British Gas writ provokes counter action

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The Independent Online
The latest attempt by British Gas to save "Sid" was on the verge of backfiring last night, as it emerged that oil and gas firms were considering issuing writs against the company in the continuing row over who should pay the gas levy.

British Gas last week stunned the industry by issuing a pounds 1bn writ against the Government, claiming it should never have paid some of the levy - a tax on cheap gas contracts signed in the early Seventies. In response, the Department of Trade and Industry issued writs against 27 oil and gas companies involved in the contracts to safeguard for the taxpayer.

In what is fast becoming a complex legal game of "pass the parcel," several of these firms are considering issuing writs against British Gas in an attempt to pass liability back to the company, which started the legal merry-go-round in the first place.

The firms are those which have a stake in the Hewett gas field off the Norfolk coast. One firm is known to be drawing up a writ, while several others are seriously considering the move. They include Arco, the US company which discovered Hewett in 1966, and which has a 20 per cent stake in the field

An Arco spokesman said: "We have analysed the contract and we are considering all our options at the moment. One of those options is the possibility that we might be able to recover from British Gas any levy that we may have to pay."

Another large oil and gas producer said: "Our interpretation is clearly that British Gas's arguments don't stack up. If they sue the DTI and the DTI sues us, then we will sue British Gas."

Asked about the development yesterday evening, British Gas said: "We are unaware of any basis on which a claim might be made."

British Gas has claimed the contracts in question have been altered so many times over the years that they no longer have legal validity. The legislation for the gas levy, which is worth 1p a therm on bills, states that if British Gas is not liable, the original producer of the gas should pay instead.

None of the writs have been served yet, and British Gas has insisted it will be negotiating with the DTI. A spokeswoman for the company explained: "We expect to be in discussion with the DTI on ways to take this dispute forward without it having to be placed formally before the courts.

However, the DTI said yesterday: "No discussions are taking place, none are planned."