Shell SA ponders next move after dismissal of oil exploration appeal

Shell South Africa is considering its next moves regarding continued investment in offshore exploration for oil after the Supreme Court of Appeal (SCA) yesterday dismissed its appeal against an earlier court ruling that set aside exploration rights and renewals for oil and gas exploration off the Wild Coast.

The SCA ruling came after the Makhanda High Court had ruled that exploration rights awarded to Shell were unlawful as communities near the affected areas had not been properly notified and consulted.

Shell was appealing against this ruling, with the SCA dismissing the appeal in a judgment delivered yesterday.

“The appeal is dismissed with costs, including those of two counsel to be paid jointly and severally by the appellants,” ruled the SCA.

It also said renewal rights for Shell had been “suspended pending determination of the application submitted on 21 July 2023 pursuant to section 81 of the Mineral and Petroleum Resources Development Act 28 of 2002 for the renewal of exploration right 12/3/252”.

Shell spokesperson Pam Ntaka said the company “respects the court’s decision to dismiss” the appeal.

“However, we welcome the court’s direction that the exploration right remains valid, subject to further public consultation and the renewal application,” Ntaka told Business Report.

“We are examining the ruling in detail and considering our next steps.”

The SCA ruled that “further public participation process be conducted to cure the identified defects in the process already undertaken, especially as the parties who claim to have an interest in the matter” had been identified.

Natural Justice, a non-profit organisation made up fo lawyers for communities and the environment, yesterday said it was disappointed by the court outcome to set aside suspension of Shell’s exploration rights.

“This is a disappointing outcome for the communities and supporting organisations that brought the case to the High Court in December 2021,” it said.

“The communities argued for an outright setting aside of the exploration right based on numerous deficiencies in the consultation and decision-making process.”

Communities argued that “there was no consultation with affected communities and the company’s consultations with traditional monarchs was insufficient”.

They said the “decision-makers failed to consider the potential harm to the fishers’ livelihoods, the impact on their cultural and spiritual rights and the contribution of oil and gas exploitation” to climate change.

“The decision-makers failed to consider and comply with the requirement of the Integrated Coastal Management Act to consider the interests of the entire community – including fishers and ocean life,” they said.

“No evidence supported bald claims that the project will provide jobs and increase government revenues.”

Cynthia Moyo, climate and energy campaigner at Greenpeace Africa, said the ruling by the SCA was a “bitter-sweet moment for the communities” along the Wild Coast.

“While the dismissal of Shell’s appeal affirms the need for lawful consultation and consideration of environmental impacts, the suspension of the setting aside of the exploration right until Shell’s renewal application is finalised undermines the fundamental rights of these communities,” Moyo said.

She added that the decision by the SCA “sends a dangerous message that corporate interests can still take precedence over the environmental and human rights” of local populations.

Shell South Africa has exited its downstream business operations in South Africa, although it is still retaining its investments in the country’s upstream and offshore activities.

One of these activities include exploration for gas and oil in the pristine Wild Coast of South Africa.