Australian LNG Plant Strike May Send Global Gas Prices Soaring

The specter of a looming strike at one of Australia's major liquefied natural gas (LNG) plants has sent ripples through global markets

by Faruk Imamovic
SHARE
Australian LNG Plant Strike May Send Global Gas Prices Soaring

The specter of a looming strike at one of Australia's major liquefied natural gas (LNG) plants has sent ripples through global markets, with wholesale gas prices in Europe already feeling the pinch.

A Deep Dive into the Potential Impact

The North West Shelf facility, operated by Woodside Energy Group, sits poised on the brink of labor unrest.

The Offshore Alliance union has sent out a clarion call, warning of a potential strike as soon as 2 September, unless an agreement on wages is finalized. The immediate fallout was evident as benchmark gas prices for both the EU and the UK surged by approximately 10% on a single Monday, as reported by Bloomberg.

This uptick comes in the backdrop of a fluctuating market. Gas prices had previously skyrocketed in response to Russia's controversial invasion of Ukraine but had somewhat stabilized thereafter. The ramifications of such a strike are not just localized.

Australia stands tall as a significant cog in the global LNG supply chain. With disruptions anticipated in the shipments from the North West Shelf facility, there's mounting apprehension about a potential domino effect on global gas supplies and prices.

Ben McWilliams, a seasoned voice and an affiliate fellow at the Bruegel think tank, shed light on the possible global repercussions during a chat with the BBC's Newsday programme. "Australia primarily caters to the Asian market," he stated.

But, with a looming strike and a consequent curtailment of the Australian gas supply, Asian consumers might pivot their attention to other major suppliers like Qatar. This redirection of demand would put them in direct competition with European buyers, driving prices upwards.

In his words, such a shift would undeniably lead to a "knock-on effect on prices."

The Global LNG Landscape Amidst Geopolitical Strains

In the aftermath of the conflict in Ukraine, Russia curtailed its natural gas supplies to Europe, compelling nations to scout for alternative energy sources.

LNG has emerged as the hero for many countries, bridging the energy chasm. Australia's role in this scenario is undeniable. It's positioned as one of the globe's premier LNG exporters, sharing this coveted mantle with Qatar and the US. Any disruption to its supply lines, therefore, casts a long shadow on the international energy landscape.

Australia
SHARE