Strikes Begin at Chevron’s Australian LNG Operations After Talks Break Off

Chevron Australia LNG — Chevron's Gorgon facility which is part of the large export operation will be impacted by the strikes (Chevron)

The first of the strikes began today at Chevron Australia’s LNG operations sending fears of potential repercussions in the global energy markets as the job actions are due to escalate over the next week. Chevron is one of the world’s largest producers and makes up a large part of Australia’s LNG supply, which is also the largest exporter in Asia.

The Offshore Alliance, which is made up of the Maritime Union of Australia and the Australian Workers Union, delayed the start of the scheduled strike for a day as mediated talks were continuing. Chevron had asked Australia’s Fair Work Commission to become involved in mediating talks this week after the company failed to win support for an Enterprise Agreement it presented to workers without the approval of the union. It was almost unanimously rejected leading to the talks which after five days reportedly also failed.

A company spokesperson told Reuters, "Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms." The company said the unions were demanding terms "above and beyond" others in the industry.

The Offshore Alliance highlights that Chevron is the only one of the major producers that has failed to reach an agreement now that the government has permitted unions to again collectively negotiate contracts. Woodside had also been faced with a potential strike but after marathon sessions going to the deadline, they announced terms for a preliminary agreement last month. The union says it has bargained in good faith on its demands over wages, overtime, work rules, and job security.

Earlier in the week the union filed a notice that detailed its plans to increase the efforts over the coming week. The current strike will last up to 11 hours and in addition, the union can bar members from undertaking specific tasks. After these intermittent actions, the Offshore Alliance said it will start a two-week work stoppage on September 14 at Chevron’s operations.

Currently, no new talks are scheduled with the only thing both sides are agreeing on is that they remain far apart. Last year, the Offshore Alliance held out in a 71-day strike against Shell. Work was stopped on the massive Prelude offshore facility and only restarted in September 2022.

Australia is the primary supplier of gas to much of Asia. China and Japan are the two largest importers followed by South Korea and Taiwan. Chevron has been taking steps to increase output from the Gorgon and Wheatstone operations which are being impacted by the strike. They were already supplying at least five percent of global supply.

Traders fear if it becomes a prolonged job action, Asian buyers might be forced to start bidding against the Europeans who are also large imports from both the U.S. and Qatar. Dow Jones reported that prices on the European markets started up by nine percent this morning with Reuters saying intra-day prices were up as much as 12 percent. The U.S. price started the day up more than two percent.