Unions prolong strikes at Chevron‘s Wheatstone LNG facility

Unions have started a 24-hour strike at one of Chevron’s LNG facilities, as the stand-off between the workers and the gas giant escalates and threatens about 7 per cent of global supplies.

Chevron Corp’s offices in Perth. Picture: Bloomberg

Unions will extend strikes at Chevrons Wheatstone facility to 24 hours, increasing pressure on the gas company that is ­struggling to maintain LNG ­production.

Chevron and unions have been locked in a stand-off for a week. Sporadic strikes designed to curtail operations have ­spooked global markets, which worry that 7 per cent of global supplies could be under pressure.

In an escalation of strikes, the Offshore Alliance notified Chevron that members at Wheatstone would not work for 24 hours.

Chevron’s Wheatstone gas platform.

Unions have told Chevron they could exercise an option for 24 one-hour strikes – a strategy that sources said was designed to cause disruption but not damage domestic production.

Unions on Thursday moved to restrict loading of LNG cargoes, a strategic pressure point designed to cause significant economic pain without prompting authorities to intervene and force an end to industrial action.

A spokesman for Chevron declined to comment on the industrial action at Wheatstone, but confirmed that the company was working to maintain steady ­production.

Energy analyst Saul Kavonic said the decision to extend the strikes would have been taken in the aftermath of a technical fault that occurred at Wheatstone on Thursday, which the gas company is working on.

“The unions will likely escalate strikes opportunistically when equipment trips to maximise the negative on production by trying to delay restarts,” Mr Kavonic said.

“It can prove more challenging for Chevron’s non-unionised workforce to restart equipment, as that is a more complex undertaking.”

LNG being shipped from the Wheatstone facility.

The escalation of the strike action comes as both sides look to exert pressure. Unions will be desperate to crimp LNG production but cannot afford to affect domestic production. Chevron’s two facilities are responsible for about half of Western Australia’s domestic gas supply.

WA has in recent months endured a spate of coal power station outages and rising demand.

Disrupting LNG production for export would not trigger government intervention but would exert significant economic pain on Chevron.

Japanese buyers are most exposed to strikes at Chevron, with roughly 16 per cent of Japan’s supplies coming from Chevron alone.

If Japanese buyers are forced to seek alternative sources, global gas prices will rise and European buyers fear being squeezed.

Research group EnergyQuest estimated revenue at risk for Chevron and partners at about $76m per day, though it said not all of that revenue would be lost as some cargoes may be deferred to a later date.

Chevron is desperate to avoid any disruptions and is relying on non-union workers to continue what it calls steady-state operations.

If it can do that, unions will be under pressure to strike a deal.

Originally published as Unions prolong strikes at Chevron‘s Wheatstone LNG facility