Plans to escalate a strike at Chevron’s liquefied natural gas projects in Australia to 24-hours a day will increase supply risks, but chances of a long outage that could fuel a lengthy spike in gas prices are low, Goldman Sachs said.
There was a reduced probability of prices rising toward the 70 euros – 107 euros ($75.19-$114.93) per megawatt hour, the bank said in a note dated on Tuesday.
“This is both because of the potentially large revenue losses to Chevron, the facility operator, associated with a full LNG export outage, and because of potential regulatory intervention,” Goldman said in a note dated on Tuesday.
A resolution of the Australian labor dispute, on the other hand, could push Dutch TTF natural gas prices down to the 23 euros to 33 euros per megawatt hour range for the remainder of summer, Goldman said.
The Dutch October natural gas contract was up by 2.3 euros at 37.48 euros per megawatt hour by 1609 GMT on Wednesday.
Workers at Chevron’s Gorgon and Wheatstone LNG facilities, which account for 5% of global supply, started work stoppages last Friday after talks over pay and conditions failed to secure a deal.
Chevron has asked Australia’s Fair Work Commission (FWC) to intervene in its dispute, banking on new laws that came into effect in June. The tribunal will hear the case, its first so far, on Sept. 22.
“This process is fairly new, implemented into law earlier this summer, and not necessarily fast,” analysts at Goldman Sachs noted.
“A final resolution is not necessarily guaranteed at the Sept. 22 hearing, we perceive the FWC’s stance towards a speedy decision as reducing the likely duration of a potential outage.”
(Reporting by Brijesh Patel in Bengaluru; Editing by Sharon Singleton)