Blow to Shell in South Africa

The Constitutional Court has refused to hear Shell and Impact Africa’s appeal on the right to conduct seismic surveys off the Wild Coast.

This ruling followed the Supreme Court of Appeal’s finding that the right to conduct the surveys was granted unlawfully.

However, the court has agreed to hear from Wild Coast communities who want to challenge the SCA’s further ruling.

This allows Shell to apply to the Minister of Mineral Resources and Energy to renew the controversial permit for a third time.

A group of environmentalists said Shell should not be given an opportunity to make up for their failed consultation process when it applied for the right over a decade ago.

This group includes the Wild Coast communities and environmental justice organisations Sustaining the Wild Coast, All Rise Attorneys, Natural Justice, and Greenpeace Africa.

The group argued that the law does not allow such a late correction to the failed consultation process.

The Constitutional Court, in granting them leave to appeal, has agreed to hear these arguments and has issued directions regarding the filing of further papers.

The Constitutional Court refused Shell and Impact’s application for leave to appeal because it saw no prospects of success.

The litigation began in the Makhanda High Court, where it was found that the exploration right had been granted unlawfully.

The ruling was based on the fact that the affected communities had not been properly notified and consulted.

The court found that the communities’ right to food and livelihoods from the ocean, their spiritual and cultural rights, and the impacts of climate change had been ignored.

The court also found that the Minister had failed to consider and comply with the Integrated Coastal Management Act requirements. It set aside the exploration right entirely.

The SCA, in hearing what became the failed appeal by Shell and the Minister, agreed with these findings.

However, the court said it would be too harsh to set aside Shell and Impact Africa’s exploration right immediately.

Instead, it suspended the order of invalidity pending the outcome of a third renewal application by Shell, which it lodged in 2023.

The Wild Coast communities say this was wrong. They say the SCA order did not protect the right of communities and other parties to fair administrative action.

It also failed to give clarity on what Shell and the Minister must do to remedy the defects in the earlier process “which means that, inevitably, more litigation will follow”.

In an affidavit, Delme Cupido, Southern Africa Hub Director of Natural Justice, also speaking for Greenpeace Africa, described the suspension of the invalidity as “extraordinary relief”.

It was a “complete surprise” because none of the parties had asked for it, and it had not been canvassed at the hearing.

He said the order was not a constitutionally compliant “effective remedy” because it was “wholly unclear what must be done and by whom to give effect to further public participation”.

He said the statutory regime precluded public participation in the renewal process, and there was a broader public interest in obtaining clarity on such orders.

The Constitutional Court has yet to set a date for hearing the application.

Shell exiting South Africa

This ruling came four months after Shell announced plans to sell its downstream South African retail, transport, and refining operations.

Shell had already declared its intention to review its operations to cut non-core assets from its portfolio.

While it was initially assumed that Shell wanted out of South Africa due to a disagreement with its BEE partner, the company clarified that it was purely a business decision.

It had undergone a cost-cutting exercise, which determined that the South African operations were non-core and should be disposed of.

Shell currently has around 600 forecourts in South Africa, which employ thousands of people.

The Anglo-Dutch oil giant had also begun selling the process its stake in the South African Petroleum Refinery (Sapref) as it was no longer commercially viable for the company.

Sapref was jointly owned by Shell and British Petroleum (BP), with both wanting to get rid of the problematic refinery that contributes around 35% of South Africa’s total refinery capacity.

It was eventually sold to the Central Energy Fund for R1 at the beginning of last month, following floods in 2022, after which it never reopened.

The first part of the article was first published by Groundup and reproduced with permission.