Shell hoping temporary truce with unions will allow another Prelude shipment
Shell is looking to ramp up output at its Prelude floating natural gas platform in the hope of running out an additional shipment amid a temporary truce with unions.
Shell is looking to ramp up output at its Prelude floating natural gas platform in the hope of running out an additional shipment amid a temporary truce with unions on the platform.
The oil and gas giant slowed output at Prelude to about 35 per cent of its capacity earlier this week ahead of industrial action that was set to begin on Friday.
The decision threatened to force the cancellation of liquefied natural gas shipments until the middle of June, amid tight gas markets and a global energy crisis.
But, with negotiators for both sides returning to the table on Friday, unions operating under the Offshore Alliance banner agreed to temporarily put a halt to authorised stoppages planned for the next week, as Shell puts its own pay deal to employees at the platform.
A spokeswoman for Shell confirmed on Friday that unions had agreed to scale back industrial action planned for the first week on July, although the threat of work bans approved by the Industrial Relations Commission for the following week still hover over the operations of the facility.
The temporary scale-back of hostilities at the troubled platform may allow Shell to ship an additional LNG cargo into the Asian market, however, with the company understood to be seeking to ramp up output in the hope of shipping a full cargo of LNG by July 8.
Analysts have said that each cargo is worth as much as $US150m in revenue to Shell.
It is understood a cargo departed the floating platform just ahead of Shell’s decision to slow down production on Tuesday, and it generally takes seven to 10 days for Prelude to fill its internal LNG storage capacity.
Shell could be forced to completely suspend production at Prelude if it reaches storage capacity limits for any of the products produced at the platform, giving the company a limited window to fill a new carrier – or reach an agreement with unions and its workforce – before the next round of industrial bans are due to take effect.
Unions and Shell have been arguing over a new enterprise agreement for months, with unions pushing for a 30 per cent increase to the allowance given to workers working offshore, to $117,000 a year, and a range of improvements to conditions – and for bans on the introduction of contract workers.
Shell, in turn, has taken its own pay offer directly to its workers, with employees voting on whether to accept the agreement over the next few days.
Any halt on exports from Prelude will further exacerbate a global gas market squeeze.
Spot LNG prices are trading at seasonal records and several major Asian nations including Japan and Pakistan are grappling with the threat of blackouts amid shortages of the fossil fuel.