French refinery fate in balance as strikes loom

Reuters News

11/5/2012 1:01:42 AM - Reuters News

By Michel Rose

PARIS (Reuters) - The fate of France's oldest refinery will be decided on Monday, marked by a one-day strike that the government and the oil industry will be anxious to prevent from escalating into a disruptive movement similar to one in 2010.

Last month, the commercial court in Rouen, northern France, rejected two bids to take over the Petit-Couronne refinery of insolvent Swiss firm Petroplus, sending it into liquidation unless a new offer is approved by November 5.

Industry Minister Arnaud Montebourg said on Monday the government opposed the liquidation of the refinery and asked the court to delay its decision because it had received a non-binding letter of interest from Libya's sovereign wealth fund.

"We don't want the liquidation of this refinery," Montebourg told RTL radio. "I'm going to ask the commercial court today to delay its judgment, to take the time necessary to allow our Libyan friends to invest in this refinery."

The plant's 500 workers and their trade unions have invested much hope in Dubai-based NetOil, which had to submit a new offer after its first failed to convince judges of its financial and technical strengths.

A new rejection would be hard to swallow for the unions, who had secured a temporary reprocessing deal with former owner Shell and returned the plant to profit.

"So far, the unions had not made a 'casus belli' out of the Petroplus case because they were fully engaged in the process of finding a buyer, restarting and maintaining the plant," Francis Perrin, head of the Energy Policies and Strategy group of publications, said.

"People often say French unions are protest-prone, but here they put so much efforts into making this case work, it would be a crushing blow if the end result was nothing and the reaction could be even stronger," Perrin said.

Preparing for the worst, and raising pressure on the French government, unions have called for a 24-hour strike on Monday, while France's most powerful union the CGT has called for workers at Total's refineries to join the protest.

The French oil major still owns five refineries in France, and whether its workers heed the call for solidarity or decide to pass in fear of losing their jobs will be scrutinized by the industry and beyond.

The closure of Total's Dunkirk refinery in early 2010, where images of emotional workers had been broadcast on national news bulletins, helped trigger a two-week strike at all of the group's French refineries.

Fuel supplies were also disrupted in the second half of 2010 when a five-week strike in the port and refining sector halted output at French refineries and caused alarm among neighboring European countries worried of price spikes.

However, observers say the poor state of the French economy compared with two years ago is likely to discourage workers from halting an industry which has already lost 2 billion euros ($2.6 billion) in the last three years.

"There are two forces at play: a force of solidarity, which is very strong, and on the other hand a real fear (about the economy)," Jean-Louis Schilansky, head of the UFIP oil industry lobby, said. "The situation is very tense, very difficult, the risk on jobs is strong."

(Additional reporting by Alexandria Sage; Editing by David Holmes and Mark Potter)