The Gorgon liquefied natural gas (LNG) and carbon capture and storage (CCS) facility, operated by Chevron Corp., on Barrow Island, Australia, on Monday, July 24, 2023.
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Workers at Chevron’s two liquefied natural gas (LNG) projects in Australia plan to escalate industrial action from Thursday to anything from an all-out strike to hours-long work stoppages, their union said, raising the risk of disrupted production at facilities. for more than 5%, increases. of the global supply.
Workers at the Gorgon and Wheatstone plants have briefly stopped work over the past six days after talks with Chevron over wages and working conditions collapsed.
The unions had said they would increase pressure on the company from Thursday, possibly by halting work completely. A union official said they will now review every 12 hours to determine what action to take.
Research group EnergyQuest estimated the revenues at risk for Chevron and partners due to the strikes at about A$76 million ($49 million) per day, although not all of that revenue would be lost as some loads may be postponed to a later date.
“There is a clear escalation of protected industrial action today, but it is taking place in one-hour blocks,” said the union official, who asked not to be named as he was not authorized to speak to the media.
“We are strategically assessing the protected industrial action we need to take every twelve hours and will continue to escalate at times that align with our industrial strategy.”
Domestic deliveries will not be affected, the union said.
Chevron had said it would continue to take steps to maintain operations if disruptions occur, without providing details.
Australia is the world’s largest LNG exporter and its main buyers are in Asia. Traders expect any supply cuts would cause Asian buyers to compete with Europeans for freight, increasing spot price volatility in the European gas market.
Dutch and British wholesale gas prices rose slightly on Wednesday, ahead of the escalation of the strike.
In an attempt to stop the industrial action, Chevron is pursuing an untested legal strategy and has applied to the Fair Work Commission, Australia’s industrial arbitrator, for a declaration of ‘unruly bargaining’. If allowed, it would end the strikes and allow the tribunal to dictate an agreement.
The committee will hold its first and so far only hearing on September 22, and a decision is expected to be made shortly thereafter.
Goldman Sachs said in a note that any 24-hour strike would increase supply risks, although the chance of a prolonged outage that could cause a prolonged spike in gas prices was slim.
“This is due to both the potentially large revenue losses for Chevron… and possible regulatory interventions,” Goldman analysts said.