European wholesale gas prices have experienced a decline following the apparent resolution of a planned strike at Australia’s largest liquefied natural gas (LNG) plant.
Concerns arose due to a potential walkout at Woodside Energy’s North West Shelf plant, which had the potential to disrupt global LNG supplies and trigger a notable increase in gas prices.
However, on Thursday, Woodside Energy reached a preliminary agreement with the unions, a development aimed at preventing the strike from taking place.
Since reaching their peak on Tuesday, benchmark EU and UK gas prices have fallen by nearly 33%.
Representatives of the employees at the North West Shelf facility expressed support for the in-principle agreement with Woodside Energy. A vote to ratify the deal was scheduled for 7:30 pm Perth time (11:30 GMT).
Brad Gandy, spokesperson for the union alliance, welcomed Woodside’s offer and the avoidance of industrial action.
As geopolitical tensions, such as the war in Ukraine, led Russia to reduce natural gas supplies to Europe, the search for alternative energy sources intensified. LNG has become a significant substitute, with Australia playing a major role as an exporter.
This shift has led to a gradual reduction in global gas prices and energy expenses, following a surge in 2022. However, concerns about the potential strike at the North West Shelf plant had raised fears that prices might increase again.
Analysts at Cornwall Insight had previously anticipated that this uncertainty could contribute to an increase in the price cap set by the UK’s energy regulator for the coming year. The cap currently keeps the typical annual household energy bill at £2,074. Although the October cap is projected to slightly decrease to £1,926, Cornwall predicts that it will rise to £2,082.56 in January.
Woodside expressed its commitment to collaborating with the unions to finalize the agreement, highlighting substantial progress made during recent talks.
While workers at other Australian offshore LNG facilities, including Gorgon and Wheatstone operated by Chevron, voted in favor of possible strike action, experts believe the risk of significant supply disruption remains low. These facilities, along with the North West Shelf site, collectively contribute to about 10% of the global LNG supply.