Northumbria police were reluctant to blame the IRA as no remains of either a bomb or an incendiary device had been found. But they did say there were similarities with other terrorist attacks around the country.
The blast, which had all the hallmarks of an IRA operation, follows two terrorist attacks on Tyneside over the past 13 months. No warning was given.
MI5 liaison officers and members of the anti-terrorist squad travelled to the North-east yesterday, and Army bomb disposal teams were called in.
The explosion, shortly before midnight on Tuesday, destroyed a British Gas tank, causing a massive fireball. The blast was heard over five miles away, but caused no injuries.
Pensioners living near by in old people's bungalows were taken to a local community centre. About 400 people spent the night away from their homes and it was not until dawn yesterday that it was declared safe for them to return to their houses.
Forensic scientists have begun searching the remains of the tank, which held 2 million cubic feet of gas. They appear to have established that the explosion was not an accident.
Police reluctance to lay direct and public blame on terrorists for the explosion seemed to be due in part to the lack of physical evidence. Detective Superintendent Barry Stewart, who is in charge of the investigation, said he had certainly not ruled out 'terrorist involvement'. He said: 'I believe it is a crime at the moment and I am treating it as such.'
He went further in saying that there had been 'great similarities' between the blast and others elsewhere, but he pointed out that there were 'unusual circumstances'. One possibility was that the blast could have been caused by some other device 'such as a gun'.
In February this year, the IRA claimed responsibility for bombing a gasometer in Warrington, Cheshire, and a subsequent bomb attack in the town's shopping centre which led to the deaths of two children.
In April, an oil storage tank at the Esso terminal in North Shields, Tyne and Wear, was targeted by terrorists who planted an incendiary device. The IRA also claimed responsibility for planting 12 incendiary devices in the Metro Shopping Centre in Gateshead.
Witnesses to Tuesday night's explosion said the sky was lit up for more than two hours. Police evacuated houses and flats in seven streets near the gasworks.
Intruder alarms at the plant, which contains three gasometers, were activated but this could have been as a result of the blast.
Jayne Rowls, 36, a civil servant who lives near to the gasworks, said: 'I had just gone to bed and turned the light out when there was an enormous bang. I jumped up to the window to see the most amazing flames shooting up into the sky. Everyone ran out into the streets.'
Joan Little, 72, who lives 30 yards away, said: 'It felt as though my bed had jumped three feet into the air. It was a massive bang.'
Blast at Tyneside oil terminal
An explosion happened at an Esso oil terminal in North Shields, Tyne and Wear, just before midnight last night, police said. One report said three blasts had been heard, but the fire service said there was no fire and no casualties. The IRA attacked the same terminal seven weeks ago.