AWU Oil & Gas Industry Reference Group

A message from your AWU Oil & Gas IRG Chair, Mick Denton

 

It has been the perfect storm for our oil and gas sector.

The COVID-19 crisis has tested us all, but we have pulled together and looked after one another – like we always do.

Now more than ever it is critical that we stand together as proud AWU members to ensure that our safety is protected and that our industry gets the attention it deserves. You can read about important information relating to safety at work here, but if in doubt, speak to your AWU delegate or organiser.

I encourage you to speak to colleagues and friends at work who are not yet in the union, but should be – with a global pandemic underway, the government ramping up efforts to attack conditions and the world more uncertain, there has never been a more important time to be a union member.

You can stay up to date or share information via our special Facebook page for Oil and Gas members.

Industry news

Already low oil prices have been compounded by the COVID-19 crisis, which has led to a huge drop in demand globally, and to prices tumbling into the negative for a period. This has led to a knock-on impact on gas prices.

With the aviation industry at its knees, and people staying home because of COVID-19, there is unlikely to be any significant increase in demand for oil for many weeks and months to come.

The good news is that our sector has not suffered a government-mandated industry-wide shut down despite early fears that State and Federal Governments would not deem the oil and gas sector, and manufacturing overall, as essential industries.

Fighting for our oil and gas sector

Intense lobbying from the AWU centred on the critical role oil and gas plays in powering the Australian economy. We partnered with APEAA and delivered a joint statement to keep oil and gas facilities running.

AWU officials and delegates across the country also highlighted how the sector could not just be shut down overnight without major and long-lasting repercussions. Closing down oil and gas facilities is not as simple as closing down other businesses, with major facilities taking several weeks to safely restart operations.

Now the focus is on making sure the sector survives these uncertain times.

Refinery operations are clearly being impacted, now that oil is now at lows we haven’t seen for a long time – down from $65 earlier this year.

Rest assured, we will fight hard to keep Australia’s refineries operating into the future. This crisis has shown that we need more, not less domestic manufacturing, and the fuel refining industry is no exception. It is absolutely critical that Australia improves its fuel security as the world becomes more uncertain.

For offshore, supply still continues but with little demand in the transport sector, tankers are now starting to fill the world over. We will fight to make sure jobs are protected and members are looked after during this difficult period.

The AWU has prepared a submission to the Federal Government Oil and Gas Enquiry, highlighting the need for fuel security with extra storage and production capacity at home. For gas, the AWU is calling for the expansion of the industry, with provisions in place to make sure some of that gas is kept at home to power our heavy industry, via a domestic reservation policy.

The current market means asset sales will likely not be going ahead. Canadian-owned Couche-Tard has just shelved its plans to buy Caltex, but says it might reconsider once the COVID-19 crisis subsides.

The AWU will continue to oppose any buyout which could put refineries at threat of being closed down. We will continue to argue that the Foreign Investment Review Board should impose greater restrictions around overseas entities buying refineries, and that no purchase can go ahead if there is any risk it would reduce the life/term length of any refinery.

Site Round-Up

The Caltex Lytton refinery has brought forward its maintenance schedule due to the collapse in the oil price. The refinery was due to go into maintenance turnaround in June to August, which would have seen the influx of hundreds of extra workers – an unacceptable risk given COVID-19.

The AWU will be working with employer, industry and government to ensure that the refinery is opened and operating at full capacity after the maintenance closure.

AWU members working on Esso offshore platforms in the Bass Strait have serious concerns around proposed 28/28 COVID-19 roster changes and the lack of social distancing possible at work due to the confined living quarters. The older platforms have cramped living conditions, making it impossible to follow the Federal government’s social distancing recommendations.

AWU members want Esso to engage with the workforce and delegates rather than approach government ministers and NOPSEMA asking for changes.

The AWU is now working with the offshore safety regulator on what critical work has to be done during this period, and what can be put off until it’s safer to do.

The Union is ensuring we get the balance right between minimum safe manning levels and the need for members to have financial security through ongoing employment.

It looks like the owner of the Geelong refinery – Viva Energy – will shelve its planned $100 million capital works program due to the decline in fuel demand and profitability.

The AWU expects many members could be affected as a result, and we hope to avoid members needing to use their annual leave to deal with reduced activity. More details are expected in the next few weeks as to manning levels, and we will keep you updated as information comes to hand.

Due to COVID-19, Australian and global demand for jet and motor fuel has dropped considerably at BP Kwinana. This has impacted the operations of the refinery. While ‘fly-in, fly-out’ services have kept some demand flowing, the overall lack of fuel demand has led to minimum manning levels and members being put on standby with full pay and conditions.

At present, the refinery cannot make enough diesel to meet the demand of the local market, meaning that WA still needs to import diesel from overseas, despite a glut in other parts of the country.

The AWU will be examining ways the major companies can fix this problem to deliver an integrated supply chain for diesel and other fuels across the country.

Off-Shore Operators

We have had some success protecting members working at off-shore operators over the course of the crisis, protecting conditions and maximising payment in the event of stand downs across the entire sector, but the global impact of COVID is beginning to bite.

Our focus has been on dealing with the major players and addressing disputes during COVID-19.

Out of the major operators – Shell, INPEX, Chevron and Woodside – around 2000 contractors have been stood down, most without pay, but some receiving stand-by payments.

Unfortunately, the impact of low prices means we are starting to see a decline in some terms and conditions, with a slight increase in casual employment.

Shell had demonstrated sensible management by paying everyone rostered hours even if they were stood down, but has started to make changes to rostering and pay for mandatory quarantine. After moving from a 3/4/3/5 roster to a ‘4/4’ roster (which actually consisted of 4 weeks on, 2 weeks off, and 2 weeks in isolation), Shell reversed its position and continued with the 3/4/3/5 roster with one key difference – a 2-week quarantine period as part of each off-swing. Initially, Shell informed employees that this quarantine period would be unpaid. After correspondence from the AWU, Shell began to pay overcycle to employees for the period of quarantine, but that stopped on April 27, and now direct Shell employees in quarantine will receive a daily payment of $200. This change is unexplained and we are querying it.

INPEX has committed to paying some contractors varying amounts, and we understand these arrangements will now be reviewed on a monthly basis. INPEX has also released strict and in some regards completely unwarranted guidelines for offshore hotel isolation for employees and contractors. Incredibly, the guidelines provide just a single walking route for WA-based members to exercise, and also impose a time limit for individuals to be outside of their accommodation for exercise. Interstate members are not permitted to leave their accommodation during quarantine.

In regard to renumeration for roster changes, Chevron is offering $5000 a month, and INPEX is providing an allowance of $18,500 per 9-week cycle. AWU pushed Woodside to a 6-2 roster after it first proposed a 14-4 roster, and its allowance is an annualised amount, ranging from $25,000 to $45,000. How that will be paid is yet to be seen.

Bargaining

The AWU will now focus on putting enterprise agreements in place to stop the undercutting of wages as a business model.

As it stands, Shell doesn’t have an EA, whilst the INPEX agreement has long been expired. INPEX has recently rejected the AWU’s request to commence bargaining for a replacement agreement, so our campaign for a replacement continues. For Chevron, final arrangements are currently underway for bargaining to commence on an agreement for employees on the Wheatstone platform.

In regards to Sodexo Remote Sites, the AWU is close to reaching an in-principle agreement with the company. The protected action ballot for AWU members working for Sodexo Remote Sites closes Thursday, May 7, and members are reminded to vote ‘yes’ on all forms of action and to make sure they return their ballots.

The Global Slowdown

On 20 April 2020, Maersk informed the crew onboard the Deliverer (including Maersk, Rigforce and Atlas employees) that it had received verbal confirmation from INPEX that manning levels were to be maintained until October 2020. Unfortunately, we have just been informed that drilling will now be delayed until October this year – meaning the rig will now be warm stacked. This will result in a significant number of employees being stood down, although some will stay with the rig during this period.

Unfortunately, many of the crew are newly employed casual employees, which means that a significant number will not be eligible for JobKeeper. On a positive note, Maersk has commenced discussions with INPEX with a view to secure a retention payment for the stood down crew during this period.

Beach Energy Australia has terminated its contract with Diamond Offshore for the Ocean Onyx rig to perform drilling services in Victoria’s Otway Basin, citing the rig’s late arrival as the reason for termination.

Due to the significant drop in oil prices and the very low likelihood of securing another drilling contract in the short term, Diamond has decided to cold stack the Ocean Onyx, resulting in mass redundancies for the employees engaged on the Onyx.

Diamond Offshore’s US-based parent company, Diamond Offshore Drilling Incorporated (DODI), has filed in the US for the equivalent of voluntary insolvency in order to restructure its debt.

Although Diamond Offshore is not currently in financial distress in Australia, the company has been directed by DODI to seek cost reductions. As a result, it plans to announce a number of redundancies on its Ocean Apex rig in WA. Diamond Offshore has engaged proactively and cooperatively with the AWU to work through the redundancy process and selection criteria, and we will continue to be involved on behalf of our members.

The AWU has requested that Diamond provide information on its eligibility for JobKeeper payments.

Despite indications that ESSO was going to terminate its drilling contract with the Noble Tom Prosser, the rig will now be placed in warm stack for a three-to-four-month period. The rig will be fully manned after that period, with drilling to resume in earnest immediately.

Of the 65 Rigforce employees who will be stood down during this period, approximately 40 qualify for JobKeeper. Rigforce has now distributed the nomination forms to these members, and to all Rigforce employees who qualify for the payment across its sites.

Stronger Together

Remember, the AWU Oil and Gas IRG is here to represent you and to fight for our industry.

Please let us know if there are issues you need raised or important matters that you would like to know more about. We will report on other sites and industry news as it comes to hand, make sure you are letting us know what’s going on.

You can stay up to date or share information via our special Facebook page for Oil and Gas members.