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Chevron sees no agreement in sight with unions over Australia LNG facilities


Hearing for intractable bargaining declaration at FWC starts Sept 22

Industrial action at Gorgon, Wheatstone facilities began Sep 8

Offshore Alliance remains 'open to compromise'

  • Author
  • Takeo Kumagai    Surabhi Sahu
  • Editor
  • Jonathan Fox
  • Commodity
  • LNG

Chevron has not reached an agreement with unions after conciliation sessions with Australia's Fair Work Commission over strike action at the Gorgon and Wheatstone LNG facilities, a Chevron spokesperson told S&P Global Commodity Insights Sept. 20.

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"No agreement has been reached with the unions following further conciliation sessions held this week with the Fair Work Commission," the spokesperson said.

"Chevron Australia engaged in meaningful negotiations in an effort to finalize Enterprise Agreements with market competitive remuneration and conditions, however, the unions continue to ask for terms significantly above the market.

"The ongoing lack of agreement reinforces our view that there is no reasonable prospect of agreement between the parties."

In a separate statement to S&P Global, Offshore Alliance spokesperson Brad Gandy said: "The negotiations before the Commissioner were useful and resulted in some concessions on both sides. However, the Offshore Alliance and its members want to secure an enterprise agreement that locks in industry standard terms and conditions and the offer made by Chevron at the conclusion of the negotiations failed to meet that standard.

"Offshore Alliance members remain open to compromise, but Chevron must table an offer that doesn't have Chevron providing lesser terms and conditions of employment to its employees when compared to other employers in the sector," Gandy added.

Offshore Alliance is an alliance between the Australian Workers' Union and the Maritime Union of Australia.

The failed talks come as the country's industrial tribunal, the Fair Work Commission, is set to hear Chevron's request for an intractable bargaining declaration on the matter Sept. 22. The declaration has provisions that can act as a circuit breaker when there are no reasonable prospects of an agreement between disputing parties.

The Offshore Alliance, which started its protected industrial action at the Chevron-operated Gorgon and Wheatstone LNG facilities Sept. 8, said its members will stop work completely for two weeks from Sept. 14 as part of the protected industrial action.

Despite industrial action, Chevron so far has maintained its scheduled LNG deliveries from Gorgon and Wheatstone, except for a recent brief fault at its Wheatstone Gas Facility, which had cut LNG production to about 80% of usual rates.

Chevron resumed full production at the Wheatstone Gas Facility Sept. 17 after it said Sept. 14 that it was working to normalize operations there following a fault.

The Gorgon and Wheatstone projects are among Australia's largest resource developments. Gorgon comprises a three-train, 15.6 million mt/year LNG facility and a domestic gas plant, while Wheatstone has a nameplate capacity of 8.9 million mt/year of LNG and a domestic gas plant.

Japanese LNG lifting volumes account for 30% of Gorgon's output and 83% of Wheatstone's production, according to S&P Global calculations based on industry information.