Costly ship grounded on trial run

Authorities are probing an incident in which a 740-million-yuan ($117 million) multi-purpose work ship under construction by Wuchang Shipbuilding Industry Co tilted and was grounded during its test voyage.

In an announcement to the Shanghai Stock Exchange on Wednesday, China Oilfield Services Ltd, the ship's owner, said the accident occurred at around 2 pm on Jan 14 at a dock in Nantong, Jiangsu province. No environmental damage was caused.

The cabin of the high-powered deep-water anchor-handling tug supply vessel, named Ocean Oil 682, had a leak, which could have caused the vessel to fail in sailing, according to China Oilfield Services.

The incident comes as a blow to the Chinese shipbuilding industry at a time when companies are struggling for market share against their counterparts in South Korea, which is in a fierce contest with China to be the top shipbuilding nation.

The accident has also further tarnished the reputation of the Chinese oil industry. China Oilfield Services is a listed subsidiary of the China National Offshore Oil Corp (CNOOC), the country's biggest offshore oil producer, which has been under public scrutiny after a string of oil leaks in 2011.

The news about the failure of the Ocean Oil 682 was initially leaked by a Web user named Imarine.cn on Jan 16. In a post, the Net user claimed the accident was caused by gross negligence of the staff when the vessel was approaching the dock during the test voyage.

The user added that the vessel is one of the most costly civilian craft built by the company.

In a follow-up post, the user said Wuchang Shipbuilding Industry Co is investigating the matter along with the ship's owner. To quash fears of some workers, the user said the company will proceed with year-end bonus distribution and will not use measures such as pay cuts or layoffs to recover losses.

Wuchang Shipbuilding Industry Co, founded in 1934, is a key enterprise under China Shipbuilding Industry Corp.

Liu Zhengguo, a spokesman for the parent firm, said it would be a mischaracterization to say the ship "sunk". He said the leak caused the ship to tilt 12 to 13 degrees to its side, which made it run aground near the shore.

He stressed that no casualties were reported in the accident, and salvage operations are still underway. In addition, the Wuchang Shipbuilding Industry Co has bought insurance for the ship.

"It seems as though not much core technology was involved in the design of this vessel," said Zou Zaojian, an ocean engineering professor at Shanghai Jiao Tong University.

The shares of China Oilfield Services fell 2.65 percent in Shanghai on Wednesday.