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Algeria’s state energy giant Sonatrach has entered into a major production-sharing agreement valued at nearly USD 5.4 billion with Saudi-based Midad Energy, the company announced on Monday. The contract focuses on the exploration and development of oil and gas reserves in the Illizi Basin, situated in southern Algeria near the Libyan border.
Spanning an initial 30-year term—with an optional 10-year extension—the agreement includes a seven-year exploration phase aimed at uncovering and assessing hydrocarbon potential in the region. Midad Energy’s North African subsidiary will fully fund the venture, earmarking around $288 million for exploration efforts in the area south of In Amenas, a key Algerian gas-producing zone.
Details of the deal were first disclosed by Algerian broadcaster Ennahar and later confirmed by the Saudi Press Agency (SPA). According to projections, total output from the project could reach approximately 993 million barrels of oil equivalent, including 125 billion cubic meters of natural gas.
This strategic partnership is part of Sonatrach’s broader push to modernize its infrastructure and strengthen international collaboration. Earlier in the year, Sonatrach signed an USD 850 million agreement with China’s Sinopec for hydrocarbon development in other regions of Algeria.
The latest deal with a Saudi firm highlights Sonatrach’s efforts to diversify its foreign partnerships in a global environment increasingly focused on energy security and sustainable transition.
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Algeria’s Energy Minister recently reiterated the government’s commitment to investing nearly USD 60 billion in the energy sector over the next five years, with a particular emphasis on exploration and production. As an OPEC member, Algeria seeks to solidify its role as a reliable global energy supplier while balancing domestic needs and moving gradually toward renewable energy solutions.
