Chevron, unions near a deal, Fair Work says despite mediation talks failing

A deal to end strikes that have sent global gas prices soaring is close, the Fair Work Commission says, despite mediation talks ending without an agreement and strikes continuing.

Chevron and two unions are close to securing a deal, the Fair Work Commission said, as it proposed a series of recommendations to heal the remaining divisions and end strikes that have roiled global gas markets.

Chevron and the Offshore Alliance, which represents the Australian Workers’ Union and the Maritime Union of Australia, have for weeks been locked in a dispute over pay and conditions. The unions recently began prolonged strikes designed to crimp LNG production – action that has underpinned benchmark gas prices amid concerns that 7 per cent of global supplies could be disrupted.

Last-ditch mediation talks ordered by the Fair Work broke on Wednesday without an agreement, but Fair Work commissioner Bernie Riordan said a deal is close.

“The parties are on the precipice of achieving a historical first enterprise agreement for these Chevron LNG facilities in Western Australia,” Mr Riordan said on Thursday.

The assessment is a far cry from the description given by Chevron when talks ended without agreement on Wednesday. A spokesman for the gas company said on Wednesday, unions continue “to ask for terms significantly above the market” and there was little prospect of a deal occurring.

But Mr Riordan said a deal could be struck with some concessions by both parties on issues ranging from overtime pay, training and travel costs.

“It would be a pity and very frustrating to simply throw out these agreed positions and have the parties return to their respective logs of claims for any future arbitration. As a result, I strongly recommend that the parties adopt the recommendation s given above, which will hopefully resolve these disputes.” said Mr Riordan.

Chevron Wheatstone LNG cargo departs for Japan.

Chevron and the Offshore Alliance said they were working through the recommendations offered by the Fair Work.

“We have received a recommendation from commissioner Riordan, which we are reviewing,” a Chevron spokesman said.

Both sides will need to make a quick decision. A full bench hearing of the Fair Work Commission on Friday.

Chevron is seeking a so-called intractable bargaining ruling, which if granted would see the Fair Work Commission rule on the outstanding disputes, which would see an arbitrator step in and rule on the outstanding issues.

The Offshore Alliance has said it will oppose Chevron’s request, insisting a deal can still be struck.

If Chevron opposes the suggestions proposed by Mr Riordan and proceeds with its intractable bargaining application – the company will be mindful that the commission could be guided by the recommendations.

Unions vow to disrupt Chevron LNG exports

Energy analyst Saul Kavonic said he expected Chevron to pursue the action through the tribunal.

“Time is on the union’s side as they can engage in protracted strikes that continually impact Chevron’s revenue and costs,” he said.

“An arbitration hearing could cut that time short, and thereby benefit Chevron. It may set a new industrial relations precedent, whereby employers just need to withstand industrial action long enough until they can achieve a forced arbitration outcome.”

While both Chevron and the Offshore Alliance insist they will only settle when there is an agreeable deal, pressure is growing on both sides.

Workers who strike have losing several days of wages during the industrial action, while the Offshore Alliance is walking a fine line by seeking to curtail LNG production without inhibiting local gas output.

Chevron has been battling to maintain LNG production, a lucrative market that countries such as Japan and Korea rely on. It has used non-union workers to maintain so-called steady state production, but there are question marks over how long it can continue for.

The threat of curtailed LNG output has stoked anxiety overseas, with benchmark European gas prices regularly jumping 10 per cent before falling again.

Originally published as Chevron, unions near a deal, Fair Work says despite mediation talks failing