British oil major Shell and its SA partner, Impact Oil and Gas, have told the 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 Eastern Cape High Court (Makhanda) in 2022 after a challenge by environmental groups.

The companies told the court on Friday that if the High Court decision stands, it will deny the country billions of dollars in foreign direct investment and energy independence.

A Business Day report notes 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, said it was imperative for the SCA to set aside the High Court findings. 

It said the High Court should not have condoned the eight-year delay in bringing the application, and that considerable resources went into funding exploration activities at the 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,’ it said in 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, socio-economic development, and contribute to SA’s energy security.'

 The SCA, after Friday’s arguments, is now seized with determining the legality of the right granted to Shell and Impact by the Department 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.

According to the Business Day report, 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 said in its papers. ‘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.’

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.’

Full Business Day report