Inpex Faces Threat of Broad LNG Loading Ban as AU Labour Dispute Deepens

(Credit: Inpex)

Workers began a limited strike on Tuesday at Inpex's Ichthys liquefied natural gas facilities in Australia over a wage dispute, and their unions threatened much broader action next week that could disrupt LNG production and loadings.

Ichthys accounts for about 10% of LNG supply from Australia, which is now the world's second-largest LNG exporter following damage to facilities in Qatar due to the Iran war.

The Offshore Alliance, made up of the Maritime Union of Australia and the Australian Workers' Union, said it was taking the action after Fair Work Commission-facilitated bargaining failed to resolve key claims on pay and conditions. The Electrical Trades Union (ETU) has also joined the strike.

Initially, workers will down tools for two hours in the morning and two hours in the evening, among other conditions.

However, the Offshore Alliance served notice of another, much more comprehensive strike to begin on June 11 and run until June 23 at the 9.3-million-metric-ton facility that could have major impacts on the production and export of LNG.

Japan Faces Possible LNG Supply Crunch

The work bans and stoppages at Ichthys come just as Japan faces a possible LNG supply crunch due to the Iran war. Australia is the country's largest LNG supplier.

"INPEX remains focused on maintaining safe operations at Ichthys LNG – and importantly, ensuring reliable energy supply to our key trading partners in the Indo-Pacific region amid disruption to global energy markets," Senior Vice President Corporate, Bill Townsend, said in an emailed statement.

The Offshore Alliance last week held off on strike action after making progress in talks with Inpex, but on Tuesday said the company had the company had failed to meet certain demands.

“The response from Inpex has been underwhelming and shows that the company is not taking the negotiations seriously,” the union group said in a statement.

The company said it "will continue to engage in good faith with employees to reach a fair and equitable agreement."

The fresh notice on Tuesday contains over 100 work stoppage points including a “ban on all activities associated with the preparation, connection, and loading of hydrocarbons (including LNG, LPG, and condensate) from the Bladin Point onshore storage tanks to an offtake carrier, excluding when an offtake has already commenced,” a notice from the Australian Workers' Union to Inpex reviewed by Reuters said.

France's TotalEnergies is a partner at Ichthys and takes 1.8 million tons a year from the plant, with Taiwan's CPC Corporation taking 1.75 million tons. Japanese utilities are among the other buyers.

Japanese Buyers Monitor Situation

Japanese gas buyers said they were monitoring the situation closely but declined to say if they had cargoes loading during the strike periods.

Tokyo Gas declined to comment but a spokesperson said the company was watching the situation "carefully".

A spokesperson for Kansai Electric said, "We don't expect a major impact in the short term, even if the strike brings operations of the project to a halt."

Talks on a new enterprise agreement began over eight months ago but the union group said progress had only been made since mandated talks overseen by Australia's labour tribunal began some weeks ago.

In 2022 and 2023, the Offshore Alliance organised strikes at three LNG projects in Australia, affecting global supply.

(Reuters - Reporting by Rajasik Mukherjee; Additional reporting by Kiyoshi Takenaka,Hina Suzuki in Tokyo; Editing by Shreya Biswas and Sonali Paul)