Workers at Chevron Gorgon and Wheatstone LNG plants in Australia approve new labor agreement

Workers at two Chevron LNG plants in Australia, which account for up to 7% of the global liquefied natural gas market, have approved a new labor agreement with the company, removing the threat of new strikes and production shutdowns. So far, this news has not had any impact on world gas prices: markets remain tense due to the Palestinian-Israeli conflict and the stoppage of Israeli gas supplies to Egypt.

Workers at two Australian LNG plants, Gorgon and Wheatstone, owned by American Chevron, have approved new terms of their employment contract with the company. An agreement in principle between Chevron and the Australian workers’ union was reached last week, and strikes at LNG plants ended on October 19.

“Chevron Australia is pleased to confirm that the employment agreement for Gorgon and Wheatstone workers has been supported by a majority of employee votes,” a company spokesman said. The new package of agreements includes improvements for workers, including increased pay, job security and career opportunities.

The Gorgon project includes three liquefaction trains with a capacity of 15.6 million tons of LNG per year, the Wheatstone project has a nominal capacity of 8.9 million tons of LNG per year. Strikes at Australian LNG plants, threatening global supplies, began in early September. Both plants accounted for up to 7% of global LNG supply last year, so the strikes have triggered price hikes on the spot market.

According to Sergei Kondratyev from the Institute of Energy and Finance, the news will have a limited impact, as the market was expecting an agreement and did not anticipate a possible long-term interruption in supplies from these facilities. “Yes, the November TTF futures fell by 3% after the publication of this news, but I would not say that this is due only to news from Australia – today prices for other energy resources, including Brent oil, are also falling,” he notes. .

Ivan Timonin from Impliment believes that reaching an agreement between workers and Chevron will be a significant signal for the market and could lead to a reduction in prices. The magnitude of the decline, however, is likely to be relatively small due to the current balance of the global LNG market. “Continued high demand and utilization of existing plants, as well as the absence of large commissioning of new production capacities this year will keep gas prices at a high level,” the analyst believes.

European gas prices reacted restrainedly to the news from Australia: November futures for the TTF index, which grew by 3% during the day, moved to zero dynamics in the evening, trading around €50.4 per MWh (about $550 per 1 thousand). cubic meters).

The prices partly take into account the risks of supplies from Egypt, which completely stopped receiving gas from Israel on October 29 and now, most likely, will not be able to fulfill its LNG export program. On October 9, due to the conflict with Hamas, Chevron suspended production at the large Tamar gas field in Israel, from where up to 22 million cubic meters of gas per day were exported via an offshore pipeline to Egypt.

Most of the Israeli supplies remained in Egypt to satisfy domestic demand; free volumes were already exported in the form of LNG to Europe from the Idku and Damietta terminals. Egypt’s LNG exports typically declined or stopped during the summer, resuming in the fall. This year, exports almost stopped in June but were expected to resume in October, but only two shipments were shipped at the beginning of the month. In total, since the beginning of the year, Egypt, according to Kpler, has shipped 3 million tons of LNG, while only 0.24 million tons have been shipped since June.

Currently, November TTF futures quotes are approximately 30% higher than before the start of the Palestinian-Israeli conflict. Prices are also supported by minor supply disruptions from Norway, which fell by 10 million cubic meters per day yesterday due to the failure of one of the compressors at the gas processing plant.

Tatiana Dyatel