Oil and gas producer Woodside Petroleum warns of possible slow up and cost increases amid recurring labor disputes at its Pluto project.

Since April 28, a dozen crane and forklift workers have been on strike at the $13 billion liquefied natural gas project in a bid for better pay and working conditions. Employed by contractor Mammoet, the laborers are still negotiating their claims.

The action succeeds two organized refusals by construction workers earlier this year over accommodation arrangements.

Any delay would be met harshly by investors as Pluto's foundation can potentially more than double Woodside's LNG production to around 6.4 million metric tonnes a year. This could also result in reliability concerns with customers, at a time when Woodside is trying to secure offtake deals for other LNG developments.

The new labor dispute will stoke skill shortage fears as the Australian market continues its slick recovery and multiple LNG projects get moving.

Despite the strike, Pluto is currently still within market guidance, having a target start-up by end February 2011 and first LNG by end March 2011.
"However continued industrial action would delay mechanical construction activities and consequently impact the project schedule and cost," Woodside said in a statement.

The company intends to end the strike by making an application to Australia's national workplace tribunal, Fair Work Australia to prevent further industrial action.

In November, Woodside raised its cost estimate for Pluto by 6 to 10 per cent, partly anticipating the increase on a shortage of skilled labor.

The Pluto LNG project is situated about 190km north-west of Karratha, Western Australia, in the Northern Carnarvon Basin. It is a joint venture between Woodside, the operator, and Tokyo Gas and Kansai Electric.