Constitutional Court blocks Shell's Wild Coast exploration bid

Shell has lost the latest round of a five-year legal battle with environmental activists over its bid to conduct oil exploration off South Africa's Wild Coast, after the Constitutional Court ruled on Friday that the oil major's exploration right should be set aside.

According to a Bloomberg report in Business Tech the ruling means Shell, valued at more than R4 trillion, will not be permitted to renew its exploration rights in the ecologically sensitive area of the Indian Ocean coastline. 

It comes as other offshore oil exploration bids in South Africa face similar legal challenges, even as neighbouring Namibia moves ahead with developing crude discoveries just across the maritime border.

“What the ConCourt decided was that the exploration right should be set aside,” said Melissa Groenink Groves, an attorney and programme manager at Natural Justice, one of the applicants in the case. Shell was not immediately available for comment.

The legal saga dates back to 2021, when activists opposed a planned seismic survey by Shell and a local partner in an area frequented by whales. Environmental groups won an interdict halting the survey over concerns that affected communities had not been properly consulted and about the potential impact on marine life. 

A high court set aside the original exploration right, along with two subsequent renewals, the following year. Shell's appeal was dismissed, though the Supreme Court of Appeal later gave the company a partial reprieve, ruling that a pending third renewal could proceed provided proper consultation took place. 

Environmental groups argued that this was flawed, since Shell should not have been able to apply to renew a right that had already been set aside and therefore no longer existed – an argument the Constitutional Court has now accepted.

The decision is likely to embolden activists who have already notched multiple court victories against oil explorers in South Africa. Shell and TotalEnergies are among the companies seeking to exploit offshore prospects in South African waters, following major discoveries off Namibia in 2022 that turned the region into one of the continent's exploration hotspots. 

TotalEnergies chief executive Patrick Pouyanné has previously described South Africa's exploration environment as legally complex, telling investors on a November earnings call that “each time we want to do it, we need to go to court.”

Source: Bloomberg via Business Tech.