Chinese Premier Wen Jiabao has ordered a thorough probe of an oil spill at a site in northern China operated by U.S. oil giant ConocoPhillips.

Environmentalists say an undersea well site that began leaking in early June has badly polluted the beaches in Bohai Bay, and impacted fishing and agricultural operations in the coastal region near Beijing.

China’s State Council, the cabinet, issued a statement after meeting Wednesday, saying Mr. Wen’s edict orders authorities to hold the U.S. company “responsible, and (to) safeguard the legal interests of those who have suffered losses.”

Hours earlier, ConocoPhillips said it would create a fund to offset damages caused by the spill. The oil company said the fund will cover its responsibilities and “benefit the general environment” in Bohai Bay. It did not say how much would be contributed to the fund.

ConocoPhillips chief executive officer James Mulva also apologized for the impact “the incidents have had on the Chinese people and the environment.”

Chinese regulators have ordered the company’s subsidiary, ConocoPhillips China, to halt all operations at the Peglai 19-3 oil field, the largest in the country.

Authorities say about 700 barrels of oil and 2,500 barrels of drilling mud have leaked into the bay since June 4. The company reported last week that it had met an August 31 deadline for fully halting the leakage from the floor of the bay and completing a clean-up. But Chinese maritime authorities say they detected continued leakage after the deadline.

Chinese state television quoted a company official saying ConocoPhillips deliberately lied when it said the leak had been contained. The company denied its employee made the comment.

An article in the ruling Communist Party’s flagship newspaper People’s Daily on Wednesday quoted legal experts as saying the government should file criminal charges against the oil company.

ConocoPhillips owns a 49 percent stake in the oil field, while Chinese offshore oil and gas producer CNOOC owns the rest of the shares.