Employees at Chevron’s liquefied natural gas (LNG) ventures in Australia initiated a strike on Friday as negotiations failed, potentially disrupting production from facilities that constitute over 5% of the world’s supply. The Fair Work Commission, Australia’s industrial mediator, stated that no further discussions were planned between the unions and Chevron, the U.S. energy giant, following five days of negotiations.
Australia, the largest global LNG exporter, primarily serves buyers in Asia. The labor dispute over wages and conditions at Chevron’s Gorgon and Wheatstone operations has bolstered gas prices in Britain and Europe, as traders anticipate heightened competition from other sources if Australian supplies dwindle.
After the news of Friday’s strike, European gas prices surged by as much as 12%.
The work stoppages, designed to escalate in the following weeks, come after domestic producer Woodside Energy successfully averted strikes at its nearby North West Shelf LNG facility last month by reaching an agreement with the same unions, which included salary increases and stricter hiring and roster change protocols.
Chevron’s spokesperson stated, “Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms.” The company asserted that the unions were demanding terms “above and beyond” industry standards, without providing further details.
Brad Gandy, a spokesperson for the Offshore Alliance, expressed that the union coalition had participated in the mediated talks “in good faith,” but after five days, Chevron had made little progress. He stated, “Chevron are being unreasonable and downright unusual in their behavior. Offshore Alliance members call on them to change tack so this dispute can be settled.”
The two sides are in disagreement over various issues, including pay, job security, rosters, and regulations concerning overtime and transfers between Chevron facilities. Work stoppages, lasting up to 11 hours, will continue until Thursday, potentially escalating to a total strike until September 29 if the dispute persists.
Chevron affirmed that it would take measures to uphold operations in case of disruptions, though specifics were not provided. The unions have cautioned that the LNG plant might need to be shut down “if there are not competent personnel to undertake handovers during work stoppages.” The exact implications of the disruption are not immediately evident. China and Japan are the primary purchasers of Australian LNG, followed by South Korea and Taiwan.
Energy analyst Saul Kavonic suggested that the strikes seemed designed to exert more pressure on Chevron to reach an agreement rather than significantly impacting production. He noted, “A complete shutdown of the facilities simply cannot be sustained for long, as it would lead to an energy crisis in Western Australia, prompting government intervention to halt any strikes.”