Strike at Chevron Australia’s LNG Ops to Resume as Contract Talks Deadlock

Workers at Chevron’s two major LNG gas facilities in Western Australia voted on Friday to resume their strike after saying that the oil major “reneged on the commitment they gave to the Fair Work Commission,” to accept the recommendations to end a previous strike. The facilities account for approximately 10 percent of global LNG production, although during the job actions that started in early September, Chevron reported that it had been able to maintain shipments.

The Offshore Alliance which represents nearly 500 members of the Australia Workers’ Union and National Maritime Union employed at Chevron’s operations, reports it will file a notice of further Protected Industrial Action on Monday. Under Australian labor law, the union must give at least seven day’s notice before the strike can resume. The notice will provide details on the timing of the strike and the extent of the action planned.

“It was with significant reluctance that the Offshore Alliance accepted the Fair Work Commission Recommendations when they were handed down two weeks ago,” the organization wrote in its announcement. The regulators had intervened strongly recommending terms for a settlement that was accepted by both sides ending a prior strike. 

The Fair Work Commission recessed a planned hearing regarding the strike to give the two sides time to take the commendations and convert them into an Enterprise Agreement. Chevron reports that progress was made but Reuters is saying sticking points emerged over employee expense reimbursement and the talks aimed at finalizing the contract reportedly collapsed on Thursday.

“Chevron’s decision to renege on adopting the recommendations of the Fair Work Commission is a contemptuous slight to its workforce, the union, and the industrial umpire,” the Offshore Alliance wrote announcing the outcome of a meeting on Thursday night and Friday. The leadership recommended members “push back” against Chevron.

The Fair Work Commission could still intervene to settle the dispute. The hearing scheduled for late September was exploring the status of the strike and grievances. The commission chose to recommend terms but it could also order final negotiations or move to impose a settlement. 

Global energy markets are closely watching the developments as the facilities known as Wheatstone and Gorgon supply Australia and are also major exporters to Asia. The fear has been that Asian buyers in China, Japan, and South Korea, would have to bid against the Europeans to make up for LNG shortfalls. While Europe has built large LNG stockpiles to make up for the loss of Russian gas exports, the fear is that a prolonged strike in Australia would hit global markets as the Northern Hemisphere moves into winter and gas usage increases.

The Offshore Alliance previously reached terms with Australia’s three other producers. The talks with Chevron have been stretched out with the last rounds going for months. The union was seeking wage increases to reflect members’ work during the pandemic and inflation as well as work rule changes.