488 metre long floating liquified natural gas facility, prelude

Tensions aboard Shell’s Prelude gas plant are running high amid wage dispute

Shell has canceled gas deliveries from its Prelude offshore facility as a labor dispute between unions and the Anglo-Dutch commodities company has come to a head.

Contractors scheduled to fly to the resource rig on Wednesday were told to resign in response to disagreements over pay increases, rosters and job security.

The dispute has also led Shell to inform their customers that they will cancel some gas deliveries from the facility until mid-July.

“Shell confirmed it had warned customers that shipments would be affected as a result of the union action until at least mid-July,” a Shell spokesman said.

The developments come as gas prices rise due to a shortage of supply and the war in Ukraine.

The LNG installation, 400 kilometers off the coast of Kimberley, was commissioned in 2019, but is plagued by technical problems, security issues and high costs

The facility temporarily shut down after an onboard fire was detected in December last year, but was later approved by the sector regulator and brought back online in April of this year.

Concern rig will shut down

The Australian Workers Union and Maritime Workers Union form the Offshore Alliance and are pushing for pay increases for members aboard the facility.

Trade unions have been taking place aboard the ship since early June, but a new set of Fair Work Commission-approved “bans” will come into effect from July 1.

Two of the bans would prevent union members from turning the turbines at the facility back on if they were “turned off”, raising concerns that the rig could be shut down temporarily if that happened.

But Australian Workers Union secretary Daniel Walton said union members were prioritizing safety and would do nothing to endanger the crew aboard the facility.

Daniel Walton (right) says workers aboard the facility are seeking pay increases. ABC news

“We fundamentally deny that we would do anything in any way to endanger the safety of the facility, all employees on board or the wider environment,” he said.

“Shell is spreading misinformation as a way to, I think, justify this industrial extremism,” he said.

Mr Walton said Shell had threatened to close the factory, using these threats as a “tactic” in the ongoing dispute between employees and the company.

“Instead of sitting down to offer a decent pay raise, they seem to be escalating their actions against their staff,” he said.

Payment dispute escalates tensions

The dispute sparking tensions aboard the facility revolves around pay increases for onboard employees, job security and pension increases.

According to Mr Walton, unions began negotiating wage increases in 2020, but tensions mounted after talks stalled and new union actions were approved for July.

“Unfortunately, Shell is not offering pay rises,” he said.

“In reality [Shell] have a position as a member stating that 25 percent of our members’ salaries will be discretionary.”

Prelude FLNG construction
Industry figures say proposed wage increases could mean a $40 million increase in operating expenses.Supplied: Shell

Shell said in a statement that the company “recognises the right of all employees to exercise their rights, including the right to participate in industrial action”.

“We are working hard to provide a strong employee value proposition for our employees that is competitive with industry peers,” the statement reads.

“We will continue to engage with our people and their representatives and remain committed to acting honestly, respectfully and transparently at all times during the negotiation process.”

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