Gas prices spike as Australian workers begin strike

The industrial action, at the US major Chevron’s Gorgon and Wheatstone plants in Western Australia, will initially see union members halt work for up to 11 hours. Should a deal not be agreed before 14 September, however, action will be escalated, with workers planning on walking out completely for two weeks.

The dispute is centred on pay and conditions. Offshore Alliance, which represents the plants’ two unions, said talks had gone on for the last week but ended without agreement.

A spokesman added: “Offshore Alliance call on [Chevron] to change tack so this dispute can be settled.”

In a statement, Chevron said: "We bargained in good faith. The unions continue to seek terms that are above and beyond equivalent terms with others in the industry, including in agreements recently reached.”

Australia is a key exporter of LNG, and the two plants are responsible for around 6% of the global supply. Europe rarely uses Australian LNG, but the strikes have prompted fears of supply disruption worldwide.

In response, benchmark European TTF gas futures were nearly 7% higher on Friday morning, at around €35 per megawatt hour.

Rabobank said: “Europe doesn’t buy a lot of Australian gas – which is largely aimed at the Asian market – but liquid gas is fungible, and global demand and supply conditions are such that these developments do have a material impact of European gas prices.”

Joshua Mahony, chief market analyst at Scope Markets, said: “Energy prices remain a key determinant of market sentiment going forward, with any significant uptick likely to raise inflation expectations and lengthen the higher-for-longer outlook.

“While we had seen a welcome pullback in crude since its Wednesday peak, the commencement of strikes at two of Chevron’s LNG operations in Australia brought a fresh move higher for naturals gas prices.”