A South African appeals court on Monday suspended a previous ruling that halted offshore exploration by Shell along the unspoilt Wild Coast and allowed oil companies another chance at public consultation, court documents showed.
The lack of public consultation was among key reasons why a lower court ruled against Shell and other oil companies Impact Africa and BG International.
In a keenly watched decision, the Supreme Court of Appeal (SCA) provided a lifeline to oil companies exploring along South Africa's coast, where a series of court actions have delayed exploration and dampened investor appetite.
Exploration interest in South Africa, sandwiched between petroleum hotspots Namibia and Mozambique, has risen following TotalEnergies' discovery of two large gas fields off the country's east coast from 2019.
The case, which has dragged on for years, was heard by the appeals court in May when lawyers for the affected communities and environmental groups, including Greenpeace, defended a prior ruling from the Makhanda High Court which nullified an exploration right granted to Impact Africa and Shell in 2014.
The oil companies and the Department of Mineral Resources and Energy then appealed this ruling, arguing that the court had erred in various aspects, including that climate change and heritage rights should not have been considered by the court.
On Monday, the appeals court dismissed the appeal but, using its powers, recognised the exploration right and its two subsequent renewals in 2017 and 2021.
"In the circumstances ... considerations of justice, equity and the principles of finality and certainty dictate that the harshness of the exploration right being set aside can and should be ameliorated," the judgement seen by Reuters said.
The court ordered a further public participation process to "cure the identified defects" pending a third and final renewal application by the oil companies.
A Shell spokesperson said it respected the appeal dismissal while welcoming the court’s direction that the exploration right remains valid, subject to further public consultation and the renewal application.
"We are examining the ruling in detail and considering our next steps," the person added.
Environmentalists and coastal communities have protested against Shell's plans for seismic surveys, saying its underwater acoustics are harmful to marine animals, especially migrating whales. Oil companies have rejected this.
"If the right is renewed, then we're back to square one," Ricky Stone, one of the environmental lawyers told Reuters.
"We're now taking instructions to appeal the SCA's order to the Constitutional Court," he said of South Africa's highest court.
(Reuters - Reporting by Wendell Roelf; Editing by Tomasz Janowski and Mark Potter)