(Bloomberg) – South Africa’s top court will start hearing arguments on Tuesday in a legal battle that has pitted environmental activists against one of the world’s biggest energy companies — and which may determine the trajectory of the country’s fledgling offshore oil industry.
Shell CEO Wael Sawan
The four-year saga began with an activist outcry in 2021 over a seismic survey planned by Shell Plc and a local partner off the nation’s rugged “Wild Coast” along the Indian Ocean, where whales are frequently spotted. Environmental groups won an interdict that halted the exploration activity over concerns that communities were not properly consulted and about the impact the survey would have on local residents and marine life.
The high court the following year set aside the decision to grant the exploration right, as well as two subsequent renewals. Shell’s appeal was dismissed, though the Supreme Court of Appeal handed the London-based company a reprieve by ruling that a third renewal, which was pending, could proceed subject to proper consultation.
The battle now moves to the Constitutional Court in Johannesburg for two days of arguments.
Should the apex court rule in their favor, it could further embolden activists who have had multiple victories in court against oil explorers, or clear the way for the activity that the government has argued will bring economic development. Shell and TotalEnergies are ramping up preparations to drill in South Africa after discoveries in 2022 across the maritime border in Namibia that have turned the area into one of the continent’s exploration hotspots.
TotalEnergies is planning a fresh drilling campaign along South Africa’s Atlantic coastline.
At the time of the appeal, Shell welcomed the court’s direction that the exploration right remains valid, subject to further public consultation and the renewal application. A spokesman for the company, which claimed in court papers that it had already spent 1 billion rand ($58 million) on the exploration program, said it would await the Constitutional Court ruling before making any further comment.
Environmental groups argue that the Appeals Court had erred by giving Shell the opportunity to apply for renewal of a right that has been set aside and, therefore, no longer exists.
If the decision to grant the exploration right “was made unlawfully, it must be set aside,” said Cormac Cullinan, a lawyer representing the groups. A public consultation process now wouldn’t “fix the original problem” and isn’t a remedy “for the people who were excluded from participating in the decision to grant the exploration right,” Cullinan said.
Shell is also reviewing a separate ruling made last month by a South African court that overturned a decision granting TotalEnergies environmental authorization for a block because the assessment was flawed and failed to address risks, requirements and public participation. Total is the successor operator of the license.
An environmental group also lodged an appeal last month against Shell’s environmental authorization for the Northern Cape Ultra Deep block along the coast.
Consulting communities “is very important,” Aluwani Museisi, country chair for Shell’s downstream business in South Africa, said Friday in an interview with Johannesburg-based broadcaster eNCA. “We will be ready to hear from the courts how we can do that better.”
