AN epic court battle over a gas sales contract amendment that dates back to 1996 has concluded with neither side able to claim a decisive victory.
AN epic court battle over a gas sales contract amendment that dates back to 1996 has concluded with neither side able to claim a decisive victory.
Instead, the judgement in the case, between Midland Brick and CMS Gas Transmission and Arc Energy, allows both parties’ contentions.
While the parties are considering the judgement, Arc Energy announced to the Australian Stock Exchange that the result would affect it financially.
While some in the industry have praised the wisdom of Justice Nicholas Hasluck’s verdict, a reading of the history behind the case also provides an insight into the early days of gas transmission into Perth.
The battle relates to a 1996 amendment to the original gas contract that Midland Brick entered into with WAPET, the then owner of the Western Australian Natural Gas pipeline – now known as the Parmelia pipeline – that brought gas to Perth from the Woodata field.
Under that amendment, Midland Brick agreed to purchase 15.175 petajoules of gas from the pipeline from the Woodata gas fields.
The 15.175 petajoules was split into a 7.175 petajoule minimum. WAPET was allowed to sell to third parties providing it took the gas that it sold to those parties off the remaining eight petajoules of Midland Brick’s contract.
CMS bought the pipeline from WAPET and the Woodata field from the Chevron, Texaco, Ampolex and Shell consortium that had owned it in 1997.
A year later, CMS sold the Woodata field to Arc Energy.
When Midland Brick went to build what it calls kiln 10 on the adjacent Whiteman Brick site it had acquired, it determined that it did not have to buy its gas for that kiln from CMS.
It went to a tender and found that, while CMS gave the most expensive of the three tenders, it was offering gas at a lower price than it was providing it to the rest of the Midland Brick’s operations.
This prompted Midland Brick to try and find out how much gas was remaining in its eight petajoules. It had already exhausted its 7.6 petajoules minimum. CMS would not reveal that information so the matter went to court.
In the case CMS argued that kiln 10 should fall under the original contract.
In his judgement Justice Hasluck ruled that CMS should tell Midland Brick how much gas it had sold to third parties from the eight-petajoule remainder.
He also ruled that Midland Brick had to buy the gas for its kiln 10 from CMS under the original contract terms.
Midland Brick, along with Alcoa and the then State Electricity Commission of WA, was a foundation customer of the WANG, which started operating in October 1971.
