Federal Court sides with BPH Energy in legal stoush. Now it has the ALP to deal with

In a lawsuit challenging the cancellation of the PEP-11 offshore gas permit, Federal Court Justice Darren John Jackson ruled in favour of BPH Energy (ASX:BPH) and its partner Bounty Oil & Gas (ASX:BUY) on Tuesday. 

“The presiding Judge…quashed the Decision and concluded that the Decision of the Joint Authority was affected by apprehended bias,” BPH Energy wrote on Tuesday. 

“This was because a fair-minded observer would have reasonably apprehended the former Prime Minister Scott Morrison…did not bring a fair mind to determine Asset Energy’s application.”

Lawsuit recap 

The decision effectively ends a lawsuit between BPH and the Commonwealth Government. 

Earlier this month, BPH and Bounty together with the Commonwealth solicitor submitted orders to the Federal Court seeking to avoid a trial. 

BPH and Bounty, through a third party subsidiary Asset Energy, took the Commonwealth Minister for Resources and the Minister for New South Wales to the Federal Court last year over Scott Morrison’s cancellation of the PEP-11 offshore licence. 

What BPH had been saying from day one was ratified by Justice Jackson in the Federal Court, finding that Scott Morrison’s decision to cancel the licence was improper.

What is PEP-11? 

PEP-11 is an oil and gas block offshore NSW. Fully approved, the licence would allow for BPH and partner Bounty to drill for hydrocarbons. 

Ahead of the 2022 national election, Scott Morrison used his self-appointment to the resources portfolio to effectively cancel the licence of his own accord, acting as a minister responsible for the NSW Offshore Petroleum Joint Authority (OPJA). 

Ultimately, PEP-11 was viewed as a strategic risk to the prospect of re-election for the LNP, which lost the election. 

Not out of the woods yet 

On 26thMarch, Scott Morrison decided to refuse Asset Energy’s application to extend its lease of the PEP-11 block rights. 

The decision to reject that extension has now been quashed by the court, meaning the application goes back to the NSW OPJA. 

That process won’t be without its own contemporary political headwinds. 

Anthony Albanese also said he was against PEP-11 in the lead up to the election, and firebrand Labor energy minister Chris Bowen is unlikely to desire being seen to throw his support behind the application. 

This is the same government, don’t forget, that caused great industry grumbling when it introduced an energy price cap in December last year. 

Market Index covered a Macquarie research note at the time, which theorised Cooper Energy’s (ASX:COE) long term earnings could be written down as much as 30%. 

Re-application to test ALP’s stance on Oz gas 

We will  now likely see  a test of the ALP government’s ideology towards Australia’s domestic gas supply chain security. This could prove trickyfor the ALP, given there’s a reported looming gas shortage, especially on the nation’s east coast. 

“In light of the decision of the Federal Court of Australia the PEP-11 Joint Venture sincerely hopes that the relevant applications can be re-considered in a timely manner and according to law by the Ministers now comprising the Joint Authority,” BPH Energy CEO David Breeze said.

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. BPH was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.