Algerian Oil Refinery Strike Will Hit US European Markets

By Keyvan Hedvat and Michael Georgy, Reuters, 10 April 2002

LONDON, April 10 (Reuters)—Algeria’s biggest refinery, the 335,000 barrel-per-day Skikda complex, has shut due to a workers strike, industry sources said on Wednesday.

The sources said oil products loadings at the Skikda export terminal had also come to a halt due to a strike by customs officials at the port.

The strike is open-ended, a refinery worker told Reuters, identifying himself as a strike leader.

There are no negotiations right now, he said.It is based on social and financial issues; we want higher pay and compensation.

A prolonged strike will put a big dent in Algeria’s sizeable oil products exports to the United States and Europe, traders said.

The impact will be worsened by existing plans for a major refinery turnaround at Skikda, due in May, that is set to halve production, European oil products traders said.

They’re planning to reduce throughput by 50 percent—it will tighten Mediterranean products and northwest Europe as well, the trader told Reuters.

Shipping sources said the port strike was launched on Wednesday while a refinery worker said the Skikda plant strike began on Tuesday.

Vessels are not loading at Skikda, the shipping source said. The refinery is on strike and customs clearance officials are also on strike.

Nothing is working and production has stopped, another refinery worker told Reuters by telephone.

An oil trader due to receive a product cargo loading at Skikda later this month said Sonatrach could not provide a clear loading date.

EXPORTS TO U.S., EUROPE

State-owned oil and gas firm Sonatrach owns Algeria’s four refineries with a total capacity of 480,000 bpd. The National Company for Oil Refining (NAFTEC), a wholly-owned Sonatrach subsidiary, runs the plants.

The impact (of the strike) depends on its duration, a European trader said. The maintenance has no connection with the strike, but this (strike) is an additional bullish factor.

Algeria is a major exporter of oil products, mainly to the United States, which last year imported 264,000 barrels per day from the OPEC member.

According to the latest Reuters survey, Algeria produced 820,000 bpd of crude oil in March. Its OPEC quota is 693,000 bpd.

Sonatrach has term contracts with leading U.S. Gulf coast refiners to supply high quality straight run fuel oil that is used as a feedstock.

An oil trader estimated that the Skikda refinery ships out roughly one 80,000 tonne cargo a week of fuel oil to the United States.

European petrochemical producers are heavily dependent on Algeria for supplies of naphtha to run their plants manufacturing ethylene and propylene that are in turn converted into a wide range of plastics for everyday use.

Sonatrach is also a regular export of diesel and jet fuel to European markets.