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The Fair Work Commission, Australia’s labor regulator, has given the green light to a workers’ union to vote on whether to stage a strike at Australian LNG plants that account for 10% of the global supply.
Workers at Chevron’s LNG export plants Wheatstone and Gorgon have been locked in a dispute with the company over pay and working conditions.
Earlier this week, Woodside Energy and Chevron initiated talks with trade unions at their Australian LNG projects in a bid to avoid industrial action.
The workers’ union Offshore Alliance told Reuters on Thursday that it had not reached an agreement with Chevron on several issues including pay.
Natural gas prices in Europe on Wednesday jumped by as much as 30% as word spread that Australian LNG workers were preparing for strikes, seeking higher wages and better job security.
The spike highlighted Europe’s precarious gas position. Even though storage is fuller than usual and gas traders have even taken to storing gas in Ukraine despite the risks, the continent’s new dependence on LNG exposes it to potentially significant price swings.
“Natural gas prices are likely to remain volatile in the coming days, at least until there is some clarity surrounding potential strike action at a number of Australian liquefied natural gas (LNG) facilities,” ING strategists Warren Patterson and Ewa Manthey said on Friday.
Despite the fact that Europe remains in a comfortable situation with storage over 88% full across the EU, the market will have to watch closely how the labor dispute in Australia will unfold, they added.
“The potential for prolonged industrial action at a number of Australian LNG facilities could put a little over 10% of global LNG supply at risk, and given Europe’s growing reliance on LNG, this would (as already seen in recent days) have an impact on European gas prices as Asian buyers compete more aggressively for alternative supply,” ING said.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.