November 28, 2023

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A labor dispute for Chevron Australia escalated with a two-week strike plan

A labor dispute for Chevron Australia escalated with a two-week strike plan

Chevron offices are pictured after the US government granted a six-month license allowing Chevron to increase oil production in US-sanctioned Venezuela, in Caracas, Venezuela December 2, 2022. REUTERS/Gabe Ora Obtain licensing rights

  • Unions plan a nationwide strike from September 14 if the talks fail
  • Short breaks from work starting Thursday
  • Unions offer to repair home gas station in Whetstone
  • Escalation of unions may support gas prices

SYDNEY (Reuters) – Workers at Chevron’s Gorgon and Wheatstone LNG projects in Australia are planning a two-week nationwide strike from Sept. 14, a union alliance said on Tuesday. Disputes over wages and conditions escalated.

Australia is the world’s largest exporter of liquefied natural gas, and the ongoing dispute has fueled volatility in natural gas markets, as traders worry about the risk of long-term disruption.

The decision to strike comes amid mediation talks hosted by the Fair Work Commission, Australia’s industrial arbitrator, which began on Monday and are set to continue every day this week, ahead of short strikes called by the union from Thursday.

“The External Coalition is escalating protected industrial actions to prove that our negotiating negotiations are far from intractable,” the trade union alliance said in a Facebook post.

Chevron did not respond to a request for comment.

Prolonged industrial work could disrupt LNG exports and is likely to increase competition for super-cooled fuel, forcing Asian buyers to outbid European buyers to attract LNG shipments.

ING said the latest move by the consortium may be a sign that mediation talks are not “progressing”.

“This is likely to provide some support to gas prices today and comes at a time when maintenance work is underway at the Norwegian Troll gas field, which has seen lower flows from Norway,” ING said in a research note.

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Dutch and British gas prices diverged on Monday, as high storage levels kept prices in the short term, although analysts said any disruptions to Australian LNG exports could complicate the supply chain.

Whetstone and Gorgon have the potential to supply up to half of all gas consumption in Western Australia, and the union alliance said on Tuesday that some employees had offered to work through strikes to help fix the local gas station at Whetstone.

The Wheatstone processing facility consists of two LNG trains, or liquefaction units, and a local gas terminal. The trade union coalition offered work in the latter facility only during strikes.

Strikes are ‘inevitable’

The union has already called for industrial action on the US energy major’s Gorgon and Wheatstone projects, which account for more than 5% of global LNG capacity, for a period of seven days from Thursday, September 7, if the parties cannot reach a solution.

Employees plan to take up to 11 hours off work in several blocks and will stop performing certain tasks through September 14.

But in its latest update, the external coalition said the work ban could be extended until at least the end of the month. She said Chevron would have to finally agree to its terms “but not before losing a few billion dollars”.

Energy analyst Saul Kavonic said “lower-level strikes” starting Thursday looked almost inevitable now, and the latest move by the unions would keep their options open for escalating strikes.

“It will lead to inefficiency, and the risk of supply impacts increases over time, but the mediation process must resolve the issues before the blows escalate to the point of interrupting physical supplies,” he added.

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Gorgon, Australia’s second largest LNG plant, has an export capacity of 15.6mtpa and Wheatstone 8.9mtpa.

Reporting by Ringo Jose in Sydney;

Our standards: Thomson Reuters Principles of Trust.

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Reports on breaking news in Australia and New Zealand covering the biggest stories across politics, business and commodities. I previously wrote about stocks on Morningstar.