Shell Prelude LNG loading disrupted for at least 2 weeks, worsening global supply

The logo of Royal Dutch Shell is pictured during a launch event for a hydrogen electrolysis plant at Shell's Rhineland refinery in Wesseling near Cologne, Germany, July 2, 2021. REUTERS/Thilo Schmuelgen
  • Extended industrial action delays LNG shipments
  • Last cargo left Prelude on June 26
  • Unions press Shell not to outsource jobs at lower pay

SYDNEY/MELBOURNE, June 29 (Reuters) - Shell Plc (SHEL.L) said on Wednesday liquefied natural gas (LNG) shipments from its Prelude floating facility off northwest Australia would be disrupted for at least two weeks due to work bans by unions fighting for better pay.

Loading disruption at the 3.6-million-tonnes-a-year facility adds to tightness in a global LNG market just as Europe scrambles to secure cargoes to make up for lost Russian gas supply. One of the largest U.S. LNG plants, Freeport LNG is also undergoing an extended outage.

"We have issued a notice to customers that cargoes will be impacted until at least mid-July due to the industrial action," a Shell spokesperson said in an emailed comment.

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The last cargo left Prelude on June 26 on the ship Oceanic Breeze, Refinitiv data shows.

When operating normally, the site typically loads a tanker every seven to 10 days, which suggests that loading of at least two cargoes will be prevented during the industrial action.

Prelude's loading delays come just three months after the facility resumed shipping LNG following a four-month shutdown due to a major power failure.

Workers on Prelude began 12 days of industrial action on June 10 over a pay dispute. The action has now been extended to July 14, Shell and the Australian Workers' Union said. read more

Shell has scheduled a vote on a new offer, including an increase of A$27,000 in the offshore allowance to A$117,000 ($80,900) a year, an increase of A$3,000 in the commuting allowance to A$10,000 annually, and other benefits.

The Australian Workers' Union says Shell has yet to meet some of its demands, including one that would stop Shell from hiring contract workers at lower pay than the company's employees doing the same job.

Prelude is co-owned by Shell, Inpex Corp (1605.T), Korea Gas Corp (KOGAS) (036460.KS), and a subsidiary of Taiwan's state-run Chinese Petroleum Corp. Shell operates the facility.

($1 = 1.4459 Australian dollars)

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Reporting by Renju Jose in Sydney and Sonali Paul in Melbourne; Editing by Jacqueline Wong and Bradley Perrett

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