Workers at the Gorgon and Wheatstone liquefied natural gas projects offshore Australia will begin striking today after talks with the projects' operator, Chevron fell through.
Talks have been going on for a couple of weeks now, eventually moving to mediation with the participation of the Australian Fair Work Commission.
The trade union alliance representing the workers, the Offshore Alliance, has repeatedly warned that it will cost Chevron billions if it rejects the workers' demand.
"Despite the Offshore Alliance giving Chevron plenty of opportunity to sort out (bargaining agreements) ... they will finally be facing their day of reckoning," the trade union said earlier today.
Work stoppages at the Gorgon and Wheatstone facilities began at 5 a.m. GMT today and could last for up to 11 hours daily. The industrial action is scheduled to continue until September 14.
Reuters noted in a report that as the strikes begin, the two LNG facilities may need to be shut down, "if there are not competent personnel to undertake handovers during work stoppages," per the OA.
The two projects together account for about 5% of global LNG supply. While Chevron failed to reach a deal with the workers, sector player Woodside, the operator of Australia's largest LNG facility, the North West Shelf, managed to strike a deal and avert a strike.
The three LNG facilities-the North West Shelf, Gorgon, and Wheatstone-represent a tenth of global LNG supply. The threat of strikes there lifted gas prices considerably and put Europeans on high alert ahead of the coming winter.
Australia, the world's biggest LNG exporter currently, does not export directly to Europe but due to its size, any disruption in supply there reverberates across the global LNG market. This week prices have been on the rise again, on the news about Chevron. As industrial action begins, they will likely move higher still.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More