Cave in or else: Unions warn strikes will cost $billions

Unions demand Woodside and Chevron surrender or strikes will cost them billions.

A Woodside Energy LNG vessel. A single shipment from the gas giant’s North West Shelf plant is worth between $US40m and $US120m depending on spot gas prices. Picture: Supplied

Unions have warned Woodside and Chevron that industrial action will cost them billions of dollars unless the companies quickly bow to their demands,

The threat of strikes at Woodside and potential industrial action at Chevron’s Gorgon and Wheatstone projects contributed to the biggest surge in gas prices since Russia’s invasion of Ukraine.

Negotiations between Woodside and the Offshore Alliance made up of the Australian Workers Union and the Maritime Union of Australia are expected to resume on Tuesday and unions must give seven days notice of ­industrial action.

Any industrial action at Chevron is unlikely before September 1 as a ballot of workers at the company’s Gorgon and Wheatstone facilities does not close until ­August 24 and seven days notice is also required.

In a social media statement on Friday, the Offshore Alliance cited a 76-day industrial dispute with Shell last year as the “potential end game for Chevron and Woodside in our dispute about pay, conditions and job security”.

“Chevron and Woodside have the benefit of hindsight in looking at how the bargaining dispute about EBA outcomes played out for Shell, and are making the same dumb IR mistakes which Shell made on Prelude,” the unions said.

“This makes Chevron and Woodside significantly dumber as they know the Prelude bargaining dispute last year cost Shell $1.5bn in lost production and profit.

“Chevron and Woodside’s production on the NW Shelf, Gorgon and Wheatstone dwarfs that of the Prelude operations and the cost to both companies in the OA taking protected industrial action, will be in the realm of several billion if they don’t resolve our outstanding bargaining claims in a hurry.”

Woodside Energy is heavily incentivised to strike a deal with unions given the cost of missing a single LNG shipment could dwarf the extra cash it doles out to agree a pay pact with 200 workers, Macquarie analysts said. It may have to pay an extra $110,000 per worker over a four or five-year period, ­totalling up to $US50m a year.

However, a single LNG shipment from the gas giant’s North West Shelf plant is worth between $US40m and $US120m depending on spot gas prices.

Gas flares at the Woodside-operated North West Shelf Venture. Picture: AFP Photo/Greg Wood

“With prices elevated on security of supply fears – even if only for a short period – Woodside is heavily incentivised to get a deal done,” Macquarie said.

Industrial action would exacerbate an already tense European energy security situation, according to ANZ. “Despite high inventories, a prolonged strike combined with a cold winter could challenge the view Europe can get through the coming winter relatively unscathed,” it said. “We believe the risk of this occurring remains low; however, it can’t be ruled out.”

Newcastle thermal coal, an ­alternative fuel to LNG used for power generation, could nearly double to $US260 a tonne if Asian and European gas prices jumped on the strikes, Citi said.

Australian Chamber of Commerce and Industry CEO Andrew McKellar said “holding Australia’s reputation and economy to ransom is beyond the pale”.

Business Council of Australia chief Jennifer Westacott said Australia could not afford to have major critical infrastructure projects held back by strike action.

ACTU secretary Sally McManus said Woodside, not unions, was responsible for the skyrocketing global prices, and the company could resolve the dispute.

A Chevron spokesman said the company was “taking steps to ensure safe and reliable operations are maintained in the event of disruption at our facilities”.