LNG prices off the canvas as Gorgon conflict grows

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Wheatstone-LNG-project-update-Video

From LNGworldnews:

After the spot LNG prices have, by many reports, hit bottom in the past few months many buyers have returned to the market to stock up for the coming winter period and higher prices expected in October and November.

Platts Japan Korea Marker for September delivery rose from $10.525/MMBtu by $0.30/MMBtu over two days.

Platts reports sources saying that prices rose due to the expectation of even higher prices during the winter.

Even though the spot trading remains thin, recent sell tender from Australia’s North West Shelf LNG was interesting for a large amount of customers, with the project awarding six cargoes. They went to portfolio sellers who are thinking of the market and optimizing their position in the market.

That doesn’t sound overly promising but at least it’s rising. Meanwhile, trouble is brewing at Gorgon:

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International Transport Workers’ Federation (ITF) President Paddy Crumlin has said that Barrow Island could be declared a Port of Convenience unless Chevron tempers its union-busting efforts in Australia’s offshore oil and gas sector.

Chevron’s Gorgon LNG project has blown out from US$37 billion to US$54 billion due to the company’s ongoing mismanagement of the project. But rather than take responsibility for its poor performance, parts of the company insist unions were to blame, said Crumlin, who is also National Secretary of the Maritime Union of Australia.

“If Chevron continues to seek to exclude my union from an Australian island which will export natural gas then it will have to be declared a Port of Convenience,” Crumlin told Dockers’ Section at the 43rd ITF Congress in Sofia, Bulgaria.

“They are suing us for nothing more than we want a collective agreement. We have made attempts to reach out to Chevron, we travelled to their shareholder meeting in Midland, Texas, earlier this year,” said Crumlin.

A “Port of Convenience” designation might take industrial action international. From the International Transport Worker’s Federation:

In recognition of continuing employer and government threats to dockers’ jobs, to organised labour and to working conditions, ITF unions voted formally to launch the POC campaign at the ITF’s 41st Congress in Durban, South Africa in 2006. The ITF recognises that we need to organise globally, campaign globally and support each other globally to challenge the multi-nationals. Ports are a huge part of this global challenge because they’re key to organising the supply chain.

The campaign focuses on six main themes:

  • Competition
  • Privatisation
  • Casualisation
  • Trade union rights
  • Occupational health and safety
  • Job security

Within the POC work programme, there is a specific campaign targeted at the activities of the four global network terminal operators (GNTs). Unions across the world have committed to back the GNT campaign. We know that these giants operate in almost half the world’s ports and are growing. With their expansion we’re concerned that labour and safety standards may be driven down in a race to the bottom. The GNT campaign is there to unite workers in GNT and other ports to challenge any negative results of global capital. GNTs have the potential to affect workers in all ports. They have the ability to undermine terms and conditions in public ports by setting up nearby and cutting wages and standards to outprice organised terminals. One of our aims is to push for ITF dialogue with the terminal operators to sign up for global framework agreements. These are umbrella agreements with employers that set labour standards in their operations around the world.

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 Meanwhile, here are is a sexy video showing where Wheatstone is at:

Lot’s of frenetic manufacturing activity…in Korea.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.