Chevron, Woodside in talks to avert Australian LNG strikes

By Reuters, edited by Offshore staff

SYDNEY/LONDON — Chevron and Woodside Energy Group are holding talks with unions, they said Aug. 10, to avert threatened strikes over pay and conditions at facilities that together supply about 10% of the LNG market.

The North Rankin Complex, one of the North West Shelf assets, includes the North Rankin A and North Rankin B platforms.

Concerns over industrial action at Woodside's North West Shelf offshore gas platforms and Chevron's Gorgon and Wheatstone LNG plants sent European gas prices to a nearly two-month high this week.

Dutch and British wholesale gas prices retreated Aug. 10 from a two-month intraday high the previous day after concerns faded over tight LNG supply due to possible strikes at Australian facilities.

Any industrial action would disrupt Australia's LNG exports and increase competition for the super-chilled fuel, forcing Asian buyers to outbid European buyers to attract LNG cargoes.

Japanese and South Korean firms are the biggest buyers of LNG from the North West Shelf project, while LNG from Chevron's Gorgon and Wheatstone plants mostly goes to Japan.

About 99% of workers at offshore platforms that supply gas to the Woodside-operated North West Shelf LNG plant, Australia's biggest LNG plant, backed industrial action in a vote whose results were made public on Aug. 9.

The unions have not yet called for action, which could range from a minor pause to an all-out strike, and workers at Chevron's Gorgon and Wheatstone plants have yet to vote on industrial action.

Asian spot LNG prices barely moved Aug. 10. Meanwhile, industry sources said South Korea's Korea Midland Power Co (KOMIPO) issued a tender for one LNG cargo for delivery of 1.6 trillion Btu in October.

"With the implied risk and potential volatility from Australian strikes, this might signal to others that it's time to book for October onward in anticipation of unknown pricing spikes," said Toby Copson, global head of trading at Trident LNG.

The Offshore Alliance umbrella group of unions said bargaining meetings for improved pay will continue Aug. 10 and Aug. 17 before it takes a final decision on a strike at Woodside's facilities.

"Our members at Woodside and Chevron are fighting for what they deserve, a fair and reasonable agreement as soon as possible as they are well aware of the hundreds of millions of dollars these companies will lose if protected industrial action slows exports of Australian gas," union spokesperson Brad Gandy said.

A two-month fight last year against Shell at its Prelude FLNG site offshore northwest Australia cost the company about $1 billion in lost exports until it reached a pay deal.

30-day window

Industrial action in Australia, including strikes or work stoppages, must be approved by the Fair Work Commission before going to members for a vote.

After a successful ballot, the union can decide whether to go ahead with action, which must take place within 30 days. Employers are given notice beforehand.

The commission has approved industrial action at Woodside's offshore platforms, and workers have given the unions approval to call a strike.

Woodside said it had engaged "actively and constructively" in the bargaining process with unions.

"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," a spokesperson said in emailed comments.

The company said it always had contingency plans to deal with potential disruptions but hoped they would not be necessary in this case.

Unions have also applied to the Fair Work Commission for permission for Chevron's workers to vote on potential strikes. A decision from the Commission is likely within days and, if approved, a ballot could be held soon after.

"We will continue to engage our employees and their representatives as we seek outcomes that are in the interests of both employees and the company," a Chevron spokesperson said in an emailed statement.

North West Shelf has an export capacity of 16.9 MMtonnes per year. Gorgon, the country's second largest LNG plant, has capacity of 15.6 MMtonnes per year and Wheatstone 8.9 MMtonnes per year.

08.10.2023