Strike Risk in Australia May Impact 10% of Global LNG Supply: Goldman Sachs Goldman Sachs analyst Samantha Dart stated in a report on Wednesday that strikes may occur at the Australian North West Shelf, Wheatstone, and Gorgon projects, posing a risk to approximately 10% of global liquefied natural gas (LNG) capacity. If the strikes disrupt production for two months, similar to the situation at Australia's Prelude project last year, European supply will tighten and may result in European gas prices reaching at least 50 euros per megawatt-hour for the remainder of the summer, leading power plants to increase coal usage and reduce gas consumption.
Goldman Sachs also mentioned that if the impact on European inventories necessitate oil as a substitute for gas, natural gas prices for the winter and summer of 2024 may increase to a range of 68-97 euros per megawatt-hour, depending on winter weather conditions. Due to the increased strike risk faced by LNG supply in Australia, European gas prices exceeded 40 euros on Wednesday for the first time since June. Benchmark natural gas futures rose by 40% on Wednesday, marking the largest increase since March 2022 and continuing the upward trend of the previous two trading days, underscoring the market's tense supply sentiment.
Oil and coal prices also climbed. Chevron and Woodside Energy Group Ltd. employees at Australian plants voted in favor of strikes. As the global competition for natural gas intensifies, strikes may affect Australia's LNG exports. The timing and whether the strikes will take place are currently unclear. Title: Australia Strike Risk Poses 10% Global LNG Supply Shock