Though one strike has already been authorized, with more likely to follow, talks between Australian unions and the owners of several key liquefied natural gas (LNG) facilities remain ongoing. An interruption to Australia’s LNG production, which could decimate the country’s output, may begin by September 1. Europe, which has become a massive buyer in the global LNG market, is expected to remain particularly vulnerable to energy shocks for some time.
Its position as the world’s weakest link may not be so weak anymore, however, as the EU has surpassed its winter target for gas stockpiles months ahead of schedule and is enjoying warmer than average weather forecasts for the fourth quarter. The bloc is also taking advantage of stronger relations with Ukraine, which has massive gas reserves, easy access to Eastern European markets, and the largest supply of storage tanks on the continent.
Related ETF and Futures: United States Natural Gas Fund, LP (UNG), Natural Gas EU Dutch TTF
European natural gas prices slumped on Wednesday morning, giving up early week gains derived from the looming threat of work stoppages across several key liquefied natural gas (LNG) facilities in Australia. As MRP noted last week, union workers at Woodside Energy Group’s North West Shelf (NWS) plant have already voted to approve a strike, threatening to walk off the job if contracts guaranteeing higher pay cannot be agreed to very soon. The Financial Times reports that Offshore Alliance, representing two unions, said the NWS workers had “unanimously endorsed” giving Woodside Energy seven working days’ notice if its claims were not resolved by close of business on Wednesday – setting the stage for a full on strike by September 1. Offshore Alliance says that they will finalize a further strike vote at the Chevron-operated Wheatstone and Gorgon LNG venture facilities by August 28.
Bloomberg reports that, if the labor dispute does spiral into walk-offs and work stoppages, they could disrupt about 10% of global LNG exports. Australia was the largest producer of LNG in the world last year, as well as the largest shipper of the fuel. Shell has acknowledged gas prices could rise in the short term if interruptions were to emerge at the key Australian facilities but noted that there has not been…
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