A view of a storage facility for Inpex’s offshore Ichthys project in an industrial park in Darwin, Australia, April 21, 2017. Picture taken April 21, 2017. REUTERS
June 9 (Reuters) – Japan’s Inpex said on Tuesday it would seek urgent orders from Australia’s Fair Work Commission to halt protected industrial action at its Ichthys liquefied natural gas facilities.
Any supply disruption from prolonged strikes could further tighten global LNG markets reeling from losses caused by the Iran war and the near closure of the Strait of Hormuz, which normally carries a fifth of global crude oil and LNG shipments.
Asia spot LNG prices are up 75% since the Iran war began, at $18.80 per million British thermal units (mmBtu).
Inpex’s move followed Monday’s warning by the Offshore Alliance that it would escalate a strike at three Ichthys sites offshore and in Darwin after the FWC’s facilitated bargaining failed to resolve key pay and conditions claims.
The company will seek to halt the strike under section 424 of the Fair Work Act to prevent extended action it said would hit its LNG buyers and domestic gas supply in Darwin.
“In the context of current fuel supply constraints, the disruption would be significant,” Bill Townsend, the firm’s senior vice president, said in an email.
Despite substantial progress in talks, outstanding matters yet to be resolved included rates of pay, allowances, and career progression, he added.
About 400 workers are set to ramp up action from Thursday, including a ban on loading cargoes of LNG and condensate, a type of light oil.
“Inpex has decided to throw away any pretence of good-faith bargaining,” Brad Gandy, a spokesperson for the Offshore Alliance, which groups the Maritime Union of Australia and the Australian Workers’ Union, said in a statement.
The decision followed six months of bargaining, countless meetings, weekends spent in negotiation and repeated compromises from the union, added Gandy, who is also branch secretary of the AWU in Western Australia.
The facility produces about 9.3 million metric tons of LNG annually, primarily supplying buyers across Asia.
It is a joint venture of Inpex, TotalEnergies and the Australian subsidiaries of CPC Corporation Taiwan, Osaka Gas , Kansai Electric Power JERA and Toho Gas .
TotalEnergies takes about 1.8 million tons a year from the facility and Taiwan’s CPC 1.75 million. Last week strike action delayed by 24 hours a vessel headed for a Taiwan port.
Ichthys also supplies domestic gas to the Northern Territory but should supply be shut in the Northern Gas Pipeline could potentially also send gas to Darwin.
Reporting by Rajasik Mukherjee and Helen Clark; Editing by Nivedita Bhattacharjee and Clarence Fernandez
