French energy company Total identified the source of a five-day gas leak from its North Sea Elgin platform that has formed a large cloud that could explode, costing the company billions of dollars.

The leak is from a (gas) well that was plugged one year ago and from a rock formation in about 4,000 metres depth, a company spokeswoman in Aberdeen said on Thursday. The platform is situated in waters less than 100 metres deep, which means the leak is far below the sea bed.

The company said it had dispatched fire-fighting ships near the scene in case of an explosion.

A flare needed to purge any gas left in the platform is burning less than 100 metres from where explosive natural gas is still leaking.

The gas is leaking from the platform above sea level, but engineers say it is important to identify the source of the gas before repairing the leak.

Total has not yet found a way to stop the gas leak, which started on Sunday and forced the evacuation of all 238 workers from the platform, which sits 240 km (150 miles) off the east coast of Scotland.

Total has said the flare should extinguish itself naturally in the next few days.

PRESSSURE SEEN FOR RELIEF WELL

Total warned on Tuesday it could take six months to halt the flow of gas. The company previously stated it hoped the leak would die down from natural causes as reservoir pressure drops.

The depth of the non-producing reservoir that is feeding gas to the Elgin platform via compromised layers of piping suggests there is more gas present rather than less, piling pressure on Total to drill a relief well, an engineer with knowledge of the matter said.

Memories are still raw in the North Sea industry of the Piper Alpha platform fire 24 years ago, when 167 people were killed in the world's deadliest offshore oil disaster.

The firm as well as UK authorities have said the expected environmental impact from the plume of gas and a spreading sheen of light oil on the water would be minimal, although environmental pollution experts said much of the gas cocktail would be either flammable or poisonous at close quarters.

But analysts said the French oil major could face costs of up to $10 billion (6 billion pounds) if its North Sea gas leak leads to an explosion and nearly $3 billion if it takes months to fix.

Total's shares have lost about 9 percent in the wake of the incident. They were trading at 37.32 euros, at 11.10 a.m. British time.

However, Jefferies securities and investment bank said in a research note that data that had emerged on the spill, which has further convinced us that the spill consequences should be less than the most pessimistic market estimates and hence that the US$9.7 billion sell-off in the stock since Monday is overdone.

(Additional reporting by Oleg Vukmanovic and Karolin Schaps in London and Sybille de La Hamaide in Paris; Editing by Jane Baird)