Scottish government wins fracking case against INEOS

EDINBURGH/LONDON (Reuters) - Scotland’s highest court ruled against petrochemicals company INEOS on Tuesday, after it challenged a devolved Scottish government moratorium against fracking for oil and gas.

A logo is pictured in the headquarters of INEOS chemicals company in Rolle, Switzerland, November 13, 2017. REUTERS/Denis Balibouse

INEOS, headed by billionaire founder Jim Ratcliffe, argued the Scottish government had imposed an unlawful ban on fracking in October 2017 and had sought a judicial review to overturn it.

The Court of Session said the government had not imposed a ban, despite several statements to that effect, and had instead an “emerging and unfinalised planning policy expressing no support on the part of the Scottish government” for fracking.

The extraction of oil and gas from tight rocks by fracturing them using chemicals has become a contentious issue in Europe after it helped reverse a fall in U.S. oil output, transformed its gas sector and boosted the economy of several states.

Despite that, fracking is also associated with environmental issues such as increased industrial activity, fears over water contamination and objections that it boosts fossil fuel production when more renewable energy should be encouraged.

INEOS operates a refinery at Grangemouth, down the Firth of Forth, and ships shale gas from the United States to supply it. It holds the rights, expiring on June 30, to explore for gas over a 400 km area between Glasgow and Falkirk.

The devolved Scottish government announced last October it was against fracking, in line with public opinion.

It ordered local authorities to reject planning applications from companies seeking to frack, a measure that energy minister Paul Wheelhouse told parliament was “sufficient to effectively ban the development of unconventional oil and gas extraction”.

“The decision that I am announcing means that fracking cannot and will not take place in Scotland,” he said then.

Judge Lord Pentland said, despite such ministerial statements which he cited in the court opinion, “there is indeed no prohibition against fracking in force at the present time”.

INEOS welcomed the court’s decision which it said clarified the “confusion arising out of government announcements”.

“Today’s judgement makes it clear the SNP government will now have to make decisions based on facts and science rather than prejudice and political expediency,” it said. “With an environmental assessment and business and regulatory assessments still to be carried out, there may never be a fracking ban in Scotland.”

Wheelhouse said, in reaction to the court ruling, that the government’s position against fracking remained unchanged.

Just over 100 miles south of the border, British shale gas developer Caudrilla expects to fracture its first two horizontal wells in Blackpool later this year, subject to approvals.

Reporting by Elisabeth O’Leary and Sabina Zawadzki; editing by Stephen Addison and Alexandra Hudson