Chevron Australia’s gas facilities could face stoppages of 10 hours as union fight escalates

SYDNEY/SINGAPORE - Chevron’s two major liquefied natural gas (LNG) production facilities in Australia could face work stoppages of up to 10 hours from next week, after unions on Tuesday threatened labour action in a dispute over pay and conditions.

Chevron’s Gorgon and Wheatstone projects account for more than 5 per cent of global LNG capacity, and news of the possible strikes sent European natural gas prices surging.

Workers at Gorgon and Wheatstone plan to stop work for seven hours in two blocks feeding the LNG plants on Sept 7, according to a document on the planned actions reviewed by Reuters. The strikes will escalate to 10 hours from Sept 8.

A smaller stoppage of three hours is planned at the Wheatstone production platform from Sept 7, the document said.

The document details work disruptions up to Sept 14.

“Members will be participating in rolling stoppages, bans and limitations, which will escalate each week until Chevron agrees to our bargaining claim,” the Offshore Alliance said in a Facebook post on Tuesday.

“It’s set to cost Chevron their LNG exports as (the industrial action) starts to bite,” said the alliance that groups together the Maritime Union of Australia and the Australian Workers’ Union.

A Chevron spokesman declined to comment on the Offshore Alliance’s latest position, referring to a previous statement that the company “will continue to take steps to maintain safe and reliable operations in the event of a disruption”.

The unions still have the option to call off the strikes if their terms are met. They warned last week that work stoppages could cost Chevron billions of dollars if workers’ demands are not met.

A similar action by the same union alliance in 2022 against Shell at its Prelude floating LNG site off north-west Australia cost the company about US$1 billion (S$1.35 billion) in lost exports in the two months it took to reach a pay deal.

‘More painful process’

Energy analyst Saul Kavonic said the unions could start with “lower level strikes” that can lead to minor disruptions to pressure Chevron into a deal. International energy companies operating in Australia, who are unable to fully make decisions locally, tend to see industrial actions escalate more quickly than domestic companies, he said.

A resolution was still likely “without materially impacting global supply but it may prove a more painful process to arrive at than we saw with the Woodside negotiations”, Mr Kavonic said.

Last week, Woodside Energy and Offshore Alliance resolved worker disputes at North West Shelf, Australia’s largest LNG facility, after negotiating higher wages, job security and employee-friendly rosters, averting industrial action.

Australia is the world’s biggest exporter of LNG, which is used primarily in Asia for power and heating as many nations attempt to reduce their reliance on coal or oil.

Concerns over possible industrial actions at the LNG facilities of Woodside and Chevron – which account for one-tenth of global supplies – has stoked extreme price volatility in global LNG markets in recent weeks. REUTERS