Nov. 5 (Bloomberg) -- StatoilHydro ASA, Norway's largest oil and gas company, said an incident at its Mongstad refinery in August that was caused by a power cut had a ``major accident potential.''

``The findings of the ongoing investigation show that the incident quickly could have escalated further as air could have forced its way into the reactor and led to an explosive development,'' the Stavanger-based company said today in a statement on its Web site. ``This was prevented by an emergency stop.''

An alarm went off Aug. 23 at around 4:30 p.m. local time and between 1,000 and 1,500 people had to be evacuated, the company said then. A large amount of smoke was visible and the catalytic cracker, a gasoline-making unit, was affected.

StatoilHydro expects to conclude its investigation into the incident by the end of the year. The Mongstad refinery has the capacity to process 189,000 barrels of oil a day, according to data compiled by Bloomberg.

To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net

Last Updated: November 5, 2008 09:07 EST