Woodside's Pluto LNG Workers on Strike Again

SYDNEY (Dow Jones), Jan. 25, 2010

Woodside Petroleum said Monday that workers building its Pluto liquefied natural gas project in Western Australia state have gone on strike again, stoking fears of potential cost blowouts in Australia's booming energy sector.

It is the second time that workers at the site have walked off the job over concerns about Woodside's plan to require them to change rooms at the end of each rostered work cycle, instead of getting their own permanent room for the duration of their involvement in the project.

Over a dozen Australian LNG projects are in the pipeline at a time when the relatively resilient local economy is showing signs of recovery, putting pressure on demand for skilled labor.

Woodside didn't say how many workers went on strike on Friday, apart from saying that it was a "significant number" and declined to comment on the strike's possible duration.

"We expect contractors to examine all options to ensure a return to work by their employees," the company said in an e-mailed statement.

"Any industrial action is extremely disappointing and, in Woodside's view, illegal."

Late last year, about 2,000 workers at Pluto's onshore construction site went on a two-day strike over the accommodation dispute. Usually about 3,500 workers are on site, Woodside said at the time.

In separate industrial action, members of the Maritime Union have stopped work a number of times since November to demand increased wages, impacting the operations of companies such as Woodside and Chevron Corp. (CVX).

Shipping companies like Total Marine Services serve drill rigs and production platforms. The union wants to close a large pay gap with construction workers on offshore platforms.

A spokesperson for Western Australia's construction union, which organized the first strike at Pluto, was unavailable for comment on Monday.

In November, Woodside raised its cost estimate for the foundation stage of Pluto by up to A$1.1 billion above its original A$11.2 billion estimate. It partly pinned the rise on a shortage of trades, such as drillers and welders.

Woodside reiterated Monday that the change of accommodation arrangements at Pluto will provide more opportunity for people to work on the project and that it is "unable to alter the decision".

It said that when employees get a permanent room, the room is not used during rostered time off, meaning 25% of the rooms are vacant at any one time.

"Industrial action of this type damages the reputation of the wider LNG industry at a time when many companies are considering major project investments," Woodside said.

"Industrial action like this sends a negative message about the reliability of the construction industry in Australia."

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