The State Council called on Wednesday for a thorough investigation into a huge spill at a Bohai Bay oilfield run by US giant ConocoPhillips.
The State Council also called for a limit on the construction of industrial plants along the bay to protect the area's environment following massive pollution from the spill that began in early June.
"Parties responsible for the accident must be made to contain the spill, clean up the mess and substantially alleviate the damages caused by pollution," the State Council said in a statement.
The oilfield where the spills occurred is operated by ConocoPhillips China, a joint venture with State-owned China National Offshore Oil Corp (CNOOC), the majority stakeholder. But the statement stopped short of singling out the two companies as culprits.
It warned, however, of the severe situation in Bohai Bay as the environmental damage is still being assessed.
"The cause of the accident must be identified, damage and losses must be defined, and those responsible must be punished according to the law," the statement said.
The State Council requested relevant ministries and departments to improve Bohai Bay's environment and limit the construction of petrochemical plants in the area.
Stricter standards for industrial projects in the area should be set, it said.
The bay's coastline hosts a number of refineries, petrochemical plants and is a major industrial base.
Meanwhile, US oil giant ConocoPhillips said it will establish a fund to cover costs resulting from the spills and "benefit the general environment in Bohai Bay".
However, the company failed to say how much money will be put into the fund in a statement issued on Wednesday.
According to the statement, ConocoPhillips China will work with Chinese authorities and CNOOC regarding the establishment and operation of the fund.
The move came after the State Oceanic Administration ordered a suspension of production in Penglai 19-3 oilfield on Sept 2.
"ConocoPhillips deeply regrets these incidents and apologizes for the impact that the incidents have had on the Chinese people and the environment," James Mulva, chairman and chief executive officer of ConocoPhillips, said in the statement.
There have been mounting calls for legal action against those found to be responsible for the pollution.
Wang Yamin, an associate professor at the Marine College of Shandong University, said that the fund should not be viewed as compensation for damage to the environment.
"It will focus only on restoring the environment," he said.
A compensation fund, he said, had the potential to bankrupt ConocoPhillips as the economic losses suffered by fishermen and other commercial concerns in the area were huge.
The wording of the statement by ConocoPhillips suggests that the company is trying to buy time, according to Jia Fangyi, an attorney at the Beijing-based Great Wall Law Firm.
"Regardless of what words are used, they must pay the bill for environmental damage and economic loss," Jia said.
At least 5,500 square kilometers have been polluted in Bohai Bay since the first spill was detected on June 4.
The polluted area is eight times the size of Singapore.
The fishing industry has reportedly suffered more than 1 billion yuan ($153 million) in losses and scallop farming was particularly hard hit.
Tests conducted in Laoting and Changli counties in Hebei province showed that oil pollution devastated the scallop crop, the Ministry of Agriculture said on Wednesday.
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