China's cabinet on Wednesday ordered an investigation into a huge spill at an oilfield run by US giant ConocoPhillips that environmental groups say has badly polluted a north China waterway.

In a meeting chaired by Premier Wen Jiabao, it ordered a thorough investigation into the spill in Bohai Bay and vowed to punish those found responsible, the State Council said in a statement.

The investigation must "ascertain the cause of the incident, as well as its harm and losses, seek responsibility in accordance with the law and uphold the legal rights of those who have suffered losses", the statement said.

On Monday, ConocoPhillips said it had halted production at its Penglai 19-3 oil field, China's biggest and the source of the leak into Bohai Bay that has caused public anger and led to accusations the firm tried to cover its tracks.

The US oil giant, which has denied any cover-up, says the equivalent of 3,200 barrels have leaked into the sea. It has defended its record over the spill but accepted responsibility for the damage caused.

Later Wednesday, the Houston-based oil firm, the third-largest in the US, apologised and said it was setting up a fund to address the company's legal responsibilities under Chinese law and to benefit the environment of Bohai Bay.

"ConocoPhillips deeply regrets these incidents and apologises for the impact that the incidents have had on the Chinese people and the environment," chairman and chief executive James Mulva said in a statement.

ConocoPhillips has taken a beating in the Chinese state media, which has accused the company of displaying "indifference" and issuing misleading statements about the spill, which first came to light in June.

But the company has denied hushing up the leak and said it had completed the shut-down of production late Sunday, two days after China's marine watchdog said it was not satisfied by efforts to stop the leak and ordered the stoppage.

ConocoPhillips co-owns the oilfield with the state-owned China National Offshore Oil Corp (CNOOC).

Chinese environmental groups have criticised ConocoPhillips over the pollution and the speed of the clean-up operation, while the marine watchdog, the State Oceanic Administration (SOA), has said it will sue the company.

Fishermen in Shandong, Hebei and Liaoning provinces that border Bohai Bay, east of Beijing, allege that oil from the leak has killed a large part of their prized harvest of seafood such as scallops.

The Penglai 19-3 oilfield began production in 1999 and was expected to produce around 60,000 barrels a day this year, according to ConocoPhillips.

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