The state did not err when it reduced the rates for Gassled’s pipe system, the Court of Appeals finds. The giant foreign funds claim that they are losing billions.

The state won again in the Gassled case.

This is revealed by a judgment of the Borgarting Court of Appeal. The appeal of the investors in the Gassled system was dismissed, so the judgment of the district court will stand.

Investors in the Gassled pipeline system argued the state erred in reducing gas transmission rates, but were unsuccessful in district court.

Now, the Borgarting Court of Appeals has also found that the state’s decision to change the rates was valid and dismisses the appeal.

“The Court of Appeal has come to the conclusion that the Ministry did not violate any requirements which may reasonably be imposed on the activities or procedures of the Ministry in connection with the approval of transactions,” writes the Court of Appeal in the judgement.

Behind the plaintiffs are major international investors such as the Canadian pension fund Canada Pension Plan Investment Board, the insurance company Allianz and the Abu Dhabi sovereign wealth fund.

Between 2010 and 2012, these and other investors bought shares in the Gassled gas pipeline network, among others from Statoil, for around NOK 32 billion, through the companies Infragas Norway, Silex Gas Norway, Solveig Gas Norway and Njord Gas Infrastructure.

Njord wrote in a message that the company must decide on a possible appeal by September 16 and will make an announcement on this subject later.

Learn more: State won gas dispute in district court

Concern for framework conditions

The case attracted a lot of attention overseas and was widely reported. The reason for this is that investments in Norwegian infrastructure may become less attractive if global investors believe that the state may suddenly change the framework conditions.

Learn more: German giant on Gassled cuts: Incomprehensible discrimination

– This case will reduce investors’ willingness to work with the Norwegian government in the future, says Giles Frost of infrastructure investor Amber Infrastructure Group at the Wall Street Journal in 2015before the case goes to the district court.

The reduction in tariffs means that investors are making less money from transporting the gas than they expected when they bought shares in Gassled.

Businesses estimate that they are losing around NOK 15 billion due to the state’s change in tariffs.

Gassled is a pipeline system for the transport and export of gas, which connects gas fields in the North Sea and the Norwegian Sea to onshore processing facilities in Norway and receiving facilities in Great Britain , France, Germany and the Netherlands.

Learn more: The state is being sued for billions

The Ministry of Petroleum is satisfied

– The Ministry of Petroleum and Energy is satisfied that the state has been acquitted in the judgment of the Borgarting Court of Appeal, said communications adviser Ella Bye Mørland at the Ministry of Petroleum and Energy.

– This means that the state has been acquitted by two courts in the lawsuit related to the modification of the tariff regulation which includes the gas transport system for Norwegian gas (Gassled), she says.

When the State changed the tariffs in 2013, it was among other things to ensure that a maximum of the value creation is taken from the fields and not from transport.

Lower costs for transporting gas through pipelines means lower costs for companies facing exploration, development and exploitation decisions. Thus, it becomes more profitable to search for more resources, the Department of Petroleum and Energy said after the district court verdict in 2015.

Must pay court costs

In the District Court, the parties were ordered to pay their own legal costs, but the Court of Appeal overturned this decision.

As a result, investors who filed a lawsuit against the state have to pay a total of over NOK 42 million in legal costs for cases in the District Court and the Court of Appeal.

This must be paid by Njord Gas Infrastructure AS, Solveig Gas Norway AS, Silex Gas Norway AS and Infragas Norway AS.

The state had demanded coverage of NOK 19.7 million in court costs for the appeal court, but the court felt that was too much and reduced the sum somewhat.

“Full coverage of the fees required for work during the appeal hearing is not granted, as the Court of Appeal does not consider it necessary for up to seven lawyers to be present during the entire hearing”, indicates the judgement.

Learn more: Norwegian oil majors fight against Norway: The state is sued for 15 billion