NZ court rejects Todd bid to restrict access to Maui pipeline

NEW Zealand’s High Court has sided with Shell NZ and OMV’s more liberal Maui gas pipeline open-access argument, and rejected Todd Energy’s bid to allow access to third parties only if the Maui partners unanimously agree to do so.
NZ court rejects Todd bid to restrict access to Maui pipeline NZ court rejects Todd bid to restrict access to Maui pipeline NZ court rejects Todd bid to restrict access to Maui pipeline NZ court rejects Todd bid to restrict access to Maui pipeline NZ court rejects Todd bid to restrict access to Maui pipeline

In a Wellington High Court judgment released last Friday, Justice MacKenzie rejected Todd Energy’s claim that open access was outside the purpose of the joint venture agreement (JVA) and therefore required the unanimous agreement of all parties – Shell NZ (83.75%), OMV (10%) and Todd Energy (6.25%).

MacKenzie agreed with Shell and OMV that open access fell within the scope of the JVA, so any decisions regarding open access could be made in accordance with the decision-making procedures of the joint venture.

He said it was unrealistic the parties would have defined the purpose of the JV so narrowly as to restrict their ability to vary contracts in response to changes in conditions over the life of the Maui field. 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," MacKenzie said.

The judge said he was “quite unable to accept” to accept Todd’s submissions.

The judgment said Todd Energy had earlier wanted access to the Maui pipeline to pump gas from its McKee and Mangahewa onshore Taranaki fields north to the Waikato and greater Auckland areas.

The Oaonui-Rotowaro Maui pipeline is by far the biggest gas pipeline in this country and at present only Maui gas molecules can legally be transported in it. Open access - to other parties and to gas from other fields, principally Pohokura – is seen as essential to developing New Zealand’s gas industry in the rapidly approaching post-Maui age.

About a month ago Todd successfully obtained a High Court interim injunction preventing Shell and OMV moving to replace Maui (and Pohokura and Kapuni) operator Shell Todd Oil Services – an unincorporated body jointly owned by Shell and Todd.

Shell – which as majority equity partner wants to take over as operator of Maui, Pohokura and Kapuni - has appealed to the Court of Appeal to have that injunction lifted and that is expected to be heard late this month.

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