Unions vow to disrupt Chevron LNG exports as gas facility suffers damaging fault

Unions have escalated strikes and have vowed to disrupt Chevron’s LNG production, which could trigger a fresh global energy crunch.

Unions have vowed to disrupt LNG production at Chevron’s facilities as they escalate industrial action, heightening pressure on the gas giant, which also reported an unrelated fault that caused disruption to about 25 per cent of production at its Wheatstone gas plant.

Global gas markets are on edge as Chevron struggles to maintain production as unions take action, threatening about 7 per cent of global supplies.

The Offshore Alliance on Thursday escalated its industrial action as workers began a series of 24 one-hour strikes designed to cause as much impact on Chevron and further their claims. Unions and Chevron have ­failed to reach agreement on a range of issues including pay, job security, rosters, transfers to other Chevron work sites, training standards and travel arrangements.

Sources familiar with the details of the industrial action said union workers had begun a spate of hour-long strikes but had not exercised their right to stop work for the entire day.

Reports indicated unions had also moved to restrict loadings of LNG cargoes, which the Offshore Alliance had alluded to in an earlier statement.

“[Offshore Alliance] members are committed to ensuring [domestic gas] is not impacted through the Protected Industrial Action on the Chevron facilities,” the union said in a statement.

“Chevron’s LNG exports however are a very different story.”

Unions can ill-afford to disrupt domestic gas supplies, with the WA state government already vowing to intervene and end strikes if that occurred.

Chevron’s two facilities are responsible for about half of Western Australia’s domestic gas supply. WA has in recent months endured a chaotic period with a spate of coal power station outages and an uptick in 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 comes from Chevron alone.

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

Benchmark European gas prices jumped 13 per cent on the first day of strikes last week as traders worried they would have to compete with Asian buyers.

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

Research group EnergyQuest estimated revenue at risk for Chevron and partners from the strikes 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.

In a further headache for Chevron, however, the company confirmed it had suffered a fault at its Wheatstone facility, causing a loss of about 25 per cent of LNG production, a spokesman for the company confirmed.

“Chevron Australia is working to resume full production at the Wheatstone Gas Facility following a fault which has impacted about 25 per cent of LNG production,” the spokesman said.

“The cause has been identified and restart activities have commenced. Domestic gas facilities are unaffected.”