Spectra Energy Corp. announced last Wednesday that it has agreed to settle outstanding litigation stemming from a contract dispute between Citrus Trading Corp. and Spectra LNG Sales, formerly Duke Energy LNG Sales Inc.

The Citrus litigation was a liability assumed by Spectra Energy in connection with the spinoff of the former natural gas assets of Duke Energy Corp. Spectra Energy became a stand-alone company last month when it assumed Duke Energy’s natural gas businesses (see NGI, Jan. 8).

Spectra Energy will pay Citrus $100 million in cash to settle a contract dispute related to Spectra’s 2003 termination of natural gas purchase and sale arrangements with Citrus Trading.

Houston-based Southern Union has a 50% interest in Citrus Corp., which owns Citrus Trading. Through its subsidiary CCE Holdings LLC, which was formed after the collapse of Enron, Southern Union said it is contractually obligated to share a portion of the settlement proceeds with the Enron bankruptcy estate. The other 50% of Citrus is owned by El Paso Corp.

In December Spectra Energy Capital LLC, formerly Duke Capital LLC, had announced it would establish a reserve of $45 million associated with this liability. As a result of the settlement, the company said the reserve has been increased to $100 million. Spectra Energy admitted no liability or fault for the matters alleged in the lawsuit.

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