Unions scrap strikes at Chevron’s LNG facilities after last-minute deal
A last-minute deal to end the prospect of strikes this week will be a relief to the global LNG market, with some 7 per cent of supplies at risk from industrial action.
The Offshore Alliance has cancelled strikes scheduled for this week across Chevron’s LNG facilities after a last-minute deal was reached.
The deal will temper market nerves about global gas shortfalls, with some 7 per cent of the world’s LNG supplies threatened by protracted industrial action.
Chevron and the Offshore Alliance, which represents the Australian Workers’ Union and the Maritime Union of Australia, have been locked in a dispute over pay and conditions for months. The dispute came to a head in September when rolling one-hour strikes for 24 hours at a time began, as unions pushed to curtail lucrative LNG production without inhibiting local gas supplies.
The dispute appeared at an end when Chevron and the Offshore Alliance said last month they had struck a deal after the Fair Work commissioner Bernie Riordan put forward a series of recommendations.
Finalising the agreement, however, stalled amid rows about a series of recommendations around pay and accommodation, and the Offshore Alliance called fresh strikes for Thursday.
Averting the potentially damaging industrial action, the Offshore Alliance said it has struck a deal over remaining issues, but Australian Workers Union WA secretary Brad Gandy said the union will strike again if a deal is not finalised immediately.
“It’s sad Chevron seems unable to do an honest deal, and we hope this can now be put to rest, but if Chevron tries to alter the deal again our members will obviously have no choice but to consider taking protected industrial action,” said Mr Gandy.
While tensions between the sides remain elevated, the deal will be a relief to workers, Chevron and Asian buyers.
Workers have endured substantial lost pay, and the Offshore Alliance had been engaged in a delicate posturing.
Chevron’s two facilities are responsible for about half of Western Australia’s domestic gas supply. The state Labor government had said it will use market powers to end strikes if domestic supplies are jeopardised, heightening pressure on the union to pressure the oil and gas giant without curtailing domestic supplies.
The cancellation of strikes is also a boost to Chevron and its major customers.
During the first wave of strikes, Chevron battled 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.
Japanese buyers were the 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.
The prospect of fresh industrial action had worried the market as Europe approaches winter, when demand for gas will soar. Gas is one of the biggest sources of electricity in Europe, but supplies remain extremely tight as the region weans from its historical reliance on Russian supplies.
Previous strikes at Chevron have sent European benchmark gas prices up more than 10 per cent.
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