KEY POINTS
- Algeria’s Sonatrach signs a $5.4 billion production-sharing deal with Saudi Arabia’s Midad Energy.
- The 30-year contract targets nearly one billion barrels of oil equivalent in output.
- The deal strengthens Algeria’s push to expand energy investment and foreign partnerships.
Algeria has signed a sweeping $5.4 billion oil and gas production-sharing agreement with Saudi Arabia’s Midad Energy, marking one of the North African nation’s largest energy pacts in recent years as it intensifies efforts to revive output and attract foreign investment.
State-owned Sonatrach said on Monday the deal covers exploration and development in the Illizi Basin, a resource-rich area in the southeast of the country near the Libyan border.
The 30-year contract, with an option to extend for another decade, includes a seven-year exploration phase. Under the terms, Midad Energy North Africa will shoulder the entire investment, including $288 million earmarked for initial exploration work.
The Illizi South perimeter, situated roughly 100 kilometres south of In Amenas, is expected to yield an estimated 993 million barrels of oil equivalent over the life of the contract. This includes around 125 billion cubic metres of natural gas, according to figures reported by Saudi state news agency SPA.
A Strategic Partnership to Bolster Algeria’s Energy Ambitions
The deal underscores Algeria’s renewed push to cement its position as a leading energy supplier to global markets. The government has outlined a $60 billion investment plan over the next five years, largely focused on upstream exploration, field development and modernisation of production facilities.
Sonatrach, which remains the country’s dominant oil and gas producer, has been working to diversify its foreign partnerships after years of stagnation in output. Earlier this year, it signed an $850 million hydrocarbon development and exploration contract with China’s Sinopec, reflecting a broader strategy to bring in foreign capital and technology to boost efficiency and production.
For Midad Energy, the agreement represents a major step in expanding its North African footprint and deepening Saudi Arabia’s energy influence across the region. The Riyadh-based company, a subsidiary of the Al Fozan Holding Group, has been steadily growing its international energy portfolio amid Saudi Arabia’s broader ambitions to strengthen its presence in global hydrocarbon markets.
Algeria, a member of the Organisation of the Petroleum Exporting Countries (OPEC), has sought to strike a balance between meeting rising domestic energy demand and maintaining its role as a reliable supplier to Europe and Asia. The partnership with Midad Energy aligns with that vision, adding momentum to Algeria’s broader plans to secure long-term energy growth while gradually transitioning towards more sustainable sources.
As the country pushes forward with its energy diversification strategy, deals of this scale are seen as a signal of investor confidence in Algeria’s hydrocarbons sector at a time of heightened competition for global capital and new energy frontiers.
