* Shell oil refinery is country's second-biggest
* Protesters lift blockade of Buenos Aires area plant (Recasts with blockade lifted)
BUENOS AIRES, July 7 (Reuters) - Local residents demanding better services ended a two-day blockade on Thursday of Argentina's second-biggest oil refinery, operated by Royal Dutch Shell <RDSa.L>, a Coast Guard official said.
The Buenos Aires province plant, Shell's only refinery in South America, has a processing capacity of about 18,000 cubic meters, or 113,000 barrels, per day.
"The protest was called off this evening, everything's resolved," the official said, asking not to be identified.
The residents were demanding that electricity, drainage and water services be installed in a slum area known as the "Flammable Village", located near the refinery and other businesses.
Officials at Shell declined to comment earlier in the day.
The disruption at the refinery came at a time of sporadic fuel shortages in Argentina, where a series of labor protests has hit energy production in recent months.
Argentina's crude output fell 19.1 percent in April from the same month last year to an average 79,836 cubic meters per day, according to the latest industry data. [ID:nN1E7630IW] (Reporting by Karina Grazina; Writing by Helen Popper; Editing by David Gregorio and Dale Hudson)
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