(Bloomberg) -- Contract talks between Chevron Corp. and labor unions in Australia will continue another day, prompting workers at two liquefied natural gas terminals to put their threatened strikes on hold.
European gas prices fell as much as 11% to the lowest in two weeks on optimism a deal can be reached.
The new deadline for industrial action at the Gorgon and Wheatstone plants is 6 a.m. local time Friday, a Chevron Australia spokesperson said in an emailed statement. The unions previously threatened to start partial strikes Sept. 7 and then escalate to full stoppages that would begin Sept. 14 and last two weeks.
“We will continue to work through the bargaining process as we seek outcomes that are in the interests of both employees and the company,” the company said in the statement. “We will also continue to take steps to maintain safe and reliable operations in the event of disruption at our facilities.”
Offshore Alliance, a group comprising unions, confirmed in an emailed statement Thursday morning local time the strike action was postponed until 6 a.m. Friday.
“It really is essential to explore all avenues to avoid industrial action,” said Richard Pratt, a consultant for Precision LNG. “Once strikes start, the parties are driven further apart so this is a welcome development.”
The two Australian LNG plants operated by Chevron made up about 7% of global LNG supply last year. The extension of talks follows a compromise that another Australian exporter, Woodside Energy Group Ltd., reached with workers last month to prevent industrial action at its own plant.
The threat of strikes has roiled global gas markets since early August, when unions first voted for potential labor actions at the three plants. The European gas benchmark surged 40% at one point, highlighting the continent’s heavy dependence on LNG after the curtailment of Russian pipeline gas flows.
Imports of LNG in Europe are recovering after a recent dip, helping offset reduced pipeline-gas flows from Norway amid maintenance there. Still, traders remain on high alert for any prolonged blips in supplies.
The impact of any industrial action may be limited at first because demand is muted in Europe and Asia, but a prolonged disruption may have sparked a bidding war between the two regions for alternative cargoes in peak winter season.
The market is still fragile and there is too much complacency, Steve Hill, executive vice president of Shell Energy, said at the Gastech conference in Singapore. Supply issues may cause challenges, he said, adding that Shell would help mitigate any disruptions.
Dutch front-month futures, Europe’s gas benchmark, closed 9.8% lower Wednesday at €31.08 a megawatt-hour. The UK equivalent contract also dropped.
--With assistance from Elena Mazneva and Ruth Liao.
(Updates with union statement in fifth paragraph and final TTF price in final paragraph.)
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