Govt is prepared to defend Shell survey decision, says Mantashe

  • Minister Gwede Mantashe has hinted that government will take further legal action after the high court annulled its decision to grant an exploration right to Shell.
  • Speaking to media at an oil conference in Cape Town, Mantashe said South Africa will use a deal on R150 billion in green funding from rich countries to its advantage.
  • Mantashe said the government’s plans to acquire the Sapref refinery in Durban were essentially on hold after the floods in KwaZulu-Natal.

Mineral Resources and Energy Gwede Mantashe hinted on Tuesday that government plans to defend its gas exploration decision regarding Shell and Impact Africa’s seismic survey at the highest court in the land, if necessary.

This comes after the Eastern Cape High Court in Makhanda set aside Mantashe’s decision to grant Impact Africa and Shell an exploration right allowing the petroleum giant to conduct a seismic survey off the Wild Coast.

The ruling was handed down in September after the Wild Coast community and nonprofit organisations approached the court to block the seismic survey.

Briefing reporters on the sidelines of the Africa Oil Week conference in Cape Town on Tuesday, Mantashe said the government still had options to seek relief and that the court in Makhanda was not the highest court in the land.

“Government has been going to court on exploration. We have had some cases. You will realise that the energy debate is very ideological and can be technical. If there are movements that are under development, they will win their cases in court at that time. It will not kill our enthusiasm,” said Mantashe.

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CEO of the Petroleum Association of South Africa Phindile Masangane said the government was crafting new guidelines for projects and was in a better position than last year regarding exploration best practices.

“It’s not just in SA where there have been legal challenges to the oil and gas industry. Similar challenges have come up in Tanzania and Uganda. We have seen challenges to pipeline projects in Namibia. Communities want energy justice. They want a say in how this is structured,” said Masangane.

Mantashe used his keynote address at the Africa Oil Week to criticise those holding the South African economy to the same standard as advanced economies when it came to the transition from fossil fuels to renewable energy.

He said at the COP27 meeting in Egypt in November, aimed at combatting climate change, the position of African economies must be recognised.

“COP27 is a global forum and South Africa is part of it. The best approach is to understand that South Africa is unique and that the answers that come out of COP27 must work for Africa,” said Mantashe.

Ahead of COP27, South Africa is heading into a crucial stage of negotiations to get $8.5 billion (~R152 billion) in funding from the US, UK, France, Germany and the EU to fund Eskom’s transition away from coal. But talks have been fraught, and the deal may hang in the balance, amid reports of disagreements about South Africa’s plans for the money – which include spending on electric vehicles.

Mantashe said it was problematic to think South Africa’s only options were to “consider or oppose” the conditions of its $8.5 billion climate, saying: “It is an offer on the table and we’ll use it to our advantage. It is about directing it to fund a project developed by us”.

READ | R152bn deal at risk amid fraught talks between rich countries, South Africa

Eskom board ‘a vast mixture of skills’

Asked about the recently announced board of Eskom, Mantashe said this was a positive development and the board was diverse in its skills. He said the board must position Eskom to address its technical capacity.

“I start by clarifying that the board is not operational. It is important for governance. It is important that government reduce financial and operational risk. We hope the revived board of Eskom will have that effect because it is a vast mixture of skills,” Mantashe said.

Mantashe said the government’s plans to acquire the Sapref refinery in Durban were essentially on hold after the floods in KwaZulu-Natal damaged the plant and affected the value proposition for the government.

“We tried to resolve the Sapref talks, but then there were the floods in KZN. We were discussing whether to pursue it. In terms of the value, you will be buying no value for value as things stand and I don’t think that is a wise decision,” he said.

In recent months, South Africa lost much of its refinery capacity, with BP and Shell closing Sapref, the country’s biggest crude oil refiner.