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Fault Shuts 25% Of LNG Output At Chevron’s Australia Plant

Liquefied natural gas (LNG) production at Chevron’s Wheatstone export facility was reduced by 25% after a fault, a spokesman for Chevron told Reuters on Thursday, the day on which trade unions escalated their strikes at the plant and the other Chevron LNG facility, Gorgon.

Chevron has already identified the cause of the fault and is working to restart LNG production at full capacity, the U.S. supermajor’s spokesman added.

The current loss of 25% LNG production at Wheatstone “shouldn't move the dial” for international gas markets, energy analyst Saul Kavonic told Reuters.

The fault at the Australian plant coincided with the escalation of the strikes at the two Chevron facilities.  

The workers have stepped up their industrial action that began earlier this week, and plan further escalations in the coming weeks.

While the unions representing the workers have not specified how many hours every day the workers at Gorgon and Wheatstone would strike, Chevron said that it had been notified of rolling 24-hour work stoppages beginning in the early morning on Thursday, Bloomberg reports.

The report notes that the industrial action has not yet affected LNG exports from Australia.

No change in the situation for the better is likely at least until September 22, when a labor market regulator will hear the dispute after Chevron reached out to it in an effort to force the workers to settle.

The supermajor is seeking to get a so-called “intractable bargaining” declaration from the Fair Work Commission, meaning the FWC could force workers to agree to terms proposed by Chevron.

Despite the escalation of the strikes and the shutdown of 25% of Wheatstone’s LNG production, Europe’s benchmark natural gas price traded 1.16% lower as of 10:15 a.m. GMT as currently weak gas demand outweighs supply issues, including longer-than-planned maintenance at some of Norway’s gas infrastructure.

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Even with the escalating strikes in Australia, Goldman Sachs believes chances are low of a long outage that would fuel a prolonged price rally.

By Tsvetana Paraskova for Oilprice.com

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