Petition to House of Lords In CATS Litigation

Petition to House of Lords In CATS Litigation
Press Release	10 September 1999

BG International, together with the other owners of the Central Area Transmission System (CATS), has petitioned the House of Lords for leave to appeal against the Court of Appeal's judgement in their dispute with Teesside Gas Transportation Limited (TGTL), a wholly owned subsidiary of Enron. On July 30th, the Court of Appeal partially overturned a previous decision in the High Court in favour of the CATS Owners. The Court of Appeal decision has resulted in a payment by the CATS Owners to TGTL. BG International's share of this payment is approximately £34 million, plus interest of approximately £12 million.

The dispute involves the Capacity Reservation and Transportation Agreement (CRTA) signed in 1990 between the CATS Owners and TGTL, for the provision of a 25 year transportation service in the CATS pipeline. Under the terms of the agreement, TGTL would pay for 300 mmscf/d of reserved capacity, whether or not it was used.

The CATS pipeline was completed in March 1993 and TGTL started making payments the following month. At this juncture TGTL had no contracted field ready to utilise their capacity and consequently incurred send or pay payments.

In February 1995 TGTL stopped making send or pay payments under the CRTA and claimed repayment of all previous payments. The CATS Owners issued proceedings against TGTL for the outstanding monies. The case was heard in the High Court in 1996 and 1997. TGTL's case for non-payment revolved around an assertion that the CATS system had not been available throughout the period of dispute. The High Court found in favour of the CATS Owners.

TGTL appealed part of the 1997 High Court decision to the Court of Appeal with the case being heard between the 20th and 22nd July 1999.

Note to Editors

The Central Area Transmission System (CATS) terminal and pipeline system are owned by BG International 51.18%, BP Amoco (Operator) 29.53%, Amerada Hess 17.72%, Phillips 0.66%, TotalFina 0.57%, and Agip 0.34%.

CATS became operational in April 1993 and began transporting gas from the Everest and Lomond fields in May 1993. It currently handles around 1.7 billion cubic feet per day of natural gas, representing some 20% of UK production.