Chevron Australia has abandoned hopes of reaching a deal with unions and is instead pursuing a novel legal strategy to halt industrial action at its Gorgon and Wheatstone liquefied natural gas (LNG) facilities.

This decision comes as unions prepare for extensive strikes.

Following the breakdown of last-minute negotiations, hundreds of workers at these critical facilities, responsible for more than 5% of global LNG supply, initiated short strikes on Friday.

The unions plan to escalate their actions with two weeks of round-the-clock strikes beginning on Thursday.

Chevron has stated that it sees “no reasonable prospect of agreement” with the unions, primarily due to their demands being significantly above market rates.

The company intends to apply to Australia’s industrial umpire, the Fair Work Commission, for an “intractable bargaining” declaration. If granted, this declaration would cease the strikes and empower the umpire to impose an agreement.

While production at both facilities continues, the situation highlights Australia’s position as the world’s largest LNG exporter and the potential impact of prolonged strikes on global energy markets.

This case also serves as a significant test of new laws, introduced in June, that grant the umpire the authority to compel parties to reach an agreement when they cannot do so themselves.

However, given the imminent full-scale strikes, it’s unlikely the umpire will have the opportunity to rule before substantial disruptions occur.