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The Forties pipeline system, which pumps crude oil from the North Sea, is set to shut down tonight, as 1,200 workers at the Grangemouth refinery in Scotland prepare to walk out in a dispute over pensions.
A spokesman for BP, which operates the pipeline, said that it expected the pipeline to close before power from Grangemouth was switched off late on Saturday, ahead of the 48-hour stoppage on Sunday and Monday.
Fears that the strike at one of the country’s biggest oil refineries could hit petrol supplies increased today when a Government minister said he could not guarantee that motorists would be able to fill up at garages.
Malcolm Wicks, the Energy Minister, told BBC Radio 4's Today programme that petrol supplies across the UK should not be a problem, but he acknowledged that some motorists could be hit by shortages at certain forecourts.
“I cannot guarantee that every garage forecourt will have petrol at that precise moment," he said.
"I hope the vast majority of people are sensible about this. They might have to be patient. People will have to be sensible and rational," Mr Wicks said.
Up to 50 North Sea oilfields may have to cease production when the main Forties system closes down tonight.
The pipeline supplies 700,000 barrels of oil a day, equivalent to 20 per cent of North Sea oil production and the shutdown will cost the UK's economy about £50 million a day, including about £25 million a day in revenues to the Exchequer.
Oil prices have fallen this morning despite continuing supply concerns in the face of the planned strike at the 200,000 barrel per day refinery.
London Brent crude for June delivery was down $1.71 at $112.63.
Ed Meir, an MF Global analyst, said that the strike was potentially very serious for the industry. “We believe that there will be tremendous pressure on the two sides to settle," he said.
John Hutton, Business Secretary, told MPs yesterday that fuel stocks and imports should be sufficient to maintain supplies during the strike.
Steam and electricity from the Grangemouth refinery are essential to operations at the nearby Kinneil processing plant, where crude oil from the Forties pipeline is stabilised by removing sulphur and extracting gas.
Unless Ineos can supply basic utilities to Kinneil to keep it running, oil and gas production from the Forties sector of the North Sea is likely to halt within 24 hours.
Tony Woodley, the general secretary of the Unite union, which represents Grangemouth workers, has indicated that the strike could escalate.
Mr Woodley will address a mass meeting of workers at Grangemouth today.
He has said that after the two-day strike there will be a pause, but he said that if the company remained intransigent then an escalation of the dispute was inevitable.
Unite has indicated that it will begin a work-to-rule after the dispute, which could cause long-term problems for the 24 hour a day, seven day a week operation run by Ineos, the owner of Grangemouth.
“We understand the seriousness of the situation," Mr Woodley said. "It is extremely serious — that is why Unite has been behaving responsibly.
"We have made sure the plant and equipment is in a state to start up extremely quickly and we have made sure there is emergency cover for the emergency services.”
He has accused Ineos of “going through the motions” during the two days of peace talks this week at Acas.
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People should wake up to the new rules here in the UK, work all your life and then move directly into poverty and sell your house to fund your retirement. And anyone accused of taking a stand is "putting a gun to the head" of the companies. I don't know where this new era of management comes from.
Tim, Dundee, Scotland
If the UK government gets £25 million a day in revenues, then it should receive £125 million a day from total North Sea oil production or £45.625 billion a year. Since, 95 per cent of this sum would accrue to an independent Scotland. So much for the false argument of England subsiding Scotland.
Dave, Dubai,
we are not losing £50million a day, we are SAVING £50 million a day. think of it like that.
luke, falmouth, uk
So, did no-one ever think to stop the pipeline being dependent on Grangemouth? Or too busy reaping in past profits.
diana, derby,
If there is no shortage of petrol,why did the Minister say on BBC this morning "It is my job to ensure the flow of energy across the country" (why use English when there's Harvard -type Business Speak?)
and then advise against drivers buying as much as they want?
Gerry Attrick, GLASGOW, SCOTLAND
Its not just Scotland...
People in the North West of England are also buying above usual amounts of fuel. Nearly every petrol station I've passed today has had queues at the pumps.
John, Blackpool, UK
Does not the whole dispute revolve over low pay rises for plant people ......offshore rates worldwide have doubled in the last 5 years .
We all need new equipment / investment in replacing the old "ancient" equipment throughout the oil/gas industry !!!!
andrew laing , ABERDEEN, SCOTLAND
Brown has regulated final salary pensions scheme to death - but only in the private sector. Such pensions are alive and well in the public sector (unfunded liabilities now exceed £75bn) Unions that decry two-tier pension provision in Ineos have no problem with two-tiers as between public and private
Alistair, Edinburgh, UK
Why do unions feel that it is appropriate during a period of near-crisis in the British economy to go on strike and cost the economy £50m a day?
This kind of behavior represents a complete disregard of the impact of their actions, akin to the police force going on strike during a riot.
Tom, London,
"It's about time someone made a stand against the degredation of pension provision by companies " - David, Grantham. But the real villain of the piece is Gordon Brown - since he removed corporation tax relief from pension funds in his 1997 Budget, the pensions industry has been in difficulties.
Richard, Worcester, England
"Oil prices have fallen this morning despite continuing supply concerns..."
Tell that up here in Scotland... As soon as it became clear there was going to be a strike [Tuesday] the garages in Glasgow whacked TWO pence onto the forecourt price.
Dick Turpin is alive and well.
dachaidh, rhu, scotland
I would love to hear how the SNP would propose to deal with this if it happened in an independent Scotland. We'd be crippled pretty quickly I think.
Rose, Stirling, UK
Interesting that no-one is picking up on the effect to the gas market. The gas in this area of the North Sea is associated, which means it comes along with the oil. Stop the oil and you stop the gas. Better hope for warm weather or there is a genuine risk of gas supplies being cut off next week!
Victoria, Ilkley,
Ineos have managed to do in 3 years what BP never did, that is close down the whole Grangemouth complex!
Richard Witten, Falkirk, Scotland
If there is no shortage of petrol,why did the Minister say on BBC this morning "It is my job to ensure the flow of energy across the country" (why use English when there's Harvard -type Business Speak?)
and then advise against drivers buying as much as they want?
C.U.JAMES, GLASGOW, SCOTLAND
So if problem is not resolved and strike continues it's obvious we'll have a problem with getting fuel and price of fuel in the north.
Panic buying causes costs to go up as well as the company's taking advantage of the strike.
Fact being, there's over 70% GOVERMENT TAX on petrol!!!!!!!!!!
Andrew T, England,
Why are the politicians obsessed with talking about garage forecourts? Who cares if drivers can get petrol for a couple of days. Shutting down 20% of the country's oil production is way more important. Politicians need to worry less about public opinion and look after our strategic interests.
Mark, London,
It's about time someone made a stand against the degredation of pension provision by companies well able to afford the pensions to continue. Well done, Unite! And no, I have no connection to the dispute whatsoever.
David, Grantham,