Summary of Industrial Action at Inpex's Ichthys LNG Project

Workers have initiated protected industrial action (PIA) at Inpex's 9.3 million tonnes per annum Ichthys liquefied natural gas (LNG) project in Darwin, Australia, which accounts for approximately 2% of global LNG output. The project is critical to Japan, meeting over 10% of its LNG demand, and the market is already strained by the closure of the Strait of Hormuz and QatarEnergy's force majeure. Inpex is seeking urgent orders from Australia's Fair Work Commission (FWC) to halt PIA by around 400 unionized workers, allowing continued bargaining over pay and conditions without major operational impacts.

Inpex reports that FWC-facilitated bargaining has been constructive, with substantial progress made, but key issues remain unresolved, including rates of pay, allowances, and career progression frameworks. The company notes that all agreement options would improve terms and conditions and offer substantial pay increases. However, Inpex has been notified of further potential PIA from June 11 to June 23 and is planning accordingly. If production facilities are taken offline, there will be significant impacts on LNG buyers and domestic gas supply in the Northern Territory, especially given current fuel supply constraints.

PIA began last week on Ichthys' floating production, storage, and offloading vessel, central processing platform, and onshore liquefaction plant, with workers initially downing tools for two-hour periods. While LNG production continued, the work-to-rule caused a 24-hour delay for the LNG carrier Pacific Breeze. After weekend talks broke down, PIA is set to escalate from June 11, with work stoppages increasing to eight hours per day and additional work bans. The Offshore Alliance (OA), representing the Maritime Union of Australia and the Australian Workers' Union, stated that Inpex came close to losing the Ichthys trains during the stoppages and warned of further escalation.

The unions are demanding annual wage increases of 3% plus improved conditions. The Australian Resources and Energy Employer Association claims this would raise average annual salaries to over A$500,000. The OA argues that Inpex is profiting from its workforce and will continue escalating PIA until fair outcomes are achieved. Additionally, the OA has complained to Australia's offshore regulator, NOPSEMA, alleging that Inpex used non-qualified personnel to operate the central control room panel during industrial action. NOPSEMA is investigating the complaint, prioritizing the health and safety of offshore workers. Inpex maintains its focus on safe operations and reliable energy supply to key trading partners amid global market disruptions.