Algerian state oil and gas firm Sonatrach has signed a $5.4-billion exploration and production agreement with Saudi Arabian firm Midad Energy, Algerian news outlet Ennahar TV reported on Monday, citing a statement from Sonatrach.
The 30-year contract in the form of a production sharing agreement is for exploration and production in the Illizi Basin in eastern Algeria. The contract can be extended by another 10 years.
The deal between Sonatrach and the Saudi firm includes an exploration period of up to seven years and total investments estimated at about $5.4 billion, according to Ennahar TV.
OPEC producer Algeriais nearing the finalization of agreements with U.S. supermajors Exxon and Chevron to explore and invest in its shale gas resources as the North African country bets big on boosting its gas pipeline and LNG exports.
Most of Algeria’s gas exports are heading to Europe, which is increasingly betting on Africa to import large volumes of pipeline gas and LNG to replace pipeline gas supply from Russia, which was Europe’s top gas supplier before the Russian invasion of Ukraine.
Algeria holds huge conventional natural gas reserves, and it is also estimated to have the third–largest shale gas reserves in the world after China and Argentina.
Apart from Saudi Arabia’s Midad Energy, other non-U.S. firms are vying to explore and operate blocks in Algeria.
Earlier this year, Zhongman Petroleum and Natural Gas Group (ZPEC), an independent Shanghai-listed Chinese oil and gas company, won a licensing contract to explore a natural gas block in central Algeria.
Algeria’s National Agency for the Valorization of Hydrocarbon Resources, ALNAFT, has awarded the Chinese firm an exploration contract for the Zerafa II gas block.
ZPEC won the block in competition with French supermajor TotalEnergies and a consortium of two other European oil firms, Italian Eni and Norway’s Equinor, the Chinese company said, as quoted by Reuters.
By Tsvetana Paraskova for Oilprice.com
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