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Chevron accepts FWC's recommendation to resolve disputes with unions at Australia LNG plants

Highlights

Recommendation follows failed talks between Chevron, unions

Unions considering recommendation 'carefully'

Dutch TTF drops more than Eur1/MWh on news

  • Author
  • Takeo Kumagai
  • Editor
  • Manish Parashar
  • Commodity
  • LNG

Chevron has accepted a recommendation from Australia's industrial tribunal, the Fair Work Commission, earlier Sept. 21 to resolve disputes with unions at its Australian LNG plants, a Chevron Australia spokesperson told S&P Global Commodity Insights Sept. 21.

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"Today, we were provided a recommendation from [the FWC's] Commissioner Riordan," the spokesperson said. "After considering the recommendation, Chevron has accepted the recommendation to resolve all outstanding issues and finalize the agreements."

"We have informed the Commissioner of our position and written to the unions and other employee bargaining representatives confirming our acceptance."

Chevron has consistently engaged in meaningful negotiations in an effort to finalize Enterprise Agreements with market competitive remuneration and conditions, the spokesperson added.

Chevron's comments came after the FWC made a recommendation to Chevron and unions earlier in the day in a bid to resolve disputes at the company's Gorgon and Wheatstone LNG facilities.

"In my view, the parties are close to achieving their desired outcome of registered enterprise agreements to cover the wages and employment conditions for employees working for Chevron at their three facilities in the northwest of Western Australia," FWC Commissioner Bernie Riordan said in the recommendation.

"The parties have been negotiating for these agreements for a long period of time and have spent countless hours at the negotiating table. These discussions have resulted in widespread agreement on the majority of provisions of the proposed enterprise agreements."

"It would be a very unfortunate circumstance if the parties did not utilize the good work that has been done during this period in adopting these agreed outcomes," Riordan added.

The Offshore Alliance, an alliance between the Australian Workers' Union and the Maritime Union of Australia, said earlier Sept. 21 its members at Chevron would consider the FWC recommendation later in the day.

"Our members at Chevron will be tonight considering Commissioner Riordan's recommendation carefully as it touches on some key bargaining claims," Offshore Alliance spokesperson Brad Gandy said.

Price impact

The Dutch TTF price for October delivery dropped by more than Eur1/MWh from its intraday high after Chevron's announcement, trading down at Eur36/MWh as of 1115 GMT, before rebounding slightly.

Platts, part of S&P Global Commodity Insights, assessed the TTF month-ahead price on Sept. 20 at Eur37.04/MWh.

The European gas market saw a number of price spikes in August on news of the potential strike action driven by concerns that Europe would face increased competition for LNG cargoes in the event of disruption to Australian exports.

Platts assessed the November JKM at $14.147/MMBtu Sept. 21, down 1% on the day.

The FWC's recommendation came a day after Chevron and the Offshore Alliance failed to reach an agreement during conciliation talks Sept. 20, and ahead of a scheduled hearing by the FWC of 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.

Currently, there are no conciliation talks underway between Chevron and the unions. However, Chevron and the unions have to decide whether to accept the FWC's recommendations by 9 am Australian Eastern Standard Time on Sept. 22 ahead of the scheduled hearing from 10 am.

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 LNG and a domestic gas plant.