August 10, 2023 [OilPrice.com]- Woodside Energy and Chevron have initiated talks with trade unions at their Australian LNG projects in a bid to avoid industrial action that could affect up to a tenth of global LNG supply.
Natural gas prices in Europe on Wednesday jumped by as much as 40% as word spread that Australian LNG workers were preparing for strikes, seeking higher wages and better job security.
The spike highlighted Europe’s precarious gas position. Even though storage is fuller than usual and gas traders have even taken to storing gas in Ukraine despite the risks, the continent’s new dependence on LNG exposes it to potentially significant price swings.
Reuters reports that almost all workers at platforms that supply gas to Woodside’s North West Shelf LNG terminal are in favor of industrial action. Strikes are also planned for the Gorgon LNG project, operated by Chevron, and Wheatstone, also one of Chevron’s projects in Australia.
While Europe has reason to worry about the effect such industrial action would have on prices, Asian LNG importers such as South Korea and Japan have reason to worry about supply, too. The two are the biggest buyers of Australian liquefied natural gas.
Strikes can still be averted, however. “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 for Woodside told Reuters earlier today.
Trade unions have also signaled they want to settle any disputes as soon as possible to avoid the disruption in operations at three of the country’s largest LNG facilities.
The North West Shelf is the largest LNG production project in Australia, with a capacity of 16.9 million tons annually, followed by Gorgon, which has a capacity of 15.6 million tons Wheatstone can produce 8.9 million tons of LNG annually.
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