[UPDATED ANALYSIS] Australian LNG labour talks - the latest

Analysis details (09:13)

RECENT REPORTS:

• Unions at Woodside Energy's (WDS AT) North West Shelf offshore gas platforms "unanimously endorsed" giving 7 working days' notice to strike if bargaining claims are not met by Wednesday (August 23rd), according to Reuters.


• The Offshore Alliance, consisting of two key unions, will also finalise a strike vote at Wheatstone and Gorgon LNG ventures (operated by Chevron) by Thursday (August 24th).


• Sources at the two LNG companies, cited by Reuters, believe some form of industrial action is likely in coming weeks. 

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.


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


• 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.

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. On this note, The system in the Gulf of Mexico has a high chance of formation. Tropical storm watches or warnings may be necessary on Monday, according to the NHC.


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

21 Aug 2023 - 09:06- Important- Source: Newsquawk