HOUSTON (Reuters) - The United Steelworkers union (USW) and Shell (LON:RDSa) Oil Co reached a tentative agreement on Thursday that sources familiar with the deal said would boost pay by 11 percent over three years for 30,000 U.S. refinery, chemical plant and pipeline workers.
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 sources said.
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 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.
USW International President Leo Gerard praised the union members' commitment in a statement about the deal.
"We reached a tentative agreement because of our members' solidarity and the industry's willingness to negotiate a contract that is fair to both parties," Gerard said.
The deal will be combined with local agreements at each plant to form the contract for individual sites. Ratification votes by union members will be conducted locally.
"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.
The two sides also agreed to keep the company portion of the health insurance premium at 80 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 in earlier contracts, will commit to do so.
Fatigue was found by federal investigators to be a factor in the 2005 explosion at BP (LON:BP) Plc's Texas City, Texas, refinery that killed 15 workers and injured 180 other people.
The contract covers 30,000 workers at plants operated by Shell, Marathon Petroleum Corp (NYSE:MPC), BP Plc, Exxon Mobil Corp (NYSE:XOM), Valero Energy Corp (NYSE:VLO), and smaller refiners such as HollyFrontier Corp and Delek US Holdings Inc.