on the day of the accident involved use of a hydraulic hammer that was not explosion-proof, which produced the sparks that triggered the blasts.
Huang Yi, a spokesman for the SAWS said at a news conference that the initial oil leak at the pipeline wasn't properly inspected and that both the pipeline's operator and local government departments bore responsibility for the explosions. Huang said the initial emergency response was "inadequate" and that workers on the scene failed to detect lingering oil and gas in the eight-hour period between the initial leak and the explosions.

Huang added that China currently has 655 pipelines spanning 102,000 kilometers. Some of the pipelines have been operating for as long as 40 years and are becoming corroded and brittle, he said. The safety watchdog is concerned about the "hidden dangers" posed by some oil pipelines that overlap with underground cable and sewage systems, he added.

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