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Strikes may impact Western Australian gas firms' output

  • : Natural gas
  • 23/08/10

Strikes could impact Australian independent Woodside and Chevron's Western Australian (WA) gas output after some Offshore Alliance (OA) union members who are Woodside employees voted in favour of protected industrial action.

An OA spokesman said 99pc of its Woodside-employed members who were balloted voted to back protected industrial action. The approval legalises strikes under Australian law, after polling closed on 9 August.

Meanwhile, key issues OA and Chevron have not concurred on include job security, agreed rosters, mutual agreement on transfers to other Chevron worksites, on the working of overcycle, training standards, travel arrangements and rates of pay, the OA said.

The OA has made an application to Australia's Fair Work Commission to hold a protected action ballot of members who are downstream workers at Chevron's 8.9mn t/yr Wheatstone LNG, while a separate vote is proposed for certain employees at the 15.6mn t/yr Gorgon LNG plant.

An offtaker with term volumes from Chevron's 8.9mn t/yr Wheatstone LNG facility has not received any updates from the supplier on potential impact to their deliveries. The buyer expects one delivery about a month from now.

OA has informed Chevron that their workers could potentially go on strike around September, should its workers also vote to back strike action, another Wheatstone offtaker said.

"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," Brad Gandy, a spokesman for the OA told Argus on 10 August. "It's in everyone's best interest to get back to what our members know best, exporting quality Australian gas to the world."

Protected action requires a 120-hour notice period to be given to the company and can include a range of actions such as refusing to load LNG carriers. Any decision to give notice to Woodside regarding action will be dependent on the progress of bargaining meetings scheduled on 10 and 15 August, as well as further discussion with members on Woodside's North Rankin, Goodwyn Alpha and Angel platforms and majority support in any subsequent ballot, an OA spokesperson said.

An RBC Capital Markets note said any strike could affect monthly exports from Chevron's 15.6mn t/yr Gorgon and Wheatstone LNG facilities as well as the Woodside-operated 4.9mn t/yr Pluto and 16.3mn t/yr North West Shelf (NWS), stating that these projects have averaged around 3.75mn t/month each month in 2023, or around 11pc of global exports.

Northwest European delivered LNG prices have soared, reflecting worries over impact on LNG supply because of possible industrial action, during an ongoing northern hemisphere heatwave despite healthy gas inventories in Europe.

The Dutch TTF contract price for September closed at $12.483/mn Btu on 9 August, $2.599/mn Btu higher than the previous day's close. The contract's spike was mainly because of concerns about potential strikes at the various Australian LNG facilities, traders said, although others were a bit more sceptical about reasons behind the jump. The divergence in views came particularly because is not confirmed if strike action will indeed be taking place.

The biggest upside risk to LNG prices at this point comes from the possibility of inter-basin competition between Asia and Europe emerging yet again, should strike action disrupt production in Australia, traders said.

The announcement of the OA ballot result follows workers at the Shell-operated 3.6mn t/yr Prelude floating LNG (FLNG) in Browse basin offshore WA voting to strike on 10 June last year, impacting the facility's July-September production.

A Woodside spokesperson said the firm recognises protected industrial action as a workplace right and does not oppose the protected action ballot applications. The company has contingency plans to deal with challenges to production, it added. "Our employees have demonstrated willingness over a number of years to work constructively with us to resolve issues and, despite the protected action ballot outcome, we are hopeful that this approach will continue," the spokesperson said on 10 August.


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