These two stories regarding Australian oil and gas development projects are worth reading together.
The Western Australian government is to hold an enquiry into the potential effects of floating liquefied natural gas (FLNG) on the state economy.
Both the major WA political parties are said to be concerned that FLNG projects replacing traditional land-based liquefaction could hit state revenues and cost jobs. Shell’s flagship Prelude FLNG that is targeting start-up in 2016 could trigger a run on floating liquefaction, not least because of the lower capital expenditure.
Given that the oil companies have all but explicitly stated that the primary driver of FLNG is to avoid Australia’s exorbitant labour and construction costs, I’m left wondering why they need an enquiry to tell them whether FLNG will cost Australia jobs. Of course it will, that’s the whole point.
Secondly (emphasis mine):
Australian Resources and Energy Minister Gary Gray has warned of the challenges and increased cost pressures facing liquefied natural gas projects.
He also highlighted the pressure of labour costs placed on projects by demands from unions such as the Maritime Union of Australia (MUA) which is reportedly bargaining for chefs working on the Inpex-operated Ichthy’s project off the north-west of Australia to be paid up to A$230,000 (US$221,428.25) a year.
“We do have to be conscious that unreasonable wage demands do place pressures on projects,” Gray said.
“My observations are not anti-union, my observations are about how prudent that behaviour is, the MUA’s behaviour, and I don’t think it’s prudent.“
“There are occasions when fabrication industries through the Henderson industrial precinct of Western Australia are having trouble shifting their locally constructed components up on to Barrow Island,” he explained.
“That is a consequence of actions taken from time to time by the MUA, that is not acceptable.”
You still need that enquiry, chaps?