Key facts
- Inpex has shut one of two LNG production trains at its Ichthys plant in Australia due to a strike.
- Australia's Fair Work Commission denied Inpex's request to halt the strike.
- The strike is expected to impact exports from Australia's third-largest LNG plant.
- The industrial action is planned to continue until July 6.
- LNG storage tanks at the plant may reach capacity by Wednesday.
Japan's Inpex has shut down one of its two liquefied natural gas (LNG) production trains at the Ichthys plant in Australia due to an ongoing strike. The decision follows Australia's Fair Work Commission's denial of Inpex's request to halt the industrial action, siding with the workers.
The closure of the plant, which is Australia's third-largest LNG facility, is expected to impact global LNG supplies, which have already tightened due to reduced exports from the Middle East amid conflicts involving Iran. Inpex had previously warned of an imminent disruption to production at both its onshore and offshore facilities.
The strike, organized by Australia's Offshore Alliance which includes the Australian Workers Union and the Maritime Union of Australia, along with the Electrical Trades Union, is planned to extend until July 6. The union's action came after a new employment agreement could not be finalized.
Evidence presented at a hearing indicated that up to seven LNG cargoes could be delayed. Inpex's onshore operations superintendent noted that LNG storage tanks could reach capacity by Wednesday, potentially leading to further operational impacts. The Ichthys plant has an annual production capacity of 9.3 million metric tons.
Japanese utilities, including equity partners Kyushu Electric Power and Tokyo Gas, are the primary long-term buyers of LNG from the project, collectively purchasing about 5.7 million tons per year. Japan's Industry Minister Ryosei Akazawa stated that the country is assessing the impact on its gas supplies.