Sonatrach, ENI Seal $1.35 Billion Energy Agreement to Boost Algeria’s Global Hydrocarbon Standing

✍️ BY: Dr. Hana Saada

The 30-year production-sharing contract for Zemoul El Kbar aims to unlock 415 million barrels, modernize extraction technology, enhance local content, and reinforce Algeria’s energy sovereignty and export capacity.

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Algiers, Algeria | July 7th, 2025 — In a step reinforcing Algeria’s role as a critical global energy supplier, Sonatrach, the Algerian state-owned oil and gas giant, and Italian energy major ENI signed a strategic production-sharing agreement worth $1.35 billion in Algiers on Monday. The accord, centered on the Zemoul El Kbar perimeter in the Ouargla province, is poised to significantly expand hydrocarbon production while embedding cutting-edge technology and empowering the national economy.

The 30-year contract—with a possible 10-year extension—marks one of the most ambitious partnerships between the two companies. It aims to extract an estimated 415 million barrels of oil equivalents, including 9.3 billion cubic meters of natural gas, combining phases of exploration, development, and long-term production.

Speaking at the signing ceremony, Sonatrach CEO Rachid Hachichi emphasized the magnitude of the deal:

“This $1.35 billion investment demonstrates the unwavering trust our international partners place in Algeria’s institutional strength and Sonatrach’s proven capacity to lead large-scale energy projects.”

The agreement also sets aside $110 million for exploration and geological research, reflecting a commitment to maximizing Algeria’s untapped hydrocarbon reserves.

Digitizing Algeria’s Energy Industry

Crucially, the deal integrates advanced digital solutions and the latest technologies to enhance well performance and recovery efficiency. This forward-looking approach, Hachichi said, aligns Sonatrach with the global transition towards digital and high-efficiency oilfield management:

“We are transitioning Sonatrach into a pioneering company in energy innovation and modernization.”

Local Content, National Growth

Beyond production metrics, the agreement incorporates a strong national development dimension. Under Algeria’s 2019 hydrocarbons law, the contract gives preferential consideration to local operators, ensuring Algerian enterprises play a central role in the contract’s execution.

“This contract reinforces local content by encouraging the participation of national actors in the project’s value chain. It is a lever for job creation, economic stimulus, and the empowerment of Algeria’s entrepreneurial fabric,” Hachichi stated.

Securing Gas Export and Energy Sovereignty

The agreement includes a dedicated gas convention outlining the commercial terms for exporting dry gas extracted from Zemoul El Kbar, boosting Algeria’s export volumes amid rising global energy demand.

“This gas marketing deal defines the export modalities, ensuring Algeria’s long-term energy security and enhancing its strategic position in international gas markets,” noted Hachichi.

Training the Next Generation of Energy Experts

A key educational component was also formalized with the signing of a framework agreement between Sonatrach, ENI, and ENI Corporate University. The partnership aims to deliver specialized technical training programs for Sonatrach’s workforce, cultivating local expertise and ensuring sustainable knowledge transfer.

“This partnership is not only about hydrocarbons. It’s a long-term investment in Algerian human capital,” Hachichi added. “Our employees will benefit from world-class instruction, fostering a new generation of experts ready to drive Algeria’s energy sector into the future.”

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