Hundreds of people at Chevron’s liquefied natural gas plants in Western Australia halted work on Friday, an industrial action affecting three facilities that account for about 6 percent of the world’s supply of the essential fuel.
At 1 p.m. local time, about 500 employees began short work stoppages and bans on some types of work, after union negotiations over pay and working conditions stalled.
The stoppages are scheduled to continue until Thursday. At that point, if the impasse remains, the unions will escalate with rolling strikes of up to 24 hours a day, for up to two weeks, according to the Offshore Alliance, a collaboration of two unions representing energy workers.
The labor action — at Chevron’s Gorgon and Wheatstone onshore processing plants and its Wheatstone offshore platform — had originally been scheduled to start on Thursday morning, but it was pushed back as Chevron and the unions attempted conciliation facilitated by a government agency.
The two sides have been in negotiations for about two years, but they have been unable to agree on issues including pay, job security, scheduling and transparency over work classification, the unions said.
“Offshore Alliance members are engaging in protected industrial action in response to Chevron’s obstinacy in refusing to accept an industry standard enterprise agreement to cover these facilities,” Brad Gandy, a union spokesman, said in a statement.
A Chevron spokesman said that the company had negotiated “in good faith” but that the two parties were still “apart on key terms.”
“We will continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities,” the spokesman said.
Gorgon and Wheatstone together produce about 25 million metric tonsof liquefied natural gas per year.
The industrial action comes two weeks after a strike was averted at a neighboring facility, Energy’s North West Shelf. The labor tensions have created volatility in European gas prices in recent weeks.
Saul Kavonic, an energy analyst, said the talk of strikes had put gas traders in Europe “on edge” because of the shortage in natural gas supplies that Russia’s invasion of Ukraine had created.
In the wake of that invasion, Russia curtailed its supply of natural gas to Europe, making nations there significantly more reliant on global liquefied natural gas supplies, he said. “Any supply disruptions now can have very serious consequences for energy security in both Asia and Europe because those markets are now super interconnected,” Mr. Kavonic said.
But he said it was “still very premature” to believe that the strike at Chevron’s facilities would lead to any serious disruption in global production of the fuel.
“There’s a huge amount of pressure involved here behind the scenes on both the company and the unions to not let this escalate,” Mr. Kavonic said. “The Australian government doesn’t want to see its reputation for reliability as an energy supplier tarnished further.”