By now I’m sure you’ve heard the outcry (about as deafening as the underwater air guns) over the looming seismic survey off the Wild Coast due to start on December 1, which has earned Shell (no longer Royal or Dutch) the opprobrium of activists, scientists, journalists and the broader public.
We must be practical about what we can hope to achieve when striking the balance between desperately needed jobs, economic growth and development that out-of-vogue but still very much required fossil fuels can offer the SA economy, and the health and sustainability of the natural world of which we are but stewards for future generations.
It is (always) much more complicated than what appears on the surface, which requires tucking the knees firmly away to avoid any hasty reactions. I have spent the past few weeks since the issue first surfaced reading scientific journals, legal opinions, Ivo Vegter’s column, Peter Bruce’s column, and media articles in Australia documenting research paid for and sponsored by oil and gas companies that concluded seismic surveys don’t do “much permanent” harm (they wouldn’t lie, would they?).
What is clear is that the science detailing and explaining long-term impacts on marine environments is still nascent and undecided. There is enough there to raise serious concern though. And as respected marine conservation photographer Jean Tresfon pointed out on Facebook, the onus must surely be on Shell here to prove that such surveys are in fact harmless.
And then what? Oil and gas are discovered, and we drill in some of the most treacherous seas on the planet to start pumping oil and gas in a decade’s time (if we’re lucky) when the trajectory of renewables, batteries and emerging technologies have potentially broken the economics? What could possibly go wrong?
How did it even get this far under the radar and without proper public consultation? We have the One Environment System to thank for that, as the impact of the seismic survey to be undertaken by Shell and Impact Africa has been authorised under the Mineral & Petroleum Resources Development Act (MPRDA), which under section 39(2) requires the submission of an environmental management plan, which is intended to assess and evaluate the environmental impacts of the activity.
The mineral resources & energy minister is the executive responsible for the administration of the MPRDA, and the environmental affairs minister is therefore not mandated to consider the application or make any decisions concerning the authorisation of seismic surveys.
The old dictum is always: follow the money. Remember Chancellor House? Well, this has all the malodorous hallmarks. Thebe Investments was founded in 1992 by Batho Batho Trust as an ANC investment company. At the time, the only shareholder was the trust, which was intended to “receive dividends” for the party, according to a 2010 Sunday Times exposé citing secret ANC documents found in an abandoned storeroom at the University of Fort Hare. According to the story the ANC blocked access to these documents. The trust holds 46.79% of Thebe.
Thebe’s investment in Shell dates back to 2003, but the eye-catching deal was unveiled in 2015, which saw Thebe take up a 28% stake in a newly formed entity called Shell Downstream SA, the product of a merger of Shell SA’s marketing and refining businesses. While this is separate from Shell’s upstream business, Shell Trading, which carries out exploration and liquefied natural gas supply, quid pro quos are not often directly beneficial.
Shell acquired a 50% share in the Transkei & Algoa blocks in November 2020 and finalised the deal on August 31 this year, with the necessary seismic survey to be conducted by Impact Oil & Gas. On the same day Impact announced that the SA government had extended the second renewal period of the exploration licence for a further two years.
Apart from the obvious conflict of interest, it is little wonder that energy minister Gwede Mantashe is pushing so hard for his Karpowerships, which have a clause in their draft power purchase agreements stipulating that the issuing authority can direct it to acquire gas from a designated supplier in future. If Shell strikes it big, the offtaker will be right there, for 20 years, and the ANC will have enough money to continue to buy its way around its many failings.
To hell with the whales and pesky environmentalists. And where is former Shell SA chair Bonang Mohale in all of this? Oh, later this week he’s launching a book on his career modelled around ethical leadership.
Fly in Heineken’s beer
There might be a fly in the beer of the Heineken deal. An article published by Bloomberg recently quotes Musa Mabesa, the Government Employees Pension Fund (GEPF) principal CEO, explaining why the fund has stopped the Public Investment Corporation (PIC) making any new unlisted investments on its behalf. It may take as long as a year to renegotiate the unlisted PIC mandate.
The mandate lapsed after a government inquiry into governance shortcomings and alleged corruption at the PIC, the R2.3-trillion fund manager that reports to the state. Mabesa said the GEPF is now negotiating a new agreement with more stringent requirements over “consequence management”, among other things.
I’m sure the fly could be removed with an exemption, but all eyes will be on these developments given the importance they hold for decision-making around the Distell deal.
• Avery, a financial journalist and broadcaster, produces BDTV's Business Watch. Contact him at badger@businesslive.co.za.
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