Gas prices jump as strikes in Australia begin

Natural gas prices have jumped after strike action kicked off at two major liquefied natural gas (LNG) facilities in Australia.

The walkouts, in a row over pay and conditions, are taking place at Chevron's Gorgon and Wheatstone plants in Western Australia.

The US energy giant's two plants account for more than 5% of global LNG capacity.

On Friday, wholesale gas prices in the UK rose by about 10%.

"Prices are up this morning… but in a rather moderate way," said analysts at Engie EnergyScan.

"We have not yet reached the stage of a drop in supply. So, no need to panic in a context where all other fundamentals are rather bearish," they added.

Australia is one of the world's largest exporters of LNG, along with Qatar and the US, and its supplies have helped to cool global energy prices after Russia began cutting its supplies of natural gas to Europe.

Australia's industrial arbitrator, the Fair Work Commission, has been hosting mediation talks between Chevron and the Offshore Alliance - which is a partnership of two unions representing energy workers.

"Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms," a Chevron spokesperson said.

Offshore Alliance spokesperson Brad Gandy said Chevron's position had "barely budged" after five days of talks.

"Offshore Alliance members call on them to change tack so this dispute can be settled," he added.

While wholesale energy costs have fallen since Russia's invasion of Ukraine last year, pressure on prices remains.

Oil prices rose this week, with Brent crude trading at about $90 a barrel, after Saudi Arabia and Russia extended their cuts to supplies to the end of the year.

LNG is methane, or methane mixed with ethane, cleansed of impurities and cooled to approximately -160C.

This turns the gas into a liquid and it can then be shipped in pressurised tankers.

At its destination, LNG is turned back into gas and used, like any other natural gas, for heating, cooking and power.