By: AGBI

Algerian president Abdelmadjid Tebboune has approved a $5.4 billion contract with Saudi Arabia’s Midad Energy to develop hydrocarbon resources in south Algeria.

Algeria’s state-owned Sonatrach signed the deal with Midad in October for the project in the Illizi South region.

Midad Energy North Africa will finance the exploration and production operations, Sonatrach said in October, adding that the contract has a duration of 30 years, which can be extended by a further 10 years.

The deal includes a seven-year exploration phase, with around $288 million earmarked for research. The company estimates total recoverable reserves in the Illizi South block at 993 million barrels of oil equivalent.

Tebboune endorsed the agreement as per a presidential decree published in the official gazette last week.

The agreement highlights Algeria’s ongoing efforts to attract foreign investment in its hydrocarbon sector to enhance production levels and revitalise its reserves.

Algeria wants to modernise its energy infrastructure and increase its market share in the global energy market following a decline in hydrocarbon output and reserves over the past few years due to lack of investment.

Sonatrach said in February that it intends to drill nearly 1,450 oil wells during its 2025-30 plan in an attempt to boost hydrocarbon production and deposits.

Sonatrach CEO Noureddine Daoud said the foreign companies, some of which were awarded concessions in 2025, would contribute 26 percent of the investments.

In June last year Algeria awarded new oil and gas concessions to five foreign groups following strong competition among 41 companies bidding for more than 150,000 square kilometres.

Algeria controls nearly 13 billion barrels of recoverable oil reserves, which could run out within 30 years at current production levels in the absence of new major discoveries, according to official estimates.