Shell postpones Prelude FLNG maintenance

LNG giant Shell said it has decided to postpone scheduled maintenance at its 3.6 mtpa Prelude floating LNG unit offshore Western Australia due to protected industrial action.

Shell and offshore Prelude employees have been in talks for a new enterprise agreement to agree new salaries for a while now.

The workers started protected industrial action on June 14 with a number of working bans.

Shell said on June 29 that the action would impact the production in the next two weeks. After that, the firm stopped production on July 11 on the giant 3.4 mtpa FLNG unit offshore Western Australia due to additional working bans.

The company also recently withdrew a plan to stop paying striking Prelude FLNG workers in order to “allow for safety-critical work to be carried out”.

In the newest move announced on Monday, Shell will postpone the planned turnaround in September on the FLNG.

“As a result of the ongoing protected industrial action and inability to complete preparation work, we are not able to proceed with the planned turnaround at this time,” a Shell spokesperson told LNG Prime via email on Monday.

Prelude FLNG was to undergo a scheduled shutdown in order to perform major maintenance on the facility and undertake any work that cannot be performed whilst the plant is producing.

The maintenance will now probably take place next year and the timing will depend on a variety of factors, including weather conditions, contractor availability, and when the ongoing PIA concludes.

“Shell remains committed to reaching an agreement and working together to find a way forward with our workforce,” the spokesperson said.

Losses mounting

The Offshore Alliance said in a social media post that PIA on the Prelude FLNG continues into its 58th day and has now cost Shell “over $1.1 billion in lost hydrocarbon production and revenue”.

According to the Offshore Alliance, Shell asked the Fair Work Commission to stop the industrial action, but the commission rejected the request.

“The FWC mediated the bargaining negotiations and were successful in assisting the parties reduce the number of outstanding bargaining claims from 7 to 3,” it said.

“Shell however have not yet agreed to job security provision which will prevent them outsourcing the jobs of Shell Prelude employees to low-wage labor hire contractors,” the Offshore Alliance said.

“The Offshore Alliance remains willing to meet with Shell to try and settle the remaining bargaining claims,” it said.

This stoppage comes just months after the floating LNG producer came back online again in April. Prior to that, Shell closed the unit after an incident in December.

It also comes at a time of very high Asian spot LNG prices and gas prices in Europe. European prices surged lately due to low flows of Russian gas and the Freeport LNG outage.

Prelude shipped its first cargo in June 2019 after several start-up delays. The FLNG has the capacity to produce 3.6 mtpa of LNG, 1.3 mtpa of condensate, and 0.4 mtpa of LPG.

Shell operates the floating facility with a 67.5 percent stake. Japan’s Inpex holds a 17.5 percent stake, Korea’s Kogas 10 percent, and Taiwan’s CPC holds 5 percent.

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