[UPDATED ANALYSIS] Australian LNG labour talks - the latest

Analysis details (07:42)

RECENT REPORTS:

• Woodside Energy (WDS AT) workers at the North West Shelf LNG plant will likely hold more talks next week after failing to reach an agreement yesterday. The talks are reportedly slated for next Wednesday, according to Bloomberg sources.


• Chevron (CVX) will reportedly delay plans to sell some spot market cargoes from its Gorgon operation amid the risk of strikes, according to Bloomberg sources.

OVERVIEW:

• Nat Gas prices have been grinding higher over the last couple of weeks as supply concerns mount over possible industrial action at Australia’s LNG facilities which supply around 10% of the LNG market.


• Although European imports of Australian LNG aren’t substantial, the fears over competition with other Asian nations for replacement cargoes have built a premium into Nat Gas prices.

BACKGROUND:

• Workers at Chevron and Woodside Energy’s plants disputed the pay and working conditions.


• Reuters sources suggested talks between Chevron, Woodside Energy and Australian unions today are not likely to lead to results for days as any decision will have to consult members.


• Workers at the North West Shelf LNG plant have backed strikes, but unions haven’t called for action at the offshore platforms yet.


• If strike action at Australia’s Gorgon, Wheatstone and North West Shelf LNG plants (see image below) lasts one month, three million tons of supply could be affected, removing about 44 cargoes of LNG from the market


• Workers must give seven days’ notice before striking.


• Japan, Taiwan, and Thailand receive around 25% of their supplies from the facilities under threat of industrial action.


• Australia ranks third in global LNG exports, after the US and Qatar.

OTHER RISKS FOR GAS MARKETS:

• Buyers will likely look for alternatives in the event of Australian strikes, with the US being the largest supplier. Thus, desks flag the risk of the Atlantic hurricane season which could choke US exports via the Gulf of Mexico.


• Scheduled maintenance is poised to take place in Q3 at the Prelude LNG facility in Australia.

16 Aug 2023 - 07:33- Research Sheet- Source: Newsquawk