Korea has been hit by a wave of industrial action

Striking workers halted all production at the LG-Caltex plant on Monday in a dispute over pay.

The refinery accounts for about 25% of South Korea's refining capacity and usually produces 650,000 barrels a day.

Despite frequent strike waves in South Korea in recent years, this is the first time a refinery has been shut.

Lee Soo-jung, a spokesman for LG-Caltex, which is a joint venture between South Korea's LG and Chevron Texaco, said the shutdown was costing it about 30 billion won ($25.92m; �14m) a day.

"The union got control of crude oil feed operations, a core unit, so we shut down the refinery for safety reasons," said another LG-Caltex spokesman, Lee Young-won.

Summer strike wave

South Korea's energy ministry said there was no immediate threat to oil supplies in Asia's fourth-biggest economy and LG-Caltex was holding 19 days of oil stocks.

The refinery dispute comes after industrial action at a string of firms in key sectors including Hyundai Motors, Kia Motors and KorAm Bank.

South Korea traditionally faces a seasonal summer rise in union action for higher wages, but labour unrest in the country has been particularly bad so far in 2004.

The Labour Ministry said there had been 337 instances of industrial action so far in 2004, with more workers, including subway unions, threatening to strike.

The LG-Caltex Oil Labour Union, which belongs to the umbrella Korea Confederation of Trade Unions (KCTU), represents 43% of the refiner's 2,550 workers.

It began the strike on Sunday after several rounds of wage talks collapsed.