Court of Appeal's judgment could have fundamental impact on Europe's bedrock gas supplier

News | 13.09.17

Oil and gas
On June 30 2017 the Borgarting Court of Appeal rendered its judgment in Gassled, a case of major importance for the upstream Norwegian Continental Shelf (NCS) industry, natural gas buyers in Europe; and the Norwegian government, as resource owner and NCS regulator. If the judgment becomes final and binding, it will benefit the European gas supply. However, it may be a rude awakening for institutional investors in NCS infrastructure.

Norway has been and is positioned to remain one of Europe's bedrock natural gas suppliers. Through Gassled - the largest submarine pipeline network in the world, the NCS supplies Continental Europe and the UK with roughly 25 % of their annual natural gas consumption. The ownership, operation and governance of these submarine pipelines is for Europe of vital economic and security of energy supply interest. NCS natural gas will contribute to a stepwise de-carbonisation transition of the European energy sector. A dispute over regulation of future transportation tariffs in Gassled has been brewing between owners of Gassled that are not NCS production licensees or shippers of natural gas and the Norwegian regulatory authorities. The dispute ended up in court.The Court of Appeal judgement confirms that the intervention of the MPE was justified and within its legal competence. The Court of Appeal as did the District Court, also confirms important principles of the Norwegian petroleum resource management based governance system. It explains the consequences of the Norwegian public administrative law based regulatory system and the authority vested in the Ministry of Petroleum and Energy to regulate transportation tariffs in Gassled. The Court of Appeal rendered its judgement in June. An appeal may be lodged by mid-September, but it is not given that the case will be admitted to the Supreme Court since it has already been heard by two instances ruling in favour of the defendant. European consumers, as well as upstream NCS and gas infrastructure investors will need to follow the final outcome if this case closely.

Read the article written by partner Bjørn-Erik Leerberg and published at International Law office.