An Aberdeen-headquartered company is facing a further legal battle after winning a £33million ruling over a major North Sea pipeline system.
In May, Kellas Midstream, the main owner of the Central Area Transmission System (CATS), was successful in its bid to recover fees which Teesside Gas Transportation (TGTL) had withheld for renting capacity within the system.
Despite the ruling from the High Court of England and Wales, TGTL has confirmed it will contest “material elements” of it at the Court of Appeal next year.
Posting accounts on Companies House, director Gareth Williams said the company “applied for and was granted leave to appeal material elements of the ruling”.
He added: “Whilst the appeal is ongoing with regards to the supplier dispute, the board will consider the options for the future direction of the company”.
It is unclear to what extent TGTL will appeal the decision and the firm did not reply to a request for comment.
CATS is managed by Kellas, serving more than 30 offshore fields over a 250-mile stretch, and last year delivered more than five billion cubic metres of gas to UK markets via a terminal in Teesside.
Along with its parent firm Antin Infrastructure Partners, Kellas collectively holds a 99% stake.
Since CATS became operational in 1993, TGTL’s main business activity has been to pay a fixed fee to hold capacity within the system – a pipeline within a pipeline – which it then sold on to operators of North Sea fields.
From 2013, that payment became a non-fixed “capacity fee” leading to a long-standing debate over the amount which should be paid and, as a result, TGTL withheld £37.7m between 2013-2018.
Kellas Midstream, based at the Silver Fin Building on Aberdeen’s Union Street, said in May it would proceed to recover the monies due following the High Court ruling, while managing director Andy Hessel said he was “very pleased” with the outcome.
In response to the appeal, a spokeswoman said: “We are aware that TGTL has been granted leave to appeal one element of the court’s ruling.
“The appeal will be heard by the Court of Appeal in 2020 and the CATS parties have no further comment.”
Selling on capacity of the system was the main business activity for TGTL, whose right to do so expired in October 2018.
TGTL posted a pre-tax loss of £20.8m in 2018 compared to a £13.4m profit in the previous year.
Meanwhile turnover – for January through to September due to the capacity rights ending in October – was £13.1m, down from £19.3m for the full year in 2017.
Kellas, formerly CATS North Sea Management, was established in 2014 to manage the pipeline system and changed its name earlier this year to reflect its expanded portfolio, including stakes in the Esmond Transport System and Humber Gathering System.
As of last year, Kellas employed 25 people at its HQ in Aberdeen.
TGTL was incorporated in 1980 by Imperial Chemical Industries, who later sold a 50% stake to the failed US commodities firm Enron.
It later became majority owned by Deutsche Bank following Enron’s collapse in 2001.