European gas prices jump 10% as strikes get underway at major LNG facilities in Australia

European gas prices moved sharply higher Friday as workers at Chevron’s Australian natural gas facilities went on strike, prompting fears that a prolonged halt to production could squeeze global supplies.

The industrial action at the Gorgon and Wheatstone projects in Western Australia follow daily talks this week to try to come to an agreement. The negotiations ultimately failed, however, to resolve a long-running dispute over pay and job security.

At present, no further talks are scheduled to take place between U.S. energy giant Chevron and the unions representing workers at the liquified natural gas projects.

Work stoppages of up to 11 hours are scheduled to continue through to Thursday, at which point the action is poised to ramp up to a total strike of two weeks.

The front-month gas price at the Dutch Title Transfer Facility (TTF) hub, a European benchmark for natural gas trading, was last seen trading around 10% higher at 36 euros ($38.50) per megawatt hour.

“Unfortunately, following numerous meetings and conciliation sessions before the Fair Work Commission, we remain apart on key terms,” a spokesperson for Chevron Australia said. The Fair Work Commission refers to Australia’s independent workplace relations tribunal, which had been mediating the talks.

Chevron Australia added that the unions sought terms it believed to be “above and beyond” equivalent terms with others in the industry, without offering further details.

Fears of strike action in Australia, one of the world’s biggest exporters of LNG, have recently pushed up European gas prices — and analysts expect near-term market volatility to persist.

European gas prices rose to around 43 euros last month but had pared gains as the two sides sought an amicable resolution. The TTF contract remains well below last summer’s extraordinary spike to more than 300 euros.

“Chevron are demanding they be given special concessions in bargaining – a demand which we have put through the shredding machine,” the Offshore Alliance said in a Facebook post Friday. Offshore Alliance is the union alliance representing workers at Chevron’s Gorgon and Wheatstone gas operations.

“Their bargaining performance has been the most inept effort of any employer the Union has dealt with in the past 5 years and our members have had enough,” the group added. “It’s game on, Chevron.”

It is understood that Chevron has taken steps to maintain operations in the event of any disruptions to its facilities.