US embassy cable - 05PARIS6927

UNCLAS SECTION 01 OF 02 PARIS 006927 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR EB and EUR/WE 
TREASURY FOR DO/IM 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
DOE FOR ROBERT PRICE PI-32 
 
E.O. 12958: N/A 
TAGS: EPET, ELAB, EFIN, ECON, PGOV, FR 
SUBJECT:  STRIKES HIT FRENCH OIL REFINERIES 
 
 
1. SUMMARY.  Strikes at Total refineries in France will 
continue until at least October 7, affecting production of 
328,000 barrels per day.  The labor dispute at SNMC (Societe 
Nationale Corse Mediterrannee), a state-owned ferry company, 
further complicated the situation by temporarily blocking 
tankers from loading and discharging oil from the Fos-Lavera 
Mediterranean hub, a major source of oil exports to the U.S. 
and home to a cluster of refineries. END SUMMARY 
 
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Employees at Total Gonfreville Pursue Strike 
-------------------------------------------- 
 
2.  On September 20, employees overseeing the distribution 
unit of the Total's refinery concern at Gonfreville-L'Orcher 
(located in Normandy, near the northern city of le Havre) 
decided to call a strike, a decision they reaffirmed on 
September 30.  In an October 3 meeting, they defined their 
strategy for the next days, deciding to continue the strike 
until October 7, when they meet again to determine if any 
progress has been made on their demands for wage increases 
and better working conditions.  The refinery is France's 
largest, with a capacity for refining 328,000 barrels per 
day, supplying between 15-17 percent of the French market 
for fuel.  Total refines the equivalent of about 2,585,000 
barrels per day. 
 
Local Management Rules Out Direct Negotiations 
--------------------------------------------- - 
3.  The representative of the union (CGT), Patrick Varache, 
announced that the strike would continue because the local 
management of Total-Gonfreville ruled out a monthly 200-euro 
wage increase demanded by the 70 employees, asking them to 
wait until December 1, the date of annual negotiations. 
Vararche mentioned that other employees not working in 
Total's distribution unit in Gonfreville were showing 
solidarity with the union.  Employees argue the company is 
making record profits, but employees are losing purchasing 
power. 
 
Strikes Could Spread to Other Totals' Operations in France 
--------------------------------------------- ------------- 
4.  Strikes could easily spread to other operations of Total 
in France.  Total's employees generally have shown great 
union solidarity.  On September 7, a strike immobilized five 
of six refineries in France after Total had disciplined four 
employees after an incident at a refinery in Provence, in 
southern France. 
 
5.  The left union CGT rallied support for a strike at Total 
to the French giant's refineries on October 4 as part of a 
general nation-wide strike.  Initially, only employees in 
the public transportation sector called for a strike on 
October 4, but the strike was observed in other sectors 
including education, postal and health sectors as well as 
private sector employees.  According to initial reports, 
around 40 percent of Total's operations in its five 
refineries in France were paralyzed by the October 4 strike. 
 
Strike at SNCM Maritime Company Temporarily Complicates the 
Situation 
--------------------------------------------- ------------ 
6.  On October 1, police were able to clear the Southern 
refining hub in the Fos-Lavera area, located near Marseille. 
The strike, sparked by a protest over the privatization of 
the state-owned ferry company SNCM (Societe Nationale Corse 
Mediterrannee), blocked tankers from loading and discharging 
oil from the Fos-Lavera Mediterranean hub, a major source of 
oil exports to the U.S. and home to a cluster of refineries 
amounting to more than 600,000 barrels a day capacity. 
Bowing to the pressure, on October 2, the transport unions 
called off that strike until October 3 "as a measure of 
responsibility." 
 
COMMENT: Prolonged Strikes Could Be Harmful 
------------------------------------------- 
 
7.  A prolonged strike at Total could be serious because it 
occurs at a time when Total has committed to ship more 
gasoline to the U.S. to help offset outages caused by 
Hurricane Katrina.  An escalation of the strike in Total, 
Europe's largest oil refiner, could also contribute to drive 
gasoline prices higher.  That said, French industry sources 
are relatively confident that the government, which was able 
to put pressure on oil firms to reduce the impact of oil 
prices on consumers, once again could come to the rescue and 
stave off the spread of this labor dispute.  Total itself 
should be able to offset lost production levels, thanks to 
refineries located in other European countries. 
STAPELTON