Union flags progress in talks as Chevron Australia LNG strikes delayed

By Renju Jose

SYDNEY (Reuters) - Strike action at Chevron's two major liquefied natural gas (LNG) projects in Australia was paused for 24 hours because of progress made in mediation talks, a union alliance said on Thursday, raising prospects the parties may be nearing a deal.

Workers at Gorgon, Australia's second-largest LNG plant and its Wheatstone operations will delay strike action until 6 a.m. on Friday (2200 GMT on Thursday), a union spokesperson said. Two union representatives, who declined to be identified, told Reuters late on Wednesday about the decision.

Australia is the world's biggest LNG exporter and the ongoing dispute over wages and conditions had stoked volatility in gas prices. Gorgon and Wheatstone operations account for more than 5% of global LNG capacity.

Dutch and British gas prices slid on Wednesday afternoon after the union's decision. [NG/EU]

"Essentially we are pulling action from 0600 today until 0600 Friday on the basis of progress in talks ... essentially we are delaying Protected Industrial Action for 24 hours," the union spokesperson said in an emailed statement.

Chevron confirmed that the unions had advised it of the roughly one-day delay but said it would continue to take steps to maintain operations if any disruptions occur.

Although Australia is not a major supplier of LNG to Europe, British and European gas prices had been buoyed in recent weeks by the possible strike action on fears fewer Australian LNG cargoes going to Asia could lead to more competition for other sources of LNG and drive up costs.

China and Japan are the top two lifters of Australian LNG, followed by South Korea and Taiwan.

Stoppages of up to 11 hours had been scheduled to begin from Thursday morning, and the union alliance on Tuesday said it planned to escalate it to a total strike for two weeks from Sept. 14 if their terms were not met.

Australia's industrial arbitrator, the Fair Work Commission, has been hosting mediation talks since Monday, and negotiations are scheduled to run on all days this week.

(Reporting by Renju Jose in Sydney; Editing by Jamie Freed)