Gas Competition Case to Be Heard in High Court

Gas Competition Case to Be Heard in High Court

The Pohokura gas competition case between Todd Energy (Plaintiff) and Shell Exploration NZ Ltd (First defendant) and OMV NZ Ltd (Second defendant) will be heard in court in Wellington on 15 February from 10am, and is expected to run for six to eight weeks.

Todd Energy is claiming that under the Pohokura joint venture agreement each party has the right and obligation to take and sell its share of the total production capable of delivery at any given time from the Pohokura field.

Todd Energy is claiming that from 2006 and each year since, Shell and OMV have constrained production from the field to 70 PJ when it could produce at least 85 PJ. Todd Energy claims that the constraint is:

• a breach of the Commerce Act sections 27 in that it has the effect, or likely effect of substantially lessening competition in the gas market;

• a breach of the Commerce Act section 30 in that it has the purpose, effect, or likely effect of controlling or maintaining, or providing for the controlling or maintaining of the price of gas;

• a breach of the Commerce Act section 29 in that its purpose is to limit production and supply of Pohokura gas.
Finally Todd Energy says the alleged off-take arrangements are a breach of the Crown Minerals Act.

Todd Energy claims the resolutions made by Shell and OMV from 2006 are a breach of the joint venture obligations, and their obligations of good faith to each other.

Todd Energy is claiming declarations, injunctions restraining the ongoing implementation of the constraint and damages of $274 million.

All allegations are denied by Shell and OMV and it is now up to the court to decide. The Judge is Robert Dobson and he is sitting with an economist lay member, Professor Martin Richardson from Australia.

ENDS

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