SINGAPORE- Major Asian buyers of liquefied natural gas (LNG) could seek US cargoes in the coming weeks if worker-related disputes at key LNG facilities in Australia escalate, analysts said, as electricity demand continues surge due to warm weather.
Uncertainty over labor disputes at western Australian facilities run by Woodside Energy Group and US major Chevron have spurred Asian LNG prices to their highest in five months, and analysts say they could rise further.
As many as 700 workers at the Australian facilities could potentially down tools over pay and job security, the first of them as early as Sept. 2, and stall output at four facilities that produce more than a tenth of the world’s LNG.
Prolonged strikes at all three plants could push Asian buyers, Chevron and Woodside to look for alternatives to meet their commitments, resulting in more competition for spot LNG cargoes, said Massimo Di Odoardo, vice president, gas and LNG research at consultancy Wood Mackenzie.
“Some LNG scheduled to go to Europe could likely be diverted to Asia, mainly from the US and Qatar,” he said.
US LNG exports to Asia snapped an eight-year growth streak and plunged 44 percent in 2022, data from analytics firm Kpler showed, as European buyers paid a premium for Atlantic LNG to make up for lost imports from Russia, its main gas supplier.
“If the Australian industrial actions materialize in the next few weeks, we think the major Asian markets may increase exports from other places, and eventually increase calls on US cargoes,” said Min Na, head of Asia LNG at Energy Aspects.
While a simultaneous, prolonged strike seems unlikely for now, a recent surge in Japanese electricity demand has added to concerns over inventories, analysts at Rystad and ANZ said.
