Industrial action in Australia at Chevron's Gorgon, Wheatstone canceled until 0500 GMT Sep 8

Australia's Offshore Alliance, or OA, has decided to postpone its protected industrial action plan at Chevron's Gorgon and Wheatstone facilities as talks are still underway, both the OA and Chevron told S&P Global Commodity Insights.

"The PIA is canceled until 1300 [0500 GMT] tomorrow," a union member at the OA said Sept. 7, noting that differences had not been resolved yet.

The PIA was initially announced for Sept. 7 but was delayed to the morning of Sept. 8, after which it has been delayed further amid ongoing negotiations. The looming strikes in Australia -- one of the world's top three LNG exporters -- have led to considerable volatility in the global gas market, particularly in Europe, where the region's increased reliance on LNG imports following the loss of Russian pipeline gas has market participants wary of any potential supply disruptions.

"We have been advised by the unions that protected industrial action will not take place at our facilities until 1 pm AWST [Australian Western Standard Time] Sept. 8," a Chevron Australia spokesperson confirmed later.

"We will continue to work through the bargaining process as we seek outcomes that are in the interests of both employees and the company," the spokesperson added. "We will also continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities."

Chevron-operated Wheatstone is among Australia's largest resource developments and the nation's first LNG hub. The Wheatstone Project has a nameplate capacity of 8.9 million mt/year of LNG and a domestic gas plant, while the Gorgon Project comprises a three-train, 15.6 million mt/year LNG facility and a domestic gas plant.

According to some industry sources, if the PIA leads to full work stoppages at these facilities, then as much as over 5% of the global LNG supply could likely go offline. However, some sources told S&P Global that they remained hopeful of a resolution that would avert strikes.

"There is still a possibility that we see an eleventh-hour agreement signed this week and avoid industrial action," Logan Reese, an associate director on the Asia Pacific Regionally Integrated team at S&P Global Commodity Insights, said earlier this week.

The initial impact of strikes will likely be minimal, but should the industrial action drag on there will be a growing risk to export volumes, Reese had cautioned Sept. 5.

In addition, the domestic market risks have been largely underreported with Gorgon and Wheatstone accounting for roughly half of Western Australia's gas supply, which is up against an overall tight supply and demand balance in the domestic market, he added at the time.

European LNG prices have been particularly volatile since talk of the upcoming strikes began in early August, with the Platts Northwest Europe Marker for October reaching a five month-high on Aug. 23 at $14.125/MMBtu. Platts, part of S&P Global Commodity Insights, last assessed the market higher March 10 at $14.966/MMBtu.

Northwest Europe has since fallen after talks of an initial delay to strike action Sept. 6, with Platts assessing the Northwest Europe Marker for October at a one-month low Sept. 6 at $9.299/MMBtu. It was last assessed lower Aug. 2 at $9.292/MMBtu. NWE rose slightly Sept. 7, with Platts assessing the market at $9.827/MMBtu.