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Major disruption looms as Chevron workers in Australia halt three plants operation

Hundreds of workers at Chevron’s Western Australia LNG plants have ceased operations, affecting 6% of global LNG supply. Union negotiations on pay and conditions have stalled, leading to short work stoppages and bans. The labour action may escalate, posing potential energy security risks.

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AUSTRALIA: In Western Australia, hundreds of workers at Chevron’s liquefied natural gas (LNG) plants brought operations to a standstill, impacting about 6% of the world’s LNG supply.

At 1 pm local time, about 500 employees initiated short work stoppages and work bans due to stalled union negotiations concerning pay and working conditions.

The labour action is scheduled to continue until Thursday, with the potential for escalating rolling strikes lasting up to 24 hours a day for two weeks if an agreement is not reached.

The Offshore Alliance, a collaboration of two energy worker unions, is overseeing the strike at Chevron’s Gorgon and Wheatstone onshore processing plants and its Wheatstone offshore platform.

Negotiations between Chevron and the unions, ongoing for two years, have hit an impasse on various issues, including pay, job security, scheduling, and work classification transparency.

The labour action is described as “protected industrial action” in response to Chevron’s reluctance to accept an industry-standard enterprise agreement for these facilities, according to a union spokesman.

Chevron maintains that it has negotiated in good faith but acknowledges that key terms remain unresolved. The company plans to ensure safe and reliable operations in case of disruptions at its facilities.

Gorgon and Wheatstone jointly produce approximately 25 million metric tons of LNG annually.

This labour dispute follows a recent strike avoidance at the neighboring Energy’s North West Shelf facility, contributing to volatility in European gas prices in recent weeks.

Energy analysts express concern that such strikes could impact global energy security, given increased reliance on global LNG supplies due to Russia’s reduced natural gas supply to Europe following its invasion of Ukraine.

While there are pressures to resolve the issue, potential disruptions are closely monitored by the energy industry.

Energy analyst Saul Kavonic said the talk of strikes had put gas traders in Europe “on edge” because of the shortage in natural gas supplies that Russia’s invasion of Ukraine had created.

In the wake of that invasion, Russia curtailed its supply of natural gas to Europe, making nations there significantly more reliant on global LNG supplies, he said.

“Any supply disruptions now can have very serious consequences for energy security in both Asia and Europe because those markets are now super interconnected,” Kavonic quoted by The New York Times.

But he said it was “still very premature” to believe that the strike at Chevron’s facilities would lead to any serious disruption in global production of the fuel.

“There’s a huge amount of pressure involved here behind the scenes on both the company and the unions to not let this escalate.

“The Australian government doesn’t want to see its reputation for reliability as an energy supplier tarnished further,” Kavonic said.

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