Workers at two large liquefied natural gas (LNG) plants in Australia, operated by US energy giant Chevron, are set to go on strike from 7 September, in a move that could drive up global prices.
This follows weeks of negotiations with unions over pay and working conditions.
Chevron told the BBC it would “continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities”.
The Wheatstone and Gorgon sites produce more than 5% of the world’s LNG.
Fears of strikes recently pushed up wholesale gas prices in Europe.
ADVERTISEMENT
What is LNG and why has it become so important?
Winter energy bills drop slightly but remain high
Around 500 workers are currently employed at the two Chevron facilities in Western Australia.
“While we don’t believe that industrial action is necessary for agreement to be reached, we recognise employees have the right to take protected industrial action,” Chevron said in a statement on Tuesday.
It added that it would “continue to work through the bargaining process as we seek outcomes that are in the interests of both employees and the company.”
The Offshore Alliance – which is a partnership of two unions representing energy workers, including those at Chevron – said it had been trying to reach an agreement with the company on “several key” issues including pay, job security, rosters and training standards.
It added that workers had been “consistently disappointed with the company’s approach to negotiations with the union and Chevron not accepting that an industry standard agreement should apply to the work they perform for the company”.
“We may see work stoppages for short periods of the day, and bans on specific work like helicopter unloadings. These actions create inefficiencies and could lead to minor production disruptions,” energy analyst Saul Kavonic said.
Mr Kavonic currently expects the strike to have a limited impact on global gas prices. However, he warned that energy prices could surge if the industrial action was stepped up.
“In the very unlikely event of a prolonged large scale supply disruption, prices could head back towards crisis levels witnessed last year [after Russia’s invasion of Ukraine],” he added.
In the last week, wholesale gas prices in Europe jumped on concerns of a disruption to supply at Chevron and another Australian LNG plant, run by Woodside Energy.
On Thursday, Woodside said it had reached an agreement in principle with unions representing workers at its North West Shelf plant.
Together, the Woodside and Chevron plants make up around 10% of the world’s supply of LNG.
Russia slashed supplies of natural gas to Europe after the start of the Ukraine war in 2022.
That pushed up prices around the world and led countries to seek out alternative sources of energy, such as LNG.
Australia is one of the world’s biggest LNG exporters and its supplies have helped to cool global energy prices.
LNG is methane, or methane mixed with ethane, cleansed of impurities and cooled to approximately -160C.
This turns the gas into a liquid and it can then be shipped in pressurised tankers.
At its destination, LNG is turned back into gas and used, like any other natural gas, for heating, cooking and power.