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Trade Unions Extend Strike At Shell's Prelude LNG

Trade unions in Australia have extended until August 11 their strike over a pay dispute at the Prelude LNG platform offshore northwestern Australia, extending the period in which the operator Shell would not be able to ship LNG from the facility.

The Offshore Alliance union and the Electrical Trades Union demand more pay in an industrial action that began in June. Shell was exporting LNG from Prelude last month, but production was taking place at reduced rates to match storage capacity amid the disruption of the tanker berthing process for vessels to pick LNG.  

Earlier this month, Shell said it was shutting down production at the LNG facility. Shell had already warned at the end of June that shipments out of Prelude would be disrupted due to the industrial action. The floating LNG production facility offshore northwestern Australia has an annual capacity of 3.6 million tons.

Prelude LNG remains shut down as the pay dispute escalates, and the trade unions on Tuesday extended bans for their workers that keep them from performing tasks such as the transfer and supply of hydrocarbons from the platform. 

Shell, for its part, declines to resume talks with unions until they call off the work stoppages, Reuters reports, citing a letter from Monday it has seen.

The disruption of LNG shipments from Prelude comes amid high LNG demand, especially in Europe, which is driving spot LNG prices and benchmark natural gas prices higher.

Europe is scrambling to secure more LNG as Russia slashed gas supply via the Nord Stream pipeline to Germany. Russia is further reducing flows via Nord Stream this week, to just 20% of the pipeline’s capacity, days after restarting the link at 40% capacity after regular maintenance. Russia’s reasons: another turbine at a compressor station is up for maintenance and repairs.

In addition, the Freeport LNG facility in the United States is shut down after a fire in early June and is not expected to resume full operations for another few months.  

By Tsvetana Paraskova for Oilprice.com

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