Chevron Australia LNG Workers Begin Strike

Workers at Chevron Corp.'s liquefied natural gas (LNG) facilities in Australia started their planned strike of at least three weeks on Friday, which could threaten supply to Asian markets.

Most of the output from Chevron Australia Pty. Ltd's Gorgon and Wheatstone projects, as well as the North West Shelf facility in which it holds a non-operated stake, goes to Asian countries, with whom it has long-term contracts, according to the company.

"Within 24 hours of Protected Industrial Action commencing on Chevron’s Gorgon and Wheatstone facilities, Chevron have started evacuating their contractor workforce", the Offshore Alliance said in a statement on Facebook.

"Chevron chartered a special flight this morning [September 8] to Barrow Island to evacuate 50 blue and white collar contract crew off the Gorgon Project", the union added.

Rigzone asked Chevron Australia Pty. Ltd. on the weekend for confirmation of the development but has yet to receive a response.

The commencement of the strike by the Offshore Alliance, which consists of the Australian Workers' Union (AWU) and the Maritime Union of Australia, means intervention by Australia's Fair Work Commission (FWC), confirmed by the AWU in a statement on September 1, failed.

The Offshore Alliance earlier extended the strike for at least two more weeks after the initially planned seven-day walkout, accusing the energy giant of circumventing bargaining negotiations.

"The Offshore Alliance lawyers have served Chevron with a further Notice of Protected Industrial Action which will commence after our first 7 days of PIA kicks off on Thursday 7th September", the union said in a statement on Facebook September 5. "The new Protected Industrial Action Notice will escalate workbans and the OA [Offshore Alliance] will have rolling 24 x 1 hour stoppages, each day for 14 days from Thursday 14th September".

The Offshore Alliance had said a majority of workers at the Gorgon and Wheatstone facilities in Western Australia voted for a strike to press for better employment standards. Of 253 Offshore Alliance members at Gorgon 249 voted in the strike ballot, all in favor. Of 188 members at Wheatstone 184 voted, all in support of a strike.

Meanwhile all six members of the Electrical Trades Union at Gorgon and all two at Wheatstone voted in favor of a strike, according to an Offshore Alliance statement August 25.

The latest strike ballot results confirmed by the FWC showed all 37 AWU members eligible to vote said yes to a strike while all nine members of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia who were eligible to vote also supported a strike.

"The Offshore Alliance has 98 percent union density on the Gorgon and Wheatstone facilities and members have voted 100 percent in favor of taking Protected Industrial Action in support of a union EBA [enterprise bargaining agreement]", said the union's announcement of the ballot results.

The union statement on September 5 said the extended action was in response to Chevron Australia attempting to dodge a union-initiated deal and opting to put forward its own terms. The Offshore Alliance said an enterprise agreement (EA) dished out by the company for a vote had won only seven supporters out of 979 employees.

The AWU statement on September 1 confirming the FWC's intervention said, "Offshore Alliance Members working for the foreign company have still not reached agreement on several key claims including job security, agreed rosters, mutual agreement on transfers to other Chevron worksites, mutual agreement on the working of overcycle, training standards, travel arrangements and rates of pay".

"Members are seeking remuneration outcomes which align with benchmark industry standards that apply to Chevron’s contemporaries Shell and INPEX and are soon to apply to Woodside. In negotiations to date Chevron has proposed remuneration terms lower than some Tier 2 oil and gas operators in Australian waters".

The AWU said in the statement Chevron Australia now remains "the only major outfit on the WA [Western Australia] gasfields without an industry standard EA enterprise agreement covering its workforce".

"Offshore Alliance members at Shell’s LNG facilities secured an EA last year after 76 days of PIA [protracted industrial action]. Members at INPEX secured an EA in 2022. And last week Offshore Alliance member representatives at Woodside endorsed an in-principle agreement negotiated with the company, with a vote on the EA to follow in the coming weeks", it said.

In confirming the first strike notice from the Offshore Alliance, Chevron Australia said in a statement emailed to Rigzone August 29, "While we don’t believe that industrial action is necessary for agreement to be reached, we recognize employees have the right to take protected industrial action and we will continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities".

In a statement to Rigzone Wednesday about the further notice of a strike, it maintained it continues to pursue bargaining.

"We will also continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities", Chevron Australia said.

The Offshore Alliance also said in another statement Thursday a simultaneous baseline agreement put forward by Chevron Australia contractor Altrad-AGC had been ruled by the FWC as "ingenuine and fake" with several people engaged in a "sham exercise". Rigzone has yet to receive a response to a request for comment emailed to Altrad on Monday morning.

Supply Risk

S&P Global reported Friday, "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".

The Offshore Alliance had also warned a strike at Gorgon and Wheatstone would bring supply uncertainty in Western Australia.

In a statement August 22 about a planned strike against the North West Shelf plant, which is operated by Woodside Energy Group Ltd., the union warned, "Western Australian gas users could face greater uncertainty on gas supply in the coming weeks when Chevron’s Gorgon and Wheatstone plants could also face industrial action".

"The three plants supply about 45 percent of WA’s [Western Australia] gas consumption", the statement posted on Facebook noted.

But on August 24 the Offshore Alliance said it had in principle reached a deal with local company Woodside to avert the strike.

Potential Project Disruption

The strike that started Friday comes amid a plan to upgrade the Wheatstone plant, which Chevron Australia says "is one of the world's largest LNG projects and the largest single resource project in Australia's history".

Chevron Australia said August 23 it was working to raise the facility's capacity from 205 terajoules per day (TJpd) to 215 TJpd, or by five percent.

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