In
a first for New Zealand, players in the natural gas market have been forced to
release details of their confidential supply contracts so that industry
competitors can better determine market prices in setting their own long-term
contract prices.
Shell Petroleum and Todd
Petroleum are currently in arbitration with Vector Gas over prices for ongoing
long-term supply. These three asked the High Court for an order that ten other
named players in the industry release details of their own terms of supply. Those named include Contact Energy, Genesis
Energy, Mighty River Power, Trustpower, Greymouth Petroleum and NZ Oil &
Gas. There was resistance to handing
over this information.
Justice Kos granted the orders,
subject to tight rules. Data provided is
to be kept under tight security in the litigation departments of the three law
firms acting in the arbitration.
Information supplied is to be used for purposes of the arbitration only,
and for no other purpose. Staff using
the data is required to sign confidentiality agreements.
There is a public interest in the
Shell/Todd/Vector arbitration setting a market price based on a more complete
picture of the market for natural gas sales in New Zealand, His Honour said. While parties to the arbitration have access
to a substantial amount of market data, that information is materially
incomplete. Shell and Todd currently
control 69 per cent of wholesale gas sales.
As purchasers, Vector and Todd have about 55 per cent of the market for
industrial, commercial and residential users.
The Arbitration Act allows
parties in any arbitration, with court approval, to demand relevant information
from outside parties. Justice Kos said
the advantage of this procedure is that it enables industry experts to analyse
data prior to arbitration. The
Shell/Todd/Vector arbitration is set down for hearing in April 2015.
Vector
v. Contact Energy – High Court (5.12.14)
14.056