Shell is shutting down production at its Prelude floating liquefied natural gas (FLNG) facility offshore Western Australia due to unions’ escalating industrial action.
The operator said on Monday it would not be able to supply cargoes until at least July 21 and that it would be sending workers off the huge FLNG vessel as work stoppages were affecting the company’s ability to moor carriers at the site to pick up LNG cargoes.
On Monday, workers overwhelmingly rejected the company’s latest pay offer, with 95% opposed, the Offshore Alliance, which combines the Maritime Union of Australia and Australian Workers’ Union, said.
The move comes at a time when the LNG market is already in turmoil, with high gas prices caused by restricted Russian flows and disruptions at other LNG export terminals, including the most recent fire at Freeport LNG in the US.
“Shell suspended bargaining 2 weeks ago when they should have been negotiating to try and reach mutually acceptable outcomes on employment conditions.
“Burning several hundred million dollars of profit and lost production is a course of action which makes zero financial sense and is a self-inflicted outcome of Shell’s gross mismanagement of industrial relations,” the Offshore Alliance noted.
Located in the Browse Basin, Prelude came back online in April after being shut down last December due to power failures caused by a fire. Shell operates Prelude with a 67.5%. Partners in the project included Japan’s Inpex with a 17.5% stake, Korea’s Kogas with 10%, and Taiwan’s CPC holding a 5% ownership interest.