Europe is facing a mounting diesel crisis as a strike at one of the largest refineries on the continent begins, reported Bloomberg. The combination of a labor action – depleted crude product stockpiles – and the EU preparing to choke off Russian supplies might be a toxic cocktail for the EU and could worsen the energy crisis.
Dutch unions appear to have stopped the restart of production units at BP Plc’s refinery in Rotterdam after a technical issue brought fuel production to a standstill last week. The refinery processes 400,000 barrels of oil annually and is a top supplier of diesel to Northern Europe.
A spokesperson for one of the unions, CNV Vakmensen, told Bloomberg that workers wouldn’t restart production unless a pay dispute is resolved.
BP has indicated that it plans to restart the refinery early this week.
“We will help resolve the problems until the facilities are ready to be restarted, and then we’ll stop, that’s our intention,” Jaap Bosma of the CNV union told Reuters on Monday.
European refinery outages are closely monitored after strikes in France led to a severe tightening in the continent’s diesel supplies. Supply woes come as the EU plans to cease Russian diesel imports.
Last week, BP workers started a work-to-rule action but called it off following a technical issue at the facility that hindered production. The unions previously gave BP a Nov. 23 deadline to resolve pay disputes.
Labor actions affecting one of the largest refineries on the energy-stricken continent come as global diesel markets are incredibly tight.
According to Wood Mackenzie Ltd, stockpiles of fuel in northwest Europe may slide to record lows.
The strike at one of Europe’s biggest refineries comes weeks after strikes at refineries in France left more than 60% of the country’s refining capacity offline while gas stations in and around Paris and in the northern part of the country began to run out of fuel.
A delay in the BP Rotterdam refinery restart also comes as Europe is scrambling for diesel supply and stocking up on Russian diesel while it still can. Europe has hiked its diesel imports from Russia this month as the EU embargo on imports of Russian oil products starting on February 5 draws closer, oil flow analytics showed.
As the EU embargo on imports of Russian diesel enters into force, “The competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the US, Middle East and India away from their traditional buyers,” the International Energy Agency (IEA) said in its Oil Market Report for November.
The disappearing supply leaves Europe vulnerable this winter as the continent’s refining capacity has been falling recently. There’s also a diesel crunch in the US.