Europe’s benchmark natural gas prices had plunged by as much as 21% at opening in Amsterdam on Thursday after a workers’ union and the company operating Australia’s largest LNG export facility reached an agreement to avert a looming strike.
After diving by 21% at open, the front-month futures at the Dutch TTF hub, the benchmark for Europe’s gas trading, recouped some of the losses but still traded 11% lower to $35.45 (32.65 euros) per megawatt (MWh) as of 9:11 a.m. GMT on Thursday.
The dip in prices followed the news overnight that a workers’ union in Australia reached an in-principle agreement with Woodside Energy over pay and work conditions that averts a strike at Woodside’s North West Shelf facilities.
Early this week, the front-month contract settled at the highest levels since April this year as the market was anxious about how labor talks would go.
“The Offshore Alliance has reached an in-principle agreement with Woodside on an Enterprise Agreement to cover the GWA, NRC, and Angel Platforms,” the trade union said early on Thursday.
“Our Reps have endorsed the in-principle agreement reached with Woodside and members will be meeting this evening to go through the offer of settlement.”
“The Union has committed to not filing a Notice of Protected Industrial Action, with the final drafting of the Agreement being provided by Woodside for review by the Union lawyers on Monday,” the Offshore Alliance said.
The North West Shelf, operated by Woodside, is the largest LNG production project in Australia, with a capacity of 16.9 million tons annually, followed by Gorgon, which has a capacity of 15.6 million tons Wheatstone can produce 8.9 million tons of LNG annually.
The averted industrial action at Woodside’s facilities is good news for LNG buyers because even if Chevron fails to reach a deal with its workers, the impact of a strike will be smaller when it doesn’t involve the massive North West Shelf platforms.