Australian Gas Explorer May Sue Victoria over Ban on Fracking

Jon Capistrano
Jon Capistrano
September 15, 2016

According to Roland Sleeman Lakes Oil chief executive, what the government of Victoria has done is unbelievable as reported by Fortune.

Lakes Oil is a junior oil and gas explorer in Australia, and they are considering the grounds for suing the state of Victoria, after the state government issued a permanent ban on fracking and extended the halt on onshore conventional gas drilling until 2020.

Lakes Oil shares sank 50% on Wednesday in their first trading since the fracking ban was issued and announced. Their stocks were the second most active on the Australian exchange before the ban.

The move by Victoria mean lakes will not be able to go ahead with two tentative deals that were lined up in 2014 to supply gas from its Wombat onshore conventional gas field to the United States giant Dow Chemical and Simplot, an Australian food manufacturer.

Mr. Sleeman would not elaborate whether his company would seek compensation from Victoria but cited an example of what happened with Metgasco in New South Wales. Although he said that, it was not exactly the same situation, but ultimately, Metgasco was compensated by the government.

New South Wales agreed to pay Metgasco $25 million last year to buy back 3 exploration licenses after suspending approval for drilling at a bright coal seam gas site due to public protest. But according to one lawyer, it would be very hard to win compensation from the Victorian government because mining and petroleum licenses are not property rights but are administrative entitlements, in which a government can terminate with legislation.

According to Jeff Lynn of law firm Ashurst, as a general rule, when any governments take away entitlements under petroleum or mining legislation, there’s not a right to compensation.

Click here to read the full story on Fortune

Featured Image Credit: Trocaire

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