Woodside and unions’ deal at Australian LNG facility could avert strike

Sydney/Singapore — Woodside Energy on Thursday reached an in-principle agreement with unions at Australia’s largest liquefied natural gas (LNG) project, potentially averting a disruption to supplies from the world’s biggest exporter of the super-chilled fuel.

The agreement led to a more than 11% decline in Dutch wholesale gas prices on Thursday, extending losses after a 15% drop in the previous session.

Woodside and the union alliance representing workers at the offshore platforms of its North West Shelf facility announced the initial deal in separate statements after a round of talks both sides deemed positive.

Employee representatives were “supportive of the in-principle agreement” and all members will vote to ratify the deal at 7.30pm Perth time (1.30pm), according to a release from the union.

“It is pleasing that Woodside has made our members a strong offer without industrial action being taken,” union alliance spokesperson Brad Gandy said in a statement.

Woodside said it will continue to work with the unions to finalise the agreement.

“Substantial progress was made at talks held on Wednesday and the parties have reached in-principle agreement on a number of issues that are key to the workforce,” it added.

The project in Western Australia, with the Gorgon and Wheatstone LNG facilities of Chevron, account for about one-tenth of global supplies. Australia is the world’s largest LNG exporter.

Workers at Chevron’s facilities are also considering industrial action, and the combined threats had supported LNG prices over the past few weeks. The union alliance is balloting Chevron workers on possible action and the first round of results from this vote was due on Thursday about 3pm Perth time (9am).

The Woodside workers unions had threatened to strike as early as September 2 unless their demands for better pay and conditions were met.

“All indications at the moment look promising that strike action at the North West Shelf will be avoided,” Warren Patterson, head of ING’s commodity research, wrote in a note.

“This suggests that we could see a further sell-off in European gas and Asian LNG prices today [Thursday].”

Asia spot LNG prices remained supported at above $14 per million British thermal units at Wednesday’s close, with traders still cautious about LNG supplies from Australia.

Energy analyst Saul Kavonic said there is still a risk of industrial action at Chevron’s facilities, but it is unlikely to significantly disrupt supplies.

Any disruption could slow the exports of the super-chilled fuel from Australia, forcing Asian buyers to outbid European buyers to attract cargoes.

Reuters