Labor unions on Thursday escalated strikes at Chevron Corp.’s Gorgon and Wheatstone LNG facilities in Western Australia by banning tanker loadings.
Unions also started 24 sporadic one-hour daily work stoppages at the export terminals and the Wheatstone offshore production platform after first going on strike last week. The actions came the same day as the Offshore Alliance (OA), a partnership between the Australian Workers Union and the Maritime Union of Australia, said an equipment failure at Wheatstone cut liquefied natural gas output in half.
The unions said a turbine tripped under the supervision of non-unionized workers. Chevron said output was cut by 25%, but added on Thursday that it was working to restart the unit after the issue had been identified.
OA said the strike escalation would not impact domestic gas for Australians, but in a post on Facebook said LNG exports were “a very different story.”
Mediated talks were expected to resume on Monday. However, no deal over pay and working conditions was expected until Australian regulators hold a hearing scheduled for Sept. 22 to consider Chevron’s request for an intractable bargaining declaration. If granted, regulators could halt the strikes and decide on employment terms.
The OA accused Chevron on Thursday of “coercive conduct,” and said the company’s supervisors had allegedly threatened pay reductions during work stoppages.
For now, the impact to the global gas market has been limited and could remain so unless the impasse drags into the winter, when demand is higher and Europe and Asia would be forced to compete for cargoes.
Kpler vessel-tracking data showed that the Gorgon and Wheatstone facilities last loaded a cargo on Tuesday (Sept. 12). No vessels were moored at Wheatstone on Tuesday. The vessel, Macoma, was scheduled to load at Gorgon on Thursday. While Macoma was near the facility, it was not moored there.
The Asia Endeavour also had canceled its journey to Gorgon, where it had been scheduled to arrive on Monday (MoSept. 18). However, other vessels flagged for the facility in the coming days were still on their way, according to Kpler.
European benchmark gas prices declined by 3.5% on Thursday, as Freeport LNG on the Texas coast ramped back up after days of reduced operations. The restart eased supply concerns in Europe and Asia, where storage inventories are also high and demand is muted.
Goldman Sachs analysts led by Samantha Dart said prolonged strikes at Gorgon and Wheatstone, which account for more than 5% of global liquefaction capacity, aren’t likely.
“While the risk of outages will arguably rise once work stoppages move to 24 hours/day, we see the probability of a lengthy outage as low,” the Goldman team said. “This is both because of the potentially large revenue losses to Chevron, the facility operator, associated with a full LNG export outage, and because of potential regulatory intervention.”
The post Australian LNG Labor Strikes Intensify Amid Wheatstone Equipment Issues appeared first on Natural Gas Intelligence
