Global gas prices could rise in the short term if strikes at Australia’s liquefied natural gas (LNG) plants take place, but markets are well balanced now with inventory levels keeping high in North Asia and Europe, a Shell executive said on Wednesday.
Gas prices jumped in Asia and Europe last week on concerns that industrial action could disrupt exports from major Australian LNG plants operated by Woodside Energy WDS-N and U.S. major Chevron CVX-N. Prices have eased so far this week.
“Supply and demand balance in LNG is quite matched which is why we see some vulnerability (in prices),” Zoe Yujnovich, Shell’s integrated gas and upstream director, told reporters.
However, she said there has not been significant hedging or changes in buying patterns so far as a result of the potential strikes.
“It’s been a little bit of an over-reaction globally in terms of price response,” Yujnovich said.
Woodside Energy is in talks with unions to avoid strikes at North West Shelf, Australia’s largest LNG facility, to resolve disputes over wages and working conditions.
Those talks come a day before the close of ballot at Chevron’s LNG plant at Gorgon and at its Wheatstone operations where workers will be voting to decide whether to allow their unions to call strikes.
North West Shelf, along with the Gorgon and Wheatstone facilities, supply about one-tenth of the global LNG market.
LNG markets could become fairly challenging if China’s gas demand rebounds significantly and Europe experiences a cold winter in coming months, Shell’s Yujnovich said.
Shell is still bullish on longer term LNG fundamentals but uncertainty about China’s economic growth is a key risk to the demand outlook, she said.