British oil major Shell and its SA partner, Impact Oil and Gas, have told the Supreme Court of Appeal (SCA) that just more than R1bn was already invested in their hunt for oil and gas off the Wild Coast, which was annulled by the high court in Makhanda in 2022 after a challenge by environmental groups.
The companies on Friday told the court that if the decision by the high court stands, it will deny the country billions of dollars in foreign direct investment and energy independence.
The department of mineral resources & energy is also challenging the high court ruling. Impact, part of the stable of empowerment holding group Hosken Consolidated Investments (HCI), said it was imperative for the SCA to set aside the high court’s findings.
Impact said the eight-year delay in bringing the application should not have been condoned by the high court. It said considerable resources went into funding exploration activities during that time.
The exploration right was awarded in 2014, while the review application by environmental groups was launched in 2021.
“Impact itself was prejudiced — in the conduct of the litigation by the eight-year delay in instituting proceedings; and by effectively being deprived of a vested interest and limited real right, after R1.1bn had been invested in reliance on the validity of the exploration right — this over a period of almost eight years since the exploration right was granted,” reads its affidavit before the SCA.
“The public was prejudiced in terms of finality and certainty, and moreover since the review precludes possible exploration activities which could result in significant public revenue, socioeconomic development, and contribute to SA’s energy security.
The SCA, following Friday’s arguments, is now seized with determining the legality of the right granted to Shell and Impact by the department of mineral resources & energy that would allow them to explore in the sea off the Wild Coast.
The high court’s decision was based on what it ruled was insufficient consultation with affected communities and traditional leaders. It found the government failed to consider the potential harm to fishers’ livelihoods, the effect on their cultural and spiritual rights, and the contribution of oil and gas exploitation to climate change.
The department, Shell and Impact deny there were insufficient consultations. The environmental groups, Natural Justice, Sustaining the Wild Coast, Greenpeace Africa and others, said the delay in bringing the review application should be placed at the door of the department and companies, which kept the process under wraps until the 11th hour.
“There is no evidence that the minister or his delegates gave the public notice that the exploration right had been granted and later renewed (there was no ‘clear statement of the administrative action’),” the environmental group’s papers read.
“The minister does not point to any such notice or publication in his heads of argument. He simply asserts that the public would have become aware of the grant of the exploration right around April 2014, without explaining how.”
Public interest
Shell said the high court failed to consider public interest when deciding to interdict the exploration work. “Shell and Impact provided evidence of the economic and social benefit that could arise from the project ... this evidence was not taken into account.”
The energy major has recently announced it was disinvesting from its downstream business in SA, which houses about 600 forecourts, making its upstream business all the more important to its presence in the country.
The environmental groups said they were confident the SCA would rule in their favour when it handed down its judgment later this year.
“The counsel for the companies were dismissive of the community concerns. They argued this judgment was dangerous for investors and oil companies but made no mention of community concerns, and, as they were in the high court, were dismissive of their cultural and heritage rights,” said Delme Cupido from Natural Justice.
“They are more concerned about profits and their shareholders than they are about the clearly articulated rights that the communities put forth.”
Business Day reported last week that TotalEnergies and the government have decided to oppose a bid by Natural Justice and The Green Connection to set aside the government’s decision to grant the French multinational the right to drill offshore for gas and oil.
TotalEnergies discovered two huge gas fields off SA in 2019 and 2020 off the southwest coast of SA between Cape Town and Cape Agulhas. The company’s area of interest in the block covers about 10,000km². TotalEnergies is the operator with a 40% stake, while Shell owns the other 40% and national oil company PetroSA the remaining 20%.
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