PARAISO, March 25 (Reuters) - Shortly before dawn on

March 17, Guillermo Risso saw a distant flash of light

illuminating the night sky and thought that the Olmeca refinery,

owned by Mexico's state oil company Pemex, must be on fire.

"It was an explosion, the entire refinery lit up," said Risso,

president of the community council of Puerto Ceiba, a coastal

town near the refinery in Mexico's southern state of Tabasco.

"We saw flames and were alarmed," he said.

The fire was caused by oily water overflowing from inside

the refinery onto a nearby road and was quickly ignited as a

vehicle passed by, resulting in the deaths of five people, the

company said in a statement last week.

As of Sunday, the company said it had cleaned up 549 cubic

meters - equivalent to 3,453 barrels - of fossil fuels in

strategic areas within or adjacent to the refinery.

It also installed containment barriers along the Rio Seco,

which surrounds the refinery and connects to the vast Mecoacan

lagoon, where fishermen harvest oysters.

Pemex did not immediately reply to requests for further

comment.

"The currents are deceptive, and it is possible that

uncontrolled waste could reach the lagoon," said biologist

Alvaro Hernandez.

Hernandez noted that, for now, fishermen affected by the

spill still plan to sell their catch during the upcoming Easter

holidays, because they cannot withstand the loss of income

caused by the crisis.

The spill in Olmeca is the latest, and the most serious to

date, in a string of issues that the new refinery project has

faced, including underproduction, an overrun budget, and delays

in meeting targets.

MORE SPILLS

It follows another spill reported in early March off the

coasts of the states of Tabasco and Veracruz.

President Claudia Sheinbaum said that the company

responsible for that disaster had not yet been identified, and

environmental authorities were still investigating the cause of

the spill.

Sheinbaum had previously stated that it might have

originated from an oil tanker off the coast of Tabasco, a theory

some experts are beginning to question given the extent of the

damage.

The government agency responsible for environmental matters

in the energy sector said that it did not yet have an estimate

of the area affected by the spill.

The Olmeca refinery has a production capacity of 340,000

barrels per day (bpd), which it has not reached because the

government is still ramping up production.

It is part of the Mexican government's plan to refine more

at home and wean the country off imports, most of which come

from the U.S.

The Gulf of Mexico Reef Corridor Network, which brings

together fishermen's associations, indigenous groups, and

environmentalists, recently issued a warning about the presence

of oil along the coasts of Tuxpan and Cazones, in northern

Veracruz.

It reported that at least seven sea turtles, two dolphins,

two manatees, and one pelican have been found affected by the

oil, most of them dead.

Red, black, and white mangroves in Laguna del Ostion, in

Veracruz, have been affected, it said.

This unique ecosystem is home to the hairy crab and the blue

crab, a protected species, as well as migratory birds and

otters.