Gas prices ease despite escalating strike action at Australian LNG plant
Gas prices eased this morning after full operations resumed at a major production facility in Australia — while strike action also failed to trigger a rally across key benchmarks.
Chevron revealed full production has now resumed at the Wheatstone liquefied natural gas (LNG) plant in Western Australia after a fault cut output last week by 20 per cent.
The relatively quick revival also ensured that the disruption did not affect deliveries — with Chevron not expecting strikes to hinder production.
“Chevron Australia confirms full production resumed last night at the Wheatstone Gas Facility following a fault on September 14. During this time LNG continued to be produced at approximately 80 per cent of usual rates, and vessel loading continued. There has been no change to scheduled LNG deliveries. Domestic gas facilities and supply were unaffected,” a spokesperson told Morning Wire
Intensifying industrial action, ranging from brief halts to 24-hour stoppages, has not yet triggered supply shortages or price rallies.
Instead, Europe’s major gas benchmarks have posted price declines this morning — with the UK Natural Gas Futures and Dutch TTF Futures down 2.3 per cent and 2.8 per cent respectively.
The UK benchmark is now priced at 90p per therm, against previous norms of 40p-45p before the rebound in post-pandemic demand and Russia’s invasion of Ukraine.
While gas prices remain historically higher, they are also well below the peaks posted in last year’s energy crisis at close to £8 per therm.
With union coalition Offshore Alliance pledging to extend industrial action beyond this month, it remains to be seen whether this could push up prices.
Australia’s industrial tribunal, the Fair Work Commission, will hear from Chevron and the unions in an attempt to resolve the dispute over wages and conditions this Friday.
It is expected to deliver its ruling soon after.
Australia is a vital supplier of LNG, a key energy source for European and Asian markets following Russia’s supply squeeze on gas pipelines.
The Wheatstone and the nearby Gorgon facility account for more than five per cent of global LNG supply, with Australia the biggest exporter to Asian markets of the super-chilled fuel.
China and Japan are its top two customers, followed by South Korea and Taiwan.
If Australia suffers outages, those markets will have to compete with supplies from the Middle East, Norway and the US that the continent is dependent on.