The prospect of industrial action at Woodside and Chevron gas plants in Western Australia, which are capable of exporting about $43 billion of liquefied natural gas a year, has hit energy markets, sending European gas prices up almost 40 per cent.
The Dutch natural gas future price closed 26 per cent higher on Wednesday as talk of workers downing tools at the Woodside and Chevron facilities emerged. The marker rose another 6 per cent in early trading on Thursday.
On Wednesday, members of the Offshore Alliance, a partnership between the Australian Workers’ Union and the Maritime Union of Australia that covers workers in the oil and gas industry, voted to take industrial action at three Woodside gas platforms.
The action could start as early as next week.
The platforms supply the North West Shelf gas export plant, which is Australia’s oldest and largest, and supplies one-third of Woodside’s production and close to one-fifth of Australia’s exports.
Together, the three plants produce 11 per cent of global LNG, according to RBC Capital Markets’ UK-based oil and gas analyst Adnan Dhanani, who said the market was vulnerable to price shocks despite healthy levels of gas storage in Europe.
A source close to the Woodside negotiations, who was not authorised to speak to the media, said without substantial progress in talks scheduled for early next week, industrial action was likely.
Under the terms of the protected action, striking employees would attend to any work necessary to maintain safety.
A Woodside spokeswoman said progress was being made in negotiations, and despite the vote there was hope a constructive resolution would be reached.
Chevron is also in the sights of the Offshore Alliance. On Tuesday, it filed a request with the Fair Work Commission for a ballot to take protected action at the US major’s Gorgon and Wheatstone LNG plants in Western Australia. An application for the Wheatstone offshore platform is expected to follow.
The two plants cover 28 per cent of Australia’s gas export capacity. Australia garnered close to $92 billion in export revenue from gas in the past financial year.
A Chevron spokesman said it would continue to engage with its employees and the union to reach an outcome that suited both sides.
If the commission accepts the applications, voting can take about 10 days, pushing any industrial action at Chevron to late August at the earliest.
Energy Minister Bill Johnston said he noted the decision of the union and if industrial action took place, the state government would “respond in an appropriate manner”.
It is likely Woodside and Chevron would come under great pressure to prioritise domestic supply over exports.
When asked about the reliability of domestic gas during any industrial action, the Woodside spokeswoman said it had contingency plans to deal with such challenges. Chevron did not respond.
Any action is unlikely to repeat the ferocity of a three-day 1986 wildcat strike on Woodside’s North Rankin platform when workers stopped company and police helicopters from landing.
Four decades later, the pattern is many months of interwoven legal actions and negotiations leading up to a vote for a protected action that allows the workers to strike free of the threat of legal action.
If a strike eventuates and settles into a battle of will between workers without wages and companies tallying up lost revenue, Woodside and Chevron will be mindful of Shell’s experience last year.
Offshore Alliance members on the Prelude floating gas facility took action for 76 days before Shell, having lost about $1 billion in revenue, agreed to meet most of their demands.
The Woodside share price rose 1.8 per cent on Thursday, closing at $39.00 a share.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Source: Thanks smh.com