French police clear fuel depot blockades as supply runs dry

20 October 2010 12:07  [Source: ICIS news]

LONDON (ICIS)--The French government ordered police to clear blockades at fuel depots across the country on Wednesday, as nationwide strike action over pension reforms continued to disrupt fuel supplies.

The government was forced to tap reserves after gasoline pumps began to dry up across the country as workers at all 13 of France’s oil refineries entered a seventh day of national strikes against president Nicolas Sarkozy’s plans to increase France's retirement age from 60 to 62 and full pension entitlement from 65 to 67.

The industrial action, along with an unrelated strike at Marseille’s Fos-Lavera oil port, has caused massive supply disruptions and panic-buying at gasoline stations across France.

France’s refineries have been worst hit, with all having been forced to either operate at minimum levels or shut production altogether.

ExxonMobil has been forced to begin the shutdown process at its merged refinery at Port Jerome-Gravenchon, while product dispatch from its refinery at Fos-sur-Mer continued to be blocked, although the facility was still running at minimum throughput levels.

Total’s refineries at Donges, La Mede, Grandpuits and Feyzin have now stopped output after striking workers and crude supply issues, caused by protests at the Fos-Lavera oil port, forced the company to begin production shutdowns last week.

The French oil major added that it was still in the process of freezing production at its refinery at Gonfreville, while its Dunkirk refinery, which has not produced fuel products since 8 March, was also still on strike.

LyondellBasell’s refinery at Berre L'Etang, INEOS’s Lavera plant and Petroplus’s refineries at Petit Couronne and Reichstett in France and Cressier in Switzerland were also forced to begin production shutdowns last week due to crude supply issues and strike action taken by workers, which prevented the plants from operating within required safety standards.

France is capable of processing about 1.87m bbl/day of crude, excluding Total’s mothballed Dunkirk refinery, according to ICIS.

The strikes have also affected downstream users, with a variety of chemical producers suffering from a lack of refined feedstock. Some producers have begun to cut chemical production or declare force majeure on products as availability diminishes.

The International Energy Agency (IEA) announced that the strike action in France could result in a shortage of European gasoil supplies and higher spot prices, while on Monday, market sources said that prices of jet fuel in Europe were likely to rise as product supplies tightened.

INEOS Oxide declared force majeure on ethylene oxide (EO), ethylene glycols, glycol ethers (and their esters), ethanolamines, oxo-alcohols and butyl acetates originating from its Lavera site in France on 14 October due to reduced output caused by strike action in the region, which was likely to add to the short supply of product in several downstream markets.

Meanwhile, Arkema also declared force majeure on supplies of oxo-alcohols from its Lavera plant and also held force majeure on polyvinyl chloride (PVC) from all four of its French sites due to restricted feedstock supply as it was unable to move PVC feedstock vinyl chloride monomer (VCM) between its facilities.

In addition, the demonstrations were also contributing to a further tightening in Europe’s butane market, resulting in higher prices.

Despite the demonstrations, Sarkozy is determined to press on with the pension reforms. The French Senate is due to vote on the pension bill later this week.

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By: Franco Capaldo
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