Santos warns on oil and gas production SANTOS' Australian gas customers paid a record $5.98 a gigajoule in the September quarter in a worrying signal for businesses fearing unaffordable price rises. The price is almost at export parity levels that oil and gas producing giants command when they ship liquefied natural gas (LNG) to Asian customers. Angry Australian industry gas users such as Orica and Alcoa have called for governments to reserve gas supplies for domestic use before Queensland's $70 billion suite of LNG export projects - one operated by Santos - come online soon. The nation's peak manufacturing group accuses companies such as Santos of hoarding domestic gas supplies to export overseas at higher prices. However according to Santos, it was customers from Western Australia - the only state that forces gas developers to set aside reserves -that drove the 10 per cent jump in prices compared to a year ago. Morningstar resources analyst Mark Taylor said that with east coast prices also rising, Santos' production report on Friday gave an idea of where prices might end up. "It has been one of the country's competitive advantages: low cost energy, but we're going to be paying the same as the rest of the world pays," he told AAP. It's going to be a meaningful impost. Higher gas prices were good for Santos, who had little expenditure need for existing domestic infrastructure and would get a huge uplift from their involvement in the PNG and Gladstone LNG projects, he said. Those two projects were on track for first LNG next year and in 2015, Santos chief David Knox said. Strong oil prices and sales and the highest oil production in six years drove record revenue of $1.03 billion in the three months to the end of September, up 20 per cent on a year ago. However the Adelaide-based company warned full year oil and gas production will be at the low end of predictions of 52 to 55 million barrels of oil equivalent (mmboe). Quarterly production of 13.4 million mmboe was 1.0 lower than the third quarter of 2012. The company's shares were punished, slumping 16 cents, or 1.1 per cent, to $14.73 by 1500 AEDT. Technical problems at its Vietnam oil and gas field operations negatively affected production for the second quarter in a row.