A court in Alaska has reduced by $1 billion the punitive damages imposed on the world's biggest oil company for the Exxon Valdez disaster in 1989, but said the firm must still pay $4 billion.

Exxon Mobil announced immediately that it would launch a fresh appeal.

The $4 billion is an appropriate number, nothing less

Dave Oesting, counsel for plaintiffs

A federal judge in Anchorage ordered the reduction after being instructed by an appeals court last year to reconsider the damages award.

However, Exxon Mobil Vice-President and General Counsel Charles Matthews said the judge's decision was ''entirely inconsistent with the law''.

Plaintiffs pleased

''This ruling flies in the face of the guidelines set by the appeals court when they sent this case back,'' Mr Matthews said.

The Exxon Valdez supertanker spilled 11 million gallons of crude oil into Prince William Sound in Alaska in 1989, polluting around 2,000 kilometres of coastline.

Its captain, Joseph Hazelwood, admitted drinking vodka before boarding the vessel, but was acquitted of operating a ship while intoxicated.

Dave Oesting, the leading counsel for about 32,000 plaintiffs - including fishermen, communities, businesses and landowners - said he was pleased with the decision, claiming ''the $4 billion is an appropriate number, nothing less''.

Exxon had based its case on the amount it had already spent following the disaster, including $300 million in voluntarily compensation, $2.2 billion to clean up Prince William Sound and $1 billion to state and federal governments.

Its lawyers argued that the punitive damages should be reduced to zero, but under the appeal court's criteria should be no more than $40 million.

The Exxon Valdez disaster is estimated to have killed 250,000 seabirds, 2,800 sea otters, 300 harbour seals, 250 bald eagles, up to 22 killer whales, and an unknown number of salmon and herring.