Gas prices soar as threat of more Aussie LNG strikes looms
Gas prices have surged across Europe, amid the renewed threat of further strike action across major LNG production sites in Australia.
Spot prices on the UK Natural Gas Futures benchmark have climbed 12.3 per cent today in early trading, while the Dutch TTF Futures benchmark has surged 11.6 per cent.
This has powered prices on the UK and Dutch benchmarks to 106.1p per therm and €42.66 per megawatt hour respectively.
Gas storage remains robust ahead of heating season, with supplies topped up at 96.9 per cent of capacity across the European Union — according to AGSI data.
Instead prices appear to be jumping after workers at Chevron’s two major LNG facilities in Western Australia voted to restart strikes last week, with unions accusing the fossil fuel major of reneging on a deal that ended industrial action last month.
LNG has been instrumental in meeting Asia and Europe’s supply needs since Russia’s invasion of Ukraine last year, and a Kremlin-backed squeeze on the country’s pipelines into Europe.
Any disruption raises the prospect of future supply shortages.
Workers at the Gorgon and Wheatstone have voted to restart industrial action, according to union coalition group Offshore Alliance.
“It’s disappointing but hardly surprising Chevron have welched on the deal given the bad faith they have shown bargaining with their workforce over the last year or so,” Offshore Alliance’s Brad Gandy told news agency Reuters.
The news follows talks between Chevron and unions — with both parties working on agreements based on recommendations made by Australia’s industrial arbitrator, the Fair Work Commission, last month.
The two sides had been at loggerheads over pay and conditions, with the facilities responsible for around seven per cent of global LNG supplies.
The threat of strikes follows industrial action being called off on Australia’s North West shelf gas platform, which is operated by Woodside Energy and feeds Australia’s largest LNG plant.
LNG, or liquefied natural gas, — is a natural gas that has been reduced to a liquid state, through a process of cooling before it is converted back into a gas for use.
For the liquefaction process it is cooled to below -150C before being re-gasified.
Recent reports from Global Data predict there will be more ships carrying LNG than oil supertankers within the next five years, with demand increasing 60 per cent year on year in 2022.
As it stands, there are 635 active LNG tankers operating worldwide, around 100 of which have been launched in the past three years.
Reflecting the boom in LNG demand, energy companies have planned for a further 524 tankers, which would double the world’s total LNG carrying capacity.
British Gas owner Centrica recently secured a bumper £6.2bn LNG deal with US fossil fuel producer Delta Midstream, building on the UK and US signing an energy and security partnership last December.
City PM has approached Chevron for comment.