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Storage tanks stand at the Irving Oil refinery in Saint John, N.B., on Aug. 8, 2013.

Andrew Vaughan/The Canadian Press

Irving Oil Ltd. is reducing its contract and plant work force at Canada’s largest oil refinery because of challenges caused by the coronavirus pandemic, the company said on Thursday.

The Canadian oil giant is cutting its contract work force at its 320,000-barrel-a-day refinery in Saint John to 225 from 1,000 in the first quarter of 2021.

An additional 60 Saint John refinery employees were cut on Thursday, representing 7 per cent of the refinery work force, the company said.

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“The COVID-19 pandemic has had extreme and serious impacts on our business and our industry,” Irving Oil president Ian Whitcomb and chief brand officer Sarah Irving said in a joint statement, citing the collapse in demand for refined products, market volatility, poor margins and the economic downturn.

Last year, Irving said it would lay off 250 people, or 6 per cent of its global work force, owing to demand disruption caused by the coronavirus pandemic.

A resurgence of coronavirus cases across the world has complicated an uneven recovery in consumption for liquid fuels that is estimated to have fallen by nine million barrels a day in 2020, according to the U.S. Energy Information Administration.

American refining margins were less than US$10 – the threshold above which most refiners make money – for the majority of the fourth quarter of 2020. Margins have since risen to about US$12.70 on Thursday, though refinery utilization is off about 10 per cent year on year.

Refiners across the globe have been scaling back contract workers as they defer maintenance projects as a result of the coronavirus pandemic.

Companies, many of them laden with high debts, slashed all but the most essential work.

U.S. oil refiners such as CVR, Hollyfrontier and PBF Energy also cut salaried employees last year in response to economic strain caused by the coronavirus pandemic.

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