Australian Energy Regulator Accuses Santos of Record-Keeping Violations

Australia's energy regulator, the Australian Energy Regulator (AER), has initiated legal action against Santos Ltd, the oil and gas producer, for alleged violations of auction record-keeping rules that occurred between March 2019 and June 2021. The AER has filed a lawsuit in the Federal Court, accusing a unit of Santos of failing to maintain essential records of material renominations across six different auction facilities on a staggering 4,701 occasions.

At the heart of the matter are Day Ahead Auctions, a critical component of the gas industry, where companies make nominations specifying the quantity of gas they expect to move from one location to another the following day. This process allows any spare gas capacity to be auctioned to interested parties. Companies are also permitted to file renomination requests to modify previous nominations under certain circumstances, and they are required to keep detailed records of these changes, along with the reasons for them.

The AER's lawsuit seeks various penalties, an order mandating the implementation of a compliance program, and cost recovery, among other remedies.

Santos, in its response to the lawsuit, cited the complexity of the national gas rules introduced in March 2019. The company acknowledged that the AER recognized this complexity but stated that the regulator implemented a strict compliance policy from the very beginning, in contrast to its approach to other gas market regulations.

The number of alleged occasions cited by the AER, according to Santos, is of limited relevance to the outcome of these legal proceedings. The oil and gas producer appears to contest the accusations and intends to defend its position in court.

This lawsuit comes as the latest development in the energy sector, highlighting the importance of adherence to regulations and compliance in Australia's dynamic energy market. The case will proceed in the Federal Court, where the parties involved will present their arguments, and a legal judgment will ultimately determine the outcome.