Growing Strike Risk in Australian LNG Industry Spurs Commodities Market Volatility
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The Commodities Feed: Australian LNG strike risk grows
European natural gas prices rallied yesterday as the threat of strike action in the Australian LNG industry grew. This is after unions served a strike notice to Chevron.
Energy – A step closer to Australian LNG strikes
European gas prices rallied yesterday with TTF settling more than 10% higher on the day after unions in Australia served a strike notice to Chevron for workers at its Gorgon and Wheatstone LNG operations. Strike action is set to start on 7 September, and the Offshore Alliance has said that action will escalate each week until a deal is finally made.
The serving of notice does not guarantee strike action, with both parties set to continue negotiations between now and 7 September. However, clearly, the risk of disruptions at both facilities, which have a combined capacity of 24.5mtpa (around 6% of global LNG supply) is growing. Woodside was able to come to an agreement with unions for workers at its North West Shelf facility last week before a strike notice was served.
Supply uncertainty will linger in the gas market, which is likely to continue to support Asian LNG, particularly given that these potential disruptions coincide with when Asian buyers usually step up their buying ahead of the northern hemisphere winter.
Middle distillates continue to be well supported with the NYMEX heating oil crack remaining above US$50/bbl, whilst the ICE gasoil crack continues to trade around US$40/bbl. A fire at Marathon’s Garyville refinery in Louisiana at the end of last week has provided further support to products. The refinery has a capacity of 596Mbbls/d, making it the second largest refinery in the US according to the Energy Information Administration. The refinery is currently operating at reduced rates and there is little clarity on when operations will return to normal.
