Chevron's Wheatstone LNG project used fill from Onslow Salt. Photo: Attila Csaszar

$49m payment spurs project dispute

Thursday, 2 February, 2017 - 15:35

An Aboriginal corporation has obtained a Supreme Court ruling that will require Mitsui & Company subsidiary Onslow Salt to release documents concerning its dealings with oil and gas giant Chevron, and contractors Bechtel and Thiess, over the Wheatstone LNG project.

The Buurabalayji Thalanyji Aboriginal Corporation sought access to the documents to help determine if it has legal rights against Onslow Salt, Bechtel or Thiess.

The case revolves around the removal of up to 10 million cubic metres of material from the mining lease that encompasses Onslow Salt’s operations.

Onslow Salt said the material was removed as part of flood mitigation work, that it did not receive payment for the material, and it should not have to disclose documents verifying those assertions.

It contracted Chevron to remove the material, as the US company needed 8.5 million cubic metres of fill for the foundations of its adjacent Wheatstone project, which is nearing completion.

Onslow Salt’s annual report, for the year to March 2012, disclosed income of $49.4 million with respect to a land agreement with an unnamed third party.

In correspondence between the parties in 2015, BTAC’s former solicitors asserted that the land agreement was with Chevron and that BTAC did not receive any royalties in respect of the associated payments.

BTAC, which is now represented by Bennett + Co, is paid royalties under the terms of a development deed it signed with Onslow Salt in 1996.

The deed only provides for compensation to BTAC in relation to the ‘salt project’, which did not contemplate the removal of materials for other commercial purposes.

Onslow Salt, which is represented by Gilbert + Tobin, responded that the $49.4 million of income was under a confidential agreement, and did not relate to the removal of fill from its mining lease.

Despite that, BTAC chief executive Matthew Slack said in an affidavit that the land agreement might be a reference to Onslow Salt’s mining lease because, as far as he was aware, it did not own other land in WA at the time.

BTAC’s application for discovery also applied to Bechtel, as it was contracted to build the LNG plant, and Thiess, as it was sub-contracted to remove the material and prepare the foundations of the LNG plant.

BTAC believed it was reasonable to suspect either Bechtel or Thiess may have been the ‘third party’ in the land agreement, according to the judgement.

Onslow Salt told the court suggestions it was in breach of its state agreement or its development deed were baseless.

It also said BTAC had had failed to provide evidence, beyond mere assertion, conjecture or suspicion.

In the ruling, Acting Master Larissa Strk expressed a degree of caution about how far the case might proceed.

“While I am satisfied that BTAC may have a cause of action against Onslow Salt, at this stage the likelihood that a cause of action will ultimately be found to exist is not at all high,” she wrote.

“Even with the assistance of pre-action discovery, at any substantive hearing, there is likely to be a significant factual contest, and debate as to complex questions of construction and relief available.”

For the purpose of BTAC’s discovery application, she said it was sufficient for the court to be satisfied that BTAC may have suffered some non-negligible loss or damage.

Master Strk also noted that the value of BTAC’s claim was not clear.

“These factors weigh heavily against the exercise of discretion to grant the application,” the judgement stated.

“Despite this, in all of the circumstances, I am satisfied that an order for pre-action discovery is reasonably necessary to achieve the proper administration of justice.”

The order applies to Onslow Salt but not Bechtel or Thiess.

Master Strk said, on the evidence, there was no other adequate means available to BTAC to obtain the information it was seeking.

“BTAC requires the documents to decide whether to commence proceedings, and without access to the documents, is denied a foundation which is required to plead any case it may have against Onslow Salt,” she said.

“While the documents sought may contain confidential and commercially sensitive information, the confidentiality of that information is not an overriding consideration and the concerns of the defendants might be addressed by adoption of a suitable regime.”

BTAC was established as a governing body after the Thalanyji people were awarded native title over a large parcel of land in the West Pilbara in 2008.

It had total income of $6.3 million in the year to June 2016, according to its annual financial statements.

This included about $210,000 in land use fees and production royalties from Onslow Salt.

BTAC also earned $3.8 million from its 40:60 joint venture with global company ESS Support Services Worldwide, which runs the workers’ village at the Wheatstone project.