Britain braces for oil refinery strike

Business Materials 27 April 2008 10:17 (UTC +04:00)

Workers at a key British oil refinery were to start a two-day strike Sunday, forcing a major North Sea pipeline to shut down and sparking fuel shortages, the AFP reported.

The walkout was to begin at 6:00am (0500 GMT) at the Grangemouth refinery, west of Edinburgh, as a convoy of tankers headed from Europe to keep Scotland moving thoughout the industrial action.

The Forties pipeline was closing, operator BP said, due to the industrial action by 1,200 workers striking in a row over pensions.

The key pipeline brings more than 700,000 barrels of crude oil ashore every day, supplying around 40 percent of Britain's oil and gas, plus international markets.

It is powered by the refinery, which operator Ineos has already shut down. Grangemouth supplies Scotland, Northern Ireland and northern England.

A spokeswoman for the Unite trade union confirmed the strike was going ahead.

"We understand the membership is standing strong, but we're ready to discuss a solution at any time," she said.

Offshore oil industry body Oil and Gas UK urged ministers to intervene, saying the pipeline closure would cost the economy 50 million pounds (63 million euros, 100 million dollars) per day in lost production, with the Treasury hit hardest.

"It is now time for the UK government at the highest level to step in and take all the necessary actions to ensure that the country is not held to ransom in this manner," said chief executive Malcolm Webb.

However, ministers insisted there would be enough fuel to go round, so long as people did not panic buy. However, some Scottish petrol stations have already run dry, while others have brought in rationing or prike hikes to keep panic buying down.

The Scottish government announced Sunday that around 65,000 tonnes of fuel, mostly diesel, was being shipped into Scotland from European ports such as Rotterdam, Amsterdam and Gothenburg.

Scotland consumes around 6,000 tonnes of diesel per day.

"We will have ample fuel supplies to see Scotland through this dispute and well into May," said First Minister Alex Salmond.

"This will provide extra reassurance for consumers and businesses alike as we look ahead to the coming working week.

"Supplies are still flowing across the country ahead of these arrivals.

"No doubt there will be some difficulties through the early part of the week as we await the reopening of the Grangemouth facility. However, the required fuel for Scotland is on the way."

Britain's Business Secretary John Hutton said: "There is plenty of petrol and diesel in Scotland to meet demand during this period of time. But of course there is going to be a challenge if people change the way that they consume fuel."

It is the first time in more than 70 years that a British refinery was shut down due to a strike.

Some 70 oil fields feed into the Forties pipeline. Around two-thirds of oil from the pipeline is immediately exported.

North Sea oil platforms could be forced to shut down due to the action, the BP spokesman said, adding they would likely take a few days to get up and running again afterwards.

Oil prices Friday: in London, Brent North Sea crude for June rose two dollars to 116.34 a barrel after earlier crossing the key 117 dollar mark.

Prime Minister Gordon Brown has said there is no need for industrial action in the dispute and urged Ineos and Unite to talk.

The dispute comes at an awkward time for Brown, ahead of London mayoral and local elections on Thursday in which opinion polls suggest his governing Labour Party could struggle.