South Africa’s Constitutional Court has ruled against the renewal of an offshore exploration right held by Shell and Impact Africa for an area along the country’s Wild Coast, bringing a five-year legal dispute over proposed oil and gas exploration to a decisive stage.
The ruling overturns the 2024 decision of the Supreme Court of Appeal (SCA), which had found significant deficiencies in the original process but suspended the setting aside of the exploration right, allowing an application for its further renewal. The Constitutional Court has now set aside that order, effectively preventing the exploration right from being renewed on the basis of the existing process. (Reuters)
The dispute dates back to an exploration right granted to Impact Africa in 2014 and subsequently renewed in 2017 and 2021. Shell became a 50% participating-interest holder in the project. The companies intended to undertake seismic surveys offshore, using arrays of airguns to generate sound waves directed towards the seabed in an effort to map geological structures that could indicate the presence of commercially viable oil and gas deposits. (SAFLII)
The proposed survey became contentious after Wild Coast communities, small-scale fishers and environmental organisations challenged the exploration right in court. Their objections centred not only on possible effects on marine ecosystems, but also on whether communities whose livelihoods, cultural practices and relationship with the ocean could be affected had been meaningfully consulted.
In 2021, the Eastern Cape High Court granted an interim interdict preventing Shell and Impact Africa from proceeding with the seismic survey. In subsequent proceedings, the court found that the consultation process surrounding the exploration right had been substantially flawed and set the right aside. The judgment emphasised that affected communities had constitutional interests that warranted protection, including interests connected to their environment and livelihoods. (SAFLII)
The SCA subsequently agreed that the original exploration right had been unlawfully granted. However, in June 2024 it altered the remedy imposed by the High Court, suspending the setting aside of the right while a further renewal application was considered. That decision became the subject of the appeal to the Constitutional Court. (SAFLII)
At the centre of the Constitutional Court proceedings was therefore not simply whether South Africa should permit offshore oil and gas exploration, but whether an exploration right found to have been granted through an inadequate consultation process could effectively be preserved through a subsequent renewal.
The Constitutional Court’s decision places particular weight on meaningful public participation. According to Reuters, the court stressed that public participation is not merely a procedural exercise or a matter of satisfying administrative requirements, but must take account of the dignity and rights of people affected by development decisions. (Reuters)
That distinction is particularly significant on the Wild Coast, where coastal communities have argued that the ocean is simultaneously an economic resource, a source of food and a component of cultural and spiritual life. Recent academic analysis of the litigation has highlighted the importance of language, customary practices and culturally appropriate forms of consultation in understanding whether affected communities have genuinely been included in decision-making. (Taylor & Francis Online)
The case therefore illustrates a broader question confronting resource-rich African economies: how governments can pursue investment, energy security and resource development while ensuring that communities located closest to proposed projects have a meaningful role in decisions that may reshape their livelihoods and environments.
Shell has maintained that offshore exploration could contribute to South Africa’s energy security if commercially viable resources were identified. The company has also defended the proposed seismic survey on environmental grounds, saying that mitigation measures would be used to reduce potential effects on marine fauna. Shell’s position is that seismic surveys are a preliminary exploration activity and do not themselves establish that commercially recoverable hydrocarbons exist. (Shell South Africa)
The economic argument is relevant to South Africa’s continuing energy challenge. The country remains dependent on imported petroleum products and has sought to develop domestic energy resources while simultaneously expanding renewable generation and pursuing a longer-term energy transition. For government and industry, offshore exploration can therefore be viewed as part of an effort to understand whether domestic resources could contribute to energy security, investment and public revenues.
But the Wild Coast litigation demonstrates that economic arguments do not operate independently of constitutional and social considerations. The courts have effectively required resource development to be grounded in a decision-making process that recognises affected communities as participants rather than simply recipients of information.
This is also important in an African context where the distribution of the benefits and costs of natural-resource development has frequently been contested. The question is not necessarily whether African countries should develop their natural resources or pursue investment in extractive industries. Rather, it concerns the terms on which those resources are developed, who participates in determining those terms, who bears environmental and social risks, and how economic benefits are distributed.
For South Africa, the Constitutional Court’s ruling may have implications beyond the Wild Coast. It reinforces the importance of robust consultation and environmental scrutiny in future resource projects, particularly those affecting coastal communities and ecologically sensitive areas. It may also influence how companies and regulators approach exploration applications in other parts of the country’s offshore territory.
The ruling does not, however, amount to a judicial determination that South Africa must abandon offshore oil and gas exploration altogether. It concerns the legality of a specific exploration right and the process through which it was granted and subsequently sought to be renewed. Other exploration projects remain subject to their own regulatory, environmental and legal processes.
Shell is also pursuing exploration opportunities elsewhere along South Africa’s coastline, including in the Orange Basin on the west coast. The Wild Coast decision therefore represents a setback for the company’s South African offshore ambitions, but not necessarily an end to its wider exploration interests in the country. (Reuters)
The significance of the judgment ultimately extends beyond the fortunes of one energy company. It places the quality of participation at the heart of debates over Africa’s natural resources. For communities along the Wild Coast, the case has been about whether decisions concerning their waters, livelihoods and cultural practices are made with them. For government, it raises the continuing challenge of balancing energy security and economic development with constitutional rights and environmental stewardship. For investors, it underscores the importance of securing not only regulatory approvals but also durable social legitimacy before committing capital to large-scale resource projects.
South Africa’s experience suggests that the viability of future resource development will depend increasingly on whether economic opportunity and community participation are treated as competing objectives or as elements of the same development framework.
