The Indonesian port city of Balikpapan, on the island of Borneo, has declared a state of emergency after a devastating oil spill spread along the coast, killing four fisherman when it ignited.

The oil spill, which occurred over the weekend, has now stretched to an area of around seven square miles (18 sq km), contaminating the sea and polluting the air with thick black smoke. One protected dugong has already washed up dead on the shore.

The four fisherman died after being caught up in the fire caused by the spill – another is still missing – and the port city of Balikpapan, which has a population of 700,000, is struggling to deal with the toxic smoke.

“We’re in a state of emergency because of the oil spill’s impact,” said the Balikpapan city secretary MN Fadli. Around 1,200 people who live in the Penajam North Penajam Paser subdistrict reported symptoms of nausea, vomiting and breathing problems after the spill caught fire on Saturday and the city has distributed masks to help residents cope with the smell.

“I may sound like I’m exaggerating, but the state of the bay is like that of a gas station,” said Fadli.

The spill is thought to have been caused by a bulk coal carrier, which was carrying coal from Indonesia to Malaysia, but samples have also been taken from Pertamina, a state-owned oil refinery that has pipelines across the bay. Pertamina has denied it is responsible for the leak.

The full environmental impact of the oil spill is not yet known but it is already affecting the livelihoods of the local fisherman who rely on going out in their boats every day.

The Indonesian Environment and Forestry Ministry said a recovery team was working to contain and clean up the spill. Rasio Ridho Sani, the director general of the ministry, said: “Our team in the field is investigating it thoroughly. We will soon find out how big the impact is on the environment and who will be held responsible.”