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Crews have continued working to contain a large bunker spill off the Norwegian coast after fuel began leaking from a Panama-registered Chinese vessel which is also threatening the west coast of Sweden.

Marine fuel began seeping from the Full City when it ran aground during stormy weather on Friday near the southern town of Langesund, in Telemark, Norway.

The ship suffered severe damage and is believed to have leaked up to 200 tonnes of marine fuel. It was carrying approximately 1,200 tonnes of oil when it struck the rocks. The vessel is operated by Hong Kong-based COSCO.

The Norwegian coast guard has set up containment boom 'barriers' to prevent the oil from spreading to other sea areas and Swedish resources have also been deployed to help with the clean-up operation.

A Norwegian rescue boat is said to have already pumped out 40 tons of oil from the vessel. Coast guard reports indicate the ship will not survive incident and pressure has been put on the captain to abandon ship. 16 sailors have been evacuated from the vessel and seven remain on board.

The Swedish coastguard flew over the area on Saturday to monitor the extent of the damaged area.

"It (the oil) has covered islands and islets. The sea is shining blue and brown wher the oil is thicker and we have spotted a large number of birds covered in oil. There are thick tracts of oil as far as the eye can see," the commanding officer of the Swedish vessel, Carl-Gustaf von Konow, told news agency TT on Sunday.

The affected coastline area is a popular holiday destination in the summer, located west of the Oslo fjord. Television channel TV2 has already shown pictures of oil coming ashore along the North Sea coastline.

The World Wildlife Fund has also indicated that there are a large number of birds in a nearby sanctuary that could be affected by the spill.