Strikes to start at major Chevron Australia LNG projects

Workers at Chevron's liquefied natural gas (LNG) projects in Australia will start strike action on Friday after mediation talks between unions and the energy major ended without a deal, potentially disrupting output from facilities that account for over 5% of global supply.

Workers at Chevron's liquefied natural gas (LNG) projects in Australia will start strike action on Friday after mediation talks between unions and the energy major ended without a deal, potentially disrupting output from facilities that account for over 5% of global supply. Australia is the world's biggest LNG exporter, and the ongoing dispute over wages and conditions at Chevron's Gorgon and Wheatstone operations had stoked volatility in gas prices.

Work stoppages that could reach up to 11 hours will begin from 1 p.m. Perth time (0500 GMT) and last through Sept. 14. A two-week total strike could then follow if an ongoing dispute over wages and conditions remained unresolved, the union had said.

"Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms," a Chevron spokesperson said. "The unions continue to seek terms that are above and beyond equivalent terms with others in the industry, including in agreements recently reached."

The Offshore Alliance, a coalition of two unions, said Chevron had demanded concessions it was unable to accept. "Despite the Offshore Alliance giving Chevron plenty of opportunity to sort out (bargaining agreements) ... they will finally be facing their day of reckoning," the union alliance said in a Facebook post.

"It's game on, Chevron." The U.S. energy major said it would continue to take steps to maintain operations if any disruptions occur, without giving details. The union had warned that the LNG plant would have to be shut down "if there are not competent personnel to undertake handovers during work stoppages".

How the disruption could play out was not immediately clear. Even though Australia is not a major supplier of LNG to Europe, British and European gas prices have been buoyed in recent weeks by fears fewer Australian LNG cargoes going to Asia could lead to more competition for other sources of LNG and drive up costs.

China and Japan are the top two buyers of Australian LNG, followed by South Korea and Taiwan. Dutch and British gas prices were mixed on Thursday due to the uncertainties about the potential strike and after maintenance in Norway curbed supply.

Energy analyst Saul Kavonic said Friday's strike action appeared to be designed to put more pressure on Chevron to cut a deal rather than substantially affect production. "The initial strikes set to begin today appear lower level, designed to create costs and inefficiencies for Chevron," he said. "This is ... all part of the negotiation 'dance' between the parties."

The strike action had been scheduled to begin on Thursday morning but unions pushed back the start time twice after making progress in mediation talks hosted by the Fair Work Commission, Australia's industrial umpire.