Union says rejects U.S. refinery workers contract offer on Friday

HOUSTON, Jan 30 (Reuters) - Union negotiators said the latest proposal from oil companies for a new three-year contract for U.S. refinery workers was rejected on Friday because it failed meet to members' objectives, according to a text message issued Friday night.

The announcement of the rejection by the United Steelworkers (USW) on Friday came 28 hours before the current contract covering hourly workers at 63 refineries accounting for two-thirds of U.S. refinery capacity is set to expire.

"Industry's latest offer fails to address issues that matter to USW members," said the text message to union members, which was also sent to the media. "All units instructed to reject."

The current three-year agreement expires at 12:01 a.m. on Sunday in the time zone where each refinery is located.

This is third offer from lead industry negotiator Royal Dutch Shell Plc that USW negotiators have rejected since talks began on Jan. 21.

A Shell (LSE: RDSB.L - news) spokesman said the talks would continue.

"Shell is continuing negotiations with USW with the intent of reaching a mutually satisfactory agreement prior to contract expiration," said Shell spokesman Ray Fisher.

Shell's statement on Friday was different from the same one the company has issued in the previous nine days of talks. Until Friday, Shell has said it was "optimistic" a mutually satisfactory agreement could be reached with the USW.

The USW is seeking annual pay raises double those of the last agreement negotiated in 2012. It also wants work that has been given in the past to non-union contractors to start going to USW members along with a tighter policy to prevent workplace fatigue and reductions in members' out-of-pocket payments for healthcare.

The last national refinery workers strike was in 1980 and lasted for three months.

Repeated rejections of contract proposals are not unusual in negotiations between the USW and Shell for a national refinery workers agreement.

At least five contract proposals were rejected during the talks in 2012 for the current agreement.

Previous negotiations between the USW and oil companies have gone down to the wire.

In 2012, an agreement was announced only hours before the contract was set to expire. During bargaining in 2009, the deadline for the contract's end was extended three times before an agreement was announced.

The union and refineries have both prepared for a possible strike, which the union signaled on Monday may be needed to win concessions from the oil companies.

(Reporting by Erwin Seba; Editing by Diane Craft)