UPDATE 3-Oil majors halt Tamoil business after sanctions

* BP, Shell not dealing with Tamoil due to sanctions

* Tamoil brings forward Swiss refinery closure to April

* Trade sources expect sanctions to tighten further

* Tamoil brings BP legal challenge to a German court

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By Jessica Donati and Emma Farge

LONDON, March 25 (Reuters) - Major international oil firms BP (BP.L) and Shell (RDSa.L) have stopped business with Libyan-controlled oil company Tamoil because of international sanctions, disrupting fuel supplies in Europe.

BP (BP.L) said on Friday it had stopped all oil deliveries with the Libyan firm and declared force majeure while Shell had also halted oil supply contracts, said a source with direct knowledge of the firm's dealings.

"We are not dealing with Tamoil at the moment," said a BP spokesman. Tamoil has in response brought a legal challenge against BP to a German court, according to spokesmen for BP and the Swiss branch of Tamoil.

Shell said it was not dealing with any Libyan state-controlled entities.

The reluctance of oil firms to buy fuels such as diesel and gasoline from Tamoil could make it worthless for Tamoil to run its refineries in Italy, Germany and Switzerland with a combined capacity of nearly 300,000 barrels per day (bpd), traders said.

While this represents only 2 percent of total European capacity, the refineries are all located inland, making it more difficult for alternative suppliers to step in.

The group declined to comment on the supply disruptions.

A spokesman for the Swiss branch of Tamoil said it had brought forward a planned outage at its 72,000 barrel-per-day Collombey refinery by two months to April, partly due to uncertainty about fuel sales. [ID:nWLA6438]

"There are discussions going on with certain fuel suppliers (customers), who are asking for guarantees," said spokesman Laurent Paoliello, adding the firm had sent a letter to two buyers to offer assurances about its exposure to sanctions.

Tamoil is not named on either U.S. or European Union lists of sanctions, and has previously said it would not be affected by international measures taken to cut off funds for Gaddafi's regime. [ID:nN11144449]

RELUCTANCE TO TRADE

Industry sources said most companies were reluctant to do business with Tamoil, although international sanctions had not explicitly targeted the Libyan-controlled firm.

"There are companies that don't trade with them anymore, on the risk of tighter sanctions in the future ... there are oil majors in the Netherlands that are refusing to supply Tamoil petrol stations," said an industry source.

At the end of 2009, Tamoil operated 2,881 service stations in Europe, including 400 in Germany and had a nationwide presence of around 8 percent in Italy.

Germany is Tamoil's largest market for product sales, while Italy and Switzerland are also main outlets, according to the company's website.

"They have swap arrangements with oil majors to supply those pump stations, whilst Tamoil supplied the BP stations in Switzerland with fuels for instance," said a trader.

When contacted Total (TOTF.PA) said it would comply with international sanctions but did not elaborate further.

"We are suspending business dealings with Libyan state controlled entities in compliance with all applicable sanctions," a Shell spokesman said.

Shell said it had no evidence that legal proceedings had been commenced against them by Tamoil.

The European Union on Thursday named five subsidiaries of Libya's state oil company subject to sanctions. They are Azzawia Refining, Ras Lanuf Oil and Gas Processing Company, Brega, Sirte Oil Company and Waha Oil Company.

On Tuesday, the United States listed 14 companies owned by the National Oil Corporation -- including prominent operator Agoco, based in rebel-controlled eastern Libya -- on its list of sanctions. [ID:nLDE72N0UT] (Additional reporting by Nia Williams and Ikuko Kurahone in London and Mathilde Cru in Paris; editing by James Jukwey)