Shell says to stop paying Prelude FLNG workers as industrial action continues

LNG giant Shell said it would stop paying Prelude FLNG workers after they extended industrial action for two more weeks.

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 FLNG unit offshore offshore Western Australia due to additional working bans. Workers also declined a pay offer from Shell.

Industrial action extended

Now Shell has received a notice that the industrial action has been extended to August 4.

“Since industrial action commenced on 10 June, we have endeavored to find every option to work around bans and stoppages and find alternate duties for our people to avoid an outcome where our staff and contractors would not be paid,” a Shell spokesperson told LNG Prime on Wednesday.

However, following the production shutdown caused by the protected industrial action, Shell cannot continue to operate in the same way, the spokesperson said.

“As a consequence, we will be resorting to lock outs as the mechanism available under the Fair Work Act. Once the lock outs are in effect, people will no longer be paid if they are not mobilized to the facility,” the spokesperson said.

The spokesperson added that Shell “remains committed to reaching an agreement and working together to find a way forward with our workforce, and we have every confidence this remains the best outcome.”

The Offshore Alliance said in a statement via social media that Shell had refused to bargain since workers rejected the company’s latest offer nine days ago.

“The Offshore Alliance has put Shell on notice that its refusal to get back to the bargaining table is in breach of the Fair Work Act and will inevitably result in legal proceedings in the Fair Work Commission,” it said.

Prelude FLNG issues

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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