A subsidiary of CNPC, China's largest oil company, is being blamed for an oil leak which contaminated tap water in Lanzhou on Friday, affecting 2.4 million people.

Crude oil leaked from a Lanzhou Petrochemical pipeline, poisoning the water source for a local water plant, and bringing hazardous levels of benzene into the city's tap water, said an environment official during a conference call with the city government Saturday.

Investigators found crude oil in soil along a duct between two water works owned by Veolia Water, a joint Sino-French venture and the sole water supplier for urban Lanzhou.

"The channel has been carrying water to Veolia Water's No.1 and No.2 plants for decades. Under this ditch lies Lanzhou Petrochemical's oil pipeline," Yan told Xinhua.

He said the leak had been located, and and repairs were underway.

Excessive levels of benzene were reported on Friday morning and the city government warned citizens not to drink the water for 24 hours.

By 11:00 am Saturday, benzene levels were confirmed safe at five out of the six tap water monitoring sites in Lanzhou, ranging from zero to 6.66 micrograms per liter.

At the sixth site, in Lanzhou's outer Xigu District, benzene level was still at 35.15 micrograms per liter. China's national limit for benzene in tap water is 10 micrograms per liter.

Lanzhou's water works repeatedly washed its filter system to flush out the pollutant on Friday night, and kept water cycling to cleanse the pipeline,

The contamination caused panic on Friday. Stores and supermarkets ran out of bottled water, and many people complained of thirst.

Fire engines and water sprinklers carried water to downtown communities for emergency supplies, and residents fetched water with pots, basins and buckets until after midnight.

From Thursday evening to early Friday morning, Veolia Water found between 118 micrograms and 200 micrograms of benzene per liter at their plants.

Benzene is a colorless carcinogenic compound used to manufacture plastics. Benzene is known to damage the human hematopoietic system, which produces blood.