Tuesday, 13 July 2010

Gas and energy

The recent decision in Todd Pohokura Limited v Shell Exploration Anor High Court Wellington CIV-2006-485-1600 delivered 13 July 2010 explains why our gas bills for domestic use are so high. There were no less than 6 counsel for the Plaintiff, 6 for the second defendant and 5 for the second defendant. The judgement is 173 pages long and the judge concludes with this comment
"A last word
[526] Any reader with the fortitude to have reached this point of an already overly long judgment will inevitably come to the view that it would be naïve in the extreme to urge that this judgment not be appealed, in light of the amounts at stake and the tensions in the relationship between the parties. Nonetheless, I take the unusual step of recording my view that the issues this judgment leaves the parties to grapple with ought to be resolved by negotiation between them, and not by further litigation. I venture that view not as a Judge apprehensive that the Court of Appeal might arrive
at a different view on any of the material issues. Rather, I do so as a New Zealander concerned that the resource vested in these parties by virtue of the permit they have from the Crown deserves to be managed without the significant inefficiency caused by the distraction of this dispute.
[527] There was general consensus among the expert economists that a GBA is, in all rational evaluations, inevitable. Professor Richardson agrees with that. Even on Todd‘s view of the dispute, flexibility of off-take has substantial value and after the very thorough airing all Todd‘s arguments have had, the prospects of securing any basis for disproportionate off-take without enforceable arrangements to redress the physical and/or financial consequences of doing so are surely negligible.
[528] This is a significant business relationship that needs a thorough breath of fresh air. That is possible in the context of renewed attempts to agree a GBA but seemingly impossible whilst the competing positions advanced in the litigation continue to be pursued."

The judge must have also had his gas bills balloon to help pay for this litigation as well. The Plaintiff lost but the judge says, with some sadness that they will appeal. The end result will not help anyone save the top end legal teams, who are no doubt booking their luxury holidays on the payment of fees and checking out their new cars. In the meantime many ordinary New Zealanders turn down the heat because the costs of the gas has risen well beyond the rate of inflation.

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