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Prelude potentially facing another shut down

Prelude potentially facing another shut down 

Helen Clark: Editor: 9 June 2022

SHELL could be close to losing large sums of money from a protected industrial action onboard its Prelude floating LNG vessel from 7am tomorrow when all non-essential staff down tools and refuse to load cargoes. 

Australia’s Fair Work Commission has approved the action as unions hammer out a new enterprise bargaining agreement with Shell. The protected industrial action runs until June 21.

The 3.6 million tonne vessel sold four cargoes through May and has varied contracts including with Korea’s Kogas. Other cargoes go into Shell’s wider LNG portfolio. This comes as the global gas market tightens amid far higher demand for LNG from Europe as it tries to swiftly pivot from Russian pipe gas.

There is an official ban on “the unloading of cargo other than food, water or medical supplies every Saturday, Sunday and Monday between the hours of 00:01 AWST and 23:59 AWST from Saturday 11 June 2022 to Tuesday 21 June inclusive,” according to the notice of protected action.

Spot prices into Korea are at about A$40 per gigajoule right now, which works out at $155 million for a cargo. 

According to union communications seen by Energy News, Shell’s Andrew Harvey suggested Shell workers want a pay rise of $180,000 per annum. The union denies that sum. The same documents reported he said those only interested in salaries could leave and work elsewhere.

Energy News has contacted Shell to verify the claim.

Offshore Alliance, made up of the Australian Workers Union and the Australian Maritime Union, has been vocal leading up to the PIA and also noted yesterday some 200 smoke detectors on the vessel were out of action, via its social media pages.

“They’ll be stoppages (of cargoes),” Energy News was told by an unnamed union member today.

“It will affect their ability to do offtakes, there are bans on restarting compressors and when they hit tank tops they may have to shut down the facility.”

Essentially without offtake storage levels will reach their peak and the huge vessel will have to stop pumping gas from the reservoirs.

This is the second shutdown in six months after a fire stopped work in December. Prelude on restarted operations in April after the regulator gave it the green light in March.

The Gaslog Greece left Prelude on the seventh of this month.

The union source said the next cargo offtake was due in two days. Energy News has not verified this.

“There are different bans on different days, we’ll see how they manage. Offtakes will be a lot slower and they may lose several cargoes before all this is over.”

“It’s going to be really, really expensive for Shell. I’ve never seen a company willing to burn hundreds of millions of dollars in an industrial dispute before.”

Separately there has been an update to yesterday’s news all the manual fire system call points, used by staff to send an alert about a fire, that were not working have been slapped with ‘Do Not Use’ tags.

A complaint has been made over this and the smoke detectors that were not working and the offshore safety regulator has opened an investigation.

“The issue does not impact the ability to safely operate the Prelude FLNG Facility, and there are no impacts to people or production as a result of the issue,”a Shell spokesperson told Energy News yesterday.

“Any issues identified as part of routine maintenance are addressed through our extensive processes in place to identify and manage risk.”

Less than two weeks ago the company took a positive final investment decision on the Crux field, to be used as backfill later this decade.


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