Four oil refineries in southern France face closure from the weekend, the country's oil lobby said on Friday, after workers at a key oil port voted to continue a strike for a 12th day. Fuel supplies to motorists could continue uninterrupted for one or two weeks, if next week's refinery strikes are limited, a spokesman for the lobby group UFIP said.
A port spokeswoman said strikers at Fos-Lavera had decided to stay out and there were no plans to resume talks with the management before the weekend. The strikers want job guarantees as part of a port reform and are also protesting against President Nicolas Sarkozy's pension reform to raise the retirement age to 62 from 60, which has already sparked waves of nation-wide protests. "No meetings are planned today... the contact has not been broken off," the spokeswoman said. UFIP said four out of six French plants supplied from Fos-Lavera could halt output from this weekend and two other could continue processing crude for a limited number of weeks.
"We can try and use the small quantities of crude we can get hold of to continue fuelling up to two refineries," a UFIP spokesman said. Southeast France would be the next region to be hit by fuel shortages, after the island of Corsica, where petrol stations were only servicing emergency vehicles.
The strike impact was evident across Europe and beyond in a rise in refining margins, or cracks, for producing motor fuel as its price rises, David Wech, an industry analyst with JBC Energy, said. "Gasoline cracks in the Mediterranean and Northwest Europe have surged over the last three days, striking the highest levels in the Med since mid July," Wech said.
North west Europe gasoline crack spread, the differential or premium between feeedstock crude and higher gasoline prices, rose to four-week highs of $8.04 a barrel on Friday - in sharp contrast with $1.5 a barrel in late September. "Inland (French) suppliers are now starting to have some problems with gas oil," said a physical distillates trader in the Mediterranean.
Dozens of vessels with crude and oil products remained blocked at Fos Lavera and refinery employees plan to join the strike on October 12 together with railway, electricity and underground workers, as part of protests against the pension reform. "If the day of strikes (October 12) brings on blockades and stoppages it will be a catastrophe," the UFIP spokesman said. "But so far it's impossible to know whether the strikes will be followed."
French port union officials said earlier this week they have also called for stoppages to continue every weekend, after a national strike action in ports last weekend. The port strike has already trimmed fuel output at the six refineries, pushing gasoline and gas oil prices in Europe to a five-month high and creating concern that the idling of plants could lead to an oversupply of unwanted feedstock crude oil. The port serves eight plants - including one in Germany and one in Switzerland - which can process more than 1 million barrels per day, around 7 percent of Europe's total capacity. The German plant can be supplied by alternative routes.