On Tuesday, Weston Energy, a gas seller which supplied 7% of the eastern Australian market, has collapsed following soaring LNG prices, marking the first significant casualty in the country from the global gas crisis following Western sanctions on Russia after its invasion of Ukraine.
Australia’s Essential Services Commission has suspended Weston Energy from the wholesale gas market after it failed to meet financial security requirements. Weston Energy’s 184 large and medium-sized customers would now be shifted to other suppliers.
Weston Energy’s collapse comes at a time when there is a new government in Australia. The new Labor government is pushing to rapidly expand renewable energy to replace gas and coal over the next eight years.
In a statement, Weston Energy Managing Director Garbis Simonian said, gas prices have nearly tripled since the start of the war.
“Rapidly rising energy prices have put hundreds of Australian businesses and thousands of jobs at risk,” said Simonian in a statement. He went on to add, “With the unprecedented surge in prices, Weston was unable to manage cash flow for its trading business”.
The surge in gas prices has also hit Australia’s second biggest gas producer Santos Ltd, which has now lined up Weston as a potential customer for 4% 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.