Residents in Lanzhou collect free water yesterday bottled by a local company using spring water sourced from a mountain area. By last night, the city’s tap water was deemed safe. [Xinhua photo]

Crude oil leaking from a petrochemical pipeline of CNPC, China's largest oil company, caused hazardous levels of benzene in a northwest Chinese city's tap water, it was confirmed yesterday.

Polluted water ran through aged joints in a concrete channel between two water works owned by Veolia ,a joint Sino-French venture in Lanzhou, leading to excessive levels of the chemical, Wang Jinsheng, a member of the national environmental emergency panel, said yesterday.

There had been several oil leaks at the Lanzhou Petrochemical Company, a subsidiary of CNPC, in the 1980s, said Wang, a professor at Beijing Normal University's College of Water Sciences, told Caixin.com.

The channel has been carrying water to Veolia Water's No. 1 and No. 2 plants for decades and the oil pipeline lay under the channel. The company is the sole water supplier for urban Lanzhou.

Crude oil was found in soil about a meter below the channel, Wang said.

On its official microblog yesterday, the Lanzhou government confirmed that the high levels of benzene were caused by oil pollution in surrounding areas, but gave no further details.

The local government said residents in more than 80 houses above the polluted channel would be relocated in the near future, according to the Oriental Morning Post.

A relocation and compensation scheme had not yet been worked out but the residents had all agreed to move, the newspaper reported yesterday.

Earlier, Yao Xin, Veolia's president, told the Beijing News that the petrochemical pipeline under the 60-year-old channel had leaked oil in the 1980s, but instead of being replaced it had been repaired and was still in use.

According to the Oriental Morning Post, some of Lanzhou Petrochemical's oil pipelines had been in service for more than 50 years.

The newspaper said the oil company and the government had been negotiating for years to eradicate potential problems, but no agreements had been reached as each side believed the other should take responsibility.

The water works had begun a program to put iron pipes into concrete channels over the next three weeks to prevent pollution, the Legal Evening News reported yesterday.

From Thursday evening to early Friday morning, Veolia Water found between 118 micrograms and 200 micrograms of benzene per liter at their plants, and the city government issued a warning to citizens not to drink the tap water.

Benzene is a colorless carcinogenic compound used in the manufacture of plastics.

Lanzhou's water works repeatedly washed the filter system to flush out the pollutant and kept water cycling to clean the pipes, Xinhua news agency reported.

Residents were asked to turn their taps on for up to 30 minutes to get rid of any polluted water. By yesterday morning, benzene levels were deemed to be at safe levels at all six tap water monitoring sites in the city.

At five sites, no benzene was detected at 9pm yesterday and the level at the other site was 2.67 micrograms per liter, the Lanzhou government said. China's limit for benzene in tap water is 10 micrograms per liter.

Residents, except those in Xigu District where there are still traces, were told yesterday the tap water is safe to use.

The contamination sparked a rush for bottled water on Friday with stores soon running out of supplies. Fire engines carried water to downtown communities for emergency use.

Veolia Water was criticized for its delay in announcing the contamination. It was reported that the company found the high benzene levels at 5pm on Thursday but didn't announce its findings until 18 hours later.

On December 4 last year, a blackout at the Lanzhou Petrochemical Company caused production materials and air pollutants to leak out.

And on January 7 in 2010, six employees were killed and six others were injured when a leaking tank exploded.