TTF gas retreats as Chevron switches tactics in bid to end LNG strikes

12 Sep 2023

Quantum Commodity Intelligence – European natural gas futures Tuesday eased back as traders waited for the next moves on the industrial action being taken by Chevron staff working at gas installations in Australia.

Benchmark TTF futures for Oct23 were around €34.70/MWh in late-afternoon European trading Tuesday, down around 3% on the day and retreating from earlier highs of €36.70/MWh.

After talks broke down Friday between Chevron and the Offshore Alliance union, staff began to take a number of measures including limiting working hours, but that could escalate to full-strike action from as early as this week.

Unions have said they will ensure critical personnel during industrial action at Wheatstone and Gorgon gas projects to maintain domestic gas supplies, but LNG exports are expected to slump if the full strike goes ahead.

In response, TTF posted two sessions of solid gains on fears that European buyers would face stiffer competition on US LNG cargoes among North Asian consumers if Australian supplies are curtailed.  

Chevron said on Monday it sees "no reasonable prospect of agreement" and has applied to Australia's Fair Work Commission for an "intractable bargaining" declaration which could at least halt the strikes.

However, the recently introduced legislation is largely untested, leaving the market in a state of flux with prices expected to remain volatile.  

"The high filling levels of the gas storage facilities offer a sufficient cushion if less LNG were to arrive in Europe as a result of the strike action in Australia," said Commerzbank in a client note, but warned, "any prolonged supply outages could spark renewed nervousness and push the gas price up more significantly."

The latest data published by Gasinfrastructure Europe calculated gas storage facilities at 93.5% capacity, well ahead of the 90% EU target by the end of October.

Markets have also brushed off supply issues in Europe with maintenance at Norway’s Troll field extended until later in the week, while dry gas flows to the US Freeport LNG export plant declined this week due to a technical issue.