Origin Energy suspended business with Imdex in the wake of an asbestos scare in a move which is costing the drilling products supplier up to $1.5 million a month.
Imdex yesterday also revealed that the Chinese supplier of the product, which caused an LNG drilling shutdown for six days, had changed its formula without notifying the company.
Origin on March 13 stopped drilling across 12 sites at the Australia Pacific LNG project in Queensland when it became known that a scouring agent called NUTPLUG contained traces of asbestos.
Imdex subsidiary AMC withdrew NUTPLUG and a blended product called STOPLEAK from the market.
Imdex managing director Bernie Ridgeway said Origin put his company "in the penalty box" by not buying any of its products.
Mr Ridgeway said the ban would likely stay in place at least for the rest of this quarter, with a loss of business in the range of $1 million to $1.5 million a month.
"We're not saying we've lost that customer at this point in time," he said.
He is expecting Origin to make a claim against Imdex over the incident. Two other clients known to have received the tainted product had not withdrawn their business.
"We had a 'please explain' from a bunch of our other customers but we have retained all of those customers," Mr Ridgeway said.
Documentation from the Chinese supplier had said NUTPLUG was made entirely from ground walnut shells.
"They changed the formulation without informing us or without any notice to us," Mr Ridgeway said.
Imdex's shares closed up 3Â¢ yesterday to 73Â¢.