UPDATE 3-BP shutting down major British oil pipeline

(Updates with pipeline starting final shutdown phase)

By Jeremy Lovell

LONDON, April 26 (Reuters) - A pipeline carrying nearly half of Britain's oil was being shut down late on Saturday ahead of a strike over pensions that has already closed a major refinery and prompted some panic fuel buying.

The Grangemouth refinery in Scotland produces a tenth of Britain's petrol and diesel but also provides the steam that allows the neighbouring Kinneil plant to begin processing the crude oil coming ashore from 70 fields in the North Sea.

Without that heat which starts the basic distillation process separating gas from heating oil and everything in between Kinneil cannot function and the flow ceases.

In preparation, for the complete shutdown which will coincide with the start of the two-day strike starting at 0600 BST (0500 GMT) on Sunday several North Sea fields began to cut production on Friday.

"The shutdown is now underway. It should be completed by six am tomorrow," a spokesman for operator BP (BP.L: Quote, Profile, Research, Stock Buzz) said.

The strike is the first to close a British refinery in more than 70 years.

The Forties pipeline carries an average of 700,000 barrels per day (bpd), close to half the 1.5 million barrels the country produces daily. One fifth of Britain's gas supply also relies on the Forties system.