Deal unlikely as strike talks between Chevron, Australian LNG workers drag into Friday
(Bloomberg) 鈥 Talks between Chevron Corp. and labor unions in Australia are set to drag into Friday 鈥 keeping natural gas markets on edge 鈥 as unions said a deal to avert strikes is unlikely.
Thursday鈥檚 discussions ended at 10 p.m. Perth time, so negotiators have just the morning of Friday to try to clinch a deal before a new 1 p.m. deadline. Offshore Alliance, representing the workers, considers the package provided by Chevron underwhelming, and it鈥檚 very unlikely they will reach an agreement, according to a union representative who asked not to be identified in line with policy.
The possibility of strikes at some of Australia鈥檚 key liquefied natural gas (LNG) plants has kept markets on edge for the past month. Chevron鈥檚 Gorgon and Wheatstone plants together supplied about 7% of the world鈥檚 LNG last year, and unions have planned to start with partial strikes if no resolution is reached.
Negotiations have been progressing slowly, the union representative said, and the strikes were delayed because the Australia鈥檚 labor regulator recommended that. Chevron said it will continue to work 鈥渢hrough the bargaining process.鈥
Gas prices in Europe 鈥 which are still volatile after last year鈥檚 historic energy crisis 鈥 jumped more than 7% on the news. The continent鈥檚 benchmark contract surged 40% at one point on fears of supply disruptions from Australia, highlighting Europe鈥檚 heavy dependence on LNG after the curtailment of Russian pipeline gas flows.
If the parties don鈥檛 reach a deal, full 24-hour walkouts at Chevron鈥檚 plants are expected to run for two weeks from Sept. 14. Another exporter, Woodside Energy Group Ltd., reached a breakthrough with unions last month at its nearby North West Shelf LNG plant.
Muted demand in Europe and Asia means the impact of walkouts could be limited initially, though any prolonged disruptions threaten to spark a bidding war between the two regions for cargoes in the peak winter season.
Europe鈥檚 supply is already impacted by the extension of maintenance at major gas fields in top exporter Norway. Flows from the country, already at multi-year lows, dropped further on Thursday, also pushing prices higher earlier in the day.
Dutch front-month futures, Europe鈥檚 gas benchmark, traded 6.8% higher at 鈧33.18 a megawatt-hour at 5:41 p.m. in Amsterdam.