In shift, South Africans prevail over Big Oil in drilling project
Shell says that there have been 35 seismic surveys conducted offshore near South Africa over the past decade, each one lasting about three months. “Our assessment was that we could conduct a similar acquisition in a safe and responsible manner,” said Bill Langin, senior vice president for deepwater exploration at Shell.
But this time was different. Everyone from fishers to surfers to eco-lodge owners, both Black and White, joined to protect the pristine coast, home to legendary migrations of whales, dolphins, sea turtles and sardines. In December, they took the London-based multinational corporation to court — and won. The seismic survey vessel that Shell hired, the Amazon Warrior, left.
Shell had argued that the complaints about harm were “of a speculative nature,” but G.H. Bloem, a judge on one of South Africa’s 13 regional high courts, declared “The expert evidence establishes that there is a reasonable apprehension of real harm to marine life.” He added that the court had “a duty to step in” and protect people’s constitutional right to be consulted.
After decades when the promise of economic development drove decisions about when to permit drilling and exploration — especially in the developing world — the outcome was a victory for the people living along the South Africa coast who opposed the exploration. And it was a setback for Shell at a time when concerns about climate change have made it increasingly difficult for large oil and gas companies to take advantage of new drilling opportunities. The International Energy Agency last year said that “there is no need for investment in new fossil fuel supply in our net zero pathway,” if the world is going to stick to the goal of limiting global warming to 1.5 degrees Celsius (2.7 Fahrenheit) above preindustrial levels.
Shell and the South African government have said that oil or gas production would bolster the country’s energy security and economic development, including local job opportunities.
“This is the least developed province,” Gwede Mantashe, a longtime ANC stalwart who is now the country’s energy minister, said in a phone interview. “If we are too liberal about development, investors won’t wait, and we will remain poor.” He has also opposed an international plan to wind down coal-fired power plants and replace them with renewable sources.
But those arguments have failed to persuade people living along the Wild Coast, the country’s poorest province, where few, if any, have the skills required to work in the oil sector.
Instead, most residents fear the end of fishing and tourism as their livelihoods. Though Shell says seismic surveys would be 12.5 to 44 miles offshore, residents envision oil spills riding the undersea current here — the world’s second swiftest — down the coast and into nutrient-rich Antarctic waters in one of the planet’s last truly untouched places.
“This ocean is our life, so it is nothing less than that which Shell would destroy,” said Zingisa Ludude, 62, who protested the blasting by writing slogans in the sand along the beach where she harvests mussels for a living. “Everything we need comes from the ocean.”
Shell has long been one of the world’s top oil companies. Built in the late 1800s by a tightknit family from east London, Shell now operates in 70 countries. It has survived world wars, pandemics and market shocks, and recently said it might write off as much as $5 billion for exiting Russia.
Shell produces about 2.4 million barrels a day of oil and natural gas equivalents. It has helped keep planes in the air, well over a billion automobiles on the roads and plastics in the kitchen — the underpinnings of the contemporary economy. When prices rise and consumers suffer, however, the oil industry thrives; in 2021, Shell earned $19.3 billion, and it still trailed ExxonMobil.
The fight in South Africa echoes a larger debate about how fossil fuel companies should reduce and eventually eliminate their carbon emissions — and the implications for regions that have benefited from drilling. Climate activists argue the companies can still make plenty of money without drilling for new resources.
“Shell can make money. No one is stopping them from being a good citizen,” said Desmond D’Sa, coordinator of the South Durban Community Environmental Alliance, which has been training unemployed people to fish. “We just don’t think they should be drilling for oil and gas.”
But Shell’s chief executive, Ben van Beurden, said activists overlook key factors in the current petroleum arithmetic. If Shell is going to reach net-zero emissions by 2050, he said, it will need to use money from its oil and gas business to fund a transition to a new type of enterprise based on renewable energy and carbon capture and storage.
Van Beurden also said that during that transition, demand for oil and gas will remain high. “We see a significant struggle for supply to keep up with demand. And I think that is going to be with us for some time to come,” he told shareholders on the company’s last quarterly earnings call.
Yet Shell and other companies are facing mounting legal and regulatory challenges in a growing number of countries.
Shell still has nearly two dozen major exploration and production developments worldwide, but it has dropped plans to invest in the Cambo oil field off the Shetland Islands in Scotland for regulatory reasons. It has solicited bids for its onshore oil fields in Nigeria, a rich vein for more than six decades. In 2017, Shell sold its interests in Canada’s oil sands, considered among the most greenhouse gas-intensive oil grades in the world.
The most jarring setback of all, however, came on May 26, 2021, when a Dutch court said that by 2030, Shell must reduce its reported worldwide emissions by 45 percent over 2019 levels. The court — responding to a class-action lawsuit brought in 2019 by Friends of the Earth Netherlands, six other Dutch nongovernmental organizations and about 17,000 individuals — said Shell’s climate plans were insufficient to prevent serious climate change, leaving the company in danger of “imminent breach” of the reduction order.
“This decision marks the first time any court in the world has imposed a duty on a company to do its share to prevent dangerous climate change,” said a memorandum by the respected law firm Cleary Gottlieb. Although Shell plans to appeal the decision, it was required to start complying immediately. “Similarly situated companies should expect to be bound by the same rules,” the Cleary Gottlieb lawyers warned.
The information data provider IHS Markit, a subsidiary of S&P Global, said in a research note that oil companies in Africa “faced increasingly insistent challenges from civil society and constraints on financing due to climate concerns.” Friends of the Earth, an environmental activist group, last December challenged British government’s financial backing of Mozambique’s liquefied natural gas facilities. A letter signed by 263 civil society organizations last year called on banks not to finance Uganda projects.
In South Africa, local activists won a temporary stay of Shell’s seismic survey by declaring that they must be properly consulted and their consent given before any large-scale economic project can take place. The judge said that costs to Shell as a result from a stay could not outweigh the importance of the constitutional right to consultation.
“I stay here, I belong here, I have a right to responsibly live here as a person,” said Ludude, echoing a sentiment the courts here ultimately found compelling. “If Shell wants to come here, they have to consult us on everything they do. That must be the basis for economic development, not a decree from somewhere.”
The political argument for oil development on the Wild Coast put forward by the South Africa’s governing party, the African National Congress, was simple: Shell will bring economic development to a place that badly needs it.
The hills here are dotted with impoverished villages and split by rivers that gush through ravines to the sea. Most of the coast is hours from a paved road. This is not a common holiday destination, like the rest of South Africa’s coast.
But this region is famous, too, for bucking against power. Its people rose up against the apartheid government in the 1950s and won a homeland, Transkei, that did not abide by the most oppressive strictures of White rule. That inspires Sinegugu Zukulu, 51, a tour guide, local plant expert and activist who has led movements here against strip mining, a toll road and now Shell.
“This is one of the last coastlines in the world that belongs to Indigenous people,” he said on a recent morning while visiting a remote stretch where the Msikaba River empties into the ocean. “Poverty is being used to impose unwanted development on us. Big, extractive projects do not lift people out of poverty — you can look at anywhere on Earth and that is proven. These projects are about shareholders.”
When Mantashe came to the region, he was booed and heckled, part of a broader controversy roiling South African politics.
The former president, Jacob Zuma, is on trial for corruption so egregious it has been termed “state capture.” Vast swaths of the economy were allegedly signed over to cronies or companies who outbid on contracts through both legal and under-the-table means.
The ANC received a $1 million donation in the third quarter last year from the Batho Batho Trust, according to the Electoral Commission of South Africa. Ten other political parties received donations that quarter. The trust owns 47 percent of Thebe, founded by ANC leaders in 1992 to start buying up chunks of a wide variety of companies just as apartheid was ending. One of Thebe’s many investments in 2008 was a 28 percent stake in Shell’s refining and marketing operations in South Africa.
Recently, South Africa’s deputy chief justice, Raymond Zondo, referred Mantashe for criminal investigation into alleged misconduct including the acceptance of security upgrades at three of his properties. Mantashe has rejected all allegations, local newspapers reported.
“The ANC is a sellout party,” said Wanda Ludude, 33, Zingisa Ludude’s son. “For them, this coast is just a beautiful deal. We don’t want to be used by them or by anyone. It is like being colonized.”
Scientists were up in arms, too. Kevin Cole, who has studied the Wild Coast’s marine life for four decades, obtained a copy of the environmental assessment Shell commissioned and said he was astounded by its lack of detail.
“It was basically a rubber stamp,” he said. “It used whaling data from the 1960s to approximate current populations. It didn’t mention the strong current we have here, whose constant upwelling means you could never contain, maybe never even access the catastrophe of an oil spill here. The whole ecosystem could implode.”
Shell says that last year when it bought half interest in offshore blocks held by a company called Impact Oil and Gas, that it had also acquired Impact’s permits, which were issued in 2014.
Seismic blasts took place for a month before a court ordered a stop. During that month, Cole found fish on the shore with their nostrils flared out, and a type of beaked whale that he’d never seen in the flesh before on a beach. Most whales, one of the world’s least studied animals, live almost entirely in deep water and rarely wash up on shore. Cole does not think it was a coincidence.
The seismic work temporarily blocked by the South African court is common, but still controversial. It comes before actual drilling. Arrays of air guns are attached to cables and dragged behind boats. The air guns then fire compressed air that creates sound pulses that reverberate off the sea floor and provide subsurface images. With new technology, these images are three-dimensional and reduce the chances of drilling dry holes or wells with quantities so small as to be not economically worthwhile. In 2020, there were 325 surveys done worldwide, Shell says.
Shell’s Langin said the company takes precautions. Each seismic ship working for Shell has a 500-meter exclusion zone (or about a third of a mile) so that if any marine mammal is seen inside that zone, the seismic shots stop for an hour after the zone is empty. Moreover, he said, Shell does not acquire data during breeding or migrating times.
“We avoid those in all areas where we work, and it’s no different in South Africa,” Langin said.
But environmental groups have not been persuaded.
“For whales and other marine mammals, life is a symphony of sound,” said the Natural Resources Defense Council, which is opposing seismic tests off U.S. coasts. “They use sound to find food and mates and generally navigate the vast ocean. To them, a seismic blast is like a bomb repeatedly going off in their home every 10 seconds.”
“For marine mammals that depend on sound communication for their social interactions and survival, seismic surveys are the equivalent of blinding entire human communities,” said Enric Sala, a conservationist and explorer-in-residence at the National Geographic Society who has led a Pristine Seas campaign.
It remains unclear what will happen here, especially since so much of the South African coast has been leased to companies such as TotalEnergies and Shell. The government has issued 20 exploration licenses on tracts along much of the country’s 1,740-mile coastline, according to the South African Oil & Gas Alliance. Not counting Prince Edward Island, 5 percent of the country’s oceans are protected by 41 marine protected areas.
TotalEnergies last year shelved its drilling plans.
“We will talk to Shell and convince them to come back,” said Mantashe, the minister. “Every mining and oil project is subjected to environmental assessment. I don’t know what the court has based their decision on. We will respond fully and put experts in the boxes.”
On April 20, TotalEnergies said it would hold consultations that would cover geophysical data, exploration wells and subsea infrastructure for production. TotalEnergies said it wants to pursue two “significant” discoveries of light liquid hydrocarbons it made in 2019 and 2020.
Kenneth Creamer, an economist at the University of the Witwatersrand, said that other international companies are running into trouble in South Africa. Recently, Amazon halted a sizable investment in Cape Town after the descendants of the Khoisan people asserted that the Amazon facilities were being built on their ancestral lands.
In both the Shell and Amazon cases, “the South Africa economy, which has been flagging for the past 10 years, sorely needs the growth, investment and job creation that would likely flow from these business activities,” Creamer said. Eventually the project might be given a “green light,” he said, “but there is always a risk that by that time investors might have moved on to less litigious jurisdictions.”
Zukulu, the activist and tour guide who was the lead complainant in the court case against Shell, said he was not going to celebrate the court ruling, which was temporary and governed only the right to consultation.
“We say you don’t celebrate while you are still in the forest,” he said. “The reality is this is an interim interdict, and Shell has the support of a party that is not going anywhere. This government is trying by any means to take the coast away from us — our government, our very own Black government, doing this, year-in year-out. They would trash our ocean for short term gain.”