Australian LNG facility strike fears recede and the wholesale market reacts
The threat of strikes in a key Australian LNG facility seems to be easing as unions accept a pay offer.
We have seen prices jump this last few days on the back of the threat of strike action. The workforce at the North Shelf Plant run by Woodside Energy had threatened to disrupt global LNG supplies. The LNG facilities in this area of Australia account for an estimated 10% of global LNG shipments and is one of the worlds largest exporters, supplying high usage countries in the far east including China.
According to BBC News, Woodside said that is would continue to work with unions to finalise the agreement. At the time of writing (24/08/2023), an agreement had been reached in principle on a number of issues that were key to the workforce.
Workers at two other offshore LNG facilities in Australia, Gorgon and Wheatstone, operated by Chevron, voted to endorse possible strike action, so we are not out of the woods yet.
Since Russia turned gas pipelines off to Europe shortly after it invaded Ukraine in September 2022, LNG has been the primary alternative to fill the void, so if there is a threat to LNG supply the markets will react quickly.
At a time when European gas storage levels are at over 90%, they will want to carry on importing LNG at a good rate to hit maximum capacity in preparation for the colder winter months ahead.
Household prices might now go back up next year
Last week, analysts at Cornwall Insight indicated that the recent uncertainty might mean that the price cap set by Ofgem is revised up further next year.
The price cap is designed to offer protection for household customers and is the maximum amount that an energy supplier can charge their customers.
The fact that this might be increased is not good news at all and a clear indication that we still have to endure a lot of price volatility in the months and years to come.
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