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Total, Ineos in Talks on French Refinery Partnership

Dec. 8 (Bloomberg) -- Total SA and Ineos AG are in talks on a refining partnership in southern France, where both companies have crude-processing plants, according to labor unions.

“There are discussions going on,” Charles Foulard, a representative of the Confederation General du Travail, said today by telephone. “What kind of partnership could be agreed upon isn’t known. There are synergies between the two sites.”

A representative of the CFDT union, who declined to be named, said Total refining management confirmed the talks yesterday at a meeting with employee representatives.

“Ineos has confirmed that it is in discussions with a number of potential partners about investment and growth opportunities at its refining sites,” Richard Longden, a U.K.- based spokesman, said in an e-mailed statement, without elaborating. Frederic Texier, a Total spokesman, declined to comment. The possible partnership was previously reported by Les Echos newspaper.

French refineries lost more than 1 billion euros in 2009, according to the Union Francaise des Industries Petrolieres, a trade group. Domestic demand for fuel products dropped to 81.5 million metric tons last year from 89.5 million in 1999 while the number of refineries in France fell to 12 from 24 in 1977.

Total this year announced the dismantling of its Flanders refinery near Dunkirk and Petroplus Holdings AG, Europe’s largest independent refiner, said it would convert its 81,000 barrel-a-day Reichstett refinery into a terminal after failing to find a buyer.

Total has plans to reduce its refining capacity by about one-fifth, or 500,000 barrels a day, between 2007 and 2011.

Ineos’s Lavera refinery near Marseille has a capacity of 218,000 barrels a day while Total’s nearby La Mede plant can process 157,000 barrels a day. Both rely on crude coming through the oil import hub.

To contact the reporter on for this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

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