The full extent of Western Australia’s gas crisis is starting to emerge with all sorts of tales of woe ranging from production cut backs at huge resource projects to Perth hotels not being able to provide clean sheets.
The two big market moving announcements this morning came from Newcrest and Minara Resources which warned of production cuts.
Just like with the Queensland floods and coal production earlier this year, Australia’s export performance will be hit hard by the explosion at Apache Energy’s Varanus Island gas facility.
Newcrest shares fell to a low of $28.56 before stabilising 45c lower for the day at $29.50 after releasing this statement warning that Telfer gold production would be 30,000 ounces below the previous forecast due to the production interruptions and the bringing forward of scheduled maintenance shut-downs.
Minara Resources fared even worse given it is a one-operation company at Murrin Murrin and today announced that forecast nickel production had been cut by 31,000-35,000 tonnes. Its shares slumped more than 5%.
With the soon-to-be floated Burrup Fertilisers also bringing forward scheduled maintenance and many other companies affected, it is clear that Apache’s blunder will cost Australia billions of dollars worth of lost production and profits in 2008.
The new Fairfax website in WA will have a big story to keep it busy for the next few months because the insurance and compensation claims will fly, not to mention the battles over who gets priority supply when energy has to be rationed.
Federal Resources Minister Martin Ferguson has highlighted energy security as an important issue for Australia and many WA energy users will be asking questions about the way Alinta Gas owner, Babcock & Brown Infrastructure, handles the crisis.
The Singapore government’s Singapore Power is the largest operator of energy distribution businesses in Australia after spending more than $10 billion buying up business over the past eight as you can see here.
It paid more than $8 billion to buy Alinta’s transmission and distribution businesses last year but the WA gas distribution monopoly went to Babcock & Brown Infrastructure.
BBI hasn’t said anything about the crisis yet, although its sister company Babcock & Brown Power, which is suffering huge indigestion from last year’s Alinta carve-up, is suspended today pending an announcement about its debt problems.
* Listen to this morning’s chat with Deborah Cameron on ABC Sydney.