Australian gas seller collapses due to soaring global prices

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Australian gas seller collapses due to soaring global prices

A sign outside a petrol station shows the price of petrol breaking through the two Australian dollar 1.46 USD a liter mark in Melbourne on March 3, 2022. WILLIAM WEST AFP MELBOURNE - A gas seller that supplied 7 percent of the eastern Australian market has collapsed due to soaring global gas prices, the first significant casualty in the country since the global gas supply crisis due to sanctions on Russia.

The Essential Services Commission on Tuesday suspended Weston Energy from the wholesale gas market for failing to meet financial security requirements and said that the company's 184 large and medium-sized customers would be moved to other suppliers.

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The collapse of Weston Energy underscores the energy price concerns set to face Australia's new Labor government as it pushes to expand renewable energy to replace gas and coal over the next eight years.

Weston Energy Managing Director Garbis Simonian said gas prices had tripled since the beginning of the year.

Recent outages at Australian coal-fired plants have caused a rise in demand for gas-fired generation.

Hundreds of Australian businesses and thousands of jobs are at risk due to rising energy prices, Simonian said in a statement.

With the unprecedented surge in prices, Weston was unable to manage cash flow for its trading business, he said.

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Weston Energy's collapse has hit Australia's No 2 independent gas producer Santos Ltd, which had lined up Weston as a potential customer for 4 percent of the 75 petajoules a year of gas it plans to produce at its Narrabri project.

Santos had no immediate comment on Weston's collapse.

Santos plans to drill appraisal wells at Narrabri this year, a project that could supply enough gas to meet half of the demand in New South Wales state. It has not yet set a timeframe for a final investment decision on the long-delayed project.