Chevron and unions begin mediation talks to avert an Australian LNG strike

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SYDNEY (Reuters) – Chevron Australia and unions representing workers at two of the U.S. energy major’s liquefied natural gas (LNG) facilities in Australia began talks on Monday aimed at averting strikes scheduled for Thursday if the parties fail to reach an agreement.

A senior member of the Fair Work Commission (FWC), Australian industrial governance, will host talks in Perth, the capital of the Western Australian state, every day this week, Reuters first reported on Friday.

A spokesman for Chevron Australia said it hoped to “narrow the sticking points” through mediated negotiation sessions.

Last week employees almost unanimously rejected a wage and terms deal offered to them directly by Chevron, bypassing unions.

The Offshore Alliance, a coalition of two unions, did not immediately respond to a request for comment about the status of the talks, which are not open to the public or the media.

Industrial work will begin at 6.00 am local time Thursday (2200 GMT Wednesday) on the Chevron Gorgon and Wheatstone projects, which account for more than 5% of global LNG production capacity, if the parties cannot reach a solution.

Employees plan to take up to 11 hours off work at multiple intervals and will stop performing certain tasks until at least September 14.

The union group said the strikes could cost Chevron “billions of dollars.”

A prolonged industrial inaction could disrupt LNG exports and increase competition for supercooled fuel, forcing Asian buyers to outbid European buyers to attract LNG shipments. China and Japan are the largest exporters of Australian LNG, followed by South Korea and Taiwan.

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Gorgon, Australia’s second largest LNG plant, has an export capacity of 15.6mtpa and Wheatstone 8.9mtpa.

Australia is the world’s largest exporter of liquefied natural gas, and the dispute has stirred up volatility in natural gas markets, with players worried about the risk of long-term disruption.

Energy analyst Saul Kavonic said last week that the planned business disruption “will add inefficiency” to Chevron’s operations and could prevent projects from maintaining full production, “but it is unlikely to affect production to an extent that will drive connectivity to global markets.”

A similar dispute between the union alliance and the North West Shelf LNG facility Woodside operates, Australia’s largest, was resolved last month after workers agreed to the deal.

(Reporting by Ringo José and Louis Jackson in Sydney; Prepared by Mohamed for the Arabic Bulletin) Editing by Christopher Cushing and Emilia Sithole-Matariz

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