France strikes, crude constraints force Total to halt refinery output

13 October 2010 16:41  [Source: ICIS news]

LONDON (ICIS)--Total has been forced to halt output at all of its refineries in France after national strikes and crude supply issues made it impossible to carry on production, the energy major said on Wednesday.

Spokesman Michael Crochet-Vourey said that workers at Donges and Grandpuits, which joined the national strike on Tuesday resulting in the group freezing production at the plants, would again protest over President Nicolas Sarkozy's pension reforms.

In addition, Total was pressured to halt production at its refineries in Gonfreville and Feyzin after workers voted in the morning to go on a rolling strike. A shutdown would take a few days to complete.

“This morning we made the same decision [to halt output] about Normandy (Gonfreville) and Feyzin for safety reasons,” Crochet-Vourey added.

Total’s Dunkirk refinery was also on strike for a second day, although it has not produced fuel products since the group announced on 8 March that its refining operations at the site would be permanently closed as a result of a collapse in demand for petroleum products in Europe and the US.

Total was forced to begin a production shutdown at its refinery at La Mede in southern France on 10 October due to constraints on crude supplies caused by striking workers at Marseille’s Fos-Lavera oil port, which has now entered its 17th day.

Crochet-Vourey said that despite it was beginning to freeze production at all of its operating refineries, it would still be able to supply customers.

"We do our best to supply our customers, we have been doing so far without any difficulties," he added.

Meanwhile, traders were watching the situation very closely as there were concerns that further strike action would have a big impact on the pricing of chemicals if disruptions were to continue.

One French buyer of vinyl acetate monomer (VAM) said that although it had not been affected by the strikes as yet, the situation could change very quickly in the coming days, as most of the refineries were now partly shutting down which could affect feedstock availability.

Sources were also reluctant to let go of any available volume due to a lack of transport links caused by the national strike action. There was also an uncertainty and a lack of confidence that the situation would be resolved soon.

“France is not the place to be if you want to move chemicals. I have some enquiries [for propylene] but don’t want to send the rail tank cars to France and not see them again,” an olefins trader said.

The trader added that logistics were not running properly due to delays on the railways and that priority was being given to public transport rather than goods travel.

Another source said the ethylene market was tight as the movement of vessels carrying product from the Mediterranean (Med) to northwest Europe (NWE), which helps balance the market, was not happening to the usual extent.

Earlier on Wednesday, the International Energy Agency's (IEA) monthly report said that major strike action in France could result in a shortage of European gasoil supplies and higher spot prices.

Additional reporting by Jane Massingham, Nel Weddle, Heidi Finch and Truong Mellor

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