French Strikes Continue to Block Refinery Shipments and LNG Terminals

March 20, 2023

© Wojciech Wrzesień / Adobe Stock
© Wojciech Wrzesień / Adobe Stock

Shipments of refined products from French refinery and depots were blocked on Monday by a 13th day of strike action, though some refineries operated with a reduced flow, a company spokesperson said.

The industrial action is part of a nationwide movement against pension system changes that lift the retirement age two years to 64. The changes were forced through parliament without a vote last week.

There is an increasing expectation of diesel supply shortages in France and Europe as a result of the strike-caused outages, which are weighing on North Sea and Nigerian crude prices and lifting the spot price of diesel higher than the forward price, traders said.

"We expect product shortages by April (in France)," one trader said. "The diesel market flipped from feeling long and heavy to short and very backward," another trader said.

There are no signs of increased export from the Middle East currently on the water to plug the supply gap, but there is expectation for more U.S. supplies as more Russian supplies go to Latin America.

Production at TotalEnergies' 240,000 barrel per day (bpd) Normandy refinery and its 119,000 bpd site at Feyzin was reduced on Monday because deliveries were blocked. Deliveries were also blocked at the company's Donges and La Mede refineries, though production at both has been halted for maintenance.

Some refining units were operating normally at the Normandy site, a company spokesperson said.

The spokesperson added that they will not give exact figures for how much production has been disrupted.

A trader told Reuters the refinery is expected to be fully shut within one or two days because of a backlog of refined stock.

About 39% of operational staff at TotalEnergies' French refineries and depots were on strike Monday morning, the spokesperson said.

Strikes also continued through the weekend and into Monday at ExxonMobil subsidiary Esso's Fos refinery, blocking deliveries, CGT union representative Germinal Lancelin said.

The union is waiting to hear results of votes of no confidence in the government before deciding on continuation of the strikes, Lancelin added.

President Emmanuel Macron's government faces two motions of no confidence in the National Assembly on Monday after it bypassed the lower house to push through the deeply unpopular overhaul of the pension system.

At French liquefied natural gas (LNG) terminals, the strike was extended until March 27 at the three terminals operated by Engie subsidiary Elengy, a union representative said.

A vote is expected later on Monday on whether to resume the strike at the Dunkirk terminal that returned to operation Friday, the representative said.


(Reuters - Reporting by Forrest Crellin and Ahmad Ghaddar, Rowena Edwards and Ron Bousso; Editing by David Goodman and Louise Heavens)

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