Sydney - Oil from a damaged ship has washed up on 60 kilometres of beaches on Australia's east coast in what officials said Friday was likely to prove Queensland's worst environmental disaster.

   Oil gushed from the Hong Kong-owned Pacific Adventurer on Wednesday when it was lashed by a storm in international waters near Brisbane.

   The 180-metre vessel, which also lost 31 containers overboard that contained the fertilizer ingredient ammonium nitrate, was still leaking oil in its berth in the Brisbane River.

   "It may well be the worst environmental disaster Queensland has ever seen," state Premier Anna Bligh said. "If there are any grounds for prosecution of this ship and its owners we will not hesitate to take that action."

   The ship's captain was accused of lying about the volume of the oil released when a container washed overboard, bashed into the hull and punctured a fuel tank.

   Beaches on Moreton Island, Bribie Island and the Sunshine Coast are closed to tourists while the mess is being cleaned up.

   Trevor Hassard, director of Tangalooma Resort on Moreton Island, said what was a pristine white-sand beach has been turned into a crescent of black sludge. "It does look absolutely, devastatingly awful," he said.

   On Marcoola Beach on the Sunshine Coast volunteers are trying to clean oil from green turtle hatchlings caught up in the disaster.

   "I'm not experienced in removing oil, so we're going to have to relocate them," said Marcoola local Leigh Warneminde-Clarke. "Some of these hatchlings still have yolk sacks attached."

   Sunshine Coast Council spokesman Stephen Skull said removing the oil would take at least two weeks.

   "It's certainly bigger than the first reports I was getting in terms of the extent of it and the magnitude of what's impacting on our beaches," he said.

   University of Queensland academic Michael White said that ammonium nitrate was not a threat to marine life but warned that the lost containers were a risk to shipping. The 31 missing boxes contained 620 tonnes of the chemical.

   "It's a hazard then, because if especially small craft come onto it, especially in heavy weather like now, they would bash the hull against the container and probably would break up the ship," he said.

   Queensland Seafood Industry Association president Neil Green said containers bobbing in the ocean were worrying trawler captains.

   "We're horrified," he said. "Looking at the location of where these containers went over, it's smack bang in the middle of our trawl grounds."