Gas prices rose in Europe on Friday after employees at Australian liquefied natural gas plants announced they would strike again. Gas prices rose by 1.6 percent to 36.78 euros per megawatt hour. The previous strike last month also led to higher gas prices.
New grounding at Australian LNG terminals increases the risk of gas supply disruption. Australia is one of the world’s largest gas suppliers, and in Europe, among other places, there is increased demand for gas now that the weather is colder. Australia does not supply Europe directly, but tight LNG supplies may lead to more competition in the gas market.
Gas prices had fallen when it was announced at the end of last month that employees in Australian factories had returned to work after the measures. But now, with strikes back, prices are starting to rise again. Together, the two plants where employees work represent nearly 7 percent of global LNG supplies.
“Not enough effort”
The employees want to strike again because they want more wages and better working conditions from their employer Chevron. At the end of September, it looked as if Chevron and the labor unions had reached an agreement on, among other things, higher wages and better job security. However, the unions now believe that the company is not making enough effort to reach an agreement and have decided to halt work again. Chevron has not yet responded to Bloomberg’s request for comment. The company said Thursday that it had a meaningful conversation with employees about formalizing the agreement.
Despite the increase, European gas prices are currently well below last winter’s level, and the historic record of €345 per megawatt-hour in March 2022. Gas is still more expensive than it was in the years leading up to Russia’s invasion of Ukraine: in 2020, The price fluctuated around 15 euros per megawatt hour.
Although gas storage facilities are almost full, our region remains vulnerable to potential production outages. Another factor is that it is not possible to accurately predict whether Europe will experience a harsh winter or a very mild winter.
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