Chevron Reaches Agreement With LNG Workers To Avoid Further Strikes

A weeks-long dispute between Chevron and workers at its two LNG projects in Australia has finally ended with an agreement that eliminates the risk of any further industrial action.

Members of the Offshore Alliance—the group that represents the workers—voted in favor of a deal with the supermajor endorsing what Chevron offered in wages and working conditions, Reuters said in a report.

The deal comes after workers went on strike for about a week in September after failing to reach an agreement with Chevron on new terms regarding their remuneration and working conditions. The strike risked disrupting global LNG supply and pushed natural gas prices higher, especially in Europe.

Talks mediated by the Australian labor market regulator followed as Chevron remained unwilling to accept all demands made by the workers. These dragged on for weeks, with the Offshore Alliance keeping the threat of another strike over Chevron’s head throughout.

Eventually, however, the parties appear to have managed to resolve their differences.

Chevron operates two massive LNG projects in Australia: Gorgon, which has a capacity of 15.6 million tons annually, and Wheatstone, which can produce 8.9 million tons of liquefied natural gas annually.

Workers at the biggest LNG facility in the country, Woodside’s North West Shelf, also threatened a strike earlier this year but the company resolved the matter relatively quickly, eliminating the threat of disruption at the 16.9-million-ton facility.

The effect that the risk of strikes—and actual strikes—at Australian LNG plants are having on gas prices has highlighted the delicate balance between supply and demand for the fuel.

Supply remains tight at a time of heightened demand because of Europe joining the regular LNG buyers’ club. Additional production capacity is coming but not immediately, which means the tightness—and price volatility—will likely remain a feature of the global LNG market for years to come.

By Irina Slav for Oilprice.com

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