Australian LNG Strike: Global Supply at Risk of Disruption

The looming strike at three Australian liquefied natural gas facilities threatens to disrupt global supply with Europe watching closely. If the industrial action does happen, Europe would be inflicted with a second winter of soaring energy prices. Already bitten by the Russia-Ukraine war, European natural gas futures surged 40 percent last week in response to the imminent strike action in Australia. 

The Offshore Alliance, which consists of the Maritime Union of Australia and the “Australian Workers’ Union, held a protected action ballot. Members secretly voted for the union to take action. “For the last decade, Chevron have run their West Coast oil and gas facilities like feudal fiefdoms with little or no regard for the interests of their key stakeholders, their operations workforce,” the Offshore Alliance stated. As such, it was set to vote “100 percent YES” to confirm protected industrial action across all three of Chevron’s LNG facilities in the country. “It’s game on in pushing back against Chevron’s sub-standard employment standards.” 

The strike vote will be finalized on August 24 at the Chevron-operated Wheatstone and Gorgon LNG ventures.  Workers at the Chevron plants are likely to join their Woodside colleagues in going ahead with the industrial action. It should be noted that the three LNG plants are located in Western Australia. Collectively, these plants produce 10 percent of the world’s supply of the fuel used in Asia and Europe to generate electricity as well as for industrial purposes. 

Sources believe the Australian LNG strike is likely in coming weeks. But the respective unions and companies are engaged in sorting things out through a balancing act. The unions want to pressurize the companies to become more cost effective to meet their demands.  But at the same time, they don’t want to cause too much financial loss, or disrupt too many cargoes. The unions acknowledge that this has longer-term implications for investment and future jobs, as well as the reputation of Australia as a reliable LNG supplier and partner. 

As for the companies, they don’t want to give in too easily to the union demands, and don’t want to have to declare force majeure on LNG shipments. For now, the outcome remains limited Australian LNG strike, ongoing negotiations, and an eventual settlement that sees the unions get some of what they want, in exchange for some longer-term guarantees.