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Gassled Investors Take Action After Norway Cuts Tariff

(Corrects story published on July 11 to show ministry comment in third paragraph.)

July 11 (Bloomberg) -- Investors owning almost 39 percent of Norway’s gas transport infrastructure said they’re taking legal action against Norway’s government over a decision to reduce tariffs for using the country’s Gassled network.

Solveig Gas Norway AS, which owns 24.8 percent of Gassled, Njord Gas Infrastructure AS, which holds 8 percent, and Silex Gas Norway AS, which has 6.1 percent, have issued a notice of claim stating they will take legal action against the Ministry of Petroleum and Energy, they said today.

The notice records the view that the tariff reduction is “without legal foundation and should be declared invalid with any resulting loss compensated,” Solveig and Njord said. The ministry received the notice and is taking it “into consideration,” said Lise Rist, a spokeswoman at the ministry. She declined to comment further.

Norway, western Europe’s largest gas exporter, said on June 27 it will push through a 90 percent cut in gas pipeline tariffs that investors in the network have said will lower income by almost 40 billion kroner ($6.6 billion). Implementation of the cut, first announced on Jan. 15, was delayed until the 2016 gas year as a concession to investors. The tariff changes will also exclude the Kvitebjoern and Norne pipelines, the ministry said.

Norway is cutting tariffs charged for access to its pipeline network to raise profits on gas discoveries and boost exploration and recovery rates. The plan has been criticized by investors in the network and their lenders, which include Canadian pension funds, a UBS AG infrastructure fund and a unit of Abu Dhabi’s sovereign fund, who argue the cut will lower their returns to 4 percent. The group had projected a minimum return of 7 percent.

Solveig, Njord and Silex will submit a writ of summons early this fall, Silex Chief Executive Officer Kurt Georgsen said by phone. Infragas Norge AS, which owns 5 percent of Gassled, is still considering whether to join the action, Chief Executive Officer Knud Noerve said by phone from Oslo.

To contact the reporter on this story: Saleha Mohsin in Oslo at smohsin2@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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