RPT-UPDATE 5-UK Grangemouth refinery shut, future uncertain
* Refinery will take at least three weeks to restart-source
* Grangemouth "Hugely important complex"-Scotland's first minister
* North Sea crude oil supply dependent on steam from Grangemouth
By Simon Falush
LONDON, Oct 16 (Reuters) - Britain may shut its second major oil refinery in just two years in the fallout from a bitter labour dispute at the Grangemouth refinery that provides most of Scotland's fuel and is crucial to the pumping of crude oil from the North Sea.
The dispute at Grangemouth, a valued part of Scotland's infrastructure, highlights the problems confronting Europe's refining industry due to rising competition from new plants in Asia and the Middle East and dwindling demand at home.
Swiss-based Ineos said on Wednesday it had closed the 210,000 barrel per day refinery and petrochemicals complex and may only re-open it if workers accept new working terms. Ineos says Grangemouth has made losses for the past four years.
The clash revived memories of protests at another UK refinery, Coryton east of London, which shut last year because of bankruptcy at parent company Petroplus.
"The plant is shut down until Tuesday. It is not operating. Tomorrow we will be putting a proposal to the workforce and we are giving them the weekend to decide and expect a response on Monday," an Ineos spokeswoman said.
"We'll review with stakeholders what the workforce says on Tuesday and whether it re-opens depends on their response," she added. A company statement had earlier said Grangemouth was financially distressed and that the industrial action called by the Unite union had inflicted significant further damage.
The plant plays a key role in Scotland's economy.
"This is a hugely important matter...whether it continues as a major part of Scotland's infrastructure. It's a hugely important industrial complex," Alex Salmond, Scotland's First Minister said in a BBC interview.
Ineos said earlier this week it had begun winding down operations at Grangemouth, ahead of a planned strike by Unite union members over the treatment of a union representative. Unite called the strike off earlier on Wednesday.
A source familiar with the situation said that it would take around three weeks to get the plant back to full operations, whenever a decision was made.
Unite, in keeping with the bitter tone of the long-running dispute, accused Ineos of "economic vandalism".
"There is absolutely no reason for the site to remain shut - the company is holding Scotland to ransom," said Unite regional secretary Pat Rafferty.
The UK government said it had been working with the regional government to ensure minimal disruption to supply.
"We have been working closely with the fuel industry and Scottish government to put robust alternative fuel supply routes in place," Edward Davey, Energy Secretary said.
Ineos, while readying the plant for shutdown, had been taking shipments of oil products, which it was distributing to customers, union sources said.
The refinery, owned jointly by Ineos and PetroChina , also supplies steam and power to BP's Kinneil oil terminal, which processes North Sea crude that comes ashore via the Forties Pipeline System.
Traders of Forties crude continued to see no drop in supply flowing into the pipeline as steam supply was not interrupted. "There's no impact expected," said a source at a company which produces Forties crude.
Underlying the immediate dispute with the union was Ineos's plan to cut jobs and pensions at the petrochemical plant, which it has said would have to close unless costs can be reduced.