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ORC spokesman Jeff Donaldson said the exercise involved the use of oil-spill equipment and an oil recovery vessel, Tukuperu, to clean up a simulated 30-tonne oil leak from a ship berthed at Beach St Wharf, Port Chalmers.
An incident command centre was set up in the council's Dunedin offices to co-ordinate the exercise response.
Mr Donaldson said the exercise scenario was well suited to Port Chalmers, as it was a busy port, and the number and size of vessels entering the port was increasing.
"A big oil spill in the area would have the potential to affect large parts of Otago Harbour and its peninsula, and involve many people.
"Although such events are rare, systems are maintained to deal with any incidents involving oil spills, and these need to be tested occasionally to ensure they are fully functional," Mr Donaldson said.
The exercise allowed Maritime New Zealand and the ORC to activate their oil spill response teams, test the capacity and effectiveness of oil containment, recovery equipment and operating systems, and allow response personnel to practise their communications.
Members of the Australian Maritime Safety Authority watched the exercise and will give an assessment of their New Zealand counterparts' responses.
The exercise will continue today with staff using Tukuperu to chase a simulated oil slick and suck it up out of the water.