Chevron Australia LNG Unions Agree Deal on Eve of Strikes Resuming

The Wheatstone offshore processing platform is one of Australia’s largest. - Credit: Chevron
The Wheatstone offshore processing platform is one of Australia’s largest. - Credit: Chevron

An Australian union alliance on Wednesday agreed to endorse deals on pay and conditions at Chevron's two liquefied natural gas (LNG) facilities in Australia, ending an impasse that had led workers to threaten renewed strikes this week.

The Offshore Alliance union said it had called off strikes originally planned for Thursday at the U.S. energy major's Gorgon and Wheatstone projects in Western Australia, which supply around 6% of the world's LNG.

Australia is among the world's biggest LNG exporters and its main buyers are in Asia. Traders anticipated any cuts to supplies due to strikes would send Asian buyers competing with Europeans for cargo, spurring spot price volatility in the European gas market.

The breakthrough followed days of talks mediated by Australia's industrial arbitrator, the Fair Work Commission, to try and revive an in-principle deal reached in September that ended weeks of strikes. That fell apart earlier this month after unions said Chevron had reneged on commitments.

Workers have shown "incredible patience" with Chevron, Offshore Alliance spokesperson Brad Gandy said in a statement, blaming the company for trying to back away from the tentative deal agreed last month.

"We hope this can now be put to rest but if Chevron tries to alter the deal again our members will obviously have no choice but to consider taking protected industrial action," Gandy said.

Chevron has previously said only a small number of issues stood in the way of an agreement, including reimbursement for meals and travel. 

"There was some real compromises by Chevron at the 11th hour that enabled a deal to be re-struck and strikes withdrawn," energy analyst Saul Kavonic said.

"The outstanding negotiation items were not significant enough that they couldn't be resolved. The risk only arose because trust had broken down between the parties, and emotions can run high by some of the individuals involved."

Kavonic said the agreement would end the risks of strikes across Australia's largest offshore LNG projects. Though union talks might happen at some smaller gas facilities next year, that will not materially impact global gas supply, he said.         

The Offshore Alliance, a coalition of the Australian Workers' Union and the Maritime Union of Australia, said  workers would vote on the proposed enterprise agreements.

The ongoing disputes had roiled global gas markets for several weeks and sent LNG prices up as much as 35% in August. 

On Tuesday, Dutch and British wholesale gas prices dropped further after losses on Monday, driven by healthy flows of natural gas from Norway, while supply concerns over geopolitical tensions also eased. NG/EU

(Reuters - Reporting by Renju Jose and Lewis Jackson in Sydney, Emily Chow in Singapore and Ashitha Shivaprasad in Bengaluru; Editing by Stephen Coates)

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