An undated handout photo of the Gorgon LNG project located in Western Australia.

FILE PHOTO: An undated handout photo of the Gorgon LNG project located in Western Australia. Photo credit: REUTERS/Chevron

Chevron Seeks to Head Off LNG Strikes as Clock Ticks Down

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September 5, 2023

(Bloomberg) —

Chevron Corp. liquefied natural gas workers in Australia threatened two weeks of 24-hour rolling outages at two major export plants from mid-September, in an escalation of a dispute that threatens global fuel supply.

The workers have served Chevron notice that they plan full stoppages from Sept. 14, following partial strikes from Sept. 7, the Offshore Alliance grouping said Tuesday on Facebook.

With just a day left to negotiate a deal and avert a disruption, Chevron has so far not canceled or delayed any LNG shipments as a result of the strike threat, Colin Parfitt, vice president of midstream, said on Tuesday.

The producer is in active talks with employees and aims “to find a solution that is a win-win-win for Chevron, our employees and the gas market,” he said in a Bloomberg Television interview.

The threat of worker action in Western Australia has roiled global natural gas markets that are still edgy after Russia’s invasion of Ukraine last year saw supply curbed and prices soar to unprecedented heights. The two facilities operated by Chevron — Gorgon and Wheatstone — made up roughly 7% of global LNG supply last year.

Chevron and workers have begun so-called conciliation conferences, according to a company spokesperson, after employees at the two plants voted down the company’s pay package proposal. The producer last week said it applied to the Fair Work Commission to seek assistance in dealing with the dispute.

With the clock ticking on negotiations, staff at a gas supply facility offered to keep working to ensure domestic deliveries — a small concession that doesn’t affect the crucial export flows.  

Chevron workers aren’t the only ones seeking higher pay after the energy crisis brought companies windfall profits. Woodside Energy Group Ltd., another Australian LNG exporter, reached a compromise with workers last month, averting industrial action at its own LNG plant. The producer is now trying to help Chevron, sharing its experiences on bargaining with unions, Woodside Chief Executive Officer Meg O’Neill said in an interview in Singapore.

A two-week shutdown at the Gorgon and Wheatstone facilities could lower Australian output by 1.1 million tons, BloombergNEF said Monday in its Global LNG Winter Outlook. 

But European gas prices were little changed Tuesday as warm temperatures and almost full storage offset the risk of supply cuts. Prices are far below the highs of the European energy crisis and at least for now, there’s no sign of a bidding war between Asia and Europe. 

–With assistance from Dan Murtaugh, Yousef Gamal El-Din, Manus Cranny, David Stringer and Shoko Oda.

© 2023 Bloomberg L.P.

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