Algiers, Oct. 13—Algeria’s gas state energy company Sonatrach has signed a $5.4 billion exploration and production agreement with Saudi Arabia’s Midad Energy, marking one of the largest bilateral energy investments between the two nations. The 30-year contract covers oil and gas operations in the Illizi Basin in eastern Algeria and includes an option for a 10-year extension.
Sonatrach announced the deal on Monday, confirming reports from Algerian broadcaster Ennahar TV. The agreement, structured as a production-sharing contract, outlines an initial exploration period of up to seven years. Total investment across the project is expected to reach about $5.4 billion during its term.
“The partnership reflects Algeria’s strategy to attract more international investors and boost energy production,” a Sonatrach spokesperson said.
Expanding exploration efforts
The Illizi Basin, known for its untapped hydrocarbon reserves, has become a focal point of Algeria’s plan to increase exploration activity. The agreement with Midad Energy strengthens Algeria’s push to revitalize its oil and gas sector, which remains the backbone of the national economy.
The North African nation is also in advanced talks with U.S. energy majors ExxonMobil and Chevron for shale gas exploration projects. These potential partnerships aim to enhance Algeria’s capacity to meet rising global demand for liquefied natural gas (LNG) and pipeline exports.
Algeria’s National Agency for the Valorization of Hydrocarbon Resources (ALNAFT) oversees the licensing and development of such projects, ensuring compliance with energy sector regulations and environmental standards.
Meeting Europe’s rising demand
Much of Algeria’s gas output is exported to Europe through pipelines and LNG shipments. Following the reduction of Russian gas supplies after the invasion of Ukraine, European countries have turned to African producers to secure energy imports.
Algeria, a member of the Organization of the Petroleum Exporting Countries (OPEC), has positioned itself as a key alternative supplier. The government has prioritized new exploration and infrastructure projects to maintain steady supply and strengthen its market share.
According to the U.S. Energy Information Administration, Algeria holds substantial conventional natural gas reserves and ranks third globally in shale gas resources, behind China and Argentina. Industry analysts view this as a major advantage as demand for diversified energy sources increases.
Global competition for Algerian blocks
Saudi Arabia’s entry into Algeria’s energy market comes amid growing interest from non-U.S. companies. Earlier in 2025, China’s Zhongman Petroleum and Natural Gas Group (ZPEC) secured rights to explore the Zerafa II gas block in central Algeria.
ZPEC won the contract after competing against European firms including TotalEnergies, Eni, and Equinor. The deal signaled Beijing’s ongoing commitment to expanding its footprint in North Africa’s resource sector.
Midad Energy’s agreement follows a similar trajectory, reinforcing Algeria’s role as an attractive destination for global investors seeking long-term energy projects.
With increasing partnerships from Saudi Arabia, China, and Western oil companies, Algeria’s gas a aims to modernize its energy infrastructure, enhance production capabilities, and strengthen its position as a reliable energy supplier to international market
