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20

Gas row going to Privy Council

The future of a multibillion-dollar gas deal may be decided by the Privy Council in London...

The future of a multibillion-dollar gas deal may be decided by the Privy Council in London following a Court of Appeal ruling that found a 1997 deal between Fletcher Challenge and ECNZ is not binding.

Four years ago, Fletcher Energy chief executive Hugh Fletcher agreed to supply ECNZ with gas for the next 17 years.

The next year, ECNZ took the position that the Heads of Agreement signed did not constitute a legally binding contract and refused to keep buying the gas, at what is thought to be a high price.

Fletcher Challenge began legal action, saying the agreement was a binding contract.

Four of the five judges on the Court of Appeal have now disagreed, saying it did not have the legal force of a contract.

The case has been complicated by the changing identities of the participants. Shell Energy, which bought Taranaki gas assets from Fletcher, says it will seek an appeal to the Privy Council.

Genesis Energy, which is now on the buying end of the gas deal, is the new face of ECNZ in the dispute.

A spokeswoman for Genesis said the company was still studying the Court of Appeal decision, and she declined to comment.

nzherald.co.nz