Shell unable to supply Prelude LNG cargoes until July 21

By Sonali Paul

MELBOURNE (Reuters) – Shell on Monday told customers it would be unable to supply liquefied natural gas (LNG) cargoes from its Prelude facility off northwestern Australia due to industrial action over a pay fight, which has been extended to July 21.

Shell has stopped production and will be sending workers off the huge floating facility from Monday night as work stoppages were affecting the company’s ability to moor tankers at the site to pick up LNG cargoes, a Shell spokesperson said.

“Shell is expected to commence shutdown of Prelude from night shift on Monday,” the spokesperson said.

The company sent customers an “inability to supply notice for all future cargoes, due to inability to complete offtakes following increased impacts related to the ongoing Protected Industrial Action (PIA),” she said.

The inability to supply notice is aligned with the current period of protected action, which has been extended to July 21, the spokesperson said. The work stoppages began on June 10.

The last cargo left on the weekend, after the company stepped up output to 95% of capacity last week as it said workers had downscaled their industrial action.

Output had been reduced sharply in June to match storage capacity at the site as shipments were disrupted due to work stoppages.

The move to shut down the site came after the Offshore Alliance said its work stoppages would impact mooring and berthing of tankers picking up LNG cargoes, the company said.

On Monday, workers overwhelmingly rejected the company’s latest pay offer, with 95% opposed, the Offshore Alliance, which combines the Maritime Union of Australia and Australian Workers’ Union, said. It urged the company to negotiate with the union.

“This situation could actually be resolved very easily if management simply drops its strange, hyper-aggressive industrial relations tactics,” Offshore Alliance Coordinator Zach Duncalfe said in a statement.

(Reporting by Sonali Paul; Editing by Tom Hogue, Kirsten Donovan)