Genesis routs Shell in gas case

Friday 12th October 2001

Royal Dutch/Shell lost a Court of Appeal case over a disputed gas supply agreement with Genesis Power and said it was considering going to the Privy Council.

The case involved a heads of agreement signed in 1997 between Genesis' predecessor, ECNZ, and Fletcher Energy, which Shell bought last year.

Under the agreement Fletcher would supply ECNZ with 320 petajoules of gas over 20 years.

The pricing has never been revealed but is known to be well above wholesale market gas prices. A June 2000 High Court judgment favouring Fletcher put the gross value of the gas in question at $1.2 billion to $1.8 billion, suggesting a price of $3.75 to $5.63 a gigajoule.

Genesis has argued the heads of agreement wasn't binding.

"The effect of the majority judgment of the Court of Appeal is to have destroyed the bargain that the parties had reached commercially," a Shell statement said.

"Contrary to the majority's conclusion, both parties always intended that the heads of agreement in question was a legally binding contract."

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