Gas prices spike as Australian LNG workers vote for strike action
Gas prices have risen across the continent this morning after labour unions in Australia announced plans to strike in less than two weeks – raising the prospect of disruption to vital shipments of liquefied natural gas (LNG) ahead of winter.
Unions on the North West shelf gas platform, which is operated by Woodside Energy and feeds Australia’s largest LNG plant, have confirmed strike action could begin as soon as 2 September.
There are fears strike action could spread to other facilities in Australia, with workers at Chevron’s Gorgon and Wheatstone LNG facilities currently voting on whether to grant unions permission to call for strike action, with first results due by Thursday this week.
Collectively, Woodside and Chevron’s facilities supply about 10 per cent of the global LNG market.
As it stands European Union gas supplies are topped up at 91 per cent capacity, with the countries slashing consumption rates in the summer heatwave while also stocking up from LNG from Australia, US and Qatar.
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.
However, the latest threats of industrial action have spurred fresh concerns about supply competition between Asian and European buyers for cargoes.
Prices on the Dutch TTF Futures benchmark have risen 5.6 per cent to 38.45 per megawatt hour, while domestically, the UK Natural Futures benchmark is up 6.7 per cent at 97.01p per therm – more than double pre-crisis levels.
Australia is one of the world’s top exporters of LNG, which Europe has relied on to stave off blackouts amid a Russian supply squeeze on gas flows.
LNG is natural gas that has been reduced to a liquid state, through a process of cooling before it is later converted back into a gas for use.
For the liquefaction process it is cooled to below -150 degrees celsius before being re-gasified.
Demand for LNG is booming across the West, with Global Data predicting more ships will be carrying LNG than oil supertankers within the next five years.
The Offshore Alliance, which combines the Maritime Union of Australia and Australian Workers’ Union, revealed in a Facebook post it had “unanimously endorsed” giving Woodside seven working days’ notice to strike if its bargaining claims are not met by close of business on Wednesday.
This paves the way for a 2 September picket line, with strike action garnering 99 per cent approval, although unions can still elect to call off any action before then.
“Offshore Alliance members don’t take industrial action lightly, but Woodside is really leaving them with little choice here,” union spokesperson Brad Gandy told news agency Reuters.
City PM has approached Woodside Energy and Chevron for comment.