Sonatrach, Midad Energy Seal $5.4 Billion Deal to Boost Hydrocarbon Development in Southern Algeria
✍️ BY: Dr. Hana Saada
Algiers – October 2025 – In a stride toward reinforcing Algeria’s energy partnerships and expanding its hydrocarbon potential, the national oil and gas company Sonatrach signed on Monday a production sharing contract with the Saudi company Midad Energy North Africa. The agreement, valued at an impressive 5.4 billion USD, concerns the exploration and exploitation of the Illizi Sud perimeter, located approximately 100 kilometers south of In Amenas in the Illizi Basin—one of the country’s most promising hydrocarbon regions.
The signing ceremony, held at Sonatrach’s headquarters, was attended by high-ranking officials, including the Minister of State, Minister of Hydrocarbons and Mines, Mohamed Arkab, the Ambassador of the Kingdom of Saudi Arabia to Algeria, Dr. Abdullah bin Nasser Abdullah Al-Busairi, and the presidents of ALNAFT and the Hydrocarbon Regulatory Authority (ARH). The contract was signed by Sonatrach’s CEO, Rachid Hachichi, and Sheikh Abdulelah Bin Mohammed Bin Abdullah Al-Aiban, CEO of Midad Energy North Africa, in a ceremony that symbolized the strengthening of Algerian-Saudi energy cooperation.
Concluded under the framework of Law No. 19-13 on hydrocarbons, the contract establishes an initial term of 30 years, extendable by an additional decade, and includes a seven-year exploration phase. The total investment—fully financed by the Saudi partner—amounts to 5.4 billion USD, of which 288 million USD will be allocated to exploration and research operations.
The project places particular emphasis on environmental stewardship and innovation. It integrates advanced digital technologies, adheres strictly to Algerian environmental regulations, and underscores the promotion of local content through the involvement of national suppliers and subcontractors. This approach reflects Algeria’s strategic vision of combining sustainable energy development with technological modernization and local capacity building.
Forecasts estimate that total production over the contract’s duration will reach nearly 993 million barrels of oil equivalent (boe), including 125 billion cubic meters of marketable gas and 204 million barrels of liquid hydrocarbons—comprising 103 million barrels of LPG and 101 million barrels of condensate. These figures underline the immense potential of the Illizi Basin and the significant economic and energy returns expected from this partnership.
This landmark agreement builds upon the memorandum of understanding signed between the two sides on March 3, 2024, and marks a new milestone in Algerian-Saudi energy relations. It embodies both nations’ shared commitment to mutually beneficial cooperation, technological progress, and sustainable resource management—a partnership that reinforces Algeria’s pivotal position as a regional energy hub and reflects the strategic depth of its economic diplomacy with the Kingdom of Saudi Arabia.
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