Unaccountable 00043 – Shell, prioritising profits over people and the planet

18 Nov 2024

Shell is one of the world’s largest oil companies and is embroiled in long-term litigation in South Africa to pursue oil and gas exploration off the country’s coastlines. But Shell has a shocking track record of environmental harm and human rights abuses. This is one of many reasons we should be sceptical of its plans for South Africa.

Shell has faced numerous allegations of corrupt activities and unethical practices across the globe. The oil giant has been accused of exploiting natural resources, engaging in bribery and contributing to environmental degradation. There is no starker example than the company’s devastating role in the Niger Delta, though it also has a dark history of support for the apartheid regime in South Africa.

Shell, the focus of this instalment of the Unaccountables, is one of the big five oil and gas majors and is profiled in Open Secrets’ recent report, The Corporations and Economic Crime Report Volume 4: The Oil and Gas Majors. Despite attempts to improve its public image, Shell’s conduct is one of continuously prioritising profit over people and the planet.

Shell – A central cog of Big Oil

Shell has a history that can be traced back to the early 1900s when the company was established, by the amalgamation of The Shell Transport and Trading Company in the United Kingdom and the Royal Dutch Petroleum Company based in the Netherlands. The company grew quickly to become one of the main competitors of the then leading company in the industry, American Standard Oil – the predecessor of ExxonMobil. By 1920, Shell was the world’s largest oil producer.

Today, Shell is a public limited company that employs around 103,000 people, operates in more than 70 countries and reported a revenue of more than $300-billion in 2023. Headquartered in London, Shell’s primary listing is on the London Stock Exchange (LSE), but is also listed on the New York Stock Exchange and Euronext Amsterdam. Its largest shareholders include BlackRock Investment Management (UK), The Vanguard Group and Norges Bank Investment Management.

As the world’s now second-biggest investor-owned oil and gas company, after ExxonMobil, Shell is a central cog of Big Oil and has significant operations in every arena of the oil and gas industry. It has made an enormous contribution to the current climate crisis. Between 1988 and 2015, Shell was the ninth-biggest corporate producer of greenhouse gas emissions, when measured by the emissions of the fossil fuels it sells, and its own emissions.

Shell: An apartheid ally

Shell has a long history in South Africa, and opened its first offices in the country in 1902. Shell propped up apartheid not only by playing a central role in sustaining the South African economy at the time, but also by providing direct support to the police and armed forces as an essential fuel provider. Shell was also chief among the major international petroleum companies operational in South Africa during apartheid and dominated the country’s oil industry.

When a voluntary oil embargo was placed on South Africa, beginning with some of the Arab League states in 1973 and later adopted by the United Nations General Assembly in 1987, some companies and states simply could not pass up the opportunity to do business with the apartheid state. For the apartheid war machine, oil was a vital commodity that the country was willing to pay a premium to access.

Shell, along with major international petroleum companies BP, Caltex, Mobil and Total, cashed in on the opportunity. Through covert operations orchestrated in part by the Strategic Fuel Fund, from the 1980s up until 1992, Shell was involved in camouflaging oil shipments to South Africa, making it one of the most notable sanctions-busting allies of the regime.

In 1987, an international campaign against Shell was launched by anti-apartheid groups in Britain, the United States and the Netherlands. Pickets were held at Shell garages around the United Kingdom asking people to boycott Shell products. Despite this, Shell continued to increase its investments in South Africa, and further, it ran advertising campaigns that stated, “We’re backing South Africa”.

Environmental catastrophe in the Niger Delta

At the time Shell was “backing” apartheid South Africa, it was wreaking devastation in Nigeria; a legacy that remains today. Shell first set up operations in Nigeria in 1936, though it would take 22 years before the first shipment of oil would leave the country. Since 1958, Shell has encountered numerous controversies, has been at the heart of significant environmental destruction in the region and involved in several human rights violations there.

Shell long had extensive operations in Ogoniland, a 1,000km2 area in the southern region of Nigeria. While Ogoniland is home to more than 250 communities, it has been turned into an environmental disaster area due to frequent oil spills and gas leaks. Since 1976, thousands of litres of oil spills have devastated the Niger Delta, causing irreparable harm to the environment and severely affecting the lives and livelihoods of residents who rely on farming and fishing for survival. The contamination of fresh river water and underground water sources has made water in the communities unsafe and unusable. Over the past 13 years, the National Oil Spill Detection and Response Agency has documented at least 37 significant oil spills.

The Movement for the Survival of the Ogoni People (Mosop), established in 1990, began advocating for a more equitable distribution of the oil wealth generated from the region. In 1993, about 300,000 Ogoni people participated in a peaceful protest against Shell, highlighting the environmental damage caused by the company’s operations. At the time, Shell accounted for half of Nigeria’s daily oil production.

In response to the protests, Shell sought military support from the Nigerian government to construct a pipeline through Ogoniland, which led to escalating violence. In November 1995, nine Mosop leaders were arrested, tortured and executed by Nigeria’s military regime following a deeply flawed trial. The families of the executed activists have long sought justice and accountability for their deaths. They say Shell urged the Nigerian government to act, knowing what the consequences would be. Shell has always denied this.

Although the United Nations Environmental Programme (UNEP) recommended a thorough cleanup of the Ogoni region in 2011, progress has been slow, leaving local people still grappling with pollution. Legal pressure and advocacy efforts continue to demand more effective and timely remediation from Shell and the Nigerian government. Currently, Shell is in the process of divesting itself of its Nigerian subsidiary, which Nigerian activists view as a tactic to evade further legal accountability for its long history of exploiting the region’s resources. Moreover, although Shell is theoretically withdrawing from the region, distancing itself from the devastation it has caused, it is set to still maintain influence through the new consortium of oil companies set to take its place.

Shell’s activities and conduct in Ogoniland can be said to encapsulate some of the most extreme and brutal forms of neocolonial exploitation in Africa.

Despite this, it is clear that many South African politicians and businesses are still eager to collaborate with Shell to conduct offshore drilling in South Africa’s oceans.

Shell in South Africa

Shell has also been implicated in walking away from some of its South African activities without properly accounting for its environmental impact.

Shell previously jointly owned (with BP) the South African Petroleum Refineries (Sapref) that manufactured a range of petroleum products including diesel, aviation fuel, base oil, liquid petroleum gas, paraffin, solvents, marine fuel oil and gasoline. In April 2022, the refinery – which began operations in 1964 and accounts for 35% of refinery capacity in South Africa – became non-operational for a period following significant flood damage.

The floods washed petrol out of the refinery and on to a nearby beach. Sapref said that it would need five years and an undisclosed amount of money to clean up, but over two years later, this has not yet happened.

Instead, it became another in a long list of pollution incidents that Sapref has been involved in, such as the release of five tonnes of hydrogen fluoride into the atmosphere in 1998 and a spill of 1,000 litres of petrol into Durban Bay in January 2001 that affected groundwater and soil beneath residents’ homes.

In May 2024, Shell announced that it would divest from its South African downstream business. It also sold its stake in Sapref to the Central Energy Fund (CEF) for the nominal amount of R1. Gwede Mantashe announced that the Department of Mineral and Petroleum Resources was looking for investors to help develop the plant as opposed to “relying on Treasury for finance”.

The sale of Sapref raises concerns not only about who the investors might be, but also about who would pay to clean up the environmental mess that Shell and BP are responsible for. By selling the refinery and not decommissioning it, Shell and BP have walked away without addressing the damage caused to the environment. Instead, this cost could fall to the CEF, and thus the state.

Shell on South Africa’s seashores

Given Shell’s track record in South Africa, and other places it has been operating in, its extensive ongoing interests in oil and gas exploration should be of great concern. The company has aggressively pursued this business in South Africa, but has run up against fierce resistance from local communities and civil society.

In October 2021, Shell announced it would begin seismic surveys off the Wild Coast of South Africa to determine if there were commercially viable reserves of oil and gas.

On 29 November 2021, a group of civil society organisations brought a case to review the Department of Mineral Resources and Energy’s (DMRE’s) decision to grant Shell, with Impact Africa, a subsidiary of Impact Oil and Gas, exploration rights to conduct these seismic surveys. In 2022, the High Court in Makhanda ruled that Shell’s right to conduct seismic surveys off South Africa’s coast had been granted unlawfully and was set aside.

The applicants argued that the original approval was unlawful for three main reasons: First, there had been no consultation with the affected communities; second, the authorities neglected to consider the potential harm to fishers’ livelihoods and the environmental and climate impact of gas and oil exploration; and third, the authorities failed to adhere to the Integrated Coastal Management Act, which requires consideration of the interests of the entire community, including ocean life and fishers.

The Makhanda High Court’s judgment was met with widespread jubilation by Wild Coast communities, who reportedly referred to the judgment as a “monumental victory for the planet”.

Shell seismic surveys off the Wild Coast of South Africa could be devastatingly harmful not only to ocean and marine life, but also the livelihoods of fishers and the fishing communities around the coast and have an impact on their rights. Marine seismic surveys use airguns to create seismic waves deep into the ocean to identify the potential for oil and gas. These airguns use loud blasts repeatedly to penetrate through the ocean and deep into the seafloor. It has been documented that South Africa’s marine life includes about 13,000 species, of which more than 3,000 are found in South Africa only. Seismic blasting and offshore drilling for oil and gas are among the topmost harmful industrial activities that destroy ocean life and ecosystems.

Shell, Impact Africa and the DMRE decided to appeal against the high court ruling, with the matter heard at the Supreme Court of Appeal (SCA) on 17 May 2024. Nearly a month later, on 3 June 2024, the SCA dismissed Shell’s appeal, confirming that the right to conduct the surveys had been granted unlawfully. However, one might argue that the SCA threw Shell a lifeline by allowing the minister of mineral resources and energy to consider Shell’s application to renew its permit.

Wild Coast communities and environmental groups have now approached the Constitutional Court to appeal against this part of the SCA’s judgment, with the court confirming it will hear the final aspects of the case in early 2025.

The groups involved, including Sustaining the Wild Coast, All Rise Attorneys, Natural Justice and Greenpeace Africa, have argued that Shell should not be allowed to “renew” its permit given that it never conducted appropriate community consultation to begin with. If the appeal succeeds, Shell and Impact Africa’s exploration rights will be invalidated, potentially ending their ability to explore for oil and gas off the Wild Coast.

Shell shall not remain unaccountable

Shell’s conduct across the globe over many decades reveals a troubling and consistent pattern of prioritising profit over people and the planet.

As the climate crisis intensifies, and figures show that we are failing to meet global targets, there is an urgent need to spotlight the role of private corporations like Shell and the threat they pose to environmental and social justice and democracy if their power and influence remain unchecked.

It is important, now more than ever, to ensure that Shell does not remain unaccountable.

Open Secrets provided detailed questions to Shell about the information in this article, but received no response despite following up several times. DM

The questions Shell didn’t answer

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