Gas prices on the European market rise due to strike in Australia

The wholesale price of gas for the European market is rising due to a strike by employees at two Australian plants producing liquefied natural gas (LNG). At around 09:30 CEST, the price of the key October delivery gas futures contract at the Title Transfer Facility (TTF), a virtual trading hub in the Netherlands, was up by around seven percent and stood just below 35 euros (roughly CZK 850) per megawatt-hour (MWh).

Employees at Chevron’s Gorgon and Wheatstone plants in Australia are starting a strike today after union talks with management over wages and working conditions failed to reach an agreement. Employees initially plan to stage limited industrial action, but from next Thursday they intend to halt work completely for two weeks if the disputes over wages and working conditions are not resolved.

The two plants account for more than five percent of global LNG production capacity. Australia is the world’s largest LNG exporter, but is not a major supplier to Europe. There are concerns, however, that restrictions on Australian LNG exports will prompt buyers in Asia to compete for supplies from other sources by offering higher prices.

Last August, the wholesale price of gas for the European market climbed to nearly 350 euros per megawatt-hour due to reduced supplies from Russia. It has since fallen significantly, helped by high LNG supplies. The gas price on the exchange is now well below the administratively set cap in the Czech Republic, which stands at CZK 2500 per MWh.

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