The most likely scenario is that the EU embargo will result in higher oil prices.

“Fitch believes that the EU ban on Iranian oil is largely credit neutral for EU integrated oil and gas companies. The cash flow impact of the ban may be negative for refining operations, but should be positive or neutral for upstream operations.” said Arkadiusz Wicik, Director in Fitch’s European Energy, Utilities and Regulation team.

The most likely scenario is that the EU embargo will result in higher oil prices. However, prices may not necessarily increase markedly from current levels as some of the risks related to the EU ban on Iranian oil appear factored in already.

Southern European countries including Italy, Spain and Greece are the largest importers of Iranian crude oil in the EU. A rise in oil prices could be further bad news for these countries, which already face a weak economic outlook in 2012.

Iran to Halt European Oil Exports?

Iran’s parliament have today drafted legislation calling for the government to halt oil exports to Europe until the EU cancels its planned ban on the country’s crude, Fars news agency reported, citing a lawmaker.

The bill would also require Iran to embargo imports from countries participating in the EU ban, Nasser Sodani, the deputy head of the parliament’s energy commission, said yesterday, according to the state run news agency. Iranian lawmakers planned to debate the bill in parliament today, Fars reported on January 27.

If agreed Sunday, Iran’s move would halt an estimated 600,000 barrels a day crude exports into the EU, leaving European refiners in countries such as Greece, Italy and Spain scrambling at short notice for alternative oil supplies, pushing up prices. The EU had envisaged a more phased approach that would give buyers time to source other oil flows.

With no sign that the West is likely to ease the sanctions pressure over the Islamic Republic’s nuclear program, the rhetoric from both sides is likely to keep oil market investors on their toes, analysts said.

Earlier Friday, Israel’s Defense Minister Ehud Barak, speaking in Davos, praised recent moves to tighten the sanctions on Iran but said that still more steps are needed.

Barak said sanctions should be accelerated and more steps should be taken against Iran’s central bank and its oil trade.

UK forecourt bosses and MPs said there was a risk of parts of the South East ‘grinding to a halt’ amid reports production had stopped at the Coryton refinery, which supplies around a fifth of the fuel in the region and 10 per cent of the UK’s supplies.

The warning came as the refinery’s Swiss parent company Petroplus said talks with its lenders had broken down and it would be filing for insolvency with the loss of up to 1,000 UK jobs.

Petroplus Struggled with Bankruptcy

Zurich based Petroplus has reportedly been struggling with bankruptcy since last year with oil prices spiralling and credit hard to come by. It previously owned a refinery in Teesside, which closed in 2009.

Petroplus admitted that talks with lenders had broken down and its European refineries, including Coryton, which produces 175,000 barrels of crude oil per day, would close. Petroplus said its primary goal was to ensure that operations are safely shut down and to preserve value for all stakeholders.

Coryton, which stands close to the M25, was bought by Petroplus from BP for $1.4billion (£714.6m) in June 2007. It began operating in 1953, producing petrol and diesel, new cleaner fuels, aviation fuels, liquefied petroleum gas, fuel oils and bitumen for roadworks.

Petroplus had about $1bn in credit lines frozen last month and since then has been fighting to stave off bankruptcy and has already suspended fuel deliveries from Coryton.

Under the new deal, EU governments are expected to have to stop signing new contracts with Iran the moment the ban comes into place, which could be as soon as this week. Extra restrictive measures on Iran’s central bank are also expected to be agreed by EU ministers, although no further details have been given.

EU foreign policy chief Catherine Ashton earlier said the sanctions were a way of persuading Iran to take part in talks.

“The pressure of sanctions is designed to try and make sure that Iran takes seriously our request to come to the table and meet,” she said as she arrived at the meeting in Brussels.

She said world powers had yet to receive a reply to an offer made to Iran in October to hold new talks.

Iran’s Nuclear Programme

“I am confident that the EU will give a resolute answer today to Iran’s refusal to fulfill its international obligations on the nuclear programme,” German Foreign Minister Guido Westerwelle said ahead of the official adoption by the foreign ministers.

Foreign Secretary William Hague urged Iran to “come to its senses” and resume negotiations on its nuclear programme after Britain, America and France sent six warships through the highly sensitive waters of the Strait of Hormuz.

He said the EU oil embargo was part of “peaceful and legitimate” measures and not designed to trigger conflict.

Any bid by Iran to block the Strait of Hormuz at the entrance to the Gulf, through which 20 percent of the world’s oil exports pass would be “illegal” and “unsuccessful”, Mr Hague warned, adding that an oil embargo was designed to persuade the Iranian government to launch meaningful talks with the international community on its nuclear intentions.

The ongoing effort to take Iran’s 2.6 million barrels of oil per day off international markets has kept global oil prices high whilst pushing down Iran’s rial exchange rate on world currency markets.

Greece, which bought 14 percent of its imported oil from Iran in the first half of 2011, wants the EU to ensure that any new oil contracts would include terms similar to those in its existing agreements with Iran, which doesn’t require financial guarantees, the diplomat said on the condition of anonymity because the talks are private.

Vulnerable Position

Greece argues it is in a particularly vulnerable position as Iran supplies crude oil to Greece on highly favourable terms that would be difficult to match elsewhere. Greek refiners do not have to make payment until 60 days after receiving shipments.

EU foreign ministers will discuss additional sanctions on Iran over its nuclear program at a meeting in Brussels tomorrow. They may reach a political decision to impose an oil embargo, with further work to alleviate Greece’s concerns in the weeks that follow, the diplomat said.

European diplomats are confident that EU foreign ministers will agree plans to impose a phased ban on the import of crude oil from Iran over the next few months.

The EU also plans to ban the transfer from Iran to Europe of gold and precious metals. This ban on the export of precious commodities is aimed at stopping the Iranian regime selling these assets for foreign currency.

Iran is the fifth largest oil producer in the world at more than four million barrels a day, according to 2010 estimates. The EU is the second largest consumer of crude oil, at 13.7million barrels a day.

In response Iran has threatened to close the Strait of Hormuz, through which about 20 percent of the world’s crude shipments pass, raising fears of global supply constraints.

James Zhang, commodity strategist at Standard Bank in London, said despite countries like Saudi Arabia being able to supply extra oil, it would be difficult for any country to immediately substitute Iran’s entire supply.

EU Oil Embargo

EU foreign ministers will meet on January 23 to consider an Europe wide oil embargo on Iran. The approved, the EU’s 27 members states would be prohibited from concluding new oil contracts with Iran or renewing any that are due to expire.

Iran’s OPEC Governor Mohammad-Ali Khatibi, in an interview with Shargh, questioned whether OPEC had as much as 4 million barrels a day in surplus capacity. He said Arab crude oil producers would be able to provide oil of a grade similar to Iran’s crude, though such an effort would prove costly for them, the newspaper cited Khatibi as saying.

“If oil producers bordering the Persian Gulf show the green light to replace Iran’s crude with theirs, whatever happens, they will be key players in a move to sanction Iran’s oil.” Shargh, the Tehran based newspaper cited Khatibi as saying in an interview.

Western sanctions are being ratcheted up, shaking Iran’s oil dependent economy.

Military pressure is building, with the US and the UK deploying warships to the Gulf, and reports suggesting Israel could be poised to launch air strikes against Iranian nuclear sites.

A covert campaign has also been stepped up, as evidenced last Wednesday by the murder of a deputy director of Iran’s main uranium enrichment plant, the fifth Iranian scientist to be targeted in Tehran by motorbike mounted assassins in the past two years.

Furious Iranian officials say they are looking at ways of to hit back against those they see responsible for the attacks.

They are also threatening to close the Strait of Hormuz in the Gulf if extra sanctions bite, cutting off the transport of 20 percent of the world’s oil. The US has said that would cross a red line, prompting likely military action.

Meanwhile, Britain’s foreign secretary said Sunday that European nations will intensify pressure on Iran over its nuclear program, but insisted the West wasn’t pressing for military action.

William Hague told Sky News television that he believed the EU would agree tough new sanctions against Tehran’s oil sector later this month, and would continue to look for peaceful methods of persuading Iran to ditch its pursuit of a nuclear weapon.

Khorasan daily reported Sunday that Ali Ashraf Nouri says the strategic decision has been made by Iran’s top authorities.

Practising Strait of Hormuz Closure

Iran’s next round of Persian Gulf naval drills will practice the armed forces ability to close the Strait of Hormuz, a lawmaker on parliament’s national security committee was cited by Mehr News as saying.

Iran’s elite Revolutionary Guards Corp will start naval exercises on 27th January in the Gulf with the aim of enhancing the country’s ability to close the chokepoint into that body of water “in the shortest possible time when the situation requires it.” Mehr cited Esmaeil Kowsari, a member of parliament’s National Security and Foreign Policy Committee, as saying in a report published on Saturday.

Iran threatened last month to shut the Strait, a transit point for a fifth of oil traded worldwide, if sanctions are imposed on its crude oil exports.

Effect of Sanctions

The Obama administration will implement the new US sanctions gradually over the next six months, however, the American measures, combined with a pending EU ban on importing Iranian crude, will wreak havoc on Tehran’s energy exports, which generate the overwhelming majority of the regime’s foreign exchange.

Beyond Europe, major Iranian customers such as Japan and South Korea will co-ordinate carefully with Washington. China is already cutting back its purchases in a bid for considerable price discounts.

For the oil markets, the net effect of the latest sanctions against Iran and the tensions will bring intensified volatility and sustained higher crude oil prices.

UK Destroyer on Route

Meanwhile, the United Kingdom on Saturday revealed that it is planning to send warships to the Persian Gulf.

The UK Ministry of Defense described the deployment of the HMS Daring as “long-planned” and “entirely routine.” The destroyer will replace a frigate stationed in the area, it said.

India to Pay Iran for Crude Oil in Rupees

India has announced today new plans to pay for Iranian crude oil it imports in Indian rupees, opposed to US dollars.

A senior Indian government official, speaking on condition of anonymity, said the issue will be addressed when a multi disciplinary team visits Tehran on January 16 to discuss uninterrupted supply from the major oil producer, the Press Trust of India reported on Sunday.

Under the proposal, the National Iranian Oil Company (NIOC) will open an Indian rupee account with Indian banks, and can use the money to purchase non strategic commodities like railway imports. However, the NIOC cannot use the money to invest in India or buy shares in Indian companies.

India satisfies about three quarters of its crude oil demands through imports and Iran is its second largest supplier after Saudi Arabia.

World Chaos Within 24 Hours

Rear Adm. Ali Fadavi, of Iran’s Islamic Revolutionary Guard Corps, said last month the world could not last 24 hours without Persian Gulf oil, and that Iran is capable of closing the strait.

“Today, out of the 1,300 billion barrels of oil in the world, 800 billion barrels are in the Persian Gulf,” Fadavi commented.

The US Navy said the threat to block the strait is unacceptable, as the flow of goods and services is vital not only to the region but to the world.

Several countries within the EU are heavily reliant on oil imports from Iran, and none more so than economically struggling Greece, which currently imports 30 percent of its domestic oil from the country, according to the International Energy Agency (IEA).

Greece Economic Collapse?

Greece’s economy is already mired in deep recession and could feasibly collapse entirely if the sanctions were imposed, according to Paul Stevens, economist and emeritus professor at Dundee University, Scotland.

“Let’s assume the European Union is stupid enough to go along with the US in imposing sanctions on Iran. That would only mean 250,000 barrels of heavy sour oil not coming into the EU.” Stevens said.

“But the impact that would have on countries like Italy and Greece would be enormous, and the Greeks are not going to slit their own throats for the sake of an EU sanction when Iran is the only country willing to offer them oil on favorable terms. It would utterly destroy the Greek economy.”

However Greece, increasingly dependent on imports of Iranian oil, will not break ranks with its EU partners to impose an oil embargo on Iran at a meeting this month, Greek government sources said on Tuesday.

“If the European Union decides to impose the sanctions, Greece will join them.” according to an official.

Greece Default?

Greece and Italy will default on their debts in 2012 but will not abandon the eurozone, as the continent’s policymakers will find away to keep the currency zone from falling apart, says Byron Wien, Vice Chairman of Blackstone Advisory Partners.

Worried that Athens will default on its debt, traders have pulled the plug on supplies and banks refuse to provide financing. Greece has stopped buying crude from Russia, Azerbaijan and Kazakhstan.

In the second quarter of 2011, Greece met 35 percent of its oil import needs from Iran, buying 111,000 barrels per day.

Search For Greek Oil

Earlier this week, Greece launched a tender inviting investors to search for oil in northern and central parts of the country, aiming to cut its energy imports bill and secure steady revenues in the long term.

Greek Minister Yiannis Maniatis has announced that he expects the first oil rig to be established before the end of 2012, as the government speeds forward with plans to exploit oil and gas reserves worth 25 billion euros.

Greece’s untapped oil reserves are estimated to hold 250 million barrels of oil worth around 25 billion euros. The government has been aware of the reserves for 15 years but failed to exploit them. According to the energy ministry there is already interest in the invitations to invest.

The prospective embargo from the EU, along with tough US financial measures signed into law by President Barack Obama on New Year’s Eve, form a concerted Western campaign to impose sanctions over Iran’s nuclear programme.

Greece Agrees to Sanctions

Diplomats said EU envoys had held talks on Iran in the last days of December, and that any objections to an oil embargo had been dropped, notably from crisis hit Greece which gets a third of its oil from Iran, relying on Tehran’s lenient financing. Spain and Italy are also big buyers.

“A lot of progress has been made,” one EU diplomat said, speaking on condition of anonymity. “The principle of an oil embargo is agreed. It is not being debated any more.”

The embargo will force Tehran to find other buyers for oil. EU countries buy about 450,000 barrels per day (bpd) of Iran’s 2.6 billion bpd in exports, making the bloc collectively the second largest market for Iranian crude after China.

The news caused a spike rise in oil prices, with Brent crude peaking at nearly $114 a barrel in intraday trading, up nearly $2 from Tuesday’s close.

Tehran insisted it would have no trouble: “We could very easily replace these customers,” said S. M. Qamsari, International Director of the National Iranian Oil Co.

But the new US sanctions have already made it difficult for Iran to keep the customers it has, and could force it to offer steep discounts to countries willing to risk doing business with it, hurting its revenues. Biggest trading partner China, driving a hard bargain, has cut its order of Iranian oil by more than half this month.

Unilateral Sanctions

“The principle of an oil embargo is agreed. It is not being debated anymore,” one EU diplomat said on condition of anonymity on Wednesday. Although the sanction has been agreed on in principle, the EU governments have not yet decided on a date to put the embargo in place.

The anti Iran move by the EU came after the United States, Britain, and Canada imposed unilateral sanctions on the Islamic Republic’s energy and financial sectors over Tehran’s nuclear program.

Alternative Supply Route

Iran has alternatives in place to let it cope with a threatened European Union embargo on its oil and increased US pressure, and plans to keep up exports of some 2.3 million barrels per day this year, a senior Iranian oil official said.

Tehran had already considered different routes if that were to happen, S.M Qamsari, International Director of the National Iranian Oil Co said from Tehran shortly before the report on the EU stance emerged.

“We could very easily replace those customers,” said Qamsari. Some, but not all, of any displaced volume could move into China as well as other Asian countries and Africa, he said. Iran was unlikely just to store crude on tankers as that was only a short term solution.

He said he expected shipments would remain unchanged this year and the volume of term, or annual, contracts was unchanged.

“We’ve got very high demand from our lifters, so we have the same quantity in our term contracts,” Qamsari said.

Roughly 30 percent, or just under 700,000 bpd, of Iran’s oil steams west of Suez, he said. More than half that volume is shipped to Europe, roughly 200,000 bpd goes to Turkey and the remainder is routed into Africa.

The International Energy Agency estimates Iran exports about 450,000 bpd to the EU.

The NIOC official said Europe’s longstanding buyers of Iranian crude, among them France’s Total and Italy’s Eni have voiced concern about potential EU sanctions, but had yet to cut back on contractual supplies.

Any punitive moves by Brussels could cause European consumers to suffer through higher prices at the pump, he said.

IEA Oil Report 2012

The latest Monthly Oil Market Report from the US IEA (International Energy Agency) forecasts the call on OPEC crude in 2012 at 30.2 million barrels per day. It also forecasts global oil demand will average 90.3 million barrels per day in 2012, an increase of 1.3 million over 2011.

However, the crude oil markets are expected to remain volatile throughout 2012, with the fundamentals of oil supply and demand continuing to take a back seat to the debt situation in Europe and tensions in the Middle East, with Iran in the driving seat.

“Given already very low European crude inventories, a spate of precautionary buying and escalating tensions surrounding the Iranian issue could sustain prompt prices at levels higher than otherwise, amid the growing concerns about the euro zone and weaker global economic activity for 2012.” the IEA said on 12th December.

Iran and Oil Supplies

Turning to oil supplies, the Iranian oil issue remains unclear, as the USA and its allies along with the EU are considering new sanctions on the Iranian oil as we know which increase fears that it will curb the oil supply, which will push oil prices to the upside strongly, and from the Iranian side, it said that if any sanctions happened, it will stop oil passing from the Strait of Hormuz.

European Debt

Back to Europe which remained for the past year the main factor that drive global markets, as the crisis is deepening and contagion risks are appearing, where many negative consequences can be noticed, however, hopes increased at the beginning of the year that serious measures would be implemented to halt the crisis’ train.

US Dollar and Oil Prices

On the other hand, the US dollar is encouraging crude oil to continue this upside journey, as it declined at the beginning of the year due to different factors. The ICE US Dollar Index opened the session at 80.27 and recorded a high of 80.29 then it declined to reach so far a low of 79.88, and is currently trading around 79.95.

In general, trading volumes remain mightily low, which give space for any minor factor to affect crude heavily and give it momentum, where fluctuations may be evident ahead of the American data which may add positive signs for the world’s largest economy.

Latest WTI Oil Price

US Light crude oil futures for January 2012 delivery was trading at $100.07 a barrel, 07.19 GMT this morning in electronic trading on the NYMEX.

The US oil contract closed yesterday’s trading session at $100.00 a barrel, $1.98 higher, or 2 percent.

OPEC Meeting

OPEC appears set to reach consensus over maintaining its official output quota at a meeting in Vienna today, as data showed that the cartel’s crude oil production was at the highest level for more than three years last month.

Kuwait’s Oil Minister Mohammad al-Baseeri said OPEC was likely to keep its production quota unchanged as the market was balanced and crude prices stable.

Analysts widely expect OPEC, which supplies a third of the world’s crude oil, to maintain its official output target of 24.84 million barrels per day, where it has stood for almost three years.

But with the IEA estimating that actual OPEC production hit 30.68 million barrels of oil per day in November, the highest amount in more than three years, OPEC may decide to issue a statement promising stricter compliance with its quotas.

Iran – Strait of Hormuz

WTI and Brent oil price jumped more than 3 percent in just minutes yesterday afternoon on a market rumour that Iran may close a major oil shipping channel, but then pared some gains as the rumour proved untrue.

Iranian MP Parviz Sorouri of the Majlis National Security and Foreign Policy Committee said “We will hold an exercise to close the Strait of Hormuz in the near future. If the world wants to make the region insecure, we will make the world insecure.”

The comments, picked up by the quasi official Iranian Student News Agency, and reported by the Tehran Times, were later complemented by a statement by the Iranian Foreign Ministry noting the Strait remains open.

The strait, located between Iran and Oman, is the most important oil shipping channel in the world.

Later, an Iranian official later dismissed the rumour, and a spokeswoman for the US Navy’s 5th fleet in Bahrain said shipping traffic in the strait was flowing normally.

“Rumours have a way of spreading around, and in this age of electronic markets, when you get something that starts to push prices up quickly, it triggers the stops and you get these explosions in prices.” said Tom Bentz, director of BNP Paribas Prime Brokerage.

Explosion Near Tehran – New Claim

A senior Iranian Revolutionary Guard commander killed in an explosion at an ammunition depot west of Tehran last week died while testing an intercontinental missile, his brother was quoted by a government newspaper as saying Saturday.

Mohammad Tehrani Moghaddam, himself a Guard officer, also said in an interview published Saturday that his brother Gen. Hasan Tehrani Moghaddam had founded the missile unit of the Lebanese Hezbollah group.

Gen. Moghaddam was killed together with 20 other Guard members on 12th November at a military site outside Bidganeh village, 25 miles southwest of Tehran, Iran. The Guard said the explosion was an accident, and occurred while military personnel were transporting munitions.

But Mohammad Tehrani Moghaddam was quoted by the government run Iran newspaper as saying that his brother was killed when the weapon exploded during testing. He did not dispute that the explosion was accidental.

“He lost his life while doing a final test of the missile. The project was in the final testing phase. It was related to an intercontinental ballistic missile … It was a completely high-tech, confidential process.” Moghaddam said.

Earlier this week, Iran insisted that the explosion that killed the architect of its missile programme was not carried out by Israel or the US, despite widespread reports that it was the work of the Israeli secret service.

A senior Iranian military official on Wednesday denied reports that Israel was linked to the blast.

Speaking at a ceremony commemorating those killed on Saturday, Iran’s armed forces joint chief of staff, Major General Hassan Firouzabadi, said in quotes carried by the semi official Fars news agency: “The recent incident and blast is not related to Israel or America.”

Meanwhile, America and western allies bluntly accused Iran on Friday of deceiving the world on nuclear arms, as the UN atomic agency passed a new resolution criticising Tehran’s nuclear defiance.

Iran shot back that the West’s allegations were based on fabricated American, Israeli, British and French intelligence fed to the International Atomic Energy Agency to try and discredit the Islamic Republic.

The unusually tough exchanges were bound to raise international tensions over Iran’s nuclear program, even though western statements emphasised that the preferred solution was through diplomacy.

Iran – Oil Statistics

Iran, a member of OPEC, ranks among the worlds top three holders of both proven oil and natural gas reserves and is OPEC’s second largest producer and exporter after Saudi Arabia. In 2008 Iran was the fourth largest exporter of crude oil globally after Saudi Arabia, Russia, and the UAE.

Iran has an estimated 137.6 billion barrels of proven oil reserves, or roughly 10 percent of the world’s total reserves. Iran has 40 producing fields (27 onshore and 13 offshore) with the majority of crude oil reserves located in the southwestern Khuzestan region near the Iraqi border.

Strait of Hormuz – Oil Supply

Tankers carrying over 15 million barrels of crude oil pass through the Strait of Hormuz everyday, making it one of the world’s most strategically important points for oil delivery.

Iran has warned in the past that any physical attack on their nuclear programme would result in disruption to oil passage through the Strait of Hormuz, which carries one fifth of the world’s oil destined mainly to the markets of China and East Asia.

Confrontation in the Strait of Hormuz could raise the price oil to record breaking levels, even eclipsing $147 seen in 2008.

China’s CNOOC Ltd and Argentina’s Bridas, which is half owned by CNOOC, had agreed a year ago to buy BP’s 60 percent stake in oil and gas group Pan American Energy, but the deal ended up being cancelled after a 1st November deadline to complete the transaction was missed.

Bridas cited legal issues and the way BP handled the transaction for the deal’s cancellation. BP said the deal hinged on Bridas obtaining Argentine anti-trust and Chinese regulatory approvals and that those permissions had not been won.

“Securing these approvals was the sole responsibility of Bridas, For reasons known only to them, Bridas has now chosen to terminate the transaction,” according to BP sources.

Bridas emphasised that the Chinese and Argentine governments had voiced support for the deal and said the cancellation “was not influenced by the European financial crisis, nor by any measure taken by Argentina.”

BP said it “will now be considering all its strategic options regarding PAE,” while Bridas said it would be willing to continue negotiations despite the deal’s cancellation.

Yang Hua, CNOOC chief, made a short statement on the failed deal, explaining that “certain conditions precedent to the completion of the deal were not obtained as expected, and Bridas chose to terminate the transaction.”

BP Fire Sale of Assets

The proposed sale was one of the largest single disposals that BP had drawn up under its plans to bolster its finances to ensure it could meet all liabilities with regard to the Macondo blowout, in which 11 oil workers died and swaths of coastline were damaged by oil pollution.

BP has diluted plans announced less than a fortnight ago to raise $45bn by selling off businesses.

But it also comes amid unease about BP’s relatively new chief executive, Bob Dudley, who failed to pull off a major share swap and Arctic exploration deal with Rosneft of Russia despite earlier announcing it with great fanfare.

Meanwhile, New Zealand’s Prime Minister John Key says “serious questions” must be answered about why a container ship ran aground on a reef off one of the country’s most spectacular coastlines.

3 Mile Oil Slick

Oil leaking from the Liberian flagged Rena has so far created a 3 mile oil slick, while an all out effort continues to remove nearly 2,000 tonnes of oil from the vessel, which is stranded 12 nautical miles off the coast.

Dispersants sprayed from the air on to the slick have not worked and bad weather is expected to hamper the containment effort with heavy gale force winds forecast for the area from Monday.

Officials say that 20 to 30 tonnes of oil have spilled into the Bay of Plenty, one of the New Zealand’s top tourist destinations, since the MV Rena ran aground on Wednesday.

The man in charge of the response, Rob Service, said most of the Australians had worked on the 2009 Montara oil spill in the Timor Sea. In that disaster, an oil platform leaked for 74 days, spewing millions of litres of oil into the sea.

“We have both New Zealand and Australian responders who were involved in the Montara response, so that experience is feeding into how we manage the on-water operations. Our ongoing monitoring of the slick and its position allows us to target the operation to the priority areas.” Mr Service said.