Marseille Oil Port Strike Forces Refineries to Halt

A 12-day-old workers strike at the French port of Marseille, expected to continue through the weekend, will force refiners in the region to start halting production, leading to motor fuel shortages.

At least four refineries may begin to completely shut from this weekend, Jean-Louis Schilansky, Paris-based head of refiners’ organization Union Francaise des Industries Petrolieres, said today in a telephone interview. Fuel supplies may be endangered from Oct. 18, he said.

“We are heading toward a progressive halt of refineries starting this weekend,” Schilansky said. “If the strike continues, there could be local fuel supply problems in mainland France.” The island of Corsica, which experienced shortages this week, is now getting supplies from Sardinia, he said.

The strike, which began on Sept. 27, had stranded 51 vessels as of yesterday, including 13 crude-oil and 15 oil- products tankers, three bulk chemical carriers, nine gas vessels and three barges, according to a statement from the port authority. Inchcape Shipping Services said on its website today that 19 crude and 26 product tankers were waiting to load or discharge.

“The strike will go on at least through the weekend,” Pascal Galeote, a representative from the Confederation Generale du Travail labor union, said today by phone from Marseille. “We think the ball is in the camp of the government to intervene.”

Galeote said no progress has been made this week with Marseille port authority management in talks on working conditions at a planned state-controlled company that will employ oil port workers as part of a 2008 ports reform.

Strategic Reserves

France hasn’t drawn on its overall strategic fuel supplies in response to the strike, Schilansky said. The reserves have been deployed in some parts of the country and replaced in others, keeping the total level unchanged, he said.

Total SA, Exxon Mobil Corp., Ineos Group Holdings Plc, and LyondellBasell Industries NV have plants in the region that account for 31 percent of French refining capacity.

The strike caused prices of gasoline and shipping to climb. Gasoline for immediate loading in Amsterdam-Rotterdam-Antwerp, Europe’s oil-trading hub, traded at as much as $770 a metric ton yesterday, according to a survey of brokers and traders monitoring the Argus bulletin board. That’s the highest price since April 30. It traded at $742 to $758 a ton today.

Stockpiles of the motor fuel in independent storage in the ARA-hub fell 3.3 percent to 889,000 tons in the week to yesterday, according to PJK International BV, a consultant in The Netherlands. That’s the lowest level since Sept. 23.

Fuel Shortage

The fuel shortage has pushed up the amount of diesel being shipped into Europe from the U.S., Christophe Barret, London- based oil analyst at Credit Agricole, said Oct. 6. Cargoes could start arriving next week, he said.

Freight rates for Aframax-class oil tankers shipping crude oil across the Mediterranean advanced 67 percent this week to 143.86 Worldscale points, according to the London-based Baltic Exchange.

Crude prices in the Mediterranean declined relative to other regions. Russia’s Urals oil for delivery in Italy was 50 cents cheaper than cargoes for delivery in northwestern Europe today, according to data compiled by Bloomberg. In the week prior to the strike, shipments in the Mediterranean were 33 cents more expensive.

Crude Unit Halts

Total plans to halt a crude distillation unit at its La Mede refinery on Oct. 10 because of a lack of oil, Charles Foulard, a CGT union spokesman, said yesterday. The refiner, Europe’s largest, may halt some refining operations at the end of the week, Michael Crochet-Vourey, a spokesman for Total, said yesterday. He reiterated this position today.

Exxon Mobil is running its Fos refinery in France at minimum rates because the strike is limiting crude supplies. “There is no shutdown of our refinery,” said Catherine Brun, a Paris-based company spokeswoman.

Ineos reduced production at its Lavera refinery because of the industrial action, Richard Longden, a spokesman for the company, said in an e-mail yesterday. Workers at the Ineos site took part in demonstrations at an oil depot at the port yesterday, Marc Sarde, a CGT representative, said by phone. They weren’t on strike, he said.

“Units at our refining and petrochemical complex at Berre, France,” are operating, David Harpole, a Houston-based LyondellBasell spokesman, said today in an e-mail. “We do not discuss operating rates of individual units.”

Oil Hub

Workers at the oil hub are protesting a law on French port operations as well as plans by the government to increase the retirement age. The port has said “all guarantees” have been given for the strike to end.

The CGT union’s national port workers branch said earlier this week that the strike was due to “local problems” and called for a strike on Oct. 12 at the ports, as well as cutting back hours and eliminating overtime and weekend shifts.

The Marseille docks have been affected by stoppages in recent years as unions resisted efforts to move jobs to the private sector.

A 12-day strike at the oil hub in December 2008 cost refineries 26 million euros ($36 million), including 15 million euros related to vessel delays and 11 million euros in lost revenue, UFIP estimated at the time. A strike at the oil terminals in March 2007 lasted 17 days.

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net Nidaa Bakhsh in London at nbakhsh@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Stephen Voss at sev@bloomberg.net

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