Potential industrial action at Australia's Ichthys LNG in focus ahead of ballot close

A potential industrial action at INPEX-operated Ichthys LNG sites in Australia is in focus, with a ballot set to close on April 24 on strike action that could begin as early as May 7, amid ongoing supply disruptions stemming from the Middle East conflict.

Market sources surveyed by Platts, part of S&P Global Energy, said April 23 that they have not yet seen any move to secure alternative cargoes in the Asian spot LNG market, as they keep a close watch on the ballot results and any subsequent action.

"It is very difficult to say for certain whether the protected industrial action will go through by early May, as negotiations are likely to go on until the last minute," said Eric Yep, senior principal analyst for First Take Gas at S&P Global Energy CERA. "In the past, we have seen many such actions called off at the last minute as parties are able to find consensus."

Members of the Offshore Alliance -- a partnership between the Australian Workers' Union and the Maritime Union of Australia -- alongside the AWU and the Electrical Trades Union, are voting in the ballot that opened April 20 on types of protected industrial action at the Ichthys LNG sites. The ballot includes 26 questions, among them potential strike action that could affect supply from the Ichthys LNG facilities.

An OA spokesperson told Platts on April 17 that the union now expects protected industrial action at INPEX-operated Ichthys LNG sites to begin as early as May 7.

The Ichthys project currently has a nameplate capacity of 9.3 million metric tons/year of LNG, 1.65 million mt/y of LPG and 100,000 barrels/day of condensate, with roughly 70% of LNG output destined for Japanese buyers, according to INPEX.

"In terms of the quantity impact [from potential industrial action], the negative effect -- namely, the market-tightening impact -- is mitigated as it would occur during a period of relatively weak demand within the year," said Hiroshi Hashimoto, senior fellow for LNG and gas at the Institute of Energy Economics, Japan.

"The physical impact is considered significant, given that this is a project equivalent to 9 million tons annually. Especially under circumstances where supply from the Middle East Gulf is disrupted, this increases uncertainty in maintaining a stable supply," he added.

Under the current circumstances surrounding concerns about LNG supply stability, Hashimoto said, "It is hoped that the issue will be resolved within two weeks at most. Both the parties involved and Australian labor regulatory authorities recognize the importance of trust in supply stability, so an early resolution is anticipated."

Ballot questions

The 26 questions in the AWU-proposed protected action ballot seen by Platts showed that the union is asking its members about types of protected industrial action, including:

• An unlimited number of bans for an indefinite period on the performance of work after 06:00 on the day of demobilization from an offshore facility.
• An unlimited number of bans for an indefinite period on activities that assist in the offloading or transferring of hydrocarbons or any other product from the Ichthys Venturer FPSO to an offtake carrier, excluding when an offtake has already commenced.
• An unlimited number of bans for an indefinite period on all activities associated with the preparation, connection and loading of hydrocarbons (including LNG, LPG and condensate) from the Bladin Point onshore storage tanks to an offtake carrier, excluding when an offtake has already commenced.

Asked whether INPEX would be able to maintain a stable supply following potential demobilization from an offshore facility and provide bridge cargoes if LNG supply were affected by protected industrial action, an INPEX spokesperson said, "Since voting related to the strike is currently underway and there are still uncertainties remaining, we will refrain from commenting on hypothetical scenarios."

CERA's Yep said, "Even in the event of a strike, all Ichthys LNG operations and export volumes may not be affected simultaneously, and the shortage of workers could be limited to certain areas of operations only."

The potential industrial action at the Ichthys LNG sites comes at a time when spot LNG prices remain high, with Platts assessing JKM -- the benchmark price reflecting LNG delivered to Northeast Asia -- for June at $17.127/MMBtu on April 23, supported by renewed caution over LNG shipping through the Strait of Hormuz after the US-Iran ceasefire was extended, while market participants continue to monitor supply-side developments at the Ichthys project.

Watching results

Despite uncertainty over potential industrial action at the Ichthys LNG project, Japanese buyers are not rushing to secure alternative LNG cargoes, according to market sources.

"They are voting now. We understand that no capacity will be suspended at the moment," a Japanese buyer of Ichthys LNG said. "So far, [I] have not heard of any Japanese buyers purchasing cargoes because of this."

Similarly, a source at a Japanese utility echoed the absence of Japanese LNG buying in response to potential strike action at Ichthys LNG.

"If the labor union starts a strike, production will be partially or entirely suspended. I think the impact will be big," a Japanese trader said. "If this 8 million-9 million [mt]/y capacity is gone, along with the situation in the Middle East, the situation could become serious."

"It could be too large [an impact], and most of the offtakers are Japanese utilities. Some market participants expect the Japanese government may step in," the trader added.

Platts has reached out to Japan's Ministry of Economy, Trade and Industry, whose minister holds a 21.99% stake in INPEX, to inquire about the impact on the country's LNG procurement in the event of protected industrial action at the Ichthys LNG sites but has yet to receive a response.

"Ichthys LNG exported 7.8 million mt of LNG in 2025, and its second-largest offtaker was Taiwan at 23% of LNG exports, while the remaining went to South Korea and China. Taiwan has been severely hit by the Iran war due to its exposure to Qatari LNG," Yep said.

"If the Ichthys strike goes through, it would have a major impact on Taiwan, constrain Australian supply after it has already been hit by the recent cyclones and tighten the regional Asian market when inventories are already dangerously low and the peak Asian summer season is looming," Yep added.