Threatened strike action at two Australian liquefaction facilities could result in the loss of up to eight LNG cargoes a week, shipbroker Simpson Spence Young said.
In a post, SSY’s LNG team said a one-week full shutdown of the 15.6 million tonnes per annum (mtpa) Gorgon plant and the 8.9-mtpa Wheatstone facility is equivalent to a loss of nearly 470,000 tonnes of LNG, which amounts to seven to eight cargoes of 65,000 tonnes.
On Monday, workers at the two Chevron LNG facilities voted in favour of allowing their unions to go ahead with industrial action in a dispute over pay and conditions. A date of 7 September was then set for this to start with escalating work bans and daily stoppages planned.
But strike action was averted by operator Woodside at its North West Shelf plant following talks with the unions.
“The impact that industrial strike action might have on LNG freight rates still remains uncertain,” SSY said.
The broker said the threat of strikes initially led to a surge in the September and October European Title Transfer Facility (TTF) pricing. But it said fears of industrial action across all Australian projects have “generally dissipated or been priced in, and there is an underlying expectation that an agreement will eventually be reached”.
According to Rystad Energy senior analyst Masanori Odaka, Asian LNG importers are adopting a “wait-and-see approach” in the wake of the strike date announcements with spot LNG prices in the region falling this week on high storage levels.
TTF pricing also fell this week.
The analyst detailed that the top three destinations for cargoes from Gorgon LNG from January through to 28 August have been the PTT-operated Map Ta Phut regasification terminal in Thailand, which landed approximately 1m tonnes. This was followed by JERA’s Higashi-Ohgishima terminal in Japan, which received received some 900,000 tonnes with 800,000 tonnes discharged at CPC’s Yung-An terminal in Taiwan.
The top destination of Wheatstone LNG over the same period was JERA’s Futtsu terminal in Japan with around 1.1m tonnes, CPC in Taiwan on 870,000 tonnes and JERA’s Higashi-Ohgishima facility in Japan receiving 730,000 tonnes.
Odaka said large-scale offtake from companies such as JERA with contracts of over 1 mtpa from Gorgon and Wheatstone could be impacted if industrial action materialises in September.
But the fallout from any strike action could be felt more keenly by importers with smaller annual imports and less alternative long-term contracts from other projects.
Odaka said: “While most Asian importers currently have comfortable LNG storage levels, an outage at two major Australian projects could impact spot LNG prices if the outages last until peak winter season.”
