China's mega national oil companies have in recent months demonstrated poor understanding of the country's digital media revolution, particularly with social media, a trait often characteristic of the nation's state-run commercial behemoths.
Traditionally, the fall-back response for any "bad news" has been silence and censorship. But in an age when a single blogger with a smart phone can break a major story or scandal, Chinese companies are having to change their public relations policy.
Take the oil leak incidents last month at the country's largest offshore Penglai 19-3 oil field in Bohai Bay.
News regarding the spills broke June 21 on the popular Twitter-like micro-blogging site Sina Weibo, two weeks after the first of two oil leaks occurred.
Failure by operator ConocoPhillips and its partner China National Offshore Oil Corp. to warn the public about the spills was not only an embarrassment, it also heightened worries over safety standards in China, especially in the wake of the Macondo oil spill in the US Gulf of Mexico.
"The Chinese never had an avenue to express their opinions until the Internet came along. This is all part of the central party relaxing its control over how the media and the public express themselves," said Chen Weidong, chief analyst at state-owned China National Offshore Oil Corp.
The original message on Sina Weibo went viral soon after being posted, and this finally prompted ConocoPhillips, CNOOC and the government to issue separate statements on the incident.
ConocoPhillips said it had promptly notified the relevant authorities after both oil spills, and CNOOC also countered criticism by saying that government authorities were aware of the incidents all along.
The government's reply was that ConocoPhillips should bear responsibility for the oil spill as the operator of the oil field, and then order all oil companies to review offshore field safety and spill-response procedures.
In an indication of the fears raised by the previous silence, the oil companies and government all pointedly noted that the leaks were not on the scale of the Macondo spill.
The Bohai Bay oil spills together totaled about 1,500 barrels of crude oil versus an estimated 4.9 million barrels from the Macondo incident.
FIRES SEEN AS SMOKING GUN
This month, fires broke out in quick succession at three refineries -- CNOOC's Huizhou refinery in South China, PetroChina's Dalian refinery in the northeast, and Sinopec's refinery in Guangzhou in the south. These were seen as indicating that the local oil industry was in the midst of a full-blown safety crisis.
"Our research and studies have shown that China's regulations and policies regarding fire safety measures at oil and gas pipelines, and storage facilities are not as adequate and comprehensive as in Western countries like the US," said Armand Cao, a consulting manager with Frost & Sullivan in Shanghai.
Even though such incidents tend to increase with heavy operating schedules, the recent ones occurred mainly because of "human error" and "a lack of expertise," he said.
Cao added that the central government was concerned over the Bohai oil leak and that he expected Beijing to look at more comprehensive policies to regulate operational safety.
Opinions however, are split over the country's safety standards.
"[The Chinese] are on par with international standards ... It's just bad luck. With a lot of maintenance occurring around the same time, they are more prone to incidents," said Zhang Liutong, an analyst with Facts Global Energy in Singapore. "In the past, they could run refineries at more than 100% with no mishaps."
Separately, market watchers said that the recent online indignation over the upstream leaks and refinery fires were a result of greater scrutiny of the oil industry, due to the general public's frustration with the NOCs due to sky-high fuel prices.
"The public is using [those incidents] to vent their frustration against the oil companies," said Chen.
These frustrations stemmed from a general perception of the state-run enterprises' dominance of the oil and gas industry, and ill feeling toward companies because of high oil prices, Cao said.
OTHER ACCIDENTS REPORTED ONLINE
The Penglai oil spills were not the first incidents involving state oil companies to be reported online.
In April, Asia's largest oil refiner China Petroleum & Chemical Corp., or Sinopec Corp., sent an investigation team to its Guangdong subsidiary after a massive liquor bill of about Yuan 1.6 million ($248,289) was posted online triggering public outrage.
Photocopies of invoices posted by a whistle-blower included such high dollar items as 1996 Chateau Lafite Rothschild at $1,850 a bottle, and 50-year-old bottles of Kweichow Moutai that cost Yuan 12,000 each.
That disclosure caused a huge uproar as it happened at a time when China was struggling to rein in soaring inflation and retail prices of gasoline and diesel were at all-time highs following two price hikes.
Sinopec later demoted the general manager of Sinopec Guangdong Co. and ordered him to pay back $20,000 for the alcohol that had already been consumed, saying that the purchases were not transparent and were kept from regulatory review.
"[The incident] has seriously hurt Sinopec's interest and corporate image and produced an adverse impact on the community," the company said, explaining its decision.
In an earlier incident, a Chinese communications professor at Shenzhen University posted an internal memo allegedly from Sinopec encouraging employees to take part in a contest using their personal Internet accounts and blogs to reflect positive sentiment about the January hike in retail fuel prices.
Just as Western and other developed countries have already learned, the Chinese government and companies are coming to understand that in the new digital reality, anything that makes them appear less than transparent and above board is sure to find its way into the public domain.
Sooner or later, Chinese NOCs will have to change their reclusive ways to fend off criticism and learn to use public relations to win back public trust and support.
But, maybe they are not quite ready just yet. Spokespersons for Sinopec, CNPC and CNOOC have yet to respond to requests for comments.
Then again, they may not have to fear lone wolf citizen journalists much longer. Chinese authorities this week ordered all cafes, bars, hotels and businesses in Beijing to install surveillance technology to monitor and identify Wi-Fi users signing into their systems.
