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Strikes end at Chevron's Australian LNG facilities

Published 09/21/2023, 07:44 PM
Updated 09/22/2023, 03:01 AM
© Reuters. FILE PHOTO: A 3D printed natural gas pipeline is placed in front of displayed Chevron logo in this illustration taken Feb. 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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By Renju Jose and Lewis Jackson

SYDNEY (Reuters) -An Australian union alliance on Friday called off strikes at Chevron (NYSE:CVX)'s two major local liquefied natural gas (LNG) projects, agreeing to resolve disputes that had threatened to disrupt around 7% of global LNG supplies.

The union alliance and Chevron accepted proposals on pay and conditions from the country's industrial arbitrator for the Gorgon and Wheatstone LNG facilities, and workers suspended strikes that began two weeks ago.

"The Offshore Alliance will now work with Chevron to finalise the drafting of the agreement and members will soon cease current industrial action," Offshore Alliance spokesperson Brad Gandy said in a statement.

The agreement ends a wage fight that has roiled global gas markets for six weeks and sent LNG prices up as much as 35% in August. Markets eased after a similar dispute involving the country's biggest LNG plant, run by Woodside (OTC:WOPEY) Energy, was resolved late last month.

The proposed deal includes "substantial improvements" in pay, job security, locked-in rosters and career progression, the alliance, which combines two unions, said.

At a short hearing on Friday the Fair Work Commission (FWC), which had convened to hear arguments about whether it should intervene and stop the strikes, adjourned the matter for four weeks while the two sides drafted the final terms of the deal.

On Thursday, the commission, which has the power to impose a settlement, said it "strongly recommended" parties accept its proposals to end work stoppages.

No LNG shipments were disrupted by the industrial action, even after a fault at the Wheatstone plant.

The alliance was pushing Chevron to match pay terms agreed by Woodside in its first ever deal with the unions, which set total remuneration for offshore platform technicians at between A$350,233 at entry level and A$418,337 at the highest level, according to figures submitted by the union to the commission.

YEARS-LONG CAMPAIGN

The deal caps a years-long campaign by the Offshore Alliance for higher pay and better conditions at major Western Australian LNG sites. A 2022 agreement with Japan's Inpex at its Ichthys LNG operation set a benchmark for subsequent talks with Shell (LON:SHEL), Woodside and Chevron.

Shell struck a deal last year after two-months of strikes at the Prelude floating LNG site cost the company about $1 billion in lost exports.

Energy analyst Saul Kavonic said the Chevron deal should see an end to most industrial action offshore Western Australia with union agreements, which last for around four years, now in place for most offshore LNG sites.

© Reuters. FILE PHOTO: A general view of Chevron's Wheatstone LNG facility in Pilbara coast, Western Australia, as seen in this undated handout  image  obtained by Reuters on September 8, 2023.  Chevron/Handout via REUTERS/File Photo

"Although, we should expect the unions will increase their membership in the wake of the recent successes they have had, and there is still some scope for more union action at the North West Shelf LNG plant and some offshore (floating production storage and offloading units) next year," he said.

An official who declined to be named said the union would next focus on striking deals at the nearby floating production storage and offloading vessels Okha and Ngujima-Yin operated by Woodside.

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