GUWAHATI, India India's oldest operating oil refinery in the northeastern state of Assam is facing a possible shutdown with powerful trade unions planning an indefinite strike against the management's retrenchment policy.

"If the refinery management goes ahead with its plans to downsize the workforce, we shall have no option but to launch an indefinite agitation with the potential to stop all crude production," Mohan Deka, president of the Assam Oil Corporation Labor Union told AFP by telephone from Digboi.

The agitation is likely to begin later this month.

Digboi refinery in eastern Assam, 527 kilometers (327 miles) from the provincial capital Guwahati, has been the flagship of the state-run Indian oil corporation producing 650,000 metric tons of crude oil annually.

The shutdown threat came at a time when the Digboi refinery is observing its centenary celebrations this month.

Digboi boasts a 100-year-old oilfield still yielding crude and the country's oldest operating oil refinery producing in excess of its official capacity.

Oil was first struck in Digboi in 1889 although it proved commercially viable and went on-stream in 1901.

The refinery had some 3,400 employees in 1990, whose strength has now been cut down to 2,400 after the management decided to prune its wage bill by reducing the workforce.

According to plans, another 1,500 employees were to be axed as part of the new retrenchment policy.

"The refinery authorities say modernization of the unit has left many workers redundant but the fact is that while sophisticated equipment was brought in, no efforts were taken to expand the existing set up," Deka said.

"Alongside modernization, if new units were set up then the workers' jobs would not have been at stake."

Refinery authorities were not available for comments.