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Grangemouth shutting down during talks

LONDON (Reuters) - Grangemouth refinery in Scotland is being gradually shut down while talks between management and union representatives to avert a strike planned for Sunday continue, operator Ineos said on Wednesday.

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“The clock really is ticking. We have to find a solution to this problem quickly,” an Ineos spokesman told Reuters. “We are being forced to close plants day by day at the site in order to make the site safe and ready for the strike on Sunday.”

After failing to reach agreement on pensions during negotiations in London on Tuesday, talks between Ineos management and union leaders resumed on Wednesday.

The refinery, which is integrated with a petrochemicals plant, began shutting a distillation unit which processes crude oil for further refining into motor fuels on Monday but the spokesman declined to specify other units in shutdown mode.

“We continue to work through the refinery, closing down infrastructure within the refinery and other units,” he said.

The refinery would have to shut down completely if the two-day strike proceeds on Sunday, reducing UK fuel supplies.

Britain’s gas supplies could also be affected if the Forties pipeline feeding the refinery has to reduce flows of oil from under the North Sea.

The government has exempted oil companies from competition restrictions that prevent them from sharing stock information, to help suppliers line up stopgap deliveries and prevent petrol pump shortages.

But the fuel import jetties at Grangemouth could also be forced to close if union leaders do not agree to provide safety cover at Grangemouth’s docks to allow backup fuel to be delivered to make up for lost production from the refinery.

“We have approached the union to see if there is a possibility of being able to provide resources to enable those jetties to remain open should the strike go forward,” the Ineos spokesman said. “We await feedback on that.”

FUEL THREAT

If the two-day strike goes ahead and forces the whole 200,000 barrel per day (bpd) refinery to close, Scotland and northern England could face shortages of motor fuel, especially diesel, oil traders have said.

Ineos has warned that North Sea oil supplies could also be disrupted by a full shutdown as the pipeline bringing North Sea Forties crude to Britain terminates at the refinery.

Analysts say around a fifth of Britain’s gas comes from the many oil and gas fields connected to the Forties system but expect any reduction in gas flows to be small as long as the BP-operated Hound Point oil export terminal remains open.

If most of the oil can be loaded onto crude tankers at Hound Point, staffed by BP workers, Forties fields should be able to remain open, a European oil and gas analyst said.

If only Grangemouth refinery itself closes and Hound Point and its oil storage facilities operate normally, losses to gas supply could be limited to around four percent of Britain’s total, he said.

Reporting by Daniel Fineren and Melissa Akin; editing by James Jukwey

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