Last-ditch negotiations between Chevron and unions representing employees at two major liquefied natural gas (LNG) facilities in Australia are now taking place in anticipation of scheduled strike action.
In the ongoing dispute over wages and working conditions, employees are planning to stage the first of a series of walkouts on Thursday. They intend to escalate to a total strike if their conditions are not met in the first place.
Prices for natural gas have lately increased as a result of concerns regarding recent stoppages.
More than five percent of the world's total LNG capacity is produced by the Gorgon and Wheatstone projects in Western Australia, which are owned by an American energy company.
The Fair Work Commission, Australia's industrial arbitrator, has been hosting mediation talks between Chevron and the Offshore Alliance, a partnership of two unions representing energy employees.
Saul Kavonic, an energy analyst, told sources that lower level strikes appear set to begin tomorrow, which will add inefficiencies but are unlikely to significantly impact global supply. However, the possibility of periodic full shutdowns beginning September 14 could have an effect on global energy markets.
Mr. Kavonic explained that in the unlikely event that the situation escalates to a full stop, approximately 6% of global supply would be halted, which would cause prices to increase if the strikes continue into the northern hemisphere winter.
Tim Harcourt, director of the Institute of Public Policy and Governance at the University of Technology Sydney, stated that he does not anticipate a prolonged strike.
He mentioned that as a result of the Fair Work Commission's ability to intervene very early, disputes in Australia do not last as long as they do in the United States and Great Britain. However, as it is a significant industry with 500 employees, it could have an effect on the global supply.
Last year's invasion of Ukraine by Russia caused oil and gas prices to skyrocket, leading to a substantial increase in energy costs for households and businesses.
Oil prices rose this week after Saudi Arabia and Russia extended their supply cuts through the end of the year.
Wholesale energy prices have declined from their peaks, but this week oil prices rose after Saudi Arabia and Russia extended their supply cuts through the end of the year.
Brent crude closed above $90 per barrel on Tuesday for the first time since November.
Additionally, Russia has reduced natural gas exports to Europe, prompting countries to seek alternative energy sources. Several nations rely on LNG to fill energy gaps.
Australia, along with Qatar and the United States, is one of the world's largest exporters of LNG, and its supplies have helped to reduce global energy prices.
LNG is purified methane or a mixture of methane and ethane that has been cooled to approximately -160 degrees Celsius. This allows the gas to be transported in pressurized containers as a liquid.
At its destination, LNG is transformed back into gas and used as any other natural gas would be for heating, cooking, and generating electricity.