Chevron's Attempt to Utilize Arbitration in Halting Gas Platform Strike

In an effort to avert potential strike action at its Wheatstone gas platform off the coast of Western Australia, Chevron has taken the step of initiating enforced arbitration proceedings with labor unions. This decision was prompted by the company's awareness of impending rolling 24-hour stoppages scheduled for its two large LNG (liquefied natural gas) projects in the coming week.

Chevron, a major American energy corporation, submitted an application to the Fair Work Commission, seeking an "intractable bargaining declaration" for the Wheatstone platform workers. This declaration would pave the way for the commission to intervene and arbitrate the union's claims. Notably, the platform workers have been engaged in negotiations for a protracted three-year period.

This strategic move by Chevron unfolded concurrently with an unexpected shutdown of its domestic gas plant at the Wheatstone facility. This gas plant supplies crucial resources to industrial customers, including prominent entities like gold miner Newcrest and South32's Worsley alumina refinery.

In a remarkable display of dedication, union members offered to work through the impending strike action in an attempt to expedite the restart of the gas plant. This facility plays a significant role, providing approximately 13 percent of Western Australia's gas supply.

The intractable bargaining laws, a relatively novel addition introduced by the Labor government last year, came into effect in June. These laws empower a full bench of the Fair Work Commission to arbitrate claims if nine months of bargaining have transpired, conciliation has been attempted, there's no foreseeable agreement, and arbitration is deemed reasonable under the circumstances.

The situation escalated when the Offshore Alliance, a coalition consisting of the Australian Workers' Union and the Maritime Union of Australia, announced a dramatic escalation of industrial action at the two LNG projects. These projects collectively contribute around 7 percent of the global LNG supply and a substantial 47 percent of domestic gas supply in Western Australia. The union notified Chevron of their intent to initiate 24 one-hour stoppages at the Gorgon and Wheatstone facilities, commencing on September 14 and spanning two weeks. Following this, a full-scale strike was planned to commence after a week of rolling stoppages, averaging approximately 10 hours per day, set to start on Thursday at 6 am.

The potential disruption in production at these two significant plants could have wide-ranging consequences. It may not only impact European gas markets that are already grappling with the challenge of replacing Russian pipeline supplies but could also cast a significant shadow over mining and industrial production in Western Australia.

The unexpected breakdown of the Wheatstone domestic gas plant occurred late on a Monday, according to sources within the Western Australian gas industry. The Australian Energy Market Operator confirmed the outage and indicated that the plant would remain shut until the forthcoming Friday. A Chevron spokesperson stated that the cause of the outage had been identified, and efforts to restart the plant were already underway.

Interestingly, the union's notification of strike action occurred despite ongoing mediation sessions with Chevron before the Fair Work Commission, which commenced on Monday. Both parties are scheduled to meet daily throughout the week in an attempt to narrow their points of disagreement.

In response to the situation, a Chevron spokesperson reiterated the company's commitment to engaging in the bargaining process and seeking outcomes that benefit both employees and the company. The spokesperson also emphasized Chevron's dedication to maintaining safe and reliable operations in the event of any disruptions at its facilities.