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  • Writer's pictureMarsoft Admin

LNG production strikes in Australia

Strikes at Woodside’s North West Shelf offshore gas platforms and Chevron’s Gorgon and Wheatstone LNG plants in Australia would have significant consequences for the LNG trade and the LNG tanker market. The scope of the potential strike activity is still to be determined; before taking industrial action, unions must make an application to the Fair Work Commission and then hold a vote of the downstream workers. Woodside’s application was approved and 99% of workers voted for industrial action. Meanwhile, Chevron’s application was approved on Friday for employees to vote.

The exports from the five concerned platforms account for almost 10% of global LNG exports. Almost all of the production from these facilities is exported to Asia – predominantly China, Japan, South Korea and India

The threat of strikes led European spot gas prices to jump to a two-month high of €44/MWh on Thursday 10 August. It is worth noting that Asian spot prices did not show similar volatility.

A major disruption to LNG loadings could have far-reaching repercussions on LNGC spot rates. The impact on shipping rates will be driven by the length and magnitude of strikes and knock-on effects on Asian buyers. If exports are shut for a prolonged period and buyers in Asia replace Australian supplies with longer-haul US supplies, Marsoft’s analysis shows that LNGC spot rates could reach more than $200,000 per day.

We will continue to monitor this situation closely and update our clients as required. Our Q3 update is scheduled to be released on 24 August, and we will include the risk of strikes, if still in play, in our outlook.


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