Riga - A rail crash near the Latvian city of Ventspils killed two people Saturday and caused a huge fireball when up to ten tanks of diesel fuel ignited.

A train transporting diesel collided with stationary wagons, probably during a shunting maneuver, according to the state fire and rescue service, as reported on Latvian television. Up to ten large fuel tankers ignited, with flames leaping into the sky, visible from 10 kilometres away.

The collision occurred near a local train station and firefighters from across the surrounding region hurried to the scene. The blaze took several hours to bring under control. Ainars Pencis, head of the state fire and rescue service, said there are fears that fuel and other chemicals spilled during the incident may have caused serious environmental damage.

However, a major disaster was narrowly averted when other tankers in the area were moved a safe distance away. These reportedly included some containing highly volatile nitric acid, which could have formed a toxic cloud had it ignited.

"It was lucky the wind was blowing in the right direction," Ventspils municipality spokesman Janis Arais told Latvian TV.

Railway police press spokesperson Dzinrta Dzene said two bodies had been found at the scene, believed to be the driver of the train and his assistant.

Ventspils is the site of a major fuel terminal on the Baltic Sea. Fuel trains use the rail lines to the city many times each day. (dpa)