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Refiners, Union Leaders to Begin Contract Negotiations Next Week

By Barbara Powell – Jan 13, 2012 1:22 PM GMT

Royal Dutch Shell Plc (RDSA) and leaders of the union representing workers at 69 U.S. oil refineries will begin negotiating a new three-year labor contract Jan. 17 to avoid a work stoppage that could disrupt plant operations.

The current contract between oil refiners and 30,000 members of the United Steel Workers expires Jan. 31. The last contract negotiations in January 2009 were settled after 12 days of talks that stalled as the union tried and failed to win safety improvements.

The union will make a similar demand at next week’s talks, according to Gary Beevers, a USW vice president and the union’s lead negotiator. The union hasn’t struck since 1980, when a work stoppage lasted three months. A strike would affect almost two- thirds of U.S. refining capacity, according to the USW.

“The most important objective is to get enforceable health and safety language into the contract,” Lynne Baker, a spokeswoman for the union in Nashville, Tennessee, said yesterday in an interview. “Our proposal will help the industry do a better job.”

Shell, negotiating on behalf of the companies, and union leaders, including Beevers, will meet in Austin, Texas, to hammer out terms. Any deal is subject to approval by refiners and pipeline operators before becoming the national pattern they use in negotiating local union contracts.

“Shell is optimistic that a mutually satisfactory agreement can be negotiated with the USW,” Kayla Macke, a spokeswoman for Shell, said yesterday in an e-mail.

Previous Agreement

In 2009, the union accepted higher wages while relenting on new safety provisions. The three-year labor agreement included 3 percent annual raises and a $2,500 bonus for workers.

“I think the union will be able to achieve some increase in wages because the oil companies have been making money although they will make the argument that many of the refineries have been losing money,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Contracts between the companies, including Exxon Mobil Corp. (XOM), ConocoPhillips (COP) and Valero Energy Corp. (VLO), and the local USW members must incorporate the terms of the national agreement, Baker said.

The majority of local contracts expire Jan. 31 and most of the rest later in the winter and spring.

Valero Energy Corp. has 13 U.S. refineries, of which five have union representation, Bill Day, a spokesman in San Antonio, said. Four of those five have contracts that expire between the end of January and April 23, he said. He declined to comment on negotiations, saying Valero had a “gentlemen’s agreement” with the union to not comment publicly on the talks.

To contact the reporter on this story: Barbara J. Powell in Dallas at [email protected]

To contact the editor responsible for this story: Dan Stets at [email protected]


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