News wire — The strikes at Chevron’s liquefied natural gas (LNG) plants in Australia will likely have limited near-term impact on U.S. gas prices as domestic demand remains low, analysts said.
Workers at Chevron’s Gorgon and Wheatstone facilities, which represent about 5% of global LNG supply, have escalated their strikes since Thursday. Unions have previously said they will strike opportunistically and target LNG exports in particular.
However, the facilities continued exports of LNG on Friday, LSEG data showed.
This compares with an uptick in U.S. gas prices in August when reports about the potential strikes at the Australian facilities surfaced.
“We aren’t seeing a strong influence from Australian strikes anymore,” said Gary Cunningham, director at energy advisory firm Tradition Energy.
“European (and Asian) buyers who had contracts with Australian producers rushed to hedge in U.S. markets in case they needed to source replacement cargoes from U.S. export facilities,” he added, referring to last month’s rise in prices.
Analysts also said the strikes have come at a time when natural gas demand is weak both in the U.S. and in Europe.
“The strike in Australia should have negligible impact on (the) benchmark as price is governed by regional supply/demand implications which remain tepid at this time,” said Ademiju Allen, senior analyst at Rystad Energy.
However, if the strikes continue for a longer stretch and until the onset of winter, U.S. and European prices could face more upward pressure, analysts warned.
“I suspect the international price impact would be higher than the domestic price impact as the additional international demand that can be met by the US LNG export is limited due to the US LNG export capacity,” Zhen Zhu, managing consultant at Guernsey, said.
U.S. gas prices this week could also have been pressured by the lower intake at Freeport LNG’s export plant in Texas, analysts said.
On Friday, the plant returned to full power capacity, LSEG data showed, after pulling less than usual gas over the past week.
Reporting by Sourasis Bose and Seher Dareen in Bengaluru; Editing by Sriraj Kalluvila – Reuters
