By Sonali Paul
MELBOURNE (Reuters) – A gas supplier that supplied 7% of the eastern Australian market has collapsed due to rising global gas prices, the first major hit in the country by the global gas crisis. gas supply due to sanctions on Russia for its invasion of Ukraine.
The Essential Services Commission on Tuesday suspended private gas retailer Weston Energy from the wholesale gas market for failing to meet financial security requirements and said the company’s 184 large and medium-sized customers would be relocated to other suppliers.
The collapse of Weston Energy highlights concerns over energy prices facing Australia’s new Labor government, as it pushes for rapid expansion of renewable energy to replace gas and coal over the next eight years. years.
Weston Energy CEO Garbis Simonian said gas prices had almost tripled since the beginning of the year due to the Russian invasion of Ukraine, which Moscow calls a “special military operation”.
At the same time, recent outages at Australian coal plants have increased the demand for gas generation.
“The rapid rise in energy prices has put hundreds of Australian companies and thousands of jobs at risk,” Simonian said in a statement.
With the unprecedented rise in prices, Weston was unable to manage the cash flow for its business, he said.
The collapse of Weston Energy has also affected Australia’s second-largest independent gas producer, Santos Ltd, which had ranked Weston as a potential customer for 4% of the 75 annual gas oil rigs it plans to produce in its Narrabri project.
Santos made no immediate comment about Weston’s collapse.
Santos plans to drill wells this year in Narrabri, a project that could supply enough gas to meet up to half of demand in the state of New South Wales. It has not set a deadline for a long overdue investment decision on the project.
(Report by Sonali Paul; Edited by Stephen Coates)