Offshore Technology

Daily Newsletter

11 August 2023

Daily Newsletter

Woodside and Chevron in union talks to avert strike action

Workers at facilities responsible for 10% of global LNG exports have not yet voted on potential industrial action.

Australian offshore operator Woodside and international giant Chevron have started talks with Australian labour unions ahead of threatened strike action.

On Thursday, the companies said they would talk to the Offshore Alliance group of unions then and next Tuesday. Members of these unions have objected to current pay rates and working conditions, particularly at Woodside's North West Shelf gas platforms and Chevron's Gorgon and Wheatstone liquified natural gas (LNG) plants. These have annual LNG capacities of 16.9 million tonnes, 15.6 million tonnes and 8.9 million tonnes, respectively.

Offshore Alliance comprises of the Australian Workers’ Union and the Maritime Union of Australia. The unions also seek better job security, including limits on how much work can be outsourced to contractors.

Workers have yet to vote on whether strikes or other action will take place at the LNG facilities. Under Australian law, such votes must be approved by the federal government’s Fair Work Commission before they can take place. Any industrial action would need to give seven days’ notice before its start and then take place within a 30-day period.

Brad Gandy, branch secretary of the Australian Workers Union, said: "Our members at Woodside and Chevron are fighting for what they deserve, a fair and reasonable agreement as soon as possible as they are well aware of the hundreds of millions of dollars these companies will lose if protected industrial action slows exports of Australian gas.”

A Woodside spokesperson told Reuters that companies were engaging “actively and constructively”, saying: "Positive progress is being made, and the parties have reached an in-principle agreement on several issues that are key to the workforce.”

Together, the facilities handle 10% of global LNG exports. Disruption at the plants would impact Australian exports, primarily those to Japan and South Korea, the main product consumers from the affected facilities.

The threat of strikes has pushed global LNG prices higher, particularly in Europe. After reducing its imports from Russia following the invasion of Ukraine, the continent seeks new international fuel sources. While Australia rarely sells directly to Europe, the potential disruption to the fragile European supply chain caused an oversized impact on markets. For the first time, gas futures contracts briefly pushed above €40/MWh ($44/MWh), an increase of almost one-third.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.