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Chevron Turns To Labor Market Regulator To End LNG Strike

Chevron will turn to Australia’s Fair Work Commission to force workers at its Gorgon and Wheatstone LNG projects to stop striking, Reuters has reported, adding there is no legal precedent for such a move.

The supermajor will seek to get a so-called “intractable bargaining” declaration from the FWC, per the report, meaning the FWC could force workers to agree to terms proposed by Chevron.

The move comes after weeks of unsuccessful negotiations between Chevron and the group of trade unions representing the workers at Gorgon and Wheatstone, the Offshore Alliance.

Reuters reported that Chevron saw “no reasonable prospect of agreement” with the unions because the unions are asking for terms significantly above the market."

"Despite the Offshore Alliance giving Chevron plenty of opportunity to sort out (bargaining agreements) ... they will finally be facing their day of reckoning," the trade union said last Friday.

Work stoppages at the Gorgon and Wheatstone facilities began in the early morning of September 8 and could last for up to 11 hours daily. The industrial action is scheduled to continue until September 14.

Gas prices in Europe surged on the news of the strikes, as the possibility of reduced LNG supply from the world’s largest exporter would see Asian buyers compete even more directly with Europe.

If the strike continues for two weeks, this would remove 1 million tons of LNG from the global market, ICIS analyst Tom Marzec-Manser told the FT.

“Even as Europe heads into the winter with very high storages, this potential reduction in supply tightens what remains a very finely balanced global gas market,” he also said.

Reuters noted in a report that as the strikes begin, the two LNG facilities may need to be shut down, "if there are not competent personnel to undertake handovers during work stoppages," per the OA.

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The two projects together account for about 5% of global LNG supply. While Chevron failed to reach a deal with the workers, sector player Woodside, the operator of Australia’s largest LNG facility, the North West Shelf, managed to strike a deal and avert a strike.

By Irina Slav for Oilprice.com

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