By Ben Farey
April 26 (Bloomberg) -- BP Plc, Europe's second-biggest oil producer, will close the North Sea Forties Pipeline System by tomorrow morning because of a strike at a refinery in Scotland, cutting U.K. oil production by 40 percent.
Ineos Group Holdings Plc's Grangemouth refinery will supply power and steam to the Forties pipeline until 6 a.m., Richard Grant, a BP spokesman in Aberdeen, Scotland, said in a phone interview today. BP had earlier expected the utility supply to stop this evening, forcing the pipeline to shut today.
Crude oil has surged on the prospect of the pipeline closing. The Forties Pipeline System ships about 700,000 barrels a day from more than 50 fields in the North Sea which will be forced to close as well. Workers at the Grangemouth refinery will start a two-day walk out tomorrow in a dispute over pensions. Fuel supplies have run out at some gas stations in Scotland as motorists rushed to fill up their cars.
The shutdown will also cut natural gas pumped from fields that produce both fuels. As much as 3 billion cubic feet a day (85 million cubic meters) of natural gas production may be affected, Grant said. That's equivalent to 30 percent of the U.K.'s gas demand at this time of year, he said.
Union Officials
Meetings with local union officials will take place this morning, Ineos spokesman Richard Longden said earlier today. The company remains ``hopeful'' the refinery workers' union, Unite, will agree to provide steam and power to allow the Forties pipeline to remain operational, he said before the latest BP comment. Talks aimed at reaching a settlement will continue ``until the eleventh hour,'' he said.
The refinery ``shutdown in now an inevitability,'' said Pauline Doyle, an official at the Unite union, in a telephone interview.
The walkout of refinery workers will begin at 6 a.m. U.K. time tomorrow, she said. Workers will return on April 29. There's ``nothing on the table'' to suggest a last minute deal to keep the Forties pipe open is possible, she said. Doyle said there may be unofficial talks with Ineos she wasn't aware of.
The shutdown of the 200,000 barrel-a-day refinery was completed yesterday in preparation for the strike, the company said. Grangemouth supplies about 95 percent of the fuel used in Scotland's central belt, including its capital, Edinburgh, and biggest city, Glasgow.
Pension Changes
About 1,200 workers at the Grangemouth plant will go on strike from 6 a.m. tomorrow in protest against changes to the company's pension scheme.
The Grangemouth plant has refined oil for around 80 years and the last time the entire facility was completely shut down was during World War II, according to Ineos, which bought the plant from BP in 2005.
Brent crude oil futures rose to a record $117.56 a barrel on London's ICE Futures Europe exchange yesterday on concern the strike will disrupt output. Wholesale gasoline prices have also reached records.
Some gas stations in Scotland have run out of gasoline and diesel as motorists filled their cars before the strike begins. Others have rationed fuel and increased prices.
Petrol garages operated by Royal Dutch Shell Group Plc and the U.K. unit of Exxon Mobil Corp. in central Edinburgh have been roped off with ``No Fuel'' signs in the price display window. Still, fuel retailers said that gasoline stations are being re-supplied and that the country has adequate stockpiles.
``Supplies of petrol and diesel are about even and there's plenty of both,'' Alexander Wells, a spokesman for the Petrol Retailers' Association, said today. Demand is ``about normal,'' he said, with pockets of higher consumption in parts of Scotland's central belt.
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