Talks to Avert Strike Called as Chevron Australia LNG Workers Reject Deal

Planned work stoppages next week at two of Australia's largest liquefied natural gas (LNG) facilities are scheduled to go ahead unless mediation can produce a deal after workers at Chevron rejected the company's offer on pay and conditions.

Australia is the world's biggest LNG exporter, and the Gorgon and Wheatstone projects account for more than 5% of global LNG capacity. The dispute has stoked volatility on natural gas markets nervous about the risk of long term disruption.

Chevron confirmed its offer had been rejected minutes after the Offshore Alliance (OA), a coalition of two unions, said on Facebook that staff at Chevron's Gorgon LNG facility and its Wheatstone downstream LNG facility in Western Australia had almost unanimously voted down the deal. 

Industrial action will begin at 6.00 am local time on Thursday (2200 GMT on Wednesday) unless parties find a resolution.

"The vote was part of the bargaining process and an important step which enabled employees to share their views," Chevron said in an emailed statement.

A senior figure at the Fair Work Commission, Australia's industrial umpire, will fly to Perth to host up to five days of  talks between the parties next week, two people with knowledge of the matter told Reuters, declining to be named. 

Chevron told Reuters it had filed a request for mediation on Friday but did not comment further.

In the absence of a deal, workers could down tools for up to 11 hours and stop performing certain tasks until at least Sept. 14 based on the alliance's current plan.

"Ballot results show that they (Chevron) are out of touch with OA members and haven’t listened to a word spoken in their discussions with members, Reps and the Offshore Alliance," the union alliance said in a Facebook post on Friday.

Chevron will be under pressure to avoid lengthy disruptions that could force it to buy replacement cargoes on the spot market, Leo Kabouche, LNG market analyst at consultancy Energy Aspects, said.

Another dispute between the union alliance and Woodside Energy Group at a nearby LNG facility was resolved without unions following through on threats of strikes.

Dutch and British gas prices edged higher early on Friday,  although high gas storage inventories and muted demand limited buying.

The Dutch October contract gained 0.22 euro to 36.00 euros ($39.06) per megawatt hour (MWh) by 0833 GMT, while the day-ahead contract   was 0.50 euro higher at 32.25 euros/MWh, according to Refinitiv Eikon data.

Asian spot LNG prices remained flat.

($1 = 0.9217 euros)

(Reuters / Reporting by Lewis Jackson; additional reporting by Marwa Rashad in London; Editing by Alasdair Pal, Tom Hogue, Miral Fahmy and Barbara Lewis)

Related Stories