French refinery strikes reduce output as TotalEnergies halts Gonfreville

Signs which read "out of order" are seen on gasoline pumps at a TotalEnergies gas station in Cambrai, France, September 28, 2022. REUTERS/Pascal Rossignol

PARIS, Sept 28 (Reuters) - TotalEnergies (TTEF.PA) is temporarily halting production at its 240,000 barrel-per-day Gonfreville refinery, the company said on Wednesday, as strike action in the sector threatens supplies at a time of deepening energy instability.

The shutdown will add to strained supply of refined products in France, with over 60% of the country's refining capacity now offline, according to Reuters calculations.

The outages come ahead of a heavy refinery maintenance season and as Europe weans itself off Russian fuel supply. Traders are already having to rely on heavy imports of refined products, analysts said.

"Strikes at French refineries could weigh on near-term diesel supplies as they coincide with non-strike-related disruptions... (and) tightening European products markets," said Livia Gallarati, oil markets analyst at Energy Aspects.

Walkouts began at all five of TotalEnergies' French refineries on Tuesday, mainly hitting deliveries. Disruptions are expected through Thursday, the striking CGT trade union said.

On Wednesday, management at the Gonfreville refinery accepted CGT demands to shut the refinery down, CGT union delegate Thierry Defresne said. It was not clear how long Gonfreville would remain offline.

The three-day CGT strike at TotalEnergies over wage demands as inflation spirals across Europe is compounding difficulties for the sector, with outages and strikes at other oil refineries impacting output and distribution to buyers.

ExxonMobil (XOM.N) oil refineries in France have been forced to limit refined product supply to their customers, a company spokesperson told Reuters. The caps were in accordance with supply contracts, the spokesperson added.

Separately, workers from the French power union FNME are also expected to walk out on Thursday, removing nuclear capacity from the French power grid.

TIGHT SUPPLIES

French sea-borne imports of crude oil have fallen by 100,000 bpd in September compared with last month, data from oil analytics firm Vortexa showed.

"(The strikes) should support French cargo values," Livia Gallarati said.

Defresne said no product was leaving Gonfreville, the 102,000 bpd Grandpuits refinery or the La Mede biorefinery. The Feyzin oil refinery is offline for repairs but stocks there were not moving because of the strike, he added. read more

Product transport from the TotalEnergies' Cote d'Opale fuel storage depots near Dunkirk were also stopped for a second day.

Meanwhile, the strike had been called off by the morning shift on Wednesday at the 230,000 bpd Donges refinery and deliveries were resuming, TotalEnergies said.

TotalEnergies said it had anticipated measures to guarantee supplies across its network of service stations.

However, some fuel pumps ran dry in northern France, where the port town of Dunkirk is located. A TotalEnergies spokesman said this was due to increased demand for its discounted fuel during the month of September, rather than fallout from the strikes.

Last weekend, Exxon shut its 240,000 barrel per day (bpd) Port Jerome-Gravenchon oil refinery, the Notre Dame de Gravenchon Petrochemical site, and the 140,000 bpd Fos-Sur-Mer refinery.

Reporting by Rowena Edwards and Ahmad Ghaddar in London and Forrest Crellin in Paris; Writing by Richard Lough; editing by Sudip Kar-Gupta, Jason Neely, Elaine Hardcastle and Deepa Babington

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