Strike At BP’s Largest European Refinery Could Deepen Diesel Crisis


Refinery workers at BP’s biggest refinery in Europe are on a partial strike over demands for higher wages and not cooperating in efforts to restart the Rotterdam refinery, which is currently offline.
Employees at the 400,000-BPD refinery, a major supplier of diesel to northern Europe, threatened earlier this month to go on a strike if their pay rises demands not met. The Rotterdam refinery accounts for nearly 3% of Northern Europe’s refining capacity, and delays to its restart could exacerbate the diesel crunch in Europe.

In early November, components of the FNV trade association voted down an early offer from BP about a pay rise, a union representative told Argus.
The refinery halted last week after a fault founded. The faulted but workers will not cooperate in the restart of production, a representative of the CNV Vakmensen union told Bloomberg on Tuesday.
BP has revealed that it plans to restart the refinery early this week.
We will help determine the problems until the facilities are ready to be restarted, and then we’ll stop, our intention, Jaap Bosma of the CNV union told Reuters on Monday.
The strike at one of Europe’s biggest refineries arrives weeks after walkouts at refineries in France left more than 60% of the country’s refining capacity offline gas stations in and around Paris and in the northern part of the country began to run out of fuel.

A pause in the BP Rotterdam refinery restart also comes as Europe is running for diesel stores and stocking up on Russian diesel while it still can. Europe has hiked its diesel substances from Russia this month as the EU ban on imports of Russian oil developments beginning on February 5 draws closer, oil flow analytics showed.
As the EU embargo on the import of Russian diesel enters into force, The competition for non-Russian diesel barrels be fierce, with EU countries having to bid cargoes from the US, Middle East, and India away from their standard customers, the International Energy Agency (IEA) said in its Oil Market Report for November.

Diesel may be the following pain point in Europe’s energy crisis, with EU sanctions on Russian exports developed to improve competition in an already very tight call, the International Energy Agency has warned. Prices for diesel, and the comparative difference to the price of crude, surged to record levels in October and are now 70 percent and 425 percent more increased, respectively, than a year back, according to the IEA. High diesel costs are fuelling inflation, counting force on the global economy and world oil demand, said the Paris-based IEA. Once an EU embargo on imports of diesel and other refined products from Russia implement in February, the market will tighten, it added. The competition for non-Russian said diesel barrels will be fierce, with EU countries having to bid shipments from the US, Middle East, and India out of their standard buyers. Increased refinery power will ultimately help ease diesel tensions.

However, until then, if costs go too high, further demand destruction may be inevitable for the market imbalances to clear. The upward force on costs of diesel — a workhorse fuel that is key for economic growth — has been growing for much of the year. Diesel markets already stretch before Russia invaded Ukraine because of the closure of 3.5mn casks a day of refinery power since the start of the Covid-19 pandemic, the IEA said. The trouble of Russian freight and lower-than-normal Chinese exports have further crimped supply just as demand for fuel revived after the easing of pandemic restrictions in most of the world. Global supply problems exacerbated in recent months by industrial action at European refineries.

Walkouts over pay at several refineries in France led to fuel shortages across northern France in October one point, helped propel diesel prices in the European trading corner of Rotterdam to more than $80 higher than the price of crude oil, the IEA said. With the cost of living rising, further industrial action is anticipated. Employees at ExxonMobil’s 270,000 b/d Fawley works in the UK have reported a strike for late November, and workers at BP’s 380,000 b/d Rotterdam building have also been intimidated to strike. High diesel prices, mixed with a weak Chinese economy, Europe’s energy crisis, and a firm US dollar, were already considering laboriously on consumption, according to the IEA. It said Global oil demand is forecasted to fall by 240,000 barrels a day in the fourth quarter compared with last year.
EU nations, by October, had already lowered crude imports from Russia by 1.1mn b/d and diesel importance by 50,000 b/d. When the sanctions on the importance of Russian crude and refined products come into full power in December and February, respectively, Europe will have to replace an additional 1.1mn b/d of crude and 1mn b/d of diesel, naphtha and fuel oil, according to the IEA’s calculations. While Russia has managed to redirect all crude shipments rejected by Europe so far, it cut exports of advanced effects by 400,000 b/d since the start of the year, the IEA said. US-led struggles to introduce a price-cap mechanism to allow some trade in Russian oil to continue may help alleviate tensions, but a myriad of uncertainties and logistical challenges remain, it added. Product trade particularly faces uncertainties.

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Olivia Wilson
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