Chevron accepts arbitration terms in dispute at Australia LNG plants

Illustration shows Chevron logo and natural gas pipeline

A 3D printed natural gas pipeline is placed in front of displayed Chevron logo in this illustration taken Feb. 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo Acquire Licensing Rights

  • Summary
  • Companies
  • FWC 'strongly' recommends parties accept its proposal
  • Chevron accepts; unions meet to decide whether to accept terms
  • Union tells FWC Chevron offer lower than Woodside deal

SYDNEY, Sept 21 (Reuters) - Chevron (CVX.N) said on Thursday it would accept the terms of a deal brokered by Australia's industrial arbitrator to resolve a dispute with unions over pay and conditions at two liquefied natural gas (LNG) projects in the country.

While the unions have yet to respond to the proposal, a successful deal could put an end to strikes that started nearly two weeks ago at the plants supplying around 7% of the global LNG market, which have roiled global gas prices.

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The Fair Work Commission (FWC), which has the power to impose a settlement, said it "strongly recommended" parties accept its proposals to end work stoppages that began on Sept. 8 at the Gorgon and Wheatstone LNG operations.

"After considering the recommendation, Chevron has accepted the recommendation to resolve all outstanding issues and finalise the agreements," a spokesperson said on Thursday.

"We have informed the Commissioner of our position and written to the unions and other employee bargaining representatives confirming our acceptance."

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The move raises the possibility the parties may strike a deal that could call off strikes hours before the two sides appear before an FWC hearing in Sydney.

A union official who declined to be named said members were currently meeting to discuss the FWC deal.

The prospect of prolonged disputes at three LNG operations in Australia, the world's top LNG exporter, sent gas prices up as much as 35% in August, but markets eased after a dispute involving the country's biggest LNG plant was resolved.

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The commission's recommendations came a day after the latest talks between Chevron and a union alliance over strikes at the Wheatstone and Gorgon facilities ended without a deal.

The two sides have until 9 a.m. on Friday (2300 GMT on Thursday) to decide whether to accept the commission's recommendations ahead of a scheduled hearing later in the day.

"I strongly recommend that the parties adopt the recommendations... which will hopefully resolve these disputes," FWC Commissioner Bernie Riordan said.

"In my view, the parties are close to achieving their desired outcome of registered enterprise agreements to cover the wages and employment conditions," Riordan said in the filing.

The tribunal has the power to halt the strikes, which escalated to two 24-hour work stoppages over the weekend.

Chevron has previously said it would not comment on the strikes, and that its focus was maintaining reliable operations when disruptions occur.


The hearing was sought by Chevron for the commission to declare bargaining had reached an "intractable" stage following more than nine months of talks, which would end the strikes and allow the tribunal to set terms and conditions of employment.

Unions argued in a submission to the commission that talks are not intractable, and that total pay for some roles at Chevron remains below equivalent roles at Woodside (WDS.AX), where the company and unions struck a deal last month.

Chevron said in a statement on Thursday it had engaged in "meaningful negotiations", but that unions had demanded terms above market standards.

Riordan said both Chevron and the unions had "spent countless hours at the negotiating table", and that the talks had resulted in an agreement on the majority of provisions.

"It would be a pity and very frustrating to simply throw out these agreed positions and have the parties return to their respective logs of claims for any future arbitration," Riordan said.

Reporting by Renju Jose and Lewis Jackson in Sydney; Writing by Alasdair Pal; Editing by Sonali Paul and Jan Harvey