BP begins Forties oil pipeline shutdown

LONDON (Reuters) - BP (BP.L) began on Friday shutting its North Sea Forties pipeline system, which supplies up to half the UK's oil, ahead of a strike planned this weekend at the Grangemouth refinery in Scotland.

Grangemouth also supplies power to a nearby plant which processes crude oil from the Forties pipeline. The power plant is due to shut on Saturday ahead of the strike by 1,200 refinery workers, which starts on Sunday.

The strike, the first to close a British refinery in over 70 years, has caused fears of fuel shortages in Scotland and northern England and triggered sharp rises in European diesel, gasoline and UK gas prices this week.

The shutdown of the Forties system takes about 24 hours and must be completed before the power station closes.

"We have started the process which will lead to shutdown," a BP spokesman said on Friday morning. "We expect that there will cease to be any throughput through the system after Saturday night."

The 700,000 barrel-a-day Forties pipeline carries up to half the UK's North Sea oil output from 70 fields, some of which began closing overnight on Thursday. A fifth of Britain's gas supply also relies on the Forties system.

The 200,000 barrel a day Buzzard oil field, one of the North Sea's largest, is among the operations that must grind to a halt with the pipeline, Canadian-based operator Nexen Inc (NXY.TO) said.

Other firms hit by the outage include Talisman Energy Inc (TLM.TO), which will have to shut 20,000 barrels a day, more a fifth of its UK output, and Canadian Natural Resources Ltd (CNQ.TO), which will forgo 12,000 barrels a day, a quarter of its North Sea production.

PLANT SAFETY

Management at the 200,000 barrel-a-day refinery, owned by Ineos, are meeting UNITE union officials on Friday to talk about safety at the plant during the strike over pensions.

Ineos said on Friday that it had completed the shutdown at Grangemouth, northwest of Edinburgh, but added that the union had refused to maintain power and steam supplies needed to keep the Forties processing plant operating.

Officials with UNITE said that they expected the power station to shut as planned on Saturday.

The government has called on Ineos and the unions to co-operate to ensure the power station remains open, even if the strike goes ahead.

The BP spokesman said that if workers at Grangemouth do change their minds and keep the power plant running, the process of shutting Forties could be stopped and reversed.

Talks to resolve the dispute collapsed on Wednesday evening.

European diesel prices have shot up this week on worries about a fuel shortage. Diesel premiums rose by as much as $23 on Thursday while London gas oil futures LGOc1, a benchmark for diesel and jet contracts, hit a record high of $1,089 a metric ton.

UK gas prices have also jumped, although the National Grid said it did not expect shortages as warm spring weather has curbed demand and there is plenty of alternative supply available.

(Additional reporting by Margaret Orgill and Jeffrey Jones; editing by Santosh Menon/James Jukwey and Rob Wilson)