Shell’s Prelude FLNG Facility Remains Off-Line as Union Extends Strike

Shell remains in a protracted labor dispute with the union representing workers aboard its massive Prelude floating liquefied natural gas (FLNG) site off Australia. The company confirmed today that the union has notified it that it plans to extend its current strike till September 1 meaning that the operation which has been shut down since July 25 will remain offline for at least two more weeks and possibly longer.

“The Offshore Alliance and ETU members on Prelude are into our 70th day of Protected Industrial Action in our EBA campaign for job security and Tier 1 rates and conditions. Shell have torched an estimated $1.3 billion of production in a dispute which has locked down production and prevented any offtakes for over 5 weeks. No company in Australian history has lost so much money in a bargaining dispute,” wrote the union announcing the extension of their strike.

Shell said in July when they announced that they were being forced to suspend operations that it has offered its unionized workforce a pay raise of $20,000 on top of their average current salary of $140,000. However, the union says that it also wants job security guarantees to prevent Shell from outsourcing work to contractors. Its 150 members turned down the pay offer by a wide margin.

“Our Prelude members have drawn a line in the sand on job security and have this week supported the extension of Protected Industrial Action until our bargaining claims are resolved,” the union said in its latest social media posting. “The Offshore Alliance and ETU will go one day longer and one day stronger!”

The labor dispute began in June with the union initially stopping work for an hour at a time or intermittent wildcat strikes. The union took the issue to Australia’s Fair Work Commission which approved the work stoppage.

After eight years of planning, Shell, which is partnered with INPEX, KOGAS, and OPIC, on the project, completed the first shipment of Liquefied Natural Gas from the Prelude Floating Liquefied Natural Gas unit in June 2019.  It is located about 300 miles north east of Broome in Western Australia. Plans called for the facility to have an annual capacity of approximately 3.6 million tonnes, but in reality, the troubled facility has rarely lived up to its expected potential. It has been plagued by breakdowns, including in December 2021 a small fire that caused a three-day power failure. It had been operating consistently since April until this latest union dispute emerged.

For its part, Shell confirmed that it has been notified of the extension by the union. The company had been scheduled to start an extensive maintenance program known in the industry as a turnaround in September. Shell now says it plans to delay that work until sometime next year. The company hopes to get the unit back in service to help meet the global demand for LNG and specifically in East Asia which has been hard hit by the closure.