Hydrocarbons in Algeria: contract signed between Sonatrach and ENI

As reported by Le Monde on July 8th, the Algerian-owned oil company, Sonatrach, and the Italian group, ENI have just initialed a $1.35 billion agreement allowing the exploration and exploitation of hydrocarbons within the perimeter of Zemoul El-Kbar, signalling a “new stage” in their cooperation.

On July 7th in Algiers, the two energy giants signed a contract to “share the production” of hydrocarbons in the amount of 1.35 billion dollars concerning a site in the south-east of Algeria, including 110 million dollars for research and exploration investments.

This thirty-year contract concerns the exploration and exploitation of hydrocarbons within the contractual perimeter of Zemoul El-Kbar, in the Berkine basin, 300 kilometers east of Hassi Messaoud, the Algerian group said in a statement. The agreement, which may be extended for a further ten years, provides for a seven-year exploration and research period.

The agreement is “a qualitative step that will make it possible to use the latest digital solutions and innovative technologies in the fields of exploration and production, to improve the performance of wells and to recover reserves,” said Sonatrach CEO Rachid Hachichi.

Received by Algerian President Abdelmadjid Tebboune, the CEO of ENI, Claudio Descalzi described this contract as a “new step” in the “strategic cooperation” between the two energy groups.

With a presence in Algeria since 1981, ENI manages with Sonatrach the TransMed gas pipeline connecting the country to Italy via Tunisia.

Before the invasion of Ukraine, Italy imported 95% of the gas it consumed, of which about 40% came from Russia. To reduce this dependence, Rome is increasingly turning to Algeria, historically its second largest supplier and the largest African exporter of natural gas – and now the 7th in the world.

In July 2022, Algiers and Rome signed several contracts for Algeria to supply more hydrocarbons to Italy. Among these agreements was a major contract to share oil and gas production, in the amount of $4 billion, between Algeria and companies in the energy sector, including ENI.

This agreement highlights Algeria’s burgeoning upstream industry, following the recent deal between QatarEnergy and Algeria, with the energy company landing a stake and exploration license in the Ahara block.

Le Monde, Maghrebi.org