Chevron (NYSE:CVX) Australia has initiated discussions with unions representing employees at two of its liquefied natural gas (LNG) facilities in Australia to prevent scheduled strikes on Thursday if a resolution cannot be reached through negotiations.
A senior member of Australia’s Fair Work Commission (FWC), the nation’s industrial mediator, is overseeing these discussions in Perth, Western Australia, throughout the week, as originally reported by Reuters last Friday.
Chevron Australia aims to resolve key differences during these mediated bargaining sessions, according to a spokesperson’s statement. Notably, Chevron employees overwhelmingly rejected a pay and conditions proposal directly offered by the company, bypassing union channels.
The Offshore Alliance, a union coalition, has not yet provided comments on the current status of the private and non-public talks.
Should the parties fail to find common ground, industrial action is set to commence at 6:00 a.m. local time on Thursday (2200 GMT on Wednesday) at Chevron’s Gorgon and Wheatstone projects. These facilities represent over 5% of global LNG production capacity. The planned work stoppages are expected to involve shifts lasting up to 11 hours, with certain tasks being halted until at least September 14. The union group has emphasized that such disruptions could potentially cost Chevron billions of dollars.
Prolonged industrial action could potentially disrupt LNG exports and escalate competition for this super-chilled fuel, leading Asian buyers to outbid European counterparts for LNG cargo. China and Japan are the largest importers of Australian LNG, followed by South Korea and Taiwan.
The Gorgon facility, Australia’s second-largest LNG plant, boasts an export capacity of 15.6 million tonnes annually, while Wheatstone has a capacity of 8.9 million tonnes.
Australia holds the title of the world’s largest LNG exporter, and this ongoing dispute has introduced uncertainty into natural gas markets, with concerns regarding potential long-term disruptions. Energy analyst Saul Kavonic suggested that the planned work disruptions might introduce inefficiencies into Chevron’s operations and impact production, but they are unlikely to cause significant fluctuations in global markets. It’s worth noting that a similar dispute with the Woodside-operated North West Shelf LNG facility, Australia’s largest, was successfully resolved last month after workers approved a deal.
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