Shell Australian Prelude LNG exports set to resume following breakthrough  

Quantum Commodity Intelligence – Shell has agreed to increase pay and guarantee jobs in a deal with unions on its huge Prelude floating LNG plant off Western Australia, allowing it to restart production after a shutdown of more than a month, according to Australia's Financial Review business newspaper.

Shell said an "in-principle enterprise agreement" had been reached with the Australian Workers' Union and Electrical Trades Union for a new enterprise bargaining agreement following 76 days of protracted industrial action that is estimated to have cost the company hundreds of millions of dollars.

The Offshore Alliance, which groups the unions, said on social media: "Our members have not taken a backward step in fighting for job security, significant uplifts in salaries and union-negotiated employment conditions." 

Shell said the process to formally lift the work bans was expected to be completed soon, which would allow a restart of production. It did not specify a date for when LNG shipments would resume.

The acrimonious dispute came at a time when Asia and the wider world was desperate for gas, amid soaring demand and increasing interruptions on Russian pipeline gas into Europe.

North Asian benchmark JKM futures for Oct22 settled Tuesday at near record highs of $56.33/mmBtu, while winter contracts for Jan23 and Feb23 were at around $64/mmBtu.

Market watchers said Asian LNG prices received a boost Wednesday following the delayed restart of the US Gulf Coast Freeport terminal, which remains shut until November.

Losses

The Prelude last exported gas on 8 July, and estimates of lost revenue from the strike vary between $500 million and $1.1 billion.

Shell had refused to negotiate with the unions while the industrial action was continuing. However, the in-principle agreement was secured during mediation with Fair Work Commission deputy president Melanie Binet.

Shell said on Wednesday its "strong preference" was for the dispute to be resolved through an agreement, and it was "confident this was the best outcome for our workforce."

"We are now focused on moving forward with our workforce, returning to safe, stable production and delivering affordable, reliable energy to our customers to meet the critical demands on energy security," a spokeswoman said.

Offshore Alliance spokesman and AWU national secretary Daniel Walton told AFR the union was happy to reach an agreement with Shell Prelude management.

"We look forward to a productive and constructive relationship with Shell management from here. The overall interests of workers and the interests of management are fundamentally aligned."