An unknown amount of diesel is believed to have spilled, either in the impact or as the vessel steamed offshore. Waves and wind action meant that most of it would have evaporated, with a small amount dispersing into the water column.
Environment Southland has scaled back its response to the spill
It activated its oil spill response team at 1am but an observation flight over the area this morning has found no sign of diesel, either on the shore around The Neck, off Stewart Island, or in the water.
Spokeswoman Michele Poole says the diesel has either blown further offshore or dispersed naturally in the heavy seas.
"We've arranged with some of the fishermen and boat owners from Stewart Island to go and have a look at The Neck, to see if they can see any signs of diesel on the water that we couldn't see from the air.
"They'll also be checking to see if they can smell anything."
Michele Poole says the vessel will be sailing to Lyttelton for inspection and repairs.
Southland Harbourmaster Kevin O'Sullivan said that the flight also confirmed that the Sureste 700 was not listing. He had been in touch with the charter company, and following discussions with Maritime NZ and Environment Canterbury's regional harbourmaster, the vessel would be steaming to Lyttelton for inspection and repairs.
The Labour Party Environment Spokesperson Maryan Street said the spill should be a reminder to government of the risks of environmental damage at sea.
"In the wake of the Rena disaster in the Bay of Plenty, the rupturing of the fuel tanks of the Sureste 700 near Paterson Inlet should be a warning to the government not to be so gung ho about deep sea drilling.
"It is fortunate that there are no concerns for the safety of the Sureste crew at present, but the loss of 23,000 litres of diesel at sea will cause environmental damage even if it is dispersed naturally by rough seas.
"New Zealanders have seen too much damage done to our precious environment in recent years. It is no wonder so many oppose deep sea drilling."
Conditions are extremely rough in the area, with winds of up to 30 knots blowing offshore.
The Sureste 700 is a 58m long fishing vessel based in Timaru and is chartered by South East Resources.