A potential strike at an Australian liquefied natural gas (LNG) plant has triggered a surge in wholesale gas prices in Europe.
The Offshore Alliance union announced that workers at the North West Shelf facility could walk out as soon as 2 September unless they receive a satisfactory pay offer.
On Monday, benchmark gas prices for the EU and UK jumped by about 10%, as reported by Bloomberg.
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Prices had previously skyrocketed after Russia invaded Ukraine, but they have since declined.
However, there are concerns that the North West Shelf facility, operated by Woodside Energy Group, could face disruption in its LNG exports if the strike goes ahead. Australia is a major global supplier of LNG.
Two other offshore LNG plants, Gorgon and Wheatstone, run by Chevron, are also at risk of strike action. Workers are currently voting on whether to join the industrial action, and the results are due on Thursday.
The three plants account for roughly 10% of the world’s LNG production.
Ben McWilliams, an affiliate fellow at the think tank Bruegel, cautioned that the strikes could have a global impact on LNG prices.
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He told the BBC’s Newsday programme earlier this month: “Australia mainly supplies Asia, but if these strikes were to happen, and Australian gas were reduced to Asian customers, we would see Asian customers turning around and looking, for example, to Qatar and competing with European buyers there.”
Mr McWilliams added that this would create a “domino effect on prices”.
After the outbreak of the war in Ukraine, Russia cut off natural gas supplies to Europe, forcing Australian along other countries to look for alternative sources of energy.
Many countries depend on LNG to meet their energy needs.
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Last week, Cornwall Insight projected that higher gas prices due to the Australian uncertainty would lead to a substantial increase in the Ofgem price cap in January.
It estimated a cap of £2,082.56 for a typical annual household bill for the first quarter of 2024, up from its £1,925.71 estimate for the fourth quarter of 2023.