Shell will shut down Prelude FLNG over industrial dispute

Shell has said that it is shutting down production at its Prelude floating liquefied natural gas (FLNG) facility off Western Australia because of increased levels of industrial action.

It said on Monday July 11th that it would not be able to supply cargoes until at least July 21st and that it would be sending workers off the huge FLNG vessel. Shell said that strikes were impacting the ability of the company to moor carriers at the site in order to collect cargoes of LNG.

It was only in March that Shell was given the green light to resume operations at Prelude after an incident in December last year. Located in the Browse Basin, Prelude was offline for four months from December 2nd due to power failures caused by a fire that put a stop to a steady six months of production.

On Monday workers rejected the company’s latest pay offer, with 95% opposed, reported the Offshore Alliance, which combines the Maritime Union of Australia and Australian Workers’ Union.

The move could not come at a worse time for the LNG market, which has suffered serious disruption as a result of restricted Russian energy flows and disruptions at other LNG export terminals, including a fire at Freeport LNG in the US, which will likely restrict supply for the rest of 2022.

Shell operates Prelude with a 67.5% stake in the operation. Partners in the project included Japan’s Inpex with a 17.5% stake, Korea’s Kogas with 10%, and Taiwan’s CPC, which holds a 5% interest.