Shell sold its South African petrol station business last month, to Adnoc Distribution for R16 billion, as part of a worldwide retreat from low-margin fuel retail and a pivot into exploration. On Friday the Constitutional Court took the exploration away.
The court set aside the offshore exploration right granted to Impact Africa in 2014 and later held jointly with Shell interests, covering a large area off the Eastern Cape's Wild Coast, and it closed the renewal route a 2024 Supreme Court of Appeal ruling had left open. Between them the two companies had already put in more than R1 billion before the High Court in Makhanda interdicted the work five years ago.
The problem was never the geology
In 2022 the Eastern Cape Division of the High Court found the right and its subsequent renewals had been granted unlawfully, because decision-makers failed to weigh the livelihoods, customary practices and the spiritual and cultural rights of coastal communities. The Supreme Court of Appeal agreed in 2024 that the grant was unlawful, but suspended the setting-aside order and allowed a pending third renewal to proceed subject to a fresh round of public participation. The environmental groups argued that consultation during a renewal cannot retrospectively cure a failure to consult before the right was awarded in the first place.
The Constitutional Court agreed the appeal court's remedy could not stand. Shell and Impact Africa had argued that cancelling the right entirely would cause substantial financial prejudice, and that further consultation during the renewal could provide an equitable solution. Writing for the majority, Justice Jody Kollapen held that the financial prejudice to the companies from setting the decisions aside while a moratorium is in place cannot outweigh the gravity of the unlawfulness, especially where there is no demonstrable public interest in preserving the unlawful right. "They brought a flawed application which was unlawfully granted," the judgment said.
What is actually left
The ruling is narrower than it sounds. If and when the moratorium is lifted or challenged, Shell and Impact Africa may re-apply for a technical co-operation permit afresh, in the same position as any other party. Until then the right and its renewals stay cancelled, and the renewal route is shut.
Cormac Cullinan, of the firm representing Greenpeace and Natural Justice, described the litigation before the ruling as probably the highest profile environmental case in South African history. A separate case, with different parties, ran the other way the day before: on Thursday 13 August the Western Cape High Court dismissed a challenge to a TGS Geophysical seismic survey in the Orange Basin, and criticised the applicants sharply for how they had run it.
