Chevron Australia, Striking Workers Agree to Terms Proposed by Tribunal

Chevron Australia Pty. Ltd. said Thursday it has accepted the recommendation for employment conditions made by Australia's Fair Work Commission (FWC) in the hope of ending a strike that has hit its liquefied natural gas (LNG) facilities.

The striking workers at the Wheatstone and Gorgon facilities have also decided to accept the FWC's recommendation after "substantial improvements" in employment terms and will now work with the Chevron Corp. subsidiary to finalize agreements, their union said Friday.

The labor tribunal issued Thursday a recommendation laying out employment terms concerning work hours, lodging conditions, allowances, salary, promotion and job security. "The parties are on the precipice of achieving historical first enterprise agreements for these Chevron LNG facilities in Western Australia", FWC Commissioner B Riordan said in the decision posted on the agency's website. "To date, a large number of issues have been settled, on a without prejudice basis, which should form the foundation of enterprise agreements between the parties for the future".

Chevron Australia had said it would formally ask the FWC for the government body to exercise its option to enforce its own terms of employment on both the disputing sides after an impasse.

Workers at the projects have been on strike since September 8 after they failed to reach a bargaining agreement with Chevron Australia despite mediation by the FWC.

Their union, the Offshore Alliance (OA) coalition between the Australian Workers' Union and the Maritime Union of Australia, has accused Chevron Australia of ignoring industry-level demands for employment conditions and insisting on its own terms instead of accommodating a union-initiated enterprise bargaining agreement.

However, in a statement emailed to Rigzone on September 11 Chevron Australia claimed the demands were above the market level and that seeing "no reasonable prospect of agreement" between the two sides, the company would apply for so-called intractable bargaining declarations by the FWC.

But the OA said in a statement sent to Rigzone Thursday the disputing sides met again last week with mediation by the FWC. And in its own statement sent to Rigzone Thursday Chevron Australia said it has now accepted the employment terms the FWC issued earlier in the day.

"Chevron Australia has consistently engaged in meaningful negotiations in an effort to finalize Enterprise Agreements with market competitive remuneration and conditions. Today, we were provided a recommendation from Commissioner Riordan", Chevron Australia confirmed in the emailed statement.

"After considering the recommendation, Chevron has accepted the recommendation to resolve all outstanding issues and finalize the agreements", the company said. "We have informed the Commissioner of our position and written to the unions and other employee bargaining representatives confirming our acceptance".

The OA also said in a statement sent to Rigzone Friday its members have agreed to accept the FWC recommendation after a meeting on Thursday night. "Offshore Alliance members at Chevron endorsed a recommendation put by the Fair Work Commision at a late night mass meeting of over 350 workers", the emailed statement said.

"The proposed enterprise agreements, which incorporate the Commissioner's recommendations, contain substantial improvements in terms and conditions of employment including increased remuneration, job security, locked-in rosters, career progression and returning all employees to a 40 percent roster", the union added.

"The Offshore Alliance will now work with Chevron to finalize the drafting of the three agreements and members will soon cease current industrial action".

The FWC decision came the same day the OA gathered a majority vote endorsing an enterprise agreement with Woodside Energy Group Ltd., according to a union statement earlier sent to Rigzone Thursday. The OA had planned a strike at the Woodside-operated North West Shelf LNG facility, in which Chevron Australia also has a stake, but called it off after an in-principle agreement was reached, according to a union statement August 24.

"Offshore Alliance members at Woodside have overwhelmingly voted to endorse a deal with the company [Woodside] while members at Chevron will meet tonight to consider a recommendation made this morning by the Fair Work Commission after the parties were engaged in talks before the FWC earlier in the week", the OA said in the statement emailed to Rigzone Thursday.

Supply Disruption

The bulk of the output from the Gorgon, North West Shelf and Wheatstone facilities goes to customers in Asia, which have signed long-term contracts, according to information on Chevron Australia's website.

S&P Global reported September 11, the first day of the strike, "A number of LNG buyers in Asia said they expect to see limited supply impact in the first few weeks [of the strike], but a bigger knock could be felt should strikes last longer".

"Strike situation would affect the Japanese buyers the most, but they seem to be holding up," an unnamed LNG importer in China was quoted as saying by the financial analytics and news provider.

"There will be limited impact of the strikes in the short term as inventory is high in Asia, longer term impact could be there if the strikes continue for prolonged period".

After a reported failure at the Wheatstone facility, Chevron said in a statement emailed to Rigzone Monday, "Chevron Australia confirms full production resumed last night (Sept 17) at the Wheatstone Gas Facility following a fault on Sept 14".

"During this time LNG continued to be produced at approximately 80 percent of usual rates, and vessel loading continued", it said in the statement. "There has been no change to scheduled LNG deliveries. Domestic gas facilities and supply were unaffected".

However, the OA said in a statement on Facebook on Tuesday, "Chevron are still flaring and they are simply hoping beyond all hope that they don't lose a train or two on the Wheatstone and Gorgon facilities. Which is almost inevitable in light of the Protected Industrial Action across their 3 facilities".

To contact the author, email jov.onsat@rigzone.com