The arbitrator also rejected Clough’s $95.7 trade practices claim that alleged there was misleading conduct on the part of operator Origin Energy.

Clough was found to be liable for the “significant majority” of the defects claims made by the joint venture up to April 2005, said Origin.

But the BassGas joint venture and Clough will not have an answer on the value of these defects and liquefied damages until the next hearing in April 2008.

Also at this time, the arbitrator will make a decision on the second tranche of defects notified by the JV after April 2005.

“The joint venture welcomes the arbitrator’s decision in this initial hearing and is hopeful that the outstanding matters in relation to the remainder of the arbitration can be resolved in a more time efficient manner,” Origin said in a statement.

Meanwhile, in its own statement, Clough said it had reviewed the details of the determination.

“The Clough Board has concluded that no amendment is currently required to previous advice given to shareholders as to the dispute’s likely impact on Clough’s financial position,” the company said.

BassGas was fully commissioned in mid-2006, two years behind schedule and during that time the development's budget blew out from the original $450 million to about $750 million.

Clough maintains it is not responsible for delays. It has argued that changes imposed by Origin are responsible for the hold-ups and the late discovery of mercury in the Yolla gas stream has created problems for the project.

Origin and its joint venture partners had raised their claim to roughly $250 million, against which Clough had counterclaimed for $95.7 million.

The BassGas joint venture comprises Origin (with a 42.5% equity), Australian Worldwide Exploration (30%), CalEnergy (15%) and Arc Energy (12.5%).