Australian Unions Reach Deal with Inpex to End Strikes at Ichthys LNG Plant

Australian union groups have come to an agreement with Japanese energy firm Inpex to halt strike action at the Ichthys LNG facilities, Reuters reported on June 17.

Australia’s Offshore Alliance, which consists of the Australian Workers Union and the Maritime Union of Australia began taking industrial action at the Ichthys onshore and offshore plants on June 2.

The strike has disrupted shipments of cargoes and forced the Japanese company to shutdown one of its two liquefaction trains this week. In addition to an LNG cargo, two condensate cargoes from the export terminal also failed to be loaded. The strike is estimated to have cost the Japanese firm at least $200 mn in lost earnings.

“Unions have notified Inpex there will be a cessation of all strike action by 6 p.m. tonight,” Offshore Alliance said in a statement.

In April, 326 of 346 union members voted to take strike action at the 9.3 mn tonnes per year (tpy) Ichthys plant in Darwin in the Northern Territory, as well as the offshore central processing facility, and the offshore floating production, storage, and offloading facility (FPSO).

Details of the deal have not been released, however Inpex has confirmed that an in-principle agreement has been come to and that cargo loading has recommenced.

Australian media have reported that the agreement includes a 3% annual raise added on top of the consumer price index. It also prevents permanent jobs from being outsourced to low-wage hire contractors.

Ichthys accounts for around 10% of Australia’s LNG output. The strike came at a difficult time, as a shortage of global supply emerged following the eruption of the Middle East conflict between Israel, the US, and Iran.

With the Strait of Hormuz closed by Iran, about 17% of global LNG supply was sidelined with both Qatar and the United Arab Emirates able to ship cargoes to buyers. Amid this shortage of LNG, spot market prices soared. Given the timing of the strike at Ichthys, Australia’s reputation as a reliable supplier of LNG took a hit.