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Fatal flaws

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Fatal flaws

Photo of Terence Creamer

16th September 2022

By: Terence Creamer
Creamer Media Editor

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The 40-page judgment delivered earlier this month by High Court Judge President Selby Mbenenge in relation to the granting and renewal of an oil and gas exploration right to Shell and partners off the Eastern Cape coast is worthy of reflection, given its implications for project development in South Africa.

As has been widely reported, Mbenenge reviewed and set aside the granting of the right and the subsequent renewals.

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Part of the conclusion of the judgment reads as follows: “It is demonstrably clear that the decisions [to grant and renew the right] were not preceded by a fair procedure; the decision-maker failed to take relevant considerations into account and to comply with the relevant legal prescripts.”

This conclusion was reached largely on the basis of procedural unfairness, a sufficient ground on its own to render the granting of the right unlawful.

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Likewise, it was made illegal by the fact that the Mineral Resources and Energy Ministers involved with the granting of the original right in 2014 and the subsequent renewals in 2021 failed to comply with applicable legal prescripts in the Mineral and Petroleum Resources Development Act.

The judgment, which at the time of writing had not been appealed, did not stop there.

It also traverses the failure of the Ministers to take account of “relevant considerations” in relation to any anticipated harm to the marine and bird life along the Eastern Cape coast, the spiritual and cultural rights of affected communities and their rights to livelihood, as well as climate considerations.

Many a developer, inside and outside of the oil and gas sector, should pay close attention to what Mbenenge writes on these issues, as they have implications for any greenfield development, be it a mine, a wind farm or new transport infrastructure.

In relation to marine and bird life, the judgment argues that it is incumbent on the decision-maker to invoke the precautionary principle and that the onus rests on the party refuting the applicability of that principle to establish that it has no application.

Regarding a community’s spiritual and cultural rights and its right to a livelihood, the judgment found that there was no evidence to show that the possibility of harm was considered by the decision-maker, while quoting from an earlier ruling which concluded that the court has a duty to step in if developers fail to consult and take measures to mitigate conduct that offends such beliefs.

Importantly, the judgment also deals with whether the decision-maker needs to and, in this case did, consider the climate change and coastal management impacts when granting the exploration right.

Here the judgment states that a comprehensive climate assessment is indeed required, and concludes that the Minister failed to take the integrated approach to coastal management required by law by treating the application as an energy-specific issue.

The failure on the part of the Minister to take account of these considerations, Mbenenge ruled, is “fatal to the decision to grant the exploration right”.

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