Shell says stops Prelude FLNG production

Shell said it has stopped production on its giant Prelude floating LNG unit offshore Western Australia due to an industrial action and work bans.

The LNG giant said on June 29 that the action would impact the production in the next two weeks. The action includes a number of work bans.

“Production on the Shell-operated Prelude FLNG facility has been temporarily suspended due to work bans currently in force under protected industrial action by members of the Australian Workers’ Union and Electrical Trades Union that prohibit offtake activities,” a Shell spokesperson told LNG Prime on Monday.

Due to the offtake ban, the floating LNG producer would soon reach its maximum storage capacity for its products of LNG, LPG and condensate, prompting the firm to stop production.

“Until the bans on the offtake of cargoes are lifted and the plant can be safely restarted, staff required to perform safety-critical functions will remain on board while all other workers have been demobilized,” the spokesperson said.

The Offshore Alliance said on Monday that Shell’s workers on Prelude FLNG overwhelmingly rejected the company’s latest pay offer.

It said that “95 percent of Shell employees have voted ‘No'” to the new agreement.

Prelude FLNG came back online in April after December incident

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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