Amid an impending full-scale strike by unions, Chevron Australia (CVX.N) has opted to take a legal route, leveraging fresh legislation in an attempt to halt industrial action at its Gorgon and Wheatstone liquefied natural gas (LNG) facilities.
Significant Impact on Global LNG Supply
These facilities contribute to over 5% of the world’s LNG supply. Strikes initiated last Friday by numerous workers followed failed negotiations with the company. Unions have warned of plans to extend their actions to two full weeks of 24-hour strikes, starting Thursday.
Chevron’s Legal Move
In a new move, Chevron announced on Monday its intent to apply for an “intractable bargaining” declaration from Australia’s Fair Work Commission. This, if approved, would serve to terminate the strikes, with the Commission intervening to determine the agreement terms.
Company’s Stance on the Situation
A company spokesperson clarified, “Despite multiple meetings and sessions with the Fair Work Commission, the unions’ terms greatly surpass market norms, and we haven’t reached an agreement.”
Production Continuity and Australia’s LNG Export Standing
Though production remains uninterrupted, the exact details remain undisclosed by the company spokesperson. Australia stands as the globe’s top LNG exporter.
New Laws Empowering Fair Work Commission
This legal strategy by Chevron will serve as a precedent, examining new laws inaugurated in June. These laws empower the Fair Work Commission to intercede, facilitating an agreement when parties cannot come to terms independently.
Time Constraints for Resolution
However, with strikes planned for Thursday, time may run short for the Commission to hear and decide on the matter. An initial hearing in Melbourne, scheduled for Tuesday, will focus only on administrative matters.
Analysts’ Insights on Production Impact
While both facilities have backup reserves, analysts believe that production will not be affected immediately. Saul Kavonic, an energy analyst, indicated that Chevron’s strategies, including the deployment of non-union workforces and remote operations, will likely ensure continued supply amidst the strikes. He added that disruptions might only be felt after a few weeks due to potential work bans by the union.
Warning of Prolonged Dispute and Losses
As this tension escalates, Offshore Alliance, a union coalition, warned Chevron of a prolonged dispute and potential billion-dollar losses in export revenue. The coalition did not offer any comments on Monday.
