Grangemouth refinery begins shutdown ahead of strike
GRANGEMOUTH, Scotland/LONDON (Reuters) - UK's Grangemouth refinery began halting work on Monday ahead of a 48-hour strike in a development that looked increasingly like a repeat of a 2008 crisis which disrupted production from several major North Sea fields.
The strike has been called in support of a Unite union representative in a dispute with owner Ineos . It is due to start on October 20, and the plant is being shut down ahead of that deadline.
A similar strike at the refinery in 2008 interrupted flows of crude through the Forties Pipeline System (FPS) and shut in production at 70 North Sea fields, pushing up Brent crude oil futures.
This is because the Grangemouth plant provides steam and power to BP's Kinneil oil processing terminal, where Forties, a key North Sea oil grade, comes ashore.
"Individual production units are being progressively taken down and will be brought to a cold status. This is the best way to guarantee the safety of the site during this period of uncertainty," Ineos spokesman Richard Longden said.
"We remain hopeful that the union will agree to continue to provide steam to BP to ensure the ongoing operation of the Forties Pipeline System," he added.
Longden said Ineos was still in discussions with Unite through the conciliation service ACAS.
Forties is the biggest of the four key crudes that underpin the Brent benchmark. It is expected to load some 387,000 bpd in October, according to the latest schedules.
Speaking earlier on Monday, a BP spokeswoman said BP was still in discussions with Ineos and could not comment on any potential implications of the shutdown for operations at Kinneil and the pipeline.
A Unite union source said Grangemouth's management had instructed staff to close the 210,000 barrels-per-day (bpd) refinery in a way that would lead to a 'cold shutdown'.
Gareth Lewis-Davies, senior energy strategist at BNP Paribas, said if Kinneil had to stop processing oil, it could lead to serious disruptions.
"If you can't stabilise the oil, then you can't create a stable crude ready for export," he said.
"The effect won't be immediate as you'll have crude oil in storage, but as soon as that's exhausted, the market tightens, and then things can grind to a halt very quickly."
(Reporting by Simon Falush and Claire Milhench; additional reporting by Lin Noueihed; editing by Jane Baird and William Hardy)
