South African court prohibits Shell, Impact from oil & gas exploration in Wild Coast

High Court of South Africa set aside the decision taken by the country’s minister of mineral resources and energy on April 29, 2014 granting rights to Impact Africa Limited and a suibsidiary of Shell Plc for exploration of oil and gas in the Transkei and Algoa exploration areas.

Shell, which has a 50 per cent working interest and operationship in these areas, is mainly responsible for conducting seismic surveys which were deemed the most dangerous by environmentalists. 

The decision by the ministry of mineral resources and energy, South Africa on December 20, 2021 to grant renewal of the exploration right was also set aside by the bench of Judge President of the High Court SM Mbenenge.

The judgment passed by the High Court of South Africa (Eastern Cape Division, Makhanda) on September 1, 2022 marks a monumental victory for the local communities and environmentalists.

The communities of the Eastern Cape coast argued that the quest to conduct the seismic survey and the resulting oil and gas exploration would impact negatively upon the livelihood and the “constitutionally and customarily held rights, including customary fishing and religious rights of the coastal communities”.

Environmentalists were concerned about the impact the exploration would have on whales and other marine life.

Impact Africa Ltd, a subsidiary of African exploration company Impact Oil & Gas Limited, had entered into an agreement with BG International Limited for the farm-out of a 50 per cent working interest and operatorship in the Transkei and Algoa exploration right offshore South Africa. 

BG International Limited is a wholly owned subsidiary of Royal Dutch Shell plc.

Under the terms of the farm-out agreement, Shell was to acquire a 50 per cent working interest in the Transkei and Algoa blocks and operatorship. 

Shell was also granted the option to acquire an additional 5 per cent working interest should the joint venture elect to move into the third renewal period (2024).

Exploration vs conservation

The principal question that the court was dealing with was whether the grant of an exploration right by the department of mineral resources and energy for oil and gas, which culminated in the need to conduct a seismic survey along the southeast coast of South Africa, was lawful.

Seismic survey is a method used during the exploration phase of oil and gas development. Energy produced by instruments such as a seismic vibrator (on land) or an airgun (in water) releases seismic waves that go through the earth’s layers and bounce back from different rock layers.

The reflected and refracted seismic waves are recorded by a receiver to give the image of the subsurface.

The judgment noted that the scramble for the utilisation of the coastal waters “often brings to the fore the interplay, foreshadowed in section 24 of the Constitution, between the right to a protected environment, on the one hand, and socio-economic development on the other.”

The petitioners included Wild Coast communities, Wild Coast small-scale fishers, non-profits like Sustaining the Wild Coast NPC, All Rise Attorneys for Climate and the Environment NPC, Natural Justice and Greenpeace Africa.

The judgment of September 1, 2022 upheld the ban on Shell imposed by the same court December 2021 from using seismic waves to explore for oil and gas off the Indian Ocean coast.

Timeline leading to court case

The application filed in the court was that the seismic survey would not only be harmful but unlawful, given that Shell does not have an environmental authorisation to conduct the exploration right in terms of the National Environmental Management Act (NEMA).

The petitioners contended that they had not been consulted prior to the decision granting the exploration right being taken and that the survey would cause harm to the environment and their livelihoods, culture and heritage.

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