Strikes to start at major Chevron Australia LNG projects after union talks break down

By Renju Jose and Lewis Jackson

SYDNEY (Reuters) -Workers at Chevron (NYSE:)’s liquefied (LNG) projects in Australia will start strike action on Friday after mediation talks between unions and the energy major ended without a deal, potentially disrupting output from facilities that account for over 5% of global supply.

Australia is the world’s biggest LNG exporter, and its main buyers are in Asia. The dispute over wages and conditions at Chevron’s Gorgon and Wheatstone operations had supported British and European gas prices, as traders fear lower Australian supplies would intensify competition for other sources of the super-chilled fuel.

“Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms,” a Chevron spokesperson said.

“The unions continue to seek terms that are above and beyond equivalent terms with others in the industry, including in agreements recently reached.”

The unions had said that work stoppages that could last for up to 11 hours were due to start at 1 p.m. Perth time (0500 GMT) and are expected to last through Sept. 14.

A two-week total strike could then follow if an ongoing dispute over wages and conditions remained unresolved.

It was not immediately clear if the strike action had started. Representative for the unions were not immediately available to comment.

The Offshore Alliance, a coalition of two unions, had earlier said Chevron had demanded concessions it was unable to accept.

“Despite the Offshore Alliance giving Chevron plenty of opportunity to sort out (bargaining agreements) … they will finally be facing their day of reckoning,” the union alliance said in a Facebook (NASDAQ:) post.

“It’s game on, Chevron.”

The U.S. energy major said it would continue to take steps to maintain operations if any disruptions occur, without giving details. The union had warned that the LNG plant would have to be shut down “if there are not competent personnel to undertake handovers during work stoppages”.

How the disruption could play out was not immediately clear. China and Japan are the top two buyers of Australian LNG, followed by South Korea and Taiwan.

Dutch and British gas prices were mixed on Thursday due to the uncertainties about the potential strike and after maintenance in Norway curbed supply. [NG/EU]

Energy analyst Saul Kavonic said Friday’s strike action appeared to be designed to put more pressure on Chevron to cut a deal rather than substantially affect production.

“The initial strikes set to begin today appear lower level, designed to create costs and inefficiencies for Chevron,” he said. “This is … all part of the negotiation ‘dance’ between the parties.”

The strike action had been scheduled to begin on Thursday morning but unions pushed back the start time twice after making progress in mediation talks hosted by the Fair Work Commission, Australia’s industrial umpire.