Half of French refineries are threatened with temporary closure due to a 15 day-old strike at the strategic Fos-Lavera oil hub near Marseille with fuel exports to the US exports to U.S. markets also under threat.
Fos-Lavera is the world's third-biggest port for oil products, with an annual throughput of 64.2 million tonnes.
“Refineries in the region will shut down between Friday and (next) Wednesday,” Jean-Louis Schilansky, head of the French fuel industry body UFIP told Reuters.
Chemicals company Ineos was the first refiner to announce it was planning a full shutdown of its 207,000 bpd Lavera refinery at the start of next week due to the strike.
“Their shutdown will lead to a halt in fuel supplies in the regions by the end of next week,” Schilansky said.
The onset of the strike has been caused by the demand that only the port's own staff be used for connecting LNG cargoes at a new terminal for Gaz de France (GDF) due to come into operation at the end of 2007.
The demand was rejected by GDF, saying only its staff were qualified to do the work for safety and technical reasons.
A meeting between the strikers, port bosses and GDF has been scheduled to find a way out of the crisis although two previous attempts have already failed.
“This is a disaster, and we need to end the crisis before the end of the week to avoid (fuel) disruptions,” Schilansky said. “We have never seen anything like this,” he added.
Refineries dependent on the hub have already begun reducing output and could be forced to shut down completely as early as the weekend if the strike continues, slashing seven percent of European refinery capacity or 1.10 million barrels per day.
Fuel supplies to motorists in the region could be affected in the next 10 days as a result of the strike, the French petroleum industry body UFIP said.
Fos-Lavera is a key regional crude inlet for the region and is also crucial for oil product exports to the United States.
Marseille is responsible for imports and exports for 600,000 bpd of French refining on the Mediterranean and the dispute has forced some French refineries linked to the hub such as Total's La Mede and Feyzin refineries and Exxon Mobil's Fos-sur-Mer to run at 65 percent of capacity.
Since its onset it is estimated that the disagreement has cost the oil firms between 4.5 million and 5.5 million, due to penalties for compensation paid to shippers because of blocked vessels.
Schilansky said oil firms' loss of earnings due to the strike was now reaching one million euros per day and could mount to two million euros per day if refineries shut down.
The port said the strike was now blocking 51 ships, including 28 oil tankers, six gas tankers and 17 cargo vessels transporting chemical products from entering the hub.