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Verve s landmark win over oil giants
Verve's landmark win over oil giants

WA taxpayers have scored a landmark win over global petroleum giants, with the Supreme Court ruling that companies including Woodside, BP and Royal Dutch Shell used the 2008 Varanus crisis to charge exorbitant prices for critically tight supplies of gas.

The case was launched by State-owned Verve Energy which gets the bulk of the gas that it uses to generate electricity from the North West Shelf joint venture by a raft of petroleum companies, also including Chevron and BHP Billiton.

Verve argued that after Apache Energy's Varanus Island explosion in 2008, which wiped $2.4 billion from WA's economy and cut a third of the State's gas supplies for months, the NW Shelf - which controlled the only gas left - refused to honour its existing contract.

Verve said the NW Shelf refused to provide 30 terajoules of gas of Verve's up-to-165TJ per day contract after the explosion, which the utility estimated cost it $860,000 a day in having to pay more for the same fuel from the joint venture.

In the middle of the crisis, the WA Government urged people to take shorter showers, and some hotels had to cut back on changing sheets as gas became either too costly, or impossible to source. The case also raised broader issues about whether the competition watchdog - the ACCC - should continue to allow the petroleum giants to collectively market gas, with concerns they wield undue influence.

Verve lost the initial case, but won its appeal. So sensitive are the commercial details in the case that the Court of Appeal did not release its judgment yesterday, and will not until the parties agree on which sections are to be blacked out.

However, the joint venture partners did have a win, as the court ruled that damages should be capped at $10 million (including interest), rejecting Verve's claims for up to $40 million.

This is because, according to those close to the case, while the court found the partners used duress to enrich themselves during the gas shortage, it did not entitle Verve to additional damages.

The operator of the NW Shelf venture, Woodside, would not say if it would seek leave to appeal to the High Court but "noted the ruling".

Verve chief executive Jason Waters extended an olive branch and said while the case vindicated its position, the utility looked forward "to continuing our long-term relationship with the North West Shelf partners".