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An Oamaru fuel company has been ordered to dig up an underground storage tank after an investigation into a suspected fuel leak at Oamaru Harbour.

Otago Regional Council compliance manager Martin King said McKeown Group Ltd was issued an abatement notice because of the "hydrocarbon contamination" in the area.

"The notice requires a series of actions by McKeown Group Ltd, which includes removing underground petroleum storage tanks, disposing of petroleum and impacted groundwater from within monitoring bores, mitigating any further contamination of the coastal marine area, and installing warning signage at its Esplanade St site to warn the public of the potential presence of hydrocarbons," he said in a statement issued to both the Otago Daily Times and the Waitaki District Council.

"The discharge of petroleum into groundwater and water in the coastal marine area is likely to have a series of adverse environmental effects, and low toxicity to humans."

In October last year, a roughly 5sq m patch appeared in the water along the Esplanade.

Later that month, the Waitaki District Council removed a small fuel tank at its property next to the McKeown Group site.

But that did not fix the issue and in May investigations resumed.

McKeown Group managing director Ken McKeown said the company was complying with the regional council's orders, but he was not convinced the tank the company itself had identified was the source of the leak.

The area was historically well used by the petroleum industry. BP and Shell once had tanks in the area as well.

"We're the only remaining petroleum industry down here, so naturally they're going to point the finger at us.

"I'd happily tell you, `yes, it's us' if that was the case, but it has yet to be verified whether it's us or not and where it is showing up in the water is along further down the road where some of the old oil companies used to be and there may be something in the ground there that we don't know about."

He said when the suspected leak was first discovered, the company tested its own tanks "and they all tested fine except for one tank, which we haven't been using since we had it tested".

The company was now waiting on the consenting process to remove the tank.

Oamaru Blue Penguin Colony science and environmental manager Philippa Agnew said it was "great" the issue had been resolved.

No seabirds had been oiled, she said.