The risk of a strike in Australia is reduced and gas prices fall in Europe

European gas prices fell amid signs that the dispute over Australia’s largest liquefied natural gas (LNG) export facility will be resolved. This eased fears of one in three potential strikes in the top exporting country.

Europe, which is still trying to get over the worst of last year’s energy crisis, is highly vulnerable to the risks of supply disruptions. Even with adequate stocks, the region still needs a steady flow of LNG from global markets.

Gas prices have been extremely volatile this month, rising as much as 40 percent, as the market awaits the outcome of industrial action threats that could affect a tenth of global LNG supply.

But today, in principle, the agreement between the unions and the company has reassured Europe. Benchmark natural gas futures fell 21 percent on Thursday, the biggest drop since March 2022.

Dutch futures contracts, the reference price for gas in Europe, were trading in the morning at 30.48 euros per megawatt-hour (324.3 dollars per 1,000 cubic meters).

DEAL ANNOUNCED

The union, which represents workers at the Woodside and North West Shelf offshore platforms, announced their agreement after positive talks.

According to the union statement, the workers’ representatives support the “agreement in principle”, while all members will vote in favor of the agreement today.

Woodside said it would continue to work with the unions to finalize the agreement. “Substantial progress was made in talks held on Wednesday and the parties agreed in principle on some issues that are important to the workforce,” the statement said.

WHAT HAPPENED?

The facilities in Western Australia, together with the Chevron Corp, Gorgon and Wheatstone LNG facilities, account for approximately one-tenth of global LNG supply. The prospect of strikes by workers at the Chevron and Woodside plants had pushed up LNG prices in recent weeks.

On the other hand, even if a deal is reached with Woodside, Chevron Corp. is still in talks with the United States over disputes with workers at two LNG plants in Australia.

The first results of the vote on the possible strike by Chevron workers are also expected to be announced. Woodside unions have announced they plan to strike on September 2 if demands for better wages and working conditions are not met.