Fletcher Energy takes gas dispute to court

By LIBBY MIDDLEBROOK

Fletcher Challenge Energy is in the High Court this week trying to uphold a major gas supply contract it signed with the Electricity Corporation of New Zealand three years ago.

The Government-owned organisation agreed to buy around 20 petajoules of gas a year from Fletcher for 17 years, beginning October 1, 2000.

At the time the deal accounted for more than 10 per cent of Fletcher's annual gas production and was estimated to be worth about $1 billion.

Fletcher Energy spokesman Stephen Jones said Electricity Corporation through Genesis Power had failed to honour the agreement and had signed an alternative gas supply contract with Natural Gas Corporation.

Genesis Power could not be reached for comment.

"They don't want to take the gas but we believe the heads of agreement is binding," said Mr Jones.

"We're asking the court for a ruling on the heads of agreement and whether it's binding or not."

Mr Jones declined to comment further on the case.

The hearing continues this week.