Global investors kick off lawsuit against Norway in gas pipeline row

REUTERS: A group of international investors is suing Norway in an attempt to overturn its decision to cut gas pipeline tariffs, arguing the fee reduction will cost them 15 billion crowns (US $ 1.9 billion) in lost earnings through 2028.

Challenging Norway’s reputation as a predictable place to do business, investors including Allianz, UBS, the Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board, argue that Norway illegally cut fees on the 8,000-km (5,000mile) Gassled natural gas pipeline network.

In a trial that started yesterday and is due to last until mid-June, the plaintiffs, who own 45 percent of Gassled, say the government broke their contract and is liable for damages because the tariff was a fundamental condition of their investment, documents filed in the Oslo district court show.

The investors bought into the pipe network via a series of deals through early 2012 before Oslo cut some of the tariffs in 2013, arguing that returns were above agreed levels and fees were so high that they discouraged new offshore investment.

The government, which denies any wrongdoing, said profit from oil and gas should be derived from the fields, not from the infrastructure, and that pipeline tariffs needed to be cut from October 2016 because the predicted return had been achieved.

The government, which is the biggest shareholder in Gassled with 45.8 percent, said the actual return was 10 percent in 2012 and was seen rising to 10.5 percent in 2028, well above the initial goal of 7 percent.