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Gas prices rise on fears of strikes in Australia

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The prospect of a possible strike at a liquefied natural gas (LNG) plant in Australia has pushed wholesale gas prices up in Europe.

The Offshore Alliance union warned that a strike at the North West Shelf facility could start as early as 2 September if no deal on pay is reached.

Benchmark gas prices for the EU and UK rose around 10% on Monday, according to Bloomberg.

Prices soared after Russia's invasion of Ukraine but have since fallen.

There are fears that strike action at Woodside Energy Group's North West Shelf facility could cause disruption to shipments of LNG from Australia, which is a key global supplier.

Workers at two other offshore LNG facilities, Gorgon and Wheatstone, operated by Chevron, are also voting on strike action, with results expected on Thursday.

Together the three plants make up about 10% of the world's supply of LNG.

Ben McWilliams, an affiliate fellow at the think tank Bruegel, warned the strikes might impact the prices globally of LNG.

Speaking to the BBC's Newsday programme earlier this month, Mr McWilliams said: "Australia typically supplies Asia, but if these strikes were to go ahead, and Australian gas were cut to Asian consumers, we would see Asian consumers turning around and looking, for example, to Qatar and competing with European buyers there."

Mr McWilliams said that if that were to happen there would be a "knock-on effect on prices".

Following the start of the war in Ukraine, Russia slashed supplies of natural gas to Europe, which led countries to seek out alternative sources of energy.

Many countries are relying on LNG to fill the gap.

Australia is one of the world's largest exporters of LNG. The others are Qatar and the US.

Last week, Cornwall Insight predicted that higher gas prices resulting from the Australian uncertainty would contribute to a significant rise in the Ofgem price cap in January.

It forecast a cap of £2,082.56 for a typical annual household bill for the first quarter of 2024, a rise from its £1,925.71 forecast for the fourth quarter of 2023.