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Shell wants to get juniors on its side

Jul 08 2012 15:00 Francois Williams

Cape Town – With all eyes on the long-awaited Cabinet decision on shale gas exploration in the Karoo, environmental groups and politicians were upset last week when they realised Shell was still continuing with its Karoo plans.

There is still a moratorium on the awarding of exploration licences and government has not yet announced if it will approve controversial hydraulic fracturing (fracking).

Shell’s representatives appear to be very busy trying to convince local authorities in the Karoo of the socio-economic benefits of shale gas development. A meeting with the Karoo Hoogland municipality took place last week in the Northern Cape. The municipality embraces towns like Fraserburg, Williston and Sutherland and large parts of the area where Shell wants to look for shale gas.

Kenneth Sinclair, member of parliament for COPE  who grew up in the Karoo, says he is not against development, but it appears that some people have an inside track to government. He believes there should be a transparent decision-making process.

While American studies have shown that shale gas developments in certain areas have not delivered the promised job opportunities and wealth, a study by Econometrix commissioned by Shell has found that it can contribute R200bn a year to the South African economy and create 700 000 jobs.

Environmentalists like the Treasure the Karoo Action Group (TKAG) are concerned that the findings are exaggerated, creating false expectations among poor communities in the Karoo. Moreover, fracking uses enormous amounts of water, while the Karoo is a semi-desert.

Jonathan Deal, who chairs the TKAG, says that despite the moratorium Shell is marketing its plans directly to municipal officials in the Karoo. The TKAG received an e-mail message from an employee at a municipality in the Eastern Cape that says Shell has taken a lot of trouble to win the support of the town council concerned, with promises of socio-economic development. Ward committee members and non-governmental organisations are now being targeted and marginalised communities are being promised jobs.

Agricultural organisation Agri SA is also in discussions with Shell. “Agri SA is having far-reaching discussions with Shell to ensure that best practice is followed should exploration and the exploitation of shale indeed be permitted,” says Nic Opperman, Agri SA’s director of natural resources.

Agri SA has drawn up a discussion document on various aspects that should be contained in possible agreements between farmers and exploration companies. A further meeting with Shell is envisaged for July 20.

Opperman says it’s a sensitive issue for farmers, but Agri SA would rather be proactive than become involved in protracted litigation later.

Janine Nel, spokesperson for Shell, says the company is going ahead, liaising with interested parties, because there are so many questions. If enough gas is found, this could present a significant opportunity for economic development and job creation and ensure a reliable local source of energy.

The company will hear Cabinet’s decision at the same time as other South Africans. The decision is expected this month.

Shell budgeted $200m for the exploration stage of its project but, because it still does not have a licence and has still not started any operations, the moratorium has had a minimal financial impact on the project, says Nel.

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