Gas prices rise on fears of strikes in Australia
Source of the image, Getty Images
Written by Ben King and Noor Nanji.
Business journalists, BBC News
The potential occurrence of a strike at an LNG facility in Australia has resulted in an increase in wholesale gas prices in Europe.
The Offshore Alliance association cautioned that a potential work stoppage at the North West Shelf establishment might commence as soon as 2 September in the absence of an agreement concerning salary terms.
Bloomberg reported that gas prices in the European Union and United Kingdom experienced an approximate increase of 10% on Monday.
The costs skyrocketed following the incursion of Russia into Ukraine but have subsequently decreased.
Concerns have arisen that industrial action at the North West Shelf site operated by Woodside Energy Group may result in hindrances to the export of LNG from Australia, a crucial player in the global market.
Employees at two additional offshore liquefied natural gas (LNG) plants, Gorgon and Wheatstone, which are managed by Chevron, are also undergoing a voting process to determine whether they will engage in a strike. The outcome of this voting process is anticipated to be announced on Thursday.
The combined total of the three plants accounts for approximately 10% of the global LNG production.
Ben McWilliams, a fellow associated with the think tank Bruegel, cautioned that the strikes could have an influence on the worldwide costs of LNG.
In an interview with BBC's Newsday programme earlier this month, Mr McWilliams stated that Australia usually supplies gas to Asia. However, if these strikes were to occur and Australian gas was no longer available to Asian consumers, they would likely seek alternative options like Qatar and start competing with European buyers there instead.
According to Mr McWilliams, in the event that occurs, there will be a ripple effect on prices.
After the beginning of the conflict in Ukraine, Russia drastically reduced its supply of natural gas to Europe, prompting countries to search for alternative energy sources.
Several nations are depending on liquefied natural gas (LNG) to bridge the deficit.
Australia is among the globe's primary distributors of liquefied natural gas (LNG), alongside Qatar and the United States.
Cornwall Insight recently forecasted that the unsettled situation in Australia would lead to an increase in gas prices, potentially causing a notable surge in the Ofgem price limit in January.
It projected a maximum limit of £2,082.56 for an average yearly household expense for the initial three months of 2024, an increase from its previous prediction of £1,925.71 for the final quarter of 2023.
