China National Petroleum Corporation (CNPC) and China Petroleum and Chemicals Corporation (Sinopec) said that large chemical firms should not be forced to buy the insurance, according to the China.com.cn website.

The insurance scheme is currently being drawn up and will be jointly implemented by the State Environmental Protection Administration and the China Insurance Regulatory Commission, the report said.

But Sinopec and CNPC, parent of Hong Kong-listed PetroChina, said that they can handle environmental compensation issues themselves, the report said, citing a note issued by the environment watchdog recently.

They also argued that the scale of compensation paid out in the oil industry was too high for China's insurance companies to bear, it added.

Resistance from the two state-owned giants and suspicion from many other firms have made the nation-wide enforcement of the scheme impossible, with the note saying it would only be piloted in some "key" industries and areas first.

An editorial in China Business View Friday criticised the two companies, saying CNPC had proved itself incapable of dealing with issues of compensation.

In late 2005, a blast at a CNPC petrochemical plant in northeastern China's Jilin province sent a highly poisonous slick of benzene along the Songhua River, threatening the water supplies of several million local residents.

More than a year later, 40 victims of the blast had not yet received any compensation from the company, the editorial said.

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