Labor Union Pauses Planned Strike at Australia's Ichthys LNG Plant

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Written by Danny Levin, Deputy Editor for IIR News Intelligence (Sugar Land, Texas)

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Summary

A trade union has paused its plans for a labor strike at one of Australia's largest LNG production and export facilities, Ichthys, set for May 27 and 28, after reaching progress on negotiations with Japan-based INPEX. Australia is Japan's largest supplier of LNG.

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Australia's LNG Presence

Australia is the world's second-largest liquefied natural gas (LNG) exporter, behind the U.S. and ahead of Qatar. Australia in particular supplies about 40% Japan's LNG imports.

Four plants, all in Western Australia, serve as the foundation of the country's LNG production and export capacity, including Ichthys in Darwin. In the Pilbara region are Woodside Energy's North West Shelf (Karratha Gas Plant) and adjoining Pluto LNG, and Gargon LNG. The Industrial Info Resources Global Market Intelligence (GMI) Oil & Gas Plant Database offers detailed information--including capacities, maintenance schedules and necessary equipment--on the four LNG plants.

According to Industrial Info Resources data, there are 16 operational LNG production plants across Australia and seven in the planning stage of construction. Readers can view a full list here.

Ichthys LNG

Majority owner and operator of Ichthys, Japan's INPEX, applauded the pause of a strike planned for May 27 and 28 that would have disrupted operations at the country's third-largest LNG production and export facility--with its capacity of 8.9 million tons per year (MTPA) from two existing liquefaction trains. Offshore Alliance, a ‌combination of the Australian Workers Union and the Maritime Union of Australia, had threatened the strike due to disputes regarding pay and working conditions.

INPEX holds 1.1 MTPA of offtake from the plant.

The company "remains focused on maintaining safe operations at Ichthys LNG, reaching a fair and equitable agreement with employees and, importantly, ensuring reliable energy supply to our key trading partners in the Indo-Pacific region amid disruption to global energy markets," an INPEX spokesperson said.

Disruption to the facility's operations could have affected about 10% of the country's LNG export volume at a time when Asian buyers have been paying elevated prices since the start of the Middle East conflict and the closure and blockade of the Strait of Hormuz. Global LNG supply is on track to be much tighter than expected before those two developments.

Under development at Ichthys is the construction of a third train, which would increase production capacity to 14 MTPA. It could come online in the early 2030s.

Woodside's North West Shelf and Pluto LNG Maintenance Strike

On May 20, maintenance workers at Woodside's onshore and offshore North West Shelf and adjacent Pluto LNG plants, both of which have integrated production and export facilities, went on strike after failing to agree on wage terms with their contractor, UGL. This includes the Karratha Gas Plant, the onshore processing facility for North West Shelf. Both facilities are fully operational.

Together, the plants have a nameplate capacity of about 19 MTPA of LNG, with Karratha as the country's largest LNG production facility. Gorgon LNG trails Karratha with a nameplate capacity of 15.6 MTPA.

Australia is seeing domestic supply shortfalls and rising electricity bills, and as a result, earlier this month, the federal government released a draft of its LNG export rules--in which exporters nationwide would reserve 20% of their production for domestic usage. Set to take full effect in July 2027, the policy would not affect existing contracts.

Australia's east coast operates less LNG production and export capacity than its western counterpart.

Key Takeaways

• A planned union strike for May 27 and 28 at Australia's Ichthys LNG plant, which is majority owned and operated by Japan's INPEX, has been postponed.
• Australia supplies 40% of Japan's LNG Imports, and INPEX has an offtake agreement for Ichthys.
• Maintenance workers are striking at North West Shelf's Karratha Gas Plant and Pluto LNG, although both facilities remain operational.
• Australia is facing a natural gas supply crunch and is proposing that exporters allocate some export capacity for domestic consumption.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).