Page last updated at 13:51 GMT, Friday, 25 April 2008 14:51 UK

Strike to close key oil pipeline

Grangemouth
The strike by Unite members is due to begin on Sunday

The Forties oil pipeline, which provides a third of the UK's daily oil output, will close if a strike by refinery workers goes ahead.

The BP-run pipeline relies on steam and electricity from the Ineos refinery at Grangemouth in central Scotland.

Workers at the plant are due to take part in a two-day strike from Sunday in a row over pensions

Prime Minister Gordon Brown said there was no need for the industrial action and called on the two sides to talk.

Speaking on a visit to Swansea, Mr Brown said it was time for those involved to find a resolution to the dispute.

Oil and Gas UK have said if the 240-mile Forties pipeline were to close, it could cost the British economy up to £50m a day.

'Tax revenue'

A BP spokesman said that closing it would cause up to 70 platforms in the North Sea to either shut down or reduce production of oil.

The pipeline links the Forties oil fields in the North Sea with the Kinneil processing plant at Grangemouth, which receives about 725,000 barrels of crude oil and 80 million cubic metres of gas a day.

BP said the pipeline would close when the provision of steam and electricity from Grangemouth runs out.

FORTIES OIL PIPELINE
map
The Forties pipeline system (FPS) carries crude oil from the Forties oil fields in the North Sea
After making landfall at Cruden Bay the oil travels to the Kinneil terminal at Grangemouth
At Kinneil it is stabilised and gas processing takes place
The Kinneil terminal uses electricity and steam from the nearby Grangemouth refinery to operate

The company added that it would keep the pipeline open as long as possible, but anticipated shutting it late on Saturday, if strike action went ahead.

Safety issues mean the pipeline requires between 12 and 24 hours to reopen.

Malcolm Webb, chief executive of oil and gas industry body, Oil and Gas UK, warned the impact of the dispute could be considerable.

He said: "This potential loss of production would have a wholly disproportionate effect on the national economy, losing the UK about £50m every day, of which foregone tax revenue to the Exchequer amounts to £25m a day.

"Moreover, if oil and gas production offshore were to be shut down, re-starting cannot happen at the flick of a switch. It would take several days to restart safely."

Oil economist Professor Alex Kemp, of Aberdeen University, said: "We are talking about 700,000 barrels a day, which is a very high proportion of the total UK production.

"When you consider that the price of a barrel of oil is currently about $110 you can see that it will be a major loss of revenue."

The UK's energy minister Malcolm Wicks described the pipeline as a "crucial" piece of infrastructure.

Truckers on the impact of the refinery shutdown

Speaking to the BBC, the minister warned the public against panic buying but admitted there were "logistical" problems getting fuel to some forecourts.

He said: "This is not a supply issue, it is a logistical issue and the industry is responding well."

There have been reports across Scotland of fuel running out, rationing, queues, and price hikes.

Emergency planning groups are convening to assess the impact of any shortages.

There was not said to be any sign of increased fuel buying in the north of England or Northern Ireland.

The dispute has prompted concern from business groups who rely on undisrupted fuel access.

The Freight Transport Association, which represents the transport interests of companies moving goods by road, rail, sea and air, called on ministers to ensure diesel supplies.

Geoff Dossetter, the organisation's external affairs spokesman said: "Malcolm Wicks said that although there was plenty of fuel available, there could be problems with the logistics required to get it to the right places where it will be required.

"As such it makes sense to here and now plan for the possibility of a problem rather than put our trust in hopes that it will not be required."

A further meeting has taken place between the Grangemouth plant's operators Ineos and representatives from the Unite trade union in a last ditch effort to avert the strike.

The meeting was called primarily to discuss safety matters at the plant, although the broader issues involved in the dispute will be discussed, the BBC understands.

Two days of talks at conciliation service Acas in London earlier this week failed to resolve the dispute.

Unite had warned that the strike could be escalated after talks between the two sides broke down on Wednesday.



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