The Wellington High Court last week granted Todd Energy the injunction it had sought, requiring Shell and OMV to allow Todd to connect its gas and condensate lines to the production station.
Todd Energy managing director Richard Tweedie told PetroleumNews.net that his company had spent $NZ250 million ($A210 million) – its 26% share – developing Pohokura and another $10 million building its own pipelines.
“Yet Shell and OMV were attempting to prevent Todd taking its share of gas and condensate by denying Todd the right to connect, despite the fact they had connected their own pipelines. At any level, this hardly seems fair. The court thought likewise,” Tweedie told PNN.
Justice Rhys Harrison said in his decision that Shell, Todd and OMV had first agreed to use jointly operated export pipelines to take Pohokura gas from the Pohokura production station (PPS) to the nearby Maui pipeline and condensate to Port Taranaki.
But the parties later “fell out” and agreed to separate exporting. Shell and OMV connected their joint pipelines to the PPS, but refused Todd connection (to the PPS) unless the company agreed to execute an interconnection deed, which it declined to do.
Todd, which challenged the validity of certain rules and protocols, then applied for the injunction to force Shell and OMV to allow it access to PPS land and facilities.
Shell and OMV opposed the granting of such an injunction, but Justice Harrison found their arguments “strained if not contrived”.
He was satisfied there was a real risk “of serious and unquantifiable damage” to Todd’s reputation if its pipelines were not connected promptly.
“That Todd’s financial harm will be serious is beyond question,” he added, referring to extra pipeline contractor charges (of up to $25,000 per day), deferred and lost gas revenue.
But he accepted that Todd had been “guilty of a degree of delay”, though delay of itself was not prohibitive. “I do not accept that Todd has been guilty of bad faith.”
The judge said the one factor that swayed him was that Shell and OMV would not suffer any loss, beyond the commercial leverage designed to force Todd into signing the interconnection deed.
He granted Todd its injunction, enabling it to take its share of first commercial Pohokura gas scheduled to flow from September 17.
The energy companies have been fighting battles over the Maui and Pohokura gas-condensate fields for more than a year.
In June, the high court stymied Shell NZ’s plans to take over operating Maui by upholding a Todd injunction, preventing the removal of Shell Todd Oil Services as operator.
But last December, the same court dismissed Todd’s appeal against Shell Exploration NZ taking over from STOS as Pohokura operator. And in June last year, the court rejected Todd’s bid to allow third party access to the Maui pipeline only if there was unanimous agreement by the partners.
Shell NZ owns 82.75% of Maui and 48% of Pohokura, while Todd owns 6.25% of Maui and 26% of Pohokura. OMV owns 10% of Maui and 26% of Pohokura.
