February 1, 2012 / 3:40 AM / 6 years ago

WRAPUP 1-U.S. refiners reach deal with union workers to avert strike

* Deal announced hours ahead of expiry of current contract

* Ratification of Shell, USW deal could take two weeks

* Strike could have shut 6 pct of U.S. refining capacity

By Erwin Seba

HOUSTON, Jan 31 (Reuters) - U.S. refinery workers reached a last-minute contract deal on Tuesday night to avert a strike that could have shut up to six percent of U.S. refining capacity and boosted fuel prices.

The United Steelworkers (USW) union announced the agreement just hours before the current contract expired for about 30,000 workers and two days after the USW warned a strike was increasingly likely.

Royal Dutch Shell Plc subsidiary Shell Oil Co. represented big U.S. refineries such as BP Plc., Valero Corp. and Exxon Mobil Corp. in the talks, which have run for the last two weeks.

“USW is pleased to announce that we have reached a tentative agreement with Shell on a new three-year agreement, pending ratification by the union’s membership,” union spokeswoman Lynne Hancock said in a statement. Shell confirmed the tentative deal in a statement.

The last nationwide strike by refinery workers was in 1980 and lasted three months. A strike could have boosted prices for gasoline, jet fuel and other refined products at a time when crude oil prices above $100 a barrel have been a drag on the global economy.

Both sides declined to disclose details of the deal.

“We’re not going to be telling the details until the agreement is ratified,” Hancock said, adding that ratification was expected to take two weeks.

In 2009, refiners agreed to a 9-percent pay increase over three years in the last round of talks with the union.

The USW, which represents hourly workers at refineries that account for about two-thirds of U.S. refining capacity, said health and safety standards were the main obstacle to a deal in 2011.

Between 2009 and 2011, 18 workers died while working at U.S. refineries.

Expiring February U.S. gasoline and heating oil futures settled higher on Tuesday, boosted by supply uncertainty stemming from a potential strike.

“A strike would be potentially supportive for products and less so for crude,” said Tom Bentz, director at BNP Paribas Prime Brokerage Inc. in New York. Other analysts said sagging U.S. fuel demand would have offset potential supply impacts.

Any shutdowns would probably have driven up U.S. fuel prices, supported in recent weeks by a string of plant problems, especially along the U.S. East Coast, where poor economics has prompted companies to shutter refineries.

Most U.S. refiners made preparations to bring in contract workers and train replacements to keep their refineries churning in the event of a strike.

Four of BP Plc’s and one of Valero Energy Corp’s refineries had made plans to idle production in the event of a nationwide strike, the companies had said.

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