By Nia Williams
CALGARY, Alberta, April 26 (Reuters) - Husky Energy HSE.TO
said on Tuesday it was confident a dispute with China's CNOOC
Ltd 0883.HK over gas delivery payments from the South China
Sea will be resolved, but warned it would take legal action
against the state-owned energy giant if necessary.
Husky operates and owns 49 percent of the Liwan Gas Project,
approximately 300 kilometres (186 miles) south of Hong Kong,
while CNOOC holds the remaining interest and buys the gas from
Husky through a take-or-pay contract.
A pipeline outage in the first quarter temporarily impacted
natural gas sales from Liwan, and Husky said it received payment
only for the actual volumes of around 150 million cubic feet per
day, rather than the 330 million cubic feet per day stipulated
by the contract.
At the same time, CNOOC officials said there had been price
changes in the Guangdong natural gas market and asked Husky to
consider a cut to the fixed price it pays for gas.
"Our view is that there's no contractual basis to change the
price unilaterally. We have a legally binding take-or-pay
contract in place," Husky CEO Asim Ghosh said during a call to
discuss the company's first-quarter results. He added that he
was confident there would be a satisfactory outcome with Husky's
"long-standing" partner.
Calgary, Alberta-based Husky is in talks with CNOOC to find
a solution and said it will take legal action if no satisfactory
outcome is obtained.
FirstEnergy (NYSE:FE) Capital analyst Mike Dunn said the fixed price
agreement had been made before Liwan went ahead and was key to
Husky's final decision to invest in the project.
"The price commitment seems to me to be the more
sacrosanct," Dunn said, adding that it was fixed in local
currency but amounted to around $13-$15 mmcf/day.
(Editing by Paul Simao)