THE NSW government has resigned itself to paying gas company Metgasco millions of dollars in compensation after it decided not appeal a judgment by the Supreme Court that overturned a suspension of its operations.
The decision is yet to be announced, but senior government sources confirmed it to The Australian Financial Review late Friday.
It is good news for long suffering shareholders in the gas minnow. The company and government will now engage over the compensation sum, which could run to over $100 million.
The troubled coal seam gas (CSG) miner won the unenviable title of the business most damaged by state politics by the last NSW parliament, as an extraordinary swell of protesters and community anxiety over CSG concentrated in the north of the state.
In April the Supreme Court overturned a decision by the Baird government to suspend Metgasco's operations.
The Baird government worried a legal challenge would create a perception of sovereign risk in NSW. The government is keen to spruce its business-friendly credentials in contrast to the recently elected Labor governments in Victoria and Queensland.
Metgasco operates in the north of NSW and has spent more than $120 million over the last 10 years to develop gas projects.
Energy Minister Anthony Roberts this week extended to June 30 a scheme to buy back exploration licensees from operators that were causing community concern. Mr Roberts is leading the Baird government's efforts to build a workable regime for coal seam gas.
Metgasco was drilling for conventional gas at its Rosella well near Lismore in northern NSW. The area also has significant coal seam gas potential.
Metgasco chief executive Peter Henderson has said it would take more than $100 million for the company to exit its operations in the state's north.
The NSW Labor opposition said during the recent state election campaign that it would cancel that if elected it would cancel Metgasco and other CSG firms' licences without compensation. "If we have to legislate in government, we will," Labor leader Luke Foley said.
