Global Gas Crunch Claims First Australian Trading Victim, Reports Reuters

By Sonali Paul

MELBOURNE (Reuters) – A gas supplier that accounted for 7% of eastern Australia’s market has gone out of business due to soaring global gas prices, marking the first major fallout in the country from the international gas supply crisis linked to sanctions on Russia following its invasion of Ukraine.

On Tuesday, the Essential Services Commission suspended Weston Energy, a private gas retailer, from the wholesale gas market after it failed to meet financial security requirements. Consequently, the company’s 184 large and medium-sized customers will be reassigned to other suppliers.

The failure of Weston Energy highlights the energy price challenges facing Australia’s new Labor government as it aims to rapidly increase renewable energy sources to replace gas and coal within the next eight years.

According to Weston Energy’s Managing Director, Garbis Simonian, gas prices have nearly tripled since the beginning of the year due to the ongoing conflict in Ukraine. Additionally, recent outages at coal-fired power plants in Australia have increased the demand for gas-generated electricity.

"Rapidly rising energy prices have put hundreds of Australian businesses and thousands of jobs at risk," Simonian remarked in a statement.

With prices reaching unprecedented levels, Weston struggled to maintain cash flow for its trading operations, he stated.

The demise of Weston Energy has also impacted Santos Ltd, Australia’s second-largest independent gas producer, which had anticipated Weston as a customer for 4% of the 75 petajoules of gas planned for production at its Narrabri project.

Santos has not commented on Weston’s collapse, but the company intends to drill appraisal wells at Narrabri this year. This project has the potential to meet up to half of New South Wales’ gas demand, although no schedule for a final investment decision on the long-delayed initiative has been established.