R1bn at stake as Shell faces second court challenge to its Wild Coast exploration​

Shell stands to lose the more than a billion rand it has invested so far in its seismic testing off the Wild Coast as well as any future possibility of exploiting oil and gas reserves in that area if it is interdicted from continuing with the survey, it warns in court papers.

On Friday, the high court sitting in Makhanda will be called upon to, among other things, weigh up environmentalists’ and scientists’ conviction that the surveying causes potentially devastating and irreversible harm to the marine environment vs the financial and public harm Shell says will be an inevitable consequence of even a short delay in the four-month window its exploration right provides for.

The second court challenge to Shell’s seismic exploration is being brought by several environmental and community organisations as well as individuals living on the Wild Coast.

They have mounted a formidable wall of evidence by several top international and local marine and other scientists about the potentially devastating environmental harm caused by seismic surveying which will see the world's biggest seismic ship, the Amazon Warrior, drag an airgun array thousands of metres long and wide, firing shockwave emissions that are so loud they penetrate through 3km of water and 40km into the earth’s crust below the seabed.

But in a 60-page affidavit, Shell SA chair Hloniphizwe Mtolo dismisses this evidence, saying the company has put in place adequate “mitigating measures” to minimise or completely do away with any potential harm to marine life.

He says the exploration right, granted in 2014 and renewed for a second time in 2020, gives Shell a small window between December and May to carry out its extensive surveying along the Wild Coast.

Without the data garnered in this brief window provided by the second renewal, Mtolo says Shell would not be able to drill an exploration well in the third renewal period and it would have to relinquish its licence in its entirety.

Terminating its seismic acquisition and processing contract would immediately come at a cost of $23m (R350m).

This includes costs for planning the survey and a contract termination fee for the seismic contractor.

It would also effectively lose its massive investment of $45m (R700m) to date, which it spent on, among other things, licensing fees, and the purchasing of all former seismic data conducted in the area and airborne and gravity magnetic surveys.

He says there are also “broader interests” at stake in the application because finding domestic offshore gas could reduce SA’s heavy reliance on energy imports.

“Should commercially viable resources be found offshore, this could significantly contribute to SA’s energy security and government’s economic development programmes, while supporting local content development.”

The matter is set down to be argued before judge Gerald Bloem on Friday morning.

The applicants are Sustaining The Wild Coast, Mashona Wetu Dlamini, the Dwesa-Cwebe Communal Property Association, Ntshindisk Nongcavu, Sazise Maxwell Pekayo, Cameron Thorpe, and All Rise Attorneys for Climate and the Environment.

The respondents include mineral resources and energy minister Gwede Mantashe, environmental minister Barbara Creecy, Shell Exploration and Production SA, Impact Africa, and BG International Ltd.

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