Europe's benchmark natural gas prices surged on Tuesday mid-day in Amsterdam as the market is closely watching whether LNG exporters in Australia will manage to avert a workers' strike that could cripple 10% of global LNG supply.
The front-month futures at the Dutch TTF hub, the benchmark for Europe's gas trading, had jumped by 8.7% to $48.28 (44.35 euros) per megawatt (MWh) as of 12:07 p.m. GMT on Tuesday, as workers and LNG facility owners in Australia continue to discuss a possible resolution to the dispute about pay and work conditions.
Woodside, which is negotiating with a workers' union alongside Chevron, said on Tuesday that it had "constructively addressed" the concerns of the employees.
"I feel like we have kind of constructively addressed a number of their areas of concern," Woodside CEO Meg O'Neill told Reuters in an interview.
This weekend, members of the union Offshore Alliance unanimously endorsed giving Woodside seven working days' notice of Protected Industrial Action if the workers' bargaining claims for the Woodside Platforms are not resolved by Wednesday, August 23.
On Sunday, the unions at Woodside's North West Shelf offshore gas platforms said they could go on strike as early as September 2 if their demands are not met.
Australia's labor regulator earlier this month gave the go-ahead to industrial action at Woodside and Chevron LNG facilities.
Woodside's North West Shelf is the largest LNG production project in Australia, with a capacity of 16.9 million tons annually, followed by Chevron's Gorgon, which has a capacity of 15.6 million tons. Wheatstone, also operated by Chevron, can produce 8.9 million tons of LNG annually.
Because of that substantial capacity, disruption at the three facilities would send ripples across the global gas market.
If workers go ahead with strikes and if those strikes result in maximum LNG export disruption, Europe's natural gas prices could exceed $109 (100 euros) per MWh, Goldman Sachs said in a note carried by The Wall Street Journal.
By Michael Kern for Oilprice.com
Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, More
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