Australian Workers' Union plans Wheatstone LNG platform demobilization until Sep 29

The Australian Workers Union plans to run a series of industrial actions at Chevron's Wheatstone platform, including a demobilization of employees working at the platform until Sept. 29, extending its initial plans ahead of the start of protected industrial actions Sept. 7, according to the latest detailed plan of industrial action seen by S&P Global Commodity Insights Sept. 5.

The plans are part of the specific industrial action submitted to Chevron Australia late Sept. 4, which also cover Chevron's Wheatstone downstream and Gorgon facilities until Sept. 28 each.

The latest AWU members' plans state a ban on employees working after 06:00 am Australian Western Standard Time (2200 GMT) on the day they demobilize from the Wheatstone Platform, starting 6 am AWST Sept. 14 until 1 am AWST Sept. 29.

This effectively marks an extension of about two weeks from an earlier plan with an unlimited number of bans for an indefinite period on employees working after 6 am AWST on the day they demobilize from the Wheatstone Platform, starting 6 am AWST Sept. 7 until 6 am AWST Sept. 14.

The latest industrial action plans came days after Chevron Australia filed an application with the Fair Work Commission to seek mediation assistance after having failed to reach enterprise agreements with its Gorgon and Wheatstone Downstream employees, following voting Aug. 30-31.

"We will continue to work through the bargaining process as we seek outcomes that are in the interests of both employees and the company. We will also continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities," a Chevron Australia spokesperson said Sept 5.

Asian LNG prices slipped Sept. 4 as the market remained well-supplied, with the potential strike in Australia lending some support.

Platts assessed the October JKM at $13.18/MMBtu Sept. 4, down 53.3 cents/MMBtu from Aug. 31, S&P Global data showed.

Initial impact likely limited

Two analysts told S&P Global Sept. 5 that the initial impact of the strikes will likely be limited as a resolution was still achievable.

"There is still a possibility that we see an eleventh-hour agreement signed this week and avoid industrial action," Logan Reese, research and analysis associate director at S&P Global, said.

The initial impact of strikes will likely be minimal but should the industrial action drag on there will be a growing risk to export volumes, Reese cautioned.

In addition, the domestic market risks have been largely underreported with Gorgon and Wheatstone accounting for roughly half of Western Australia's gas supply, which is up against an overall tight supply and demand balance in the domestic market, he added.

According to Australia-based energy analyst Saul Kavonic, the strikes are likely to proceed. However, initially, the planned strikes are unlikely to materially impact LNG or domestic gas supply.

The new notices keep the unions' options open to extend or escalate the strikes after the first week of industrial action, Kavonic said.

"The mediation should help reach a resolution before the strikes escalate to the point supply is materially impacted," he added.

Project exposure

The Chevron-operated Gorgon and Wheatstone projects are among Australia's largest resource developments. The Gorgon Project comprises a three-train, 15.6 million mt/year LNG facility and a domestic gas plant, while the Wheatstone Project has a nameplate capacity of 8.9 million mt/year of LNG and a domestic gas plant.

The Japanese buyers are foundational customers for the Gorgon and Wheatstone projects, with Japanese LNG lifting volumes accounting for 30% of the Gorgon output and 83% of Wheatstone output, according to S&P Global calculations based on industry information.

Gorgon and Wheatstone LNG together exported around 24.6 million mt of LNG in 2021 and 27.5 million mt in 2022. They have exported around 17.4 million mt of LNG so far this year, according to S&P Global data.

In 2022, around 46% of Gorgon and Wheatstone's LNG exports were sent to Japan, followed by 15% each to China and South Korea and around 14.4% to Taiwan. The remainder went to Singapore, Thailand and India.

So far this year, Japan accounted for 46.6% of total LNG exports from the Gorgon and Wheatstone projects, followed by China at 15%, Taiwan at 13%, South Korea around 9%, Thailand 8%, Singapore 5.3% and the remainder to other Asian countries.