GAS | LNG

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Australian LNG strike edges closer as talks falter

(Montel) The risk of industrial action disrupting LNG deliveries out of the world’s third-largest producer edged closer on Tuesday as negotiations with Australian energy suppliers faltered ahead of a potential strike decision for Friday.

While there had been “some progress” in the negotiations, the two sides were still “nowhere close enough to an agreement and the inevitability of a strike is getting greater”, a source close to the negotiations told Montel.

But he said a final decision was not expected until at least Friday. Industrial action could take various forms with a full blown strike potentially affecting up to 10% of global supply.

Negotiators of the Offshore Alliance, a partnership between the Australian Workers’ Union and Maritime Union, resumed formal negotiations today with LNG producer Woodside regarding potential industrial action at the country’s biggest terminal, the 16.9m tonne/year North West Shelf liquefaction facility.

Formal negotiations were also held with Chevron on Monday over potential strikes at two other LNG facilities – the producer’s 15.6m tonnes/year Gorgon facility and the 8.9m tonnes/year Wheatstone plant.

Production stoppage?

Any decision to go on strike would likely be gradual, the source said, adding “it would be a combination of different work stoppages that would ultimately slow and even stop production”.

The Offshore Alliance went on strike for 75 days last year, bringing operations at Shell’s 3.6m tonne/year Prelude floating LNG terminal to a halt.

Woodside Energy, meanwhile, said in a statement that “positive progress is being made and the parties have reached an in principle agreement on a number of issues that are key to the workforce”.

Workers at the company’s North West Shelf facilities voted last week to endorse potential industrial action in their dispute on pay and conditions that has been underway since April.

Legally protected industrial action must commence within 30 days of such a decision and with seven days’ notice.

European gas prices earlier jumped 10%, with market participants concerned a shortfall in Australian output would increase competition with Asian buyers for spot cargoes in a constrained global market.

The benchmark front-month contract on the Dutch TTF hub last traded up EUR 2.93 at EUR 37.36/MWh.