High Court rejects Todd Petroleum's arguments on pipeline access

The score is one-all between heavyweight energy players Shell New Zealand and Todd Petroleum in recent legal stoushes.

The High Court in Wellington has rejected Todd Petroleum's arguments that access to the Maui pipeline by third parties wanting to transport non-Maui gas required unanimous agreement by the Maui Joint Venture parties.

Todd, Shell and Austrian firm OMV are the joint venture parties.

Todd claimed, in a judgment released by Justice MacKenzie, that open access was outside the purpose of the joint venture agreement and any activity outside that required unanimous agreement of the joint venture parties.

Shell and OMV contended this "open access" was an activity that fell within the scope of the joint venture and a decision on it could be made in accordance with the decision-making procedures in the joint venture.

Justice MacKenzie agreed with Shell and OMV. He said it was unrealistic that the joint venture parties would define the purpose of the joint venture so narrowly as to restrict their ability to vary contracts to respond to changes in conditions over the lengthy period of the Maui project.

The building of the Maui pipeline was undoubtedly within the specified purposes of the joint venture.

"Making use of that asset in a manner which is to the commercial advantage of the joint venture by the transmission of other gas, and by other parties, also falls within the specified purpose," Justice MacKenzie said.

This decision follows a dispute a month ago between Shell and Todd about their joint venture, Shell Todd Oil Services (STOS).

Todd won an interim injunction from the High Court in Wellington stopping the STOS board from resigning as operator of a number of gas fields owned by Shell and Todd and other parties.

Shell wanted to take over the work as operator of the fields from STOS but Todd opposed that. Shell said it was common international practice for the largest equity holder in a field to be its operator.

Shell has appealed to the Court of Appeal to have the injunction lifted and that is expected to be heard late this month.

- NZPA