It was described by environmentalists as an ``international embarrassment'' ahead of the millennium celebrations expected to draw huge crowds to the harbour, and next year's Sydney Olympics.

Shell Oil Australia Ltd., after initially apologising, later denied liability and said blame lay with the crew of the Laura D'Amato who had opened two valves. ``I believe it's two valves and they are connected with the balancing of the tanks,'' Shell chairman Peter Duncan told reporters. He said the valves had nothing to do with the transfer ofthe crude which had been underway for four hours when the spillage happened.

Officials of the Maritime Union and of the Sydney Waterways Authority confirmed there were rumours of sabotage involving two sacked crew members of the tanker. Waterways Authority Chief executive officer Matt Taylor said ``I just heard someone might have done something silly on board the ship for spiteful reasons but it doesn't seem to be the case,'' he said before the statement by Shell. New South Wales state premier Bob Carr described it as ``an outrage that should not have happened'' and said he had ordered a full-scale inquiry. He said he would press for maximum fines, which can be up to US $650,000.

Aerial inspection revealed the oil had spread beyond containment lines. Conservationists began trying to save the seabirds.