USW, Shell agree to raise refinery worker pay by 11 percent: sources

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HOUSTON (Reuters) - The United Steelworkers union (USW) and Shell Oil Co agreed on Thursday to a pact that will boost pay for 30,000 U.S. refinery, chemical plant and pipeline workers by 11 percent over three years, said sources familiar with the agreement.

Workers represented by the USW will receive a 3.5 percent pay raise in each of the first two years of the deal and a 4-percent raise in the final year.

The union entered talks with lead oil company negotiator Shell on Jan. 16 seeking an 8-percent-a-year pay increase for hourly workers. USW-represented refinery workers make about $40 an hour after four years on the job.

In 2015, following a sometimes bitter strike at 12 refineries and three chemical plants affecting 7,000 workers, Shell, the U.S. arm of Royal Dutch Shell Plc, and the USW agreed to a 12-percent pay increase over four years.

The contract between the USW and Shell often forms the basis for contracts at plants where workers are represented by other unions.

The agreement between the union and Shell came about nine hours before the current contract was to expire at 12:01 a.m. on Friday.

The deal will be combined with local agreements at each plant to form the contract for individual sites.

"We believe this agreement respects the needs of our employees, underpins our resolute commitment to safety and ensures the economic health of Shell's facilities," company spokesman Ray Fisher said in a statement.

A USW representative was not immediately available to discuss the agreement.

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The two sides also agreed to keep the company portion of the health insurance premium at 80 percent with employees paying 20 percent.

Small plants with less 150 union members will add one union health and safety representative under the deal. Also, plants that have not adopted a fatigue reduction standard as agreed to in 2012 and 2015, commit to do so.

Fatigue was found by federal investigators to be a factor in the 2005 deadly explosion at BP Plc's Texas City, Texas, refinery that killed 15 workers and injured another 180 people.

The new agreement will also likely be accompanied by an extension of the existing contract to keep workers on their jobs until the new pact is ratified.

The contract covers 30,000 workers at plants operated by Shell, Marathon Petroleum Corp, BP Plc, Exxon Mobil Corp, Valero Energy Corp, and smaller refiners such as HollyFrontier Corp and Delek US Holdings Inc.

(Reporting by Erwin Seba; editing by Richard Chang and James Dalgleish)

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