"The handling of the oil spill is slow, which could be (due to a lack of) equipment resources."

A spokeswoman from the Balikpapan environmental agency said that oil dispersant was being sprayed in the affected area, especially around coastal settlements, as well as the use of an oil boom.

In addition, volunteers consisting of the military, members of the local and business communities have been working for the past two days to clean up oil from coastal areas, the spokeswoman said.

However, Nasution said the extent of the spill is "quite massive" and has impacted the local shoreline and marine life, adding marine mammals and seabirds will more than likely be immediately affected, while fish could ingest the oil and cause health problems further down the line.

Greenpeace does not yet know if the fires were accidental or started by design in order to burn off excess fuel in the water, but Nasution said they are "worsening the situation."

Source determined

During a press briefing Monday, municipal secretary Sayid MN Fadli cautioned locals, suggesting the area had become hazardous.

"The bay is now like a gas station," he said, after warning people not to smoke near the oil spill.

"When the leakage was first detected, we closed the distribution line of crude oil from Lawe-lawe to Balikpapan straightaway to prevent it from getting worse," spokesman Togar MP said, according to the Jakarta Post.

Indonesian media reports had previously quoted Pertamina as denying wrongdoing, saying that tests of the waters from the bay had determined that the substance was marine fuel oil, not the crude which is carried in its pipelines in the area.

The company said that after repeated tests of the oil-contaminated seawater it had concluded that it was indeed its product.

In a statement, Greenpeace criticized the development.

"As top priority, we demand Pertamina to take full responsibility on the impact of oil spills incident.

"It is a shameful manner at the beginning Pertamina has denied the truth that leaked oil in the area origins from their underwater pipeline. We urge Indonesian National Police to continue investigation to determine (the) main causes of leakage."

Pertamina did not respond to a CNN request for comment.

Locals have been reported having difficulty breathing and experiencing nausea and vomiting since the fires broke out over the weekend.

The region has experienced severe spills in the past, and Greenpeace's Nasution says that the government should focus on a future strategy how of to mitigate the impact of such incidents.

"Long-term recovery measures are crucial (and should be) be drawn up soon," he said.