South Africa's $2.8B Offshore Oil Bet Faces Legal Challenge Over 370,000 Barrels Daily

A 370,000-barrel-per-day production target and a French government stake worth 2.8 billion dollars sit at the centre of South Africa’s offshore oil ambitions, and both are now exposed to courtroom risk.

Operation Phakisa, the marine resource strategy launched in 2014, mapped more than 95 percent of South Africa’s nearly 3,000-kilometre coastline for offshore oil and gas exploration. The plan calls for 30 exploration wells drilled within a decade, with projected average daily output of 370,000 barrels of oil and gas sustained over 20 years. Saldanha Bay, a port town reshaped by iron ore exports exceeding one billion tonnes in the 1970s, has been designated a key logistics hub for the expansion.

Two major court cases now threaten the commercial viability of those plans.

Shell and TotalEnergies, the multinational operators holding oil concessions, face legal challenges from coastal communities and civil society groups. The claimants argue they were excluded from consultation processes and that extraction poses unacceptable social and environmental risks to towns including Saldanha Bay.

The most advanced case centres on the Aukotowa Fisheries Cooperative, backed by nonprofits The Green Connection and Natural Justice. The cooperative has sued TotalEnergies over exploration rights to a 30,000-square-kilometre offshore block in the Orange Basin, a biodiverse marine area on the Namibia-South Africa border. The cooperative contends that TotalEnergies’ environmental impact assessment was inadequate, failing to account for the project’s climate contribution and placing corporate profit above vulnerable coastal livelihoods. The Western Cape High Court completed hearings in late March and is expected to rule later this year.

By contrast, the challenge to Shell and Impact Africa has already cleared two lower courts. Sustaining the Wild Coast and allied organisations have contested the companies’ exploration permit since 2021, arguing the companies violated South African law by failing to consult affected communities. The case now rests with South Africa’s Constitutional Court, which reserved judgment in September 2025. A ruling against the operators would be final and would effectively terminate the permit.

Melissa Groenink-Groves, programme manager at Natural Justice, said the South African cases could establish regional precedent. “When communities win in the courts, the successes serve as inspiration for other communities to advocate for their rights in their own contexts,” she said. Groenink-Groves added that Operation Phakisa exploration applications have been “granted largely without properly assessing the devastating impact an oil spill could have on small-scale fishers, the risks of drilling in ultra-deep waters, and without accounting for climate change impacts associated with oil and gas exploitation.”

The government’s economic rationale for offshore expansion reflects real fiscal pressure. With unemployment above 30 percent and wealth inequality acute, policymakers view Operation Phakisa as a vehicle for socioeconomic development. The fossil fuel sector contributes more than 3 percent of gross tax revenue, creating strong political incentives to advance extraction. Minister of Mineral and Petroleum Resources Gwede Mantashe has characterised the court cases as “anti-development.”

International capital adds another layer to the dispute. The French government holds a 2.8 billion dollar stake in TotalEnergies, giving the operator state-level backing for its South African ambitions. That backing has not insulated the company from legal exposure. Political economist Patrick Bond of the University of Johannesburg argued that Operation Phakisa “only makes economic sense if its social and environmental harms are ignored,” and that “if a genuine social cost of carbon analysis were done in any African fossil fuel project, there would be few, if any, able to justify the projects economically.”

TotalEnergies stated in writing that it “is a responsible operator fully committed to complying with all applicable South African legislation.” Shell and the Department of Mineral and Petroleum Resources did not respond to requests for comment.

The broader investment context is worth noting: offshore oil and gas discoveries accounted for over 85 percent of new global exploration finds in 2024, signalling that capital continues to flow toward ocean-based extraction even as legal and environmental scrutiny intensifies. Whether South Africa’s Constitutional Court ruling, expected sometime after September 2025, reshapes the risk calculus for operators across the region remains the open question investors in African offshore blocks are now watching closely.