Todd
Petroleum described as the “nuclear option” threats by Vector Gas to stop
processing Todd’s drawdown from the Kapuni field as the two ramp up a long-running
dispute over Vector’s pricing. The High
Court refused Vector’s request that a six-week trial scheduled for next April be
split in two: first to determine interpretation issues; the second, competition
and pricing issues.
Commerce Act litigation
in 1997 forced owners of the Taranaki Kapuni Gas treatment plant to process
competitors’ gas at a reasonable price.
This price was set in a 1999 arbitration with producer price index
adjustments applied every two years.
Nearly two decades on, Todd holding extraction rights from the Kapuni
field and Vector Gas as owner of the Kapuni Gas treatment plant dispute the
1999 arbitration both as to its effect (interpretation issues) and its
relevance (competition and pricing issues).
Vector says market dynamics have changed since the 1997 High Court
ruling. The position should be revisited. In any event, the formula for fixing a
processing fee is no longer reasonable, it says.
Justice Dobson refused Vector’s
request to split the trial into two separate hearings. The factual background is complex, he
said. There is twenty years of history
behind the litigation. Evidence relevant
to interpretation issues will cross over into competition issues. There is a risk findings of fact made at a
first hearing could hamper decisions at a second. A second hearing is delayed if there are
protracted appeals from the first, he said.
Todd
Petroleum v. Vector Gas – High Court (29.09.17)
17.125