Algeria: $5.4 Billion Deal with Saudi Firm to Expand O&G Exploration
Summary:
On 13 October 2025, Algeria’s state-owned energy company Sonatrach signed a US $5.4 billion production-sharing agreement with Saudi Arabia’s Midad Energy North Africa to explore and develop hydrocarbons in the Illizi South perimeter, located roughly 100 kilometers south of In Amenas, near the Libyan border.
The signing ceremony took place at Sonatrach’s headquarters in Algiers, attended by Algeria’s Energy Minister Mohamed Arkab, Saudi Ambassador Abdullah Al-Busairi, and senior officials from ALNAFT and the Hydrocarbon Regulatory Authority. Sonatrach CEO Rachid Hachichi and Midad Energy CEO Sheikh Abdulelah Al-Aiban formalized the deal.
The agreement spans 30 years, with an option to extend it by an additional decade. It includes a seven-year exploration phase, during which Midad will assume full financial responsibility, investing about US $288 million in exploration and a total of US $5.4 billion over the project’s lifetime. The development is projected to yield around 993 million barrels of oil equivalent, including 125 billion m³ of natural gas and 204 million barrels of liquids such as LPG and condensate.
Outlook:
The agreement between Algeria’s Sonatrach and Saudi Arabia’s Midad Energy is expected to strengthen Algeria’s upstream hydrocarbon sector by increasing production capacity, particularly in natural gas, and attracting significant foreign investment.
By partnering with a Gulf-based firm, Algeria could diversify its energy alliances beyond traditional European markets and foster broader economic and diplomatic cooperation within the Arab region.
The project also aligns with Algeria’s strategic objective of modernizing its oil and gas industry through the adoption of advanced extraction technologies, digital monitoring, and increased local content participation. If implemented effectively, it could contribute to sustained production growth, help address domestic energy needs, and enhance export potential.
Explore our services or speak with our team of North Africa-based risk experts.