Industrial action is on the horizon as workers at two significant liquefied natural gas (LNG) plants in Australia, under the operation of Chevron, prepare to go on strike starting from September 7. This move has the potential to impact global prices as the negotiation deadlock over pay and working conditions with labor unions persists.
Chevron has conveyed to the BBC that it remains committed to ensuring safe and dependable operations in the face of any potential disruptions at its facilities.
The Wheatstone and Gorgon sites, which account for over 5% of the world’s LNG production, could face production setbacks as the labor dispute unfolds.
The specter of strikes has recently been a driving factor behind the escalation of wholesale gas prices in Europe.
The Concept and Significance of LNG: LNG, or liquefied natural gas, has emerged as a pivotal energy source. While winter energy bills exhibit a modest decline, the broader implications of LNG’s importance remain intact.
Approximately 500 personnel are presently employed across the two Chevron facilities situated in Western Australia.
Chevron commented on Tuesday, stating, “While we hold the view that industrial action is not imperative for reaching an agreement, we acknowledge the right of employees to engage in protected industrial action.” The company emphasized its ongoing commitment to the negotiation process to achieve mutually beneficial outcomes for both its workforce and the enterprise.
The Offshore Alliance, a collaboration between two unions representing energy sector workers, including those within Chevron, has been striving to achieve consensus with the company on multiple pivotal matters encompassing compensation, job security, work schedules, and training benchmarks.
The alliance expressed its disillusionment with the company’s stance during negotiations and criticized Chevron for not endorsing an industry-standard agreement for their contributions.
According to energy analyst Saul Kavonic, the impending strike could lead to sporadic work stoppages during certain periods of the day and the imposition of bans on specific tasks, such as helicopter unloading. While Kavonic anticipates a moderate effect on global gas prices, he cautions that the situation could intensify, potentially driving energy prices upward.
Kavonic went on to highlight that a prolonged and extensive supply disruption could culminate in a return to crisis-level prices observed last year following Russia’s incursion into Ukraine.
Recent concerns over potential supply interruptions from Chevron and another Australian LNG plant operated by Woodside Energy have spurred a rise in wholesale gas prices across Europe. Notably, Woodside Energy has declared an initial agreement with unions representing employees at its North West Shelf facility.
Collectively, the Woodside and Chevron facilities constitute approximately 10% of the world’s LNG supply.
After the commencement of the Ukraine conflict in 2022, Russia curtailed its natural gas deliveries to Europe, triggering global price hikes and prompting nations to explore alternative energy sources, including LNG.
Australia, a prominent exporter of LNG, has been instrumental in moderating worldwide energy costs. The process of converting methane, or methane blended with ethane, into LNG involves purification and cooling to around -160°C, rendering it a liquid state suitable for transportation in pressurized vessels.
Upon reaching its destination, LNG is reconverted into gas form and utilized for heating, cooking, and power generation, analogous to conventional natural gas.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Daily Insight 360 journalist was involved in the writing and production of this article.
