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Strike on Shell’s FLNG Prelude Ends After 76 Days

strike settled on Australian FLNG Prelude
Production on the Prelude has been suspended since July (Shell file photo)

Published Aug 25, 2022 12:12 PM by The Maritime Executive

The protracted labor dispute between Shell and the union representing workers on its massive Prelude FLNG vessel off the coast of Australia has come to end with a tentative agreement. The mediated settlement comes less than a week after the union said it would extend the strike at least till the first of September vowing not to give up as they passed the 70-day mark for the strike and 18 months of negotiations.

The company released a brief statement saying "Shell is pleased to confirm an in-principal Enterprise Agreement has been reached with the Australian Workers’ Union and Electrical Trades Union in relation to the Prelude FLNG facility.”

The agreement between the Offshore Alliance, which represented the two unions, and Shell was mediated by Australia’s Fair Work Commission, which had also approved the labor action against Shell. After receiving approval for its strike, the union had begun in June with one-hour work stoppages at the facility that is located about 300 miles northeast of Broome in Western Australia. In July, Shell announced that it was suspending operations at the facility.

“Our members have not taken a backward step in fighting for job security, significant uplifts in salaries and union negotiated employment conditions,” the Offshore Alliance said in a brief statement after the settlement was reached. In addition to wage increases, the union was seeking job security which had become the point of contention during the negotiations. While the agreement does not cover maintenance and catering staff which are already contracted labor, reports indicate that under the agreement Shell can not contract out additional jobs at lower pay levels. Full details of the agreement will be released in the coming days.

The work ban approved by the Fair Work Commission was withdrawn on Wednesday morning clearing the way for work to resume on the FLNG. Shell said it was focusing on returning the Prelude to safe and stable production. The company had previously said it would defer a maintenance period scheduled for September into 2023 in order to resume production after the strike. Estimates are that Shell lost over US$1 billion in production during the 76-day work stoppage.

Problems at the site, however, may not be over. While the unions are expected to present the agreement to members for final ratification in the coming days, regulators continue to monitor the facility. According to the Sydney Morning Herald, the offshore safety regulator NOPSEMA visited the site again this month during the work stoppage and is preparing an updated report based on its findings. 

The facility which was designed to have an annual capacity of approximately 3.6 million tonnes, has experienced a series of troubles since it completed its first shipment in 2019 that have limited its production. In December 2021, it experienced a small fire that left the facility without power for days and resulted in the ongoing monitoring by regulators.

In celebrating its victory, the union said the agreement with Shell also sends a signal to others in Australia’s energy industry for future negotiations. The union cited upcoming contract negotiations with Chevron, Santos, and Woodside, saying it hopes they proceed without a similar dispute.