February 3, 2015 / 12:02 AM / 4 years ago

Tough talk from Shell, union as refinery pay talks resume

HOUSTON (Reuters) - Negotiations were getting underway late on Tuesday between Royal Dutch Shell Plc (RDSa.L) and union leaders over a new wage contract for U.S. refinery workers who have been on strike for three days, both sides said.

Members of the United Steel Workers union picket the Tesoro refinery in Carson, California February 2, 2015. REUTERS/Bob Riha, Jr.

The two camps have been at an impasse since the union called walkouts early on Sunday for the first time since 1980 at nine plants with about 10 percent of U.S. refining capacity, saying Shell left the negotiating table when talks broke down.

The meeting on Tuesday evening is being held as both sides use increasingly strident language to talk about the dispute, ramping up their rhetoric in private and public.

Executives have made clear they will try to hold firm, saying they cannot afford to lift wages because crude prices have sunk 50 percent since June, eroding their profits.

Other executives have suggested Shell, acting as the lead negotiator for oil companies, gave away too much in negotiations held in years past.

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Meanwhile, the USW has said further walkouts may be ordered at some of the other 63 refineries and chemical plants it represents if progress is not made.

“Shell and USW are meeting Tuesday evening to continue contract negotiations in hopes of coming to a satisfactory agreement for both parties,” company spokesman Ray Fisher said.

Shell has declined to comment on the details of the talks.

Late on Monday, Shell reopened communication with the United Steelworkers union (USW) though the union said no progress was made.

Since bargaining first started on Jan. 21, the union has rejected five offers from Shell.

The union is seeking annual pay increases of 6 percent, double the size of those in the last agreement. It also wants work that has been given in the past to non-union contractors to start going to USW members, a tighter policy to prevent workplace fatigue and reductions in members’ out-of-pocket payments for healthcare.

The strikes were the first ordered in 35 years in support of a nationwide pact that would cover 30,000 workers.

Most affected refineries are running near normal, with operators having called on trained managers, retirees and operators from non-union plants to replace workers.

But one plant, Tesoro Corp’s TSO.N 166,000 barrel-per-day Martinez, California, refinery, was being fully shut down as part of it was already in the middle of maintenance work, the company has said.

While refiners are promising little or no disruption to production, wholesalers and other buyers have snapped up supplies.

Traders have said the strike contributed to higher prices for gasoline futures RBc1, which were around $1.60 a gallon late on Tuesday.

Refinery outages can reduce purchases of crude, and U.S. oil prices CLc1 slipped 2 percent to below $51.90 after a string of sharp gains.

Writing by Terry Wade; Additional reporting by Jessica Resnick-Ault; Editing by Alden Bentley, Bernard Orr

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