Loaded for Bear — Mantashe, Trump and the quid pro quo politics of oil

What do Gwede Mantashe and Donald Trump have in common? 

Well, they both seem to have a fondness for Vladimir Putin and his Russian state, despite the awkward fact that the Kremlin autocrat has admirers among both Trump’s white nationalist Christian base and Manatshe’s ANC, which makes much of its credentials as an African liberation movement widely despised by the former.

As my colleague and fellow columnist Tim Cohen would say, I am not making this up.  

But Russia is also in many ways a petro-state – meaning its political economy thrives or withers on the fumes of oil and gas – and that may at least partly explain their mutual affection for the place and its sometimes topless leader. 

Both Manatshe and Trump also have an abiding adoration for fossil fuels, and seem to take a very transactional, quid pro quo, stance to the oil sector – in a gangster sort of way.

To wit, Mantashe was quoted by Bloomberg last week as saying that perhaps Pretoria should reconsider permitting for Shell’s upstream operations in South Africa – meaning its exploration and production activities – in light of its decision to divest from its downstream assets, which effectively comprise its fleet of service stations across the country. 

“They still want to stay upstream, so what we should be doing, we should be more reluctant to grant licences and permits, at that level, to Shell,” Mantashe was quoted by Bloomberg as saying during an interview while he was campaigning for the ANC in Richards Bay.

Or put another way: “Nice little upstream projects and plans you have here. Too bad if something happened to them.” 

Shell for its part has said its looming divestment from its South African downstream assets was a purely business decision, which presumably means that number crunchers armed with spreadsheets have applied their collective minds to the matter.

As I speculated last week, it may have something to do with Shell’s announced pivot to electric vehicle charging offerings, an area where the South African cupboard is notably bare.

On further reflection, I might add that labour costs are also much higher at South African petrol stations than they are in almost all developed economies, where self-service is the norm – meaning you pump the fuel yourself. 

Shell’s divestment plans also coincide with a punch-up with Thebe Investment Corporation – which has close links to the ANC – over the value of its stake in the oil major’s South African downstream assets. Thebe has confirmed this has gone to arbitration and denied that’s the reason for Shell’s pullout.

But where there is smoke there is fire, and Shell has long played with political matches in Africa. Its legacy onshore in Nigeria, where it has also recently divested, is one of rampant corruption and a befouled environment. 

It’s called the “resource curse”, which broadly refers to the way the oil industry and its government partners in crime, notably in Africa, have fleeced political economies while leaving the wider populace high and dry in a sea of abject poverty. 

Thebe’s links to the ANC, and to Shell as its BEE downstream partner, certainly offer one plausible explanation for Mantashe’s thinly veiled threats. Such partners can bite back politically if things don’t go their way. Mantashe may be acting a bit like a mob boss, but one would have to peel a bakkie-load of onions to shed any tears for Shell.

There is a price to be paid for playing in an extractive state with an extractive ruling party – one which should not be lost on an extractive company in an extractive industry.  

Which brings us to the former and hopeful occupant of the US White House, who often tries to effect the role of a mafia don as well as that of political leader of a fascist and theocratic cult.

Trump, according to the Washington Post – in remarks widely picked up by other media – reportedly told some top US business executives last month that he would shred US President Joe Biden’s environmental regulations if they gave him $1-billion for his re-election.

At a dinner at his Mar-a-Lago home and club, Trump reportedly promised to open the floodgates to drilling in the Gulf of Mexico and the Alaskan Arctic while gutting the Biden administration’s climate policies. 

But neither Trump nor Mantashe have much leverage over the oil industry. 

In Trump’s case, if the oil sector does not pony up $1-billion, what’s he going to do? Suddenly ditch his climate change denialism and go full-on green? 

In Mantashe’s case, so what if the DMRE holds back on offshore exploration permits for Shell? 

The oil company’s 2023 profits were $28.5-billion and it has plenty of options for exploration. Its real money is being made elsewhere and in South Africa it has had to contend with a robust civil society opposed to seismic surveys – which the scientific jury remains out on, but anyway – and so Shell might just clam up and move on.

Having said that, Business Day reported on Monday that Shell is back in court this week with its partner Impact Oil and Gas to have its right to search for oil and gas off the Wild Coast reinstated. 

That signals it plans to remain in South Africa’s upstream space, at least for now. But if it loses this legal bid in the Supreme Court of Appeal, who knows?  

Mantashe’s reported utterances also send a bad signal to foreign investors in general. He’s effectively saying that if a foreign company divests from some of its domestic assets – especially if they have links to the ANC – that the government may scupper its plans to invest elsewhere in South Africa’s economy. 

Shell may just tell Mantashe – in a diplomatic way, of course – to take a hike, and the wider oil industry is in the same position regarding audacious Trump’s $1-billion request. DM