Woodside Heads Off Australian Labor Dispute Roiling Gas Markets
Threat of walkouts at liquefied natural gas plants had raised supply concerns ahead of Northern Hemisphere winter
SYDNEY—Woodside Energy reached a preliminary deal with disaffected workers at some of its natural gas export facilities in Australia, a move that could head off a walkout that risked disrupting global gas supply and jolting worldwide energy prices.
Workers at three Woodside WDS 0.08%increase; green up pointing triangle-operated offshore liquefied natural gas platforms had threatened to strike over issues including pay after the Australian company and union officials had failed to find common ground after months of talks.
Worries about strikes at one of the world’s major LNG exporters had stoked volatility in natural-gas prices as European countries prepare for their second winter since Russia’s invasion of Ukraine disrupted traditional energy markets.
Woodside and union representatives reached agreement on a collective deal in the early hours of Thursday following a 15-hour meeting at the company’s headquarters in the Western Australian city of Perth. Members will now decide whether to endorse the deal and won’t strike while the agreement is being ratified, said Offshore Alliance, a partnership between two local unions.
The agreement should ease concerns of a sudden drop in LNG exports from Australia, which rivals Qatar as the largest exporter of the supercooled fuel. The labor dispute in Australia reverberated through global markets amid worries that European and Asian buyers could be pushed into a bidding war for gas from elsewhere, including from the U.S.
“Europe, and global LNG markets, are inevitably more exposed to global LNG supply and demand shocks as the flexibility historically provided by Russian gas supply to Europe is gone for good,” said Massimo Di Odoardo, head of global gas analysis at Wood Mackenzie. The Woodside plants, and others operated by Chevron in Australia, account for more than 10% of global LNG supply combined, he said.
Workers at the Chevron-operated LNG facilities are still seeking a similar agreement and are due to return ballots on potential strike action over coming days. The U.S. energy giant is proposing a collective agreement for workers at its Gorgon and Wheatstone onshore facilities that falls short of workers’ demands, Offshore Alliance spokesman Brad Gandy said Thursday.
“The Alliance will be strongly recommending to members to vote no to these non-union Chevron agreements,” Gandy said.
A Chevron spokesman said that the company was committed to bargaining in good faith for an outcome that benefits all parties.
Should workers reject deals agreed to by unions and decide to strike, Asia is most at risk of having contracted LNG supply choked off, analysts say. Most gas supply from Australia—which rivals Qatar as the world’s biggest LNG exporter—is typically destined for Japan and China. High inventories have eased some concerns, analysts at ANZ Bank said recently.
European nations have been stockpiling gas in an attempt to avoid a repeat of the crippling price spikes seen last winter and the European Union’s gas-storage levels are on the cusp of reaching their pre-winter target more than two months early. In June last year, the bloc established new rules that tasked member states with filling gas-storage facilities to at least 90% of their capacity by Nov. 1 each year, starting in 2023.
Despite rising recently, prices in Europe are still far lower than their record highs from just under a year ago, when Moscow first slashed natural-gas flows.
Under Australian employment law, workers can stop work within 30 days of such a vote providing they give employers seven days’ notice. Industrial action could include a range of work bans, such as refusing to load tankers or vessels with LNG, or a walkout, according to Offshore Alliance. A spokeswoman for Woodside, Australia’s seventh-largest company by market capitalization, said the company had not received any notice of strike action and would work toward finalizing the agreement.