UPDATE 3-India's fuel crisis ends as strike falters

(Updates with end of strike)

By Himangshu Watts and Nidhi Verma

NEW DELHI, Jan 9 (Reuters) - India's fuel crisis eased on Friday as a strike by oil sector workers ended on its third day after the government called in troops to load tankers and threatened to imprison union leaders.

The strike by white-collar workers of state-run firms who were demanding better pay had triggered panic buying, cut natural gas and crude oil output in the energy-hungry nation and delayed flights.

"We have called off the strike in the public interest," said Sanjay Varshney, a spokesman for the unions.

The government had said the strike was illegal and had invoked laws that forbid the obstruction of essential commodities.

"They cannot hold the country to ransom," Petroleum Secretary R.S. Pandey told reporters.

Ministers turned the heat on union leaders after long queues at the few petrol pumps with supplies jammed rush-hour traffic in major cities. Officials feared power plants may have to shut and cooking gas shortages could trigger anger.

The strike was called off after employees from two firms decided to resume work and Indian Oil Corp (IOC.BO) Chairman Sarthak Behuria told reporters that army officials had been called to fill tankers and the company would take stern action against employees on strike.

Oil Minister Murli Deora said he expected fuel supplies to return to normal by Saturday morning. Pandey said more than 60 percent of retail outlets in major cities were now open.

CRISIS AVERTED?

Before the union representing all state firms called off the strike, BPCL's director for marketing, S. Radhakrishnan, said 70 percent of his company's employees had resumed work, while sources at explorer Oil India Ltd said workers at that company were also abandoning union leaders.

Earlier, four-fifths of petrol stations in large cities like Mumbai, Delhi, Bangalore and Kolkata had run out of stocks and supplies to airlines had suffered, industry officials said. Dozens of flights were delayed.

Officials at IOC, which runs about 18,000 of India's petrol pumps, and other state-run firms such as Oil and Natural Gas Corp (ONGC.BO) began the strike on Wednesday.

The few petrol stations with stocks struggled to meet demand. "I had to work until 3:00 a.m. because there was a long queue of vehicles trying to tank up," said Dhruva Gharai, the owner of a gas station in Kolkata.