Shell cancels cargoes from ‘Prelude’ FLNG offshore northwest Australia because of dispute with workers

Wednesday, 29 June 2022
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Shell Australia said liquefied natural gas cargo exports from the “Prelude” floating LNG production facility offshore northwest Australia will be halted at least until mid-July because of an industrial dispute with unions.

The Shell-operated FLNG vessel is moored 400 kilometres (249 miles) north of the town of Broome on Western Australia’s Kimberley coast and has 3.6 million tonnes per annum of capacity.

The dispute is with trade unions represented by the Offshore Alliance comprising the Australian Workers’ Union and the Maritime Union of Australia and centres around stalled negotiations on a new collective agreement.

The Australian energy safety authorities had only allowed the “Prelude” FLNG plant to re-start in April 2022 after being shut in December 2021 after the latest in a series of incidents in an electrical utility on board.

The “Prelude”, which came on stream in 2019, generally has around 200 or so crew on board at the one time.

A Shell Australia spokesperson said the company had notified LNG customers that it was cancelling cargoes until at least the middle of July due to the impact of the industrial action.

The unions for workers on board the “Prelude” said they had failed to make progress on several outstanding issues in negotiations with Shell.

Shell added that it had cancelled the change-over of workers due to fly to the vessel as a result of bans introduced by union members.

Restrictions

Workers have said there would be restrictions including signing permits at certain times between July 1 and July 7, a ban on restarting processor compressors and steam turbine generators that have tripped and a ban on refuelling helicopters or unloading certain cargoes.

The unions added that the work stoppages would also affect the mooring of LNG carrier alongside the “Prelude” to lift cargoes at certain hours of the day.

The “Prelude” joint venture is owned 67.5 percent by Shell and 17.5 percent by Inpex Corp. of Japan, operator of the Australian Ichthys project near Darwin in the Northern Territory.

A further 10 percent of Prelude is held by LNG buyer Korea Gas Corp. and 5 percent by CPC Corp. of Taiwan.

Shell and its partners recently took a final investment decision to proceed with the Crux natural gas field joint venture offshore Western Australia to provide more feed gas for the “Prelude”.

The project has its key regulatory approvals and these include a production licence from the National Offshore Petroleum Titles Administrator.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has also accepted the Crux offshore project proposal.

Resources from the Crux gas field will mean “Prelude” FLNG receiving up to 550 million standard cubic feet of gas per day.

Shell Australia Chairman Tony Nunan had said at the time that developing the Crux project reinforces the company’s commitment to Australia, including boosting the regional economy, creating jobs and providing training opportunities.

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