(Updates with further details on judgment, background...

(Updates with further details on judgment, background throughout)

June 4 (Reuters) - The Federal Court ordered Santos (STO) to pay A$2.75 million ($1.83 million) in penalties for breaching auction record-keeping obligations under the National Gas Rules, Australia's second largest energy producer said on Tuesday.

In October 2023, the Australian Energy Regulator (AER) filed a lawsuit against Santos, claiming that the gas and oil giant had violated auction record-keeping rules between March 2019 and June 2021.

According to the regulator, Santos failed to keep crucial records of material re-nominations for the day-ahead auction on 4,701 occasions at six distinct auction venues.

During day ahead auctions, any surplus gas capacity can be auctioned off when businesses nominate how much gas they anticipate moving the following day from one site to another.

Companies can file a renomination request to modify prior nomination subject to certain circumstances, and are required to make records of the changes and reasons.

"Santos always acted and will continue to act in good faith in respect of nomination and renomination behaviour in the domestic gas market, and there are no allegations otherwise," Santos said in a statement.

AER Chair Clare Savage said the court's decision reinforced the importance of accurate record-keeping for gas market participants.

In addition to the penalty, Santos was mandated to finish a one-time assurance program pertaining to its record-keeping practices. ($1 = 1.5006 Australian dollars)