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The dispute between Chevron and the unions representing workers at the Gorgon and Wheatstone LNG project has taken a turn for the worse, with the unions now threatening a two-week total strike starting September 14.
"The Offshore Alliance is escalating protected industrial action to demonstrate that our bargaining negotiations are far from 'intractable'," the group of unions said in a Facebook post cited by Reuters.
The escalation follows a decision by Chevron to launch mediation talks with the participation of Australia’s Fair Work Commission—the authority in charge of mediating such disputes.
The talks began yesterday with plans to continue through the week in hopes of finding common ground and averting industrial action.
The outcome of the first day of talks, however, does not seem encouraging. Previously, the Offshore Alliance had planned partial strikes, such as bans on performing certain tasks for between 7 and 11 hours a day. Now it is talking about a total strike.
Some of this action is now inevitable, Reuters reports, adding that workers at Gorgon and Wheatstone will begin work stoppages on September 7 unless the dispute is settled by then. The work stoppages will continue for a week, at least, with the possibility to be extended until the end of the month, the Offshore Alliance said.
"It will create inefficiencies, and the risk of supply impacts grows with time but the mediation process should resolve the issues before the strikes escalate to the point of a material supply disruption," Credit Suisse’s Australian Research director Saul Kavonic told Reuters.
The Gorgon and Wheatstone facilities account for over 5% of global LNG output so any disruption there would disrupt the global market, too, given the current precarious balance between supply and demand for the liquefied fuel. The two together have an annual capacity of close to 25 million tons of LNG.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.