Gas prices fall as fears over Australian strike recede
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Journalist covering business news, BBC News
Wholesale gas prices in Europe experienced a decline following signs that a potential strike at the biggest liquefied natural gas facility in Australia had been avoided.
The strike that occurred at Woodside Energy's North West Shelf facility had the potential to cause significant disruptions to international liquefied natural gas (LNG) shipments, resulting in a notable surge in gas prices.
However, the company managed to make progress on Thursday by reaching a tentative agreement with labor unions, aiming to put an end to the strike.
The prices of EU and UK gas have experienced a significant drop of around 33% since reaching their highest point on Tuesday.
The employee delegates at the North West Shelf facility expressed their approval of the preliminary understanding reached with Woodside Energy. They declared their intention to endorse the agreement through a voting process scheduled for Thursday.
"We are glad that Woodside has presented our members with a robust proposal without the need for any strikes or protests," expressed Brad Gandy, spokesperson for the union coalition.
After the outbreak of the conflict in Ukraine, Russia greatly reduced its exports of natural gas to Europe, prompting nations to explore alternative energy sources.
Several nations are depending on liquefied natural gas (LNG) to bridge the shortfall, and among them, Australia stands as one of the largest global suppliers.
This has resulted in a gradual decline in gas prices worldwide and a decrease in energy bills, which had skyrocketed in 2022.
Nevertheless, the possibility that employees at the North West Shelf facility could go on strike on 2 September elicited concerns that prices might begin to increase once more.
Analysts from Cornwall Insight projected that the lack of clarity would have an impact on the increase of the price ceiling determined by the energy regulatory body in the UK. This ceiling limits the amount that suppliers can charge consumers for each unit of energy and is expected to rise in the coming year.
The regulation signals that the average yearly expense for households, referred to as the cap, is presently at £2,074. However, the upcoming cap for October, set to be disclosed on Friday, is predicted to decrease slightly and settle at £1,926.
Nevertheless, Cornwall predicted that the cap would increase to £2,082.56 in January. The expert mentioned that a new forecast will be published this coming Friday.
Woodside stated that it will maintain its collaboration with the labor unions in order to reach a conclusive agreement.
Significant advancements were achieved during the discussions conducted on Wednesday, and the involved parties have obtained a preliminary consensus on various crucial matters concerning the employees.
Employees at two additional offshore LNG sites in Australia, namely Gorgon and Wheatstone, which are managed by Chevron, have given their approval for potential strike measures on Thursday.
In addition to the North West Shelf location, the facilities constitute approximately one-tenth of the global provision of liquefied natural gas (LNG).
But, according to energy expert Saul Kavonic, the chances of labor strikes causing significant disruptions to Chevron's operations are slim.
