ALUMINIUM giant Alcoa has had a win in its bid to recoup more than $100 million from gas producer Apache over the massive explosion at the Varanus Island plant in 2008.
The disaster slashed the state's domestic gas supplies by about a third and dented its economy to the tune of an estimated $3 billion.
And an official report into the explosion said a 30cm pipeline, maintained by Apache, ruptured and exploded at the shoreline because of corrosion, a risk that was "not only foreseeable but to some extent foreseen" by the company.
Alcoa, a major user of natural gas from the plant at its three WA alumina refineries, claims the disaster forced it to spend $138 million more than it would have under a sales agreement with Apache on acquiring gas and diesel from elsewhere.
Alcoa commenced proceedings to sue Apache in March 2011, claiming it suffered substantial economic loss.
It claims Apache Energy - the Australian arm of US parent company Apache Corporation - breached its duty of care to ensure the pipeline was well maintained and made a separate claim of negligence against subsidiary Apache Northwest, which is responsible for operating the facility.
On Tuesday, WA's Court of Appeal denied Apache leave to appeal Alcoa's claims.
Apache, which included a force majeure clause in its gas supply contract, claimed it was not liable because Alcoa was aware of the risk of a supply interruption and had no difficulty in obtaining alternative supplies.
The appeal panel, led by Justice Michael Buss, sided with Alcoa.
"Alcoa's pleading of the alleged duty of care is adequate in that it pleads ... that the total cessation of the supply of gas ... was likely to lead to Alcoa suffering substantial economic loss and damage," the summary judgement reads.
Alcoa's claim against Apache is likely to continue.
But Apache said it would consider whether to seek special leave to appeal to the High Court of Australia "in order to clarify this critical branch of the law".
"At issue is whether Alcoa is permitted to recover tort damages in addition to the contractual liquidated damages for which it contracted," Apache Northwest said.
"Alcoa is a large global company that was able to protect itself from gas supply disruption and did protect itself through contract liquidated damages, insurance, and other deliberate business strategies."
Alcoa declined to comment.
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