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Oil report

Banks entitled to 1.35 bln euros over Spanish gas site closure, court finds

MADRID, Oct 29 (Reuters) - Spain’s Supreme Court ruled on Thursday that Santander, Caixabank and Bankia are entitled to compensation of 1.35 billion euros ($1.6 billion) from the state in a long-running dispute over a shuttered gas storage site.

Spain decided to close the Castor underwater facility, which was meant to store almost a third of its daily gas needs, but stopped gas injections after more than 200 minor earthquakes were detected in 2013.

A study showed the earthquakes could return if it resumed operations, and Spain paid 1.35 billion euros in compensation to the construction companies involved, which included Spain’s ACS and Canada’s Dundee Energy.

Gas grid operator Enagas had sold Santander, Caixabank, and Bankia a combined 1.35 billion euros in payment rights that they expected to recoup through domestic gas bills over the coming decades.

They sued when the constitutional court annulled this mechanism and the state stopped servicing the debt.

On Thursday, the Supreme Court granted the banks “the right to be paid by the government the amounts they had paid to acquire the mentioned payment rights.”

Santander has rights to 700 million euros, Caixabank 450 million, and Bankia the remaining 200 million.

All three banks declined to comment. The industry ministry was not available for comment. ($1 = 0.8461 euros) (Reporting by Emma Pinedo, editing by Isla Binnie and Jane Merriman)

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