Europe's biggest refiner is instead planning to sell its UK refinery, industry sources said, which combined with a permanent closure of Dunkirk will allow it to meet a target to cut production 500,000 barrels per day by 2011.

Workers at Total's six French refineries have been on strike for seven days, bringing production to a halt, triggering panic buying in some petrol stations and prompting the intervention of French President Nicolas Sarkozy.

"Total has decided to make a firm commitment and maintain all refineries, apart from Dunkirk, during the next five years," Industry Minister Christian Estrosi told parliament.

Estrosi added the government was ready to organise a round table on the future of the French refining industry, meeting the final demand unions had made before calling on workers to stop the strike.

A Total spokesman declined to comment beyond saying the group had made some proposals and that progress had been made.

"We have presented a text with eight proposals on which the two sides will continue to work. The progress is significant," he said, adding a meeting that started at 0900 GMT between union representatives and company personnel officials was continuing.

Earlier in the day, Sarkozy had asked Total Chief Executive Christophe de Margerie for pledges not to shut refineries.

THORN IN THE GOVERNMENT'S SIDE

Workers at all Total's French refineries had originally taken action to halt output in protest at plans by the group to close its Dunkirk plant.

European refiners are struggling to cope with low margins and poor demand and several refineries have been put up for sale or sold.

Sarkozy, whose ratings are close to all-time lows amid rising unemployment, faces regional elections next month. His centre-right government has been seen as keen to avoid protests and panic buying at petrol pumps.

The government also wants to take a tough stance with companies such as Total that are restructuring while posting hefty full-year profits, some analysts said.

Last month, Sarkozy tried to win assurances from car maker Renault to centre production of a new small car in France instead of Turkey. Renault posted a net loss of 3 billion euros for 2009.

France has over 12,500 petrol stations and Total supplies half of the country with petrol.

Environment Minister Jean-Louis Borloo told Europe 1 radio France was not at risk of running out of fuel and had around 10 days of stocks. "At this point in time, there is no risk of shortage," he said.

Petroleum industry body UFIP said on Monday there were around 7 days of fuel supply left.

A spokesman for the UK's Department of Energy and Climate Change said Britain was not aware of any plans to sell the Lindsey refinery.

"It's business as usual as far as we know," he said.

(additional reporting by Michael Holden in London)

(Writing by Marie Maitre and Jo Winterbottom; editing by Marcel Michelson)