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A prolonged stoppage is the least likely scenario of potential strikes at Australian LNG facilities accounting for 10% of global supply, according to Reuters’ Asia commodities and energy columnist, Clyde Russell.
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 on September 2 if their demands are not met.
Woodside’s talks with its LNG workers have so far failed to produce an outcome that would avert a strike at the country’s largest LNG facility, the North West Shelf.
There, 99% of workers voted in favor of industrial action.
Australia’s labor regulator earlier this month gave the go-ahead to industrial action at Woodside and Chevron LNG facilities, in case the workers' votes are in favor of it.
Natural gas prices in Europe and in Asia spiked when the news of the potential strikes broke. They have since retreated but if actual strikes begin, they would affect a tenth of the world’s supply of liquefied natural gas and another spike could follow.
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. Together, the three produce about 40 million tons of LNG per year.
Because of that substantial capacity, disruption at the three facilities would send ripples across the global gas market, sending prices higher and once again pricing poorer buyers out of the market.
In addition, the pre-winter seasonal rally of LNG tanker charter prices has started earlier than in previous years amid expectations of high demand for the winter and uncertainties over the potential strike in Australia.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.