[UPDATED ANALYSIS] Australian LNG labour talks - the latest

LATEST REPORTS

• Offshore Alliance members at Woodside Energy endorsed the in-principle agreement.

WOODSIDE OPERATIONS SITREP:

• Woodside Energy reached an agreement in principle with unions on Thursday. Workers are meeting to decide on whether to ratify the deal, according to a union spokesperson. The meeting between Woodside and unions on Wednesday lasted 15 hours.


• Offshore Alliance members at Woodside Energy endorsed the in-principle agreement.


• The final draft of the Enterprise Agreement (EA) is currently being drafted by Woodside and the Offshore Alliance will be provided a copy of this document on Monday for the union to consider its drafting.


• Unions will not engage in any strike action while process to finalise the deal takes place.

CHEVRON'S OPERATIONS SITREP:

• Workers at Chevron's Australian downstream LNG facilities vote to allow unions to call strikes if needed, according to the union cited by Reuters; over 99% of the 433 workers that voted were in favour of taking action.


• Chevron continues to negotiate two separate disputes, according to Bloomberg.


• Credit Suisse energy analyst Kavonic said there was still a risk of strikes at Chevron's facilities, but it was unlikely to significantly disrupt supplies.
  

KEY DATES:

• 
  AUG 28 – Voting of Wheatstone platform workers expected to be completed, in the afternoon.

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.


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

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.

25 Aug 2023 - 06:32- EquitiesResearch Sheet- Source: Newsquawk